    [Senate Hearing 107-233]
    [From the U.S. Government Publishing Office]

                                               S. Hrg. 107-233, Pt. 1 deg.

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 3338

      AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENT OF DEFENSE FOR THE
         FISCAL YEAR ENDING SEPTEMBER 30, 2002, 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

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                        COMMITTEE ON APPROPRIATIONS \1\

                         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
    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
    MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
                                         MARY L. LANDRIEU, Louisiana
                       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            TOM HARKIN, Iowa
    RICHARD C. SHELBY, Alabama           BYRON L. DORGAN, North Dakota
    JUDD GREGG, New Hampshire            RICHARD J. DURBIN, Illinois
    KAY BAILEY HUTCHISON, Texas          HARRY REID, Nevada
                                         MARY L. LANDRIEU, Louisiana

                               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)
                           David Morrison (Minority)

                             Administrative Support

                                 Alycia Farrell

        \1\ Committee and subcommittee memberships--January 25 to June 6,
    2001.

        Note.--From January 3 to January 20, 2001 the Democrats held the
    majority, thanks to the deciding vote of outgoing Democratic Vice
    President Al Gore. Senator Thomas A. Daschle became majority leader at
    that time. Starting January 20, 2001, the incoming Republican Vice
    President Richard Cheney held the deciding vote, giving the majority to
    the Republicans. Senator Trent Lott resumed his position as majority
    leader. On May 24, 2001, Senator James Jeffords of Vermont announced
    his switch from Republican to Independent status, effective June 6,
    2001. Jeffords announced that he would caucus with the Democrats,
    changing control of the evenly divided Senate from the Republicans to
    the Democrats. Senator Thomas A. Daschle became majority leader once
    again on June 6, 2001.

                        COMMITTEE ON APPROPRIATIONS \2\

                         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
    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
                     Terry Sauvain, 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

        \2\ Committee and subcommittee memberships--June 6, 2001 to July
    10, 2001.

        Note.--From January 3 to January 20, 2001 the Democrats held the
    majority, thanks to the deciding vote of outgoing Democratic Vice
    President Al Gore. Senator Thomas A. Daschle became majority leader at
    that time. Starting January 20, 2001, the incoming Republican Vice
    President Richard Cheney held the deciding vote, giving the majority to
    the Republicans. Senator Trent Lott resumed his position as majority
    leader. On May 24, 2001, Senator James Jeffords of Vermont announced
    his switch from Republican to Independent status, effective June 6,
    2001. Jeffords announced that he would caucus with the Democrats,
    changing control of the evenly divided Senate from the Republicans to
    the Democrats. Senator Thomas A. Daschle became majority leader once
    again on June 6, 2001.

                        COMMITTEE ON APPROPRIATIONS \3\

                    ROBERT C. BYRD, West Virginia, Chairman
    DANIEL K. INOUYE, Hawaii             TED STEVENS, Alaska
    ERNEST F. HOLLINGS, South Carolina   THAD COCHRAN, Mississippi
    PATRICK J. LEAHY, Vermont            ARLEN SPECTER, Pennsylvania
    TOM HARKIN, Iowa                     PETE V. DOMENICI, New Mexico
    BARBARA A. MIKULSKI, Maryland        CHRISTOPHER S. BOND, Missouri
    HARRY REID, Nevada                   MITCH McCONNELL, Kentucky
    HERB KOHL, Wisconsin                 CONRAD BURNS, Montana
    PATTY MURRAY, Washington             RICHARD C. SHELBY, Alabama
    BYRON L. DORGAN, North Dakota        JUDD GREGG, New Hampshire
    DIANNE FEINSTEIN, California         ROBERT F. BENNETT, Utah
    RICHARD J. DURBIN, Illinois          BEN NIGHTHORSE CAMPBELL, Colorado
    TIM JOHNSON, South Dakota            LARRY CRAIG, Idaho
    MARY L. LANDRIEU, Louisiana          KAY BAILEY HUTCHISON, Texas
    JACK REED, Rhode Island              MIKE DeWINE, Ohio
                         Terry Sauvain, Staff Director
                     Charles Kieffer, Deputy Staff Director
                   Steven J. Cortese, Minority Staff Director
                                     ------

                            Subcommittee on Defense

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

                               Professional Staff

                                Charles J. Houy
                                  Susan Hogan
                                   Gary Reese
                                  Tom Hawkins
                                Robert J. Henke
                                 David Morrison
                                  Lesley Kalan
                                Mazie R. Mattson
                          Steven J. Cortese (Minority)
                            Sid Ashworth (Minority)
                           Kraig Siracuse (Minority)

                             Administrative Support

                           Alycia Farrell (Minority)

        \3\ Committee and subcommittee memberships--July 10, 2001.

        Note.--From January 3 to January 20, 2001 the Democrats held the
    majority, thanks to the deciding vote of outgoing Democratic Vice
    President Al Gore. Senator Thomas A. Daschle became majority leader at
    that time. Starting January 20, 2001, the incoming Republican Vice
    President Richard Cheney held the deciding vote, giving the majority to
    the Republicans. Senator Trent Lott resumed his position as majority
    leader. On May 24, 2001, Senator James Jeffords of Vermont announced
    his switch from Republican to Independent status, effective June 6,
    2001. Jeffords announced that he would caucus with the Democrats,
    changing control of the evenly divided Senate from the Republicans to
    the Democrats. Senator Thomas A. Daschle became majority leader once
    again on June 6, 2001.
                                C O N T E N T S

                                  ----------

                          Wednesday, February 28, 2001

                                                                       Page

    Department of Defense: Defense health programs...................     1

                           Wednesday, March 21, 2001

    Department of Defense: North Atlantic Treaty Organization issues.   345

                           Wednesday, March 28, 2001

    Department of Defense: U.S. Pacific Command......................   399

                           Wednesday, April 25, 2001

    Department of Defense: Chemical Demilitarization Program.........   443
    Nondepartmental witnesses........................................   487

                             Wednesday, May 9, 2001

    Department of Defense:
        Reserves.....................................................   523
        National Guard Bureaus.......................................   567

                            Wednesday, May 23, 2001

    Nondepartmental witnesses........................................   701

                            Wednesday, June 6, 2001

    Department of Defense: Department of the Air Force...............   867

                            Wednesday, June 13, 2001

    Department of Defense: Department of the Army....................   911

                            Wednesday, June 20, 2001

    Department of Defense: Department of the Navy....................   959

                          Wednesday, September 5, 2001

    Department of Defense: Office of the Secretary of Defense........  1015

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                          WEDNESDAY, FEBRUARY 28, 2001

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

                             DEPARTMENT OF DEFENSE

                            Defense Health Programs

    STATEMENTS OF:
            VICE ADMIRAL RICHARD A. NELSON, SURGEON GENERAL, MEDICAL CORPS,
                U.S. NAVY
            LIEUTENANT GENERAL PAUL K. CARLTON, SURGEON GENERAL, U.S. AIR
                FORCE
            LIEUTENANT GENERAL JAMES B. PEAKE, SURGEON GENERAL, U.S. ARMY

                    opening statement of senator ted stevens

        Senator Stevens. Let me welcome all of you to our first
    subcommittee hearing for this 107th Congress. I am delighted to
    see the turnout, and nice to see everybody here ahead of time.
        We meet to review the Department of Defense (DOD) medical
    program and the Defense Health Program, or DHP. In just 1
    year's time, we have seen tremendous changes in the DOD medical
    program. Congress has fulfilled the commitment to our military
    retirees to provide a lifetime of care. This benefit is now
    authorized, established, and clear, and we must now find a way
    to implement it and to pay for it and to be sure it happens as
    promised.
        In a year's time, the challenges facing the Defense Health
    Program have only grown. In particular, the fiscal challenge
    seems to change day by day, and always in increasing amount.
    Senator Inouye and I and all the members of the subcommittee
    put great value in military medicine. We honor and will fulfil
    the commitments that have been made to our service members,
    their families, and to our veterans and our retirees.
        We will first hear from the service surgeons general of the
    armed forces. This committee puts great stock, gentlemen, in
    your views and your professionalism because you are charged to
    make DOD's medical programs work, and we thank you for what you
    do. As a matter of fact, each of us are beneficiaries of your
    system.
        Just last night we heard the broad outlines of what
    President Bush is preparing for his fiscal year 2002 budget. We
    are not going to press you today on the details of that budget.
    We will receive those details on April 3rd. What we seek from
    you today is your professional assessment of the current
    challenges facing the Defense Health Program and your forecast
    of changes for the next year.
        Gentlemen, we always appreciate full and frank discussion
    and we will look forward to sharing views with you today. We
    will do our best to work with you, as we have always.
        General Paul Carlton, we welcome you back, General. General
    Jim Peake, congratulations on your promotion. We welcome you
    here today. You have a most impressive background, General. We
    are very eager to work closely with you. Admiral Dick Nelson, I
    regret to be informed this is the last time you will testify
    before this committee. You have been refreshingly candid and
    open with us, Admiral.
        Admiral Nelson. Thank you, sir.
        Senator Stevens. We appreciate that. We commend you for
    your service, your 34 years of distinguished service to our
    country, and wish you and your wife Alice the very best. A
    young man like you should not think about retiring.
        Before we go to your statements, Senator Inouye, you have a
    statement?

                     STATEMENT OF SENATOR DANIEL K. INOUYE

        Senator Inouye. Mr. Chairman, I thank you very much. I wish
    to associate myself with your remarks. I would like to thank
    the Admiral for his service to his Nation. I wish you the very
    best in the future.
        General Peake, as I told you, the combat badge impresses
    me. Did you know that he has a combat badge?
        Senator Stevens. Yes.
        Senator Inouye. General Carlton, we are always happy to
    have you here with us.
        General Carlton. Thank you, sir.
        Senator Inouye. Mr. Chairman, my statement is a rather
    lengthy one. I would like to have it made part of the record.
    However, I believe that all of us here should note that this is
    the first Defense Subcommittee hearing of the year and
    understand this was done deliberately.
        We could have had the Chiefs of Staff for the Air Force,
    the Army, or the Navy or the Secretary of Defense, but we
    decided to have you people first. This is because if the
    quality of life of our men and women in the service are not
    what they think is appropriate, then we are going to have a
    terrible time meeting the requirements of our military family.
        So we wanted all of you to realize that this subcommittee
    considers your activities to be of utmost importance to our
    Nation's security. Senator Stevens and I are not as young as
    the three of you sitting there (Surgeon Generals of the Army,
    Navy and Air Force). We have been around for a little while. We
    were in World War Two, when all three of you were youngsters.
    At that time, in my regiment only 4 percent of my men had
    dependents. The men were all young. Patients in military
    hospitals at that time looked like what the military was mainly
    composed of, men.
        Today we find that there are more gynecologists than
    orthopedic surgeons, more pediatricians than anesthesiologists.
    This is the way it should be because, as you know, today the
    ratio of active duty to family members is a bit different. In
    the Army 75 percent of the troops have dependents, the same is
    true for the Air Force and the Navy. If we do not maintain the
    high quality of life that you have been providing, we will have
    trouble maintaining an adequate military force.
        Oftentimes in discussing the security of this Nation, we
    only seem to concern ourselves with things like B-2s, F-22s,
    and cruisers. But when we come down to it, it is not the guns,
    it is not the bombs; it is what you do that maintains our
    security at the level that we should have it.
        So, gentlemen, I join my chairman in welcoming you. I
    assure you that we are looking forward to working with you.
        Thank you, Mr. Chairman.
        [The statement follows:]

                 PREPARED STATEMENT OF SENATOR DANIEL K. INOUYE

        Good morning. I join the Chairman in welcoming General
    Peake, General Carleton, and Admiral Nelson to discuss Military
    Medical Programs. I would like to take this opportunity to
    acknowledge Vice Admiral Nelson who is making his final
    appearance before this Committee as Surgeon General of the
    Navy. I thank Admiral Nelson and congratulate him, for his long
    service to the Navy and the nation, and his assistance to this
    committee. I wish him much success in his future endeavors.
        I would like to extend a special welcome to General Peake
    who is appearing before this Committee for the first time as
    the Surgeon General of the Army.
        I hope General Peake finds this hearing to be a worthwhile
    experience, and that it will be the first of many fruitful
    discussions.
        The last session of Congress focused on many health care
    issues including medical errors, patient safety, and for the
    military health care system, the National Defense Authorization
    Act, which authorized TRICARE to cover not only active duty
    service members and their family members, but to expand its
    coverage to include military retirees and their family members
    and survivors.
        Service members on active duty are concerned about access
    to health care services for their family members. We must
    ensure that the men and women who have committed to a career of
    service to our nation, both present and past, have a health
    care benefit worthy of their sacrifice. In order to provide
    this key quality of life service to our newly-expanded
    population, we must enable all members of the Military Health
    Service System team to contribute fully to meeting this new and
    greater demand for health care based on the professional
    abilities of each team member.
        Historically it has been the Military Health System that
    has established successful new paradigms for health care, and
    we must continue this proud tradition. The Military Health
    System provides a far superior quality of life for our service
    members and their families, but we must never forget to build
    on our past successes to meet present and future challenges
    successfully .
        Continuing fiscal restraints require us to make the best
    use of our resources while maintaining quality. I am
    particularly pleased with the continued advancements made in
    telemedicine and other medical technology, I commend the
    Department Of Defense for being a leader of this innovative
    modern technology.
        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, retention of Military Health
    System personnel, implementation of the expanded TRICARE
    benefit plan, and new technology initiatives. I look forward to
    hearing your testimony.

        Senator Stevens. Senator Hutchison, Senator Domenici, do
    you have any comments to make at the beginning of the hearing?

                   STATEMENT OF SENATOR KAY BAILEY HUTCHISON

        Senator Hutchison. Yes, Mr. Chairman. Before I get to my
    line of questions, I would like to say a couple of things.
        First of all, thank you very much. Clearly you are one of
    the priorities that Congress is making for our military
    personnel. As we upgrade quality of life, health care along
    with housing and pay are the linchpins of that commitment that
    we are making.
        I am introducing a bill today that will extend the period
    under which victims of the Gulf War syndrome will be able to
    receive treatment and be able to, hopefully, get coverage. I am
    very disappointed that we have not gone nearly as far as I
    think we should to find the cause of the Gulf War syndrome, and
    I think that we are on the cusp of finding that cause and I
    hope that you will be committed at the Department of Defense to
    helping us get the momentum to support the research that seems
    to have some hope of finding the cause of Gulf War syndrome.
        This is the tenth anniversary of the end of the Gulf War
    and one in seven of our veterans have symptoms, some of which
    are unexplained, but all of which occurred following service
    and those symptoms were not present before the individual left
    to go serve our country. I do not ever want it to be said that
    we did not do everything possible to support those who have
    served our country when they have ailments that they did not
    have when they left.
        Last but not least, obviously we are on a program now of
    TRICARE for Life and improving TRICARE. I think that it was
    right that we kept the commitment to veterans finally that they
    would have health care for life. But we are going to be faced
    with the appropriations issues, because there are shortfalls in
    the funding that we now have if we are going to keep that
    commitment.
        But we are going to keep the commitment and we will find
    the money and we just need you to implement that commitment
    that we will have quality health care for life for our retirees
    and the veterans who are entitled to it and those who are
    active duty personnel.
        I thank you, and I hope I am here for the questioning
    round, but in case I am not I wanted to make those points.
    Thank you.
        Senator Stevens. Senator Domenici.

                     STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Mr. Chairman thank you very much. I think
    it is very important that these hearings occur early and, with
    your permission, I would like to just make a little statement
    that analyzes the shortfalls in the Defense Health Program that
    have occurred. I think the big problem we have in funding our
    commitments in the area of health is that the Defense
    Department, for better or for worse, has underestimated the
    inflationary add-on for these programs. They do it
    consistently, and it is always extremely low.
        We have a 5 year period of time when they estimated
    inflation at 1.2 percent inflation and the actual inflation
    rate was 4.8 percent. Now, frankly, with all the work that the
    chairman and the ranking member do to put the right amount of
    money in the appropriation bill, I do not think it is fair to
    ask them to second guess you on the inflation rate and say,
    well, we are funding everything, but we do not believe your
    inflation rate.
        I think the Department has to get on the ball and put an
    inflation rate in that is realistic. In institutions of health
    delivery, the cost is going up, perhaps as fast as in United
    States generally.
        I have a statement which details that this is underfunded.
    Mr. Chairman, I think one of the best things you could do with
    the ranking member is to insist and encourage the Department to
    put the right number in. The Department puts the wrong number
    in because they do not estimate the inflation in at a high
    enough level. We fund it at the requested level, and then we
    all get in a trap around here because we have to have a
    supplemental to ultimately pay for it. Then, the appropriators
    are asked, why are you having the supplemental?
        Well, indeed, Mr. Chairman, we are going to have to have a
    supplemental this year. You and I know that. The newest item is
    that we are going to have to add $1.2 billion, and maybe $1.4
    billion, as the shortfall for the health programs in this
    Department. If you all would like to check that, that is a
    question we would submit for the record. We think the 2001
    shortfall is $1.2 billion, but it may be as high as $1.4
    billion.
        I think you should tell us whether that number is right. I
    am going to go asking for the supplemental amount because I
    think we ought to not leave these programs hanging without the
    money behind them. That causes some grief. Sometimes it causes
    delay, and in all cases it causes the health delivery system to
    put their payment plan, hold it in abeyance until the money
    comes.
        So, Mr. Chairman, would you put my statement in the record
    which details this. I have introduced a measure here; it is S.
    395, and I want to call to everyone's attention to the $1.2
    billion. When you do your supplemental I am sure you are going
    to include this because it is a shortfall for the year we are
    in over and above what you have appropriated, not because of
    you and the ranking member, but because the inflation rate was
    underestimated.
        [The statement follows:]

                 PREPARED STATEMENT OF SENATOR PETE V. DOMENICI

        Since 1994, budgets for the Defense Health Program have been
    submitted to Congress without requesting enough spending to cover all
    known medical and health care expenses.
        DOD has been projecting an average annual inflation rate of 1.8
    percent in the Defense Health Program, but the actual average rate for
    the past five years is 4.9 percent. Just last year, DOD predicted 2.1
    percent inflation for the Defense Health Program in 2001; experts are
    predicting the rate to be 7.9 percent.
        This has resulted in expenses being incurred but no funds to pay
    the bills. Chairman Stevens has led Congress by funding these gaps with
    additional spending, often in emergency supplemental appropriations
    bills.
        But the delays from inadequate budget requests means healthcare
    providers do not know if or when they will receive full funding. As a
    result, appointments for healthcare can be complicated, and the
    services rendered can be delayed or degraded. A system that many
    already find troublesome can become exasperating.
        This problem affects an active beneficiary population of almost six
    million, including 1.5 million active duty servicemen and women, 1
    million retirees, and 3.3 family dependents.
        President Bush has already pledged that he will fully fund Tricare
    costs in 2002 at an estimated $3.9 billion, but it is not yet known if
    he and Secretary Rumsfeld know about or have addressed remaining
    funding gaps in the rest of the Defense Health Program.
        The appropriations legislation introduced on Monday provides an
    ``urgent'' (not emergency) supplemental appropriation of $1.2 billion
    for the Defense Health Program for 2001.
        I also am making four specific recommendations for the Defense

    Health Program for the 2002 congressional budget resolution:
      --Sufficient budget authority and outlays to enable the enactment of
            the 2001 appropriations legislation.
      --An additional $1.4 billion in fiscal year 2002 to accommodate
            actual inflation in DOD health care, rather than the
            unrealistic under-estimate left by the officials of the
            outgoing Administration.
      --To accommodate future inflation, the budget resolution will also
            provide the needed budget authority and outlays to accommodate
            5 percent inflation for the next ten years for a total of
            almost $18 billion.
      --The Congressional Budget Office has not included additional
            discretionary spending in its ``baseline'' for the ``Tricare
            for Life'' program. The technical reasons for this are
            esoteric, but the money is substantial--$9.8 billion over ten
            years.
        It is unacceptable to make health care promises but not to include
    in the budget the money required to make good on them. The steps being
    taken here will make Congress' word good.

                                  SUPPLEMENTAL

        Senator Stevens. Thank you very much, Senator. I do note
    your introduction of the bill to authorize that amount and to
    request it and I appreciate that.
        In fiscal year 2000 our subcommittee added $1.3 billion,
    $1.311 billion in supplemental. We are in sort of a cycle where
    many of the medical costs come in supplementals. Senator Inouye
    and I do not like that, either. We have to get to the point
    where these moneys are put into a regular bill and we do not
    face supplementals for health care costs, because it is very
    hard to plan for expenditures in the beginning if they do not
    come about until some time in July. With one-quarter of the
    year left, they are not much good to the military.
        Admiral Nelson, we are glad to have you here. We welcome
    you for your last appearance. We would be pleased to have your
    statement, sir.
        Admiral Nelson. Thank you. Mr. Chairman, Senator Inouye,
    distinguished members: First, I would like to thank you, and
    thank the Congress, for the health benefit contents to the
    National Defense Authorization Act of 2001. I think the
    importance and the significance of it to our military
    beneficiaries, the active duty, family members, as well as our
    retirees who have reached age 65 and over, is extremely
    important to the future of our military. So I thank you for
    that.

                                  COMPENSATION

        I look forward to the full resourcing of the new benefits,
    so that we can implement them.
        My written testimony addresses many of Navy medicine's
    accomplishments of the past year and I will not dwell on that
    here today. But rather, there are two areas of concern to me
    that I would like to discuss briefly with you. The first one
    deals with our medical providers, both in their provider
    satisfaction and also retention. During my years as commander
    of a medical center and then these last almost 3 years as
    surgeon general, I have become increasingly concerned about the
    issues surrounding retention of our critical health care
    specialists.
        Last year, last spring, I asked the Center for Naval
    Analysis (CNA) to do a study for us on that subject. I got the
    results of that study, in December. Also last year, the three
    surgeons general, in recognizing the same problem, asked the
    Assistant Secretary for Health Affairs to initiate a flag
    officer review board to review special pays for providers. That
    board has not completed its work yet, I do not believe, but I
    have looked at CNA, the single most significant issue dealing
    with our provider's satisfaction today is the compensation. It
    has been 10 years since a review was done of the compensation
    package.
        The impact that I am seeing in the Navy is a loss of
    critical wartime specialties. The pipeline it takes to build a
    surgeon or an orthopedist is 10 to 12 years.
        Senator Stevens. You are talking about in uniformed
    personnel, not contract personnel?
        Admiral Nelson. Yes, sir, I am. I am talking uniformed
    people in our direct care system, operating in our hospitals
    and clinics.
        I am concerned that, and the three of us were concerned
    enough to ask for a review of retention and compensation. I am
    hopeful that this year we will be able to bring forward some
    initiative for action which will impact positively on
    retention.
        Senator Stevens. What is going to be the timing on that,
    Admiral, do you know?
        Admiral Nelson. I do not know that, sir. That rests with
    the Department of Defense, Health Affairs.
        Senator Stevens. We will raise it with them, and tell them
    to be prepared to tell us. I think you are right. I agree with
    you on that.
        When was the last time those were adjusted, Admiral?
        Admiral Nelson. 1991, sir. There has been--the study that
    CNA did for us indicated that there had been up to a 24 percent
    further gap in pay for like physicians.
        Senator Stevens. Have you got any statistics about the
    reenlistment rates and the attrition because of the loss of
    adjustment in those salaries?
        Admiral Nelson. Yes, sir. Yes, sir, I do. I have it for all
    specialties in the Navy. There is a study going on now, at the
    request of Congress, to look at all three services. I think
    that is about complete, and we can provide that for the record
    if you would like.
        Senator Stevens. I would like to see that as soon as it is
    ready.
        Admiral Nelson. I can provide you the Navy study
    immediately, yes, sir.
        [The information follows:]

                                 STABLE FUNDING

        Admiral Nelson. The second area of concern to me and it is
    one I raised last year. That is the need for stable,
    predictable, and sufficient funding for the direct care system.
    It is necessary for the three medical departments to run our
    hospitals and our clinics, to make them the most efficient that
    they can be.
        Our military health system optimization plan emphasizes
    maximum use of the direct care system for hospitals and
    clinics, but adequate business planning and implementation of
    that requires dependable resources throughout the year. I think
    we have a responsibility, just as Senator Domenici said, we
    have a responsibility to bring you an honest health care budget
    request, one that recognizes the true costs of quality health
    care.
        We as services cannot thrive on the year-end emergency
    supplementals. The year-end supplementals do not allow us
    investment in the future. It allows us to take care of
    immediate things, but not really invest for the future. We have
    to get past the supplementals.

                               PREPARED STATEMENT

        We are committed to working with this committee, to working
    with the Congress, to improve military health care. I
    appreciate the support that this committee has been over the
    years that I have been surgeon general and I thank you very
    much for that.
        Thank you, sir.
        [The statement follows:]

              PREPARED STATEMENT OF VICE ADMIRAL RICHARD A. NELSON

        Chairman Stevens, Senator Inouye and distinguished Senators, thank
    you for the opportunity to review Navy Medicine's accomplishments in
    2000 and plans for the future.
        This has been a challenging and rewarding year for the Navy Medical
    Department. We have successfully responded to many challenges placed
    before us. We continue to face a period of unprecedented change for
    medicine. Our health system must remain flexible as we incorporate new
    technologies and advances in medical practice, struggle to maintain our
    facilities, optimize our health care delivery, embrace new health
    benefits, enhance patient safety, and increase our ability to provide
    care to beneficiaries over age 65 in the coming months. Navy Medicine
    has been working tirelessly to maintain our superior health services in
    order to keep our service members healthy and fit and ready to deploy
    while providing a high quality health benefit to all our beneficiaries.
    As you know, healthcare is an especially important benefit to service
    members, retirees and family members. It is an important recruitment
    and retention tool. For active duty members and their families it's one
    of the key quality of life factors affecting both morale and retention.
    Additionally, the benefits afforded to retirees are viewed by all as an
    indicator of the extent to which we honor our commitments. The expanded
    health care benefits in last year's National Defense Authorization Act
    were most welcomed by all our beneficiaries and will help restore the
    faith of our retirees in Military Health Care. However, we must also
    ensure the provisions are delivered and that sufficient resources are
    available now and in the future to avoid making a commitment we can't
    afford to keep.

    Global Force Health Protection
        The year 2000 has seen Navy Medical Department personnel assigned
    to Navy and Marine Corps forces world wide, many of whom are deployed
    with our underway ships or in forward areas. This year, thousands of
    Navy medical personnel supported joint service, Marine Corps, and Navy
    operations and training exercises.
        Our medical personnel have provided humanitarian relief to many
    countries around the globe. During periods of social unrest, Navy
    medical personnel provided environmental and preventive medical
    assistance in Guatemala, Columbia, Peru and Micronesia. In support of
    our national strategy to assist governments pursuing democracy and
    independence, our medical personnel assisted in Russia, East Timor,
    Indonesia, Samoa, and Mozambique, coordinating humanitarian relief,
    epidemiology, preventive medicine, dentistry, and ophthalmology
    support. Despite the challenges of working in austere environments,
    these deployments have provided a valuable opportunity to hone our
    medical skills and test our readiness while providing relief to people
    in need.
        During the tragic events of recent military and commercial airline
    crashes, Navy medicine quickly mobilized Special Psychiatric Rapid
    Intervention Teams (SPRINT) to assist servicemen, families and
    civilians through their grieving process. Most recently, a SPRINT team
    deployed to assist the 318 uninjured crewmembers of USS COLE after the
    recent terrorist attack in Yemen. In addition, a task-organized Fleet
    Surgical Team deployed to augment the medical capability in theater in
    support of the forces still operating in the high threat environment.
         As we move into this new millennium, our Navy and Marine Corps men
    and women are called upon to respond to a greater variety of challenges
    worldwide. This means the readiness of our personnel is now more
    important than ever. Military readiness is directly impacted by Navy
    Medicine's ability to provide health protection and critical care to
    our Navy and Marine Corps forces, which are the front line protectors
    of our democracy. That's what military medicine is all about--keeping
    our forces fit to fight.
        I am also pleased to report that we recently implemented a new
    Reserve Utilization Plan (RUP) that will optimize our use of reservists
    during peacetime and contingencies. The Medical RUP is Navy Medicine's
    plan for achieving full integration of Medical Reserves into the Navy
    Medical Department. Prior to the Total Force Policy, the Medical
    Reserves were considered a ``Force in Reserve,'' to be called upon
    during national emergency.

    Taking Care of the Fleet
        Under our theme of ``Force Health Protection,'' we will place
    special emphasis on keeping Sailors and Marines healthy and fit and
    ensuring our deployable platforms are ready to deliver effective
    casualty care--Manage Health Not Just Illness. The Force Commander
    Health Promotion Unit Award (which we call the Green ``H'') is used to
    measure one aspect of Fleet medical readiness. It enhances the health,
    fitness and mental well being of our Sailors through their involvement
    and participation in unit health promotion initiatives. This award is a
    tangible, visible measure of the operational force's progress toward
    prevention and population health, since those commanding officers who
    earn the Green ``H'' are authorized to paint it on their ship's
    superstructure.
        This year, more than 130 ships or units have earned the right to
    paint the Green ``H'' on their bridge wings, reflecting decreases in
    alcohol related events and tobacco use rates, as well as increased
    physical readiness test scores.

    Readiness
        Navy Medicine tracks and evaluates overall medical readiness using
    the readiness of the platforms as well as the readiness of individual
    personnel assigned to those platforms. The platforms include the two
    one thousand bed hospital ships, 6 Active duty and 4 Reserve 500 Bed
    Fleet hospitals, as well as medical units supporting Casualty Receiving
    and Treatment Ships (CRTS), units assigned to augment Marine Corps, and
    overseas hospitals. One of our measures of readiness is whether we have
    personnel with the appropriate specialty assigned to the proper
    billets; that is, do we have surgeons assigned to surgeon billets and
    Operating Room Nurses assigned to Operating Room Nurse billets, etc.
        The readiness of a platform also involves issues relating to
    equipment, supplies and unit training. Currently these are tracked
    separately. Navy Medicine is developing a metric to measure the
    readiness of platforms using the Status of Resources and Training
    System (SORTS) concept tailored specifically to measure specific
    medical capabilities such as surgical care or humanitarian services.
    Navy Medicine also monitors the deployment readiness of individual
    personnel within the Navy Medical Department. Personnel are required to
    be administratively ready and must meet individual training
    requirements such as shipboard fire fighting, fleet hospital
    orientation, etc. The compliance of individual personnel is tracked
    through a database called Standard Personnel Management System (SPMS)
    and reported to Headquarters.

    Our People
        People are critical to accomplishing Navy Medicine's mission and
    one of the major goals from Navy Medicine's strategic plan is to
    enhance job satisfaction. We believe that retention is as important if
    not more so than recruiting, and in an effort to help retain our best
    people, there has been a lot of progress. Under our strategic plan's
    ``People'' theme, we will focus on retaining and attracting talented
    and motivated personnel and move to ensure our training is aligned with
    the Navy's mission and optimization of health. Their professional needs
    must be satisfied for Navy Medicine to be aligned and competitive.
    Their work environment must be challenging and supportive, providing
    clear objectives and valuing the contributions of all.
        All Navy Medicine personnel serving with the Marine Corps face
    unique personal and professional challenges. Not only must they master
    the art and science of a demanding style of warfare, but they must also
    learn the skills of an entirely separate branch of the armed services.
    Whether assigned to a Marine Division, a Force Service Support Group,
    or a Marine Air Wing, Navy medical personnel must know how Marines
    fight, the weapons they use, and the techniques used to employ them
    effectively against harsh resistance. To excel in this endeavor is an
    accomplishment that should be recognized on a level with other Navy
    warfare communities.
        Recently, Navy leadership approved a new program allowing Hospital
    Corpsmen and Dental Technicians, as well as other ratings assigned to
    the Fleet Marine Force, to qualify for a Fleet Marine Force warfare
    pin. This designation and associated warfare pin is an outward
    recognition of the important role our corpsmen and dental techs play in
    this unique duty. It will be a positive motivator for current and
    future HMs and DTs supporting the Marines in the field.
        Finally, as we work to meet the challenges of providing quality
    health care, while simultaneously improving access to care and
    implementing optimization, we have not forgotten the foundation of our
    health care--our providers. We appreciate and value our providers'
    irreplaceable role in achieving our vision of ``superior readiness
    through excellence in health services.''
        Within each of our medical facilities there has been an overall
    initiative to reward clinical excellence and productivity and to ensure
    that those who are contributing the most are receiving the recognition
    they deserve. Additionally, selection board precepts now emphasize
    clinical performance in the definition of those best and fully
    qualified for promotion.

    Medical Corps
        This past year, the three Surgeons General asked a Flag Officer
    Review Board to review special pays and propose changes to improve
    critical provider retention and satisfaction. I also asked the Center
    for Naval Analysis to complete a study on provider satisfaction to
    assess the extent to which changes in special pay would promote
    retention. The goal is to make the pays more flexible, raise the caps,
    and remove some of the restrictive aspects of the contracts with the
    intent of demonstrating early in an officer's career that they are
    valued. If we don't value our providers, we cannot expect them to
    continue to provide outstanding medical service. We track retention by
    the use of loss rates compared to beginning full strength numbers. The
    annual loss rates for the Medical Corps, as a whole has held steady at
    10-11 percent and the primary care communities are healthy. However, I
    am concerned about our retention rates for enlisted and officer medical
    specialties. Loss rates within surgical specialties are high and we
    have dramatically low retention rates. Specialties such as General
    Surgery have a loss rate over 22 percent and Orthopedic Surgery has a
    loss rate over 27 percent. Other equally important wartime critical
    specialties are also undermanned, including anesthesia (93 percent) and
    neurosurgery (57 percent). We predict a large exodus of radiologists in
    the next two years as many reach the end of their service obligations.
    Distribution problems are significant because we have not been able to
    keep pace with attrition in some specialties. There exist significant
    pay gaps between our surgical specialists, and their civilian
    counterparts (frequently in excess of $100 thousand per year).
    Reductions in the Health Professions Scholarship Program (HPSP) several
    years ago, coupled with reductions in Graduate Medical Education
    training pipelines, have contributed to significant shortages of
    providers. We have several military treatment facilities where we are
    unable to assign a military radiologist, which we have to replace with
    high cost contract support.

    Dental Corps
        After three years of increasing annual loss rates, the dental corps
    annual loss rate for fiscal year 1999 was down to 8.3 percent. While
    still too early for conclusive analysis, this improvement may have
    resulted from increased special pay for military dentists and resolving
    manning shortages resulting from enhanced accession programs.
    Continuation of such initiatives is essential to ongoing efforts to
    access and retain qualified officers.

    Nurse Corps
        Although, overall fiscal year 2000 data revealed generally higher
    retention levels than in prior years, the nationwide nursing shortage
    has adversely impacted our Nurse Corps. In direct competition with the
    private sector for a diminishing pool of appropriately prepared
    registered nurses, Navy faces shortages in the nurse anesthesia,
    maternal-child, psychiatric and operating room specialties, that must
    be addressed if we are to effectively meet both operational and
    peacetime healthcare delivery missions. Currently, only nurse
    anesthetists are authorized to receive incentive special pay. That
    program has been a successful retention tool thus far, but the
    civilian-military pay gap in that field continues to grow. In order to
    more accurately gauge compensation gaps for both generalist and
    advanced practice nurses, the Nurse Corps is also included in the
    Center for Naval Analyses study on Health Professions Retention
    Accession Incentives. Results of the study will provide a tool for
    future strategies. Further retention bonuses may be needed to retain
    all types of nurses as competition increases for the dwindling supply.

    Medical Service Corps
        Medical Service Corps as a whole, enjoys a relatively stable annual
    loss rate of nine percent, however loss rates vary significantly
    between specialties. Many of our health professionals incur high
    educational debts prior to commissioning and the amount of debt load
    increases with succeeding accessions. In addition, a substantial pay
    gap between military and civilian licensed professionals has resulted
    in decreasing retention. There is some variation over time of those
    specialties that are most difficult to recruit and retain, although
    some are consistently on our critical list. Currently, optometrists,
    pharmacists, psychologists and environmental health officers present
    the greatest challenges.

    Enlisted Members
        Navy Medicine's enlisted member retention statistics compared to
    Navy Line communities are fairly similar. However, problems arise in
    specialized areas such as pharmacy, radiology, and search and rescue
    fields. In the Dental community, shortfalls are beginning to appear
    both in recruitment and retention. An enlistment bonus for HMs and DTs
    is needed to help us more effectively compete in today's tight
    employment market. Increasing the selective reenlistment bonus (SRB)
    cap and authorizing SRB payments for advanced technical Navy Enlisted
    Classifications (NECs) would help improve retention in the ratings,
    particularly where there is a substantial pay delta with civilian
    counterparts.

    Uniformed Services University of the Health Sciences
        As the Executive Agent of the Uniformed Services University of the
    Health Sciences (USUHS) I would like to comment on the achievements of
    the University and its contributions. I am proud to inform you that the
    Secretary of Defense recently awarded USUHS the Joint Meritorious Unit
    Award for exceptionally meritorious service from July 1, 1990 to July
    1, 2000. The University has graduated 3,000 military physicians with a
    better overall understanding of the military, a retention rate almost
    twice as long as scholarship physicians and 42 percent of the graduates
    serving in operational or leadership positions. The University also
    provided over $85 million in clinical services to the military services
    and has trained over 200,000 defense personnel with an annual cost
    avoidance of over $40 million. The Casualty Care Research Center of the
    University has trained over 4,000 emergency health providers. I would
    also like to point out that USUHS' unique military training offers an
    enormous intrinsic value to our hospitals and operational billets that
    cannot be measured.

    Make TRICARE Work
        We continue to make significant progress in improving TRICARE and
    enjoy the full support of the senior line leadership. Our new Chief and
    Vice Chief of Naval Operations (CNO, VCNO) have already shown a great
    degree of interest and appreciation for Navy Medicine and are providing
    continued support in making TRICARE work. The Defense Medical Oversight
    Committee (DMOC) continues to be an active and influential body when it
    comes to Defense Health Program (DHP) funding requirements in the
    context of other service decisions and management and reengineering
    initiatives. Line and medical leadership is looking for ways to improve
    the delivery of the health care benefit.
        As stated earlier, the recent passage of the Fiscal Year 2001
    National Defense Authorization Act (NDAA) brings expanded health care
    benefits to our beneficiaries. Although the new law includes
    initiatives such as TRICARE Prime Remote for families, elimination of
    co-pays for active duty family members, and a catastrophic cap
    reduction, its greatest impact will be enhancing the healthcare benefit
    for our senior retirees and their families. In looking at our strategic
    plan's ``Health Benefit'' theme, we will concentrate on informing our
    customers, with the goal that all our beneficiaries will be
    knowledgeable about and confident in their health benefits. This
    objective will be even more critical as we implement the recent
    legislative changes that improve the health benefit. We will also focus
    on improving access, so beneficiaries will have timely access to
    services, assistance and information. And we will do all we can to
    simplify the delivery of the health benefit.
        This legislation is a milestone in military health care not seen
    since the initiation of the CHAMPUS program more than thirty years ago.
    We are working with DOD (Health Affairs), the TRICARE Management
    Activity and the other services to put these changes into effect.
    Embrace Best Business and Clinical Practices--Optimization
        There is no more important effort in military medicine today than
    implementing the MHS Optimization Plan to provide the most
    comprehensive health services to our Sailors, Marines and other
    beneficiaries. Optimization is based upon the pillar of readiness as
    our central mission and primary focus.
        For several years now, we have attempted to shift our mindset from
    treating illnesses to managing the health of our patients. Fewer man-
    hours will be lost due to treatment of injury or illness because we
    manage the health of our service men and women, which keeps them fit
    and ready for duty. With this in mind, TRICARE Management Activity and
    the three services created an aggressive plan to support development of
    a high performance comprehensive and integrated health services
    delivery system. We took lessons learned from the best practices of
    both military and civilian health plans. The outcome was the MHS
    Optimization Plan. Full implementation of this plan will result in a
    higher quality, more cost effective health service delivery system.
        The MHS Optimization Plan is based on three tenets. First, we must
    make effective use of readiness-required personnel and equipment to
    support the peacetime health care delivery mission. Second, we must
    equitably align our resources to provide as much health service
    delivery as possible in the most cost-effective manner--within our
    MTFs. And third, we must use the best, evidence-based clinical
    practices and a population health approach to ensure consistently
    superior quality of services.
        Although many commands report numerous efforts to optimize or
    improve their facility, I am concerned that frequently these efforts
    are not tied to specific goals or objectives. This is where performance
    measurement comes in. Performance measurement provides focus and
    direction, ensures strategic alignment and serves as a progress report.
        A part of the Optimization Plan is identifying a specific Primary
    Care Manager for each beneficiary. Assigning PCMs by name will improve
    access and continuity of care. Each PCM will manage the health of their
    patient and coordinate their care. When necessary, PCMs will refer
    patients to a specialist. Each PCM is a member of a health care team.
    This team will provide support when the PCM takes leave, has training
    or is deployed. The team concept further enhances continuity and
    customer satisfaction. The end result is a healthier population, which
    is a primary goal of the Optimization effort.
        In the Navy, we are making available comparative performance data
    on all facilities--so MTF commanders can see where they stand and learn
    from each others' successes. Ultimately, it allows us to raise the bar
    for the whole organization. As we continue in our journey of applying
    performance measurement, we will begin to identify targets for our
    system and for each MTF. Holding MTF COs accountable for meeting those
    targets will be the next step in this evolution.
        When Navy Medicine first decided that using metrics would help us
    drive organizational change, we asked the Center for Naval Analysis to
    help us. Once the leadership of Navy Medicine had come to agreement on
    our Mission, Vision, Goals and Strategies, we partnered with CNA to
    develop a fairly complex system of composite metrics that we can look
    at to see if we are going in the right direction. We are completing our
    second year with these metrics and have found that many of the measures
    have data that only changes once a year. This may be fine to measure
    how well we are doing in moving towards some of our strategic goals,
    but they are not adequate by themselves to manage the complexity of the
    Navy Medical department. This year we've added two other ``levels'' of
    metrics. One is a group of Annual Plan measures. After reviewing our
    strategic plan in light of the current environment, understanding the
    strengths, weaknesses, opportunities, and threats to our organization,
    we identified several priorities for the year. We then identified
    measures to track progress on these items--and this data has to be
    measurable at least quarterly. Finally, we have just identified 20-25
    measures for our ``Dashboard of Leading Indicators'' that our
    leadership will be looking at on a monthly basis. Once we look at the
    historical data for these dashboard indicators, we will be setting not
    only targets for where we want to be but also action triggers in case
    we are going the wrong direction in some area. We will agree on a level
    below which, we will no longer just watch and see if it improves, but
    we will take action to change the processes. So you can see it is an
    ongoing journey or evolution--and I believe each of the services is
    involved in a similar evolution. We in the Navy have web based our
    Optimization Report Card and the satisfaction survey data is provided
    to MTF commanders in a more user friendly display on a quarterly basis.

    Dental
        Let me provide one more example of effective use of performance
    measures that is taking place within our Navy Dental organization. In
    June 1998, senior dental leaders, including Commanding Officers,
    implemented 12 system metrics to be collected uniformly across all
    levels of Navy Dentistry. The system-wide application and utilization
    of this initiative has lead to improved alignment while documenting
    higher performance. During the past seven quarters, improvements in the
    data collection process enabled valid and useful data based decision-
    making. This metric-based management has produced significant outcomes:
      --Dentist Productivity increased by 12 percent.
      --Operational Dental Readiness increased from 90 to 96 percent.
      --Dental Health Index increased from 22 to 34 percent.
        A composite metric ``dashboard'' was developed as a tool to allow
    overall performance evaluation while considering all metrics
    simultaneously. This tool is used quarterly to monitor the performance
    and effectiveness of each Command (and even down to the branch level at
    170 branches, and 13 Naval Hospitals and 59 ships). All dental units
    achieve a composite score ranking. It is significant to note that
    today's lowest scoring dental unit has a higher composite performance
    score than that of the top performer 12 months ago. Guided by metrics,
    Navy Dentistry moved military dental billets and eliminated substantial
    contract costs. These dollars are then available as working capital to
    meet requirements within the dental system to further increase
    production and efficiency.

    Optimization Resourcing Levels
        Our analysis of our direct care system indicates that in many
    cases, Military Treatment Facilities are not optimally staffed and
    funded to deliver efficient health care. The direct health care system
    can not function at optimal levels in an austere fiscal environment.
    For example, a Family Physician working with two clinical support staff
    may be able to effectively care for a panel of only 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.
    Clinical support staff to clinical provider ratio is presently 1.81.
    The MHS Optimization target is 3.50. Additional staff in the following
    categories is also necessary: Case Managers to coordinate care for the
    top 1 percent of medically complex cases, freeing clinical providers to
    do more direct patient care. Utilization Managers are needed to analyze
    trends in ambulatory care usage by diagnostic and patient category, and
    develop plans for population health interventions. Medical Record
    Coders to perform accurate and detailed coding to account for workload
    and performance, thus ensuring marketshare is accounted for in
    comparison with contractor performed work. And Pharmacy technicians are
    needed to support increased prescription volume with workload
    recapture. I am 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. However, I am firmly committed to
    changing the business practices and culture of Navy Medicine to
    recapture workload currently being done in the private sector. Overall,
    the area of resources continues to be one of concern. We do not have
    adequate financial resources to provide what is needed within the
    Direct Care System.
        The rapidly escalating costs of the Managed Care Support Contracts
    places the Direct Care System at risk. As these costs increase, there
    is constant pressure to find relief by reducing the Direct Care Program
    funding in our Military Treatment Facilities to pay for the Managed
    Care Contracts. The Direct Care System cannot continue to be the source
    for the Department's relief from these unplanned and unexpected
    increased costs without serious degradation of the most cost effective
    portion of our Military Health System.
        As a result of these internal pressures, I have restricted the
    resourcing of the Direct Care Program of Navy Medicine to a survival
    basis over the past two years. This action has left us in a position of
    detracting from our facility maintenance, equipment replacement, and
    continuing medical education programs to ensure that we use our limited
    resources for the delivery of the healthcare benefit. As we continue to
    underfund our facilities maintenance, this will eventually come back to
    haunt us in more costly repair requirements, higher Military
    Construction Program requirements, and higher equipment replacement
    requirements.
        Of concern is also the replacement cycle for our MTFs and
    maintenance of real property. We now face an average facility
    replacement cycle of over 100 years, compared to data indicating the
    private sector is less than 25 years. This does not mean that the
    private sector plans to replace their facilities every 25 years, but
    implies that a major renovation will be required every 25 years to
    remain competitive. If we do not spend more on maintenance
    requirements, a significant degradation of our infrastructure will
    result.
        A replacement hospital is badly needed for our beneficiaries in
    Naples, Italy. The new hospital is almost 30 percent complete. The U.S.
    Navy contract with the Italian developer currently calls for leasing
    the hospital upon its completion in late 2002. There is also the option
    to buyout the facility, which may offer advantages over leasing.

    Quality of Care
        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. 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 MHS Optimization Plan
    will play a key role in allowing enrollee assignment to a PCM by name.
        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.
        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 System II (CHCS II) of
            computerized patient records to improve documentation of care
            provided including the follow up of laboratory and radiology
            exams, and pharmacy orders.
      --Deployment of the Pharmacy Data Transaction System (PDTS) to
            prevent prescription and allergy errors in a highly mobile
            population.

    Medical Research
        Navy Medicine also has a proud history of incredible medical
    research successes from our CONUS and OCONUS laboratories. Our research
    achievements have been published in professional journals, received
    patents and have been sought out by industry as partnering
    opportunities.
        The quality and dedication of the Navy's biomedical R&D community
    was exemplified this year as three researchers were selected to receive
    prestigious awards for their work. CDR Daniel Carucci, MC, USN received
    the Joints Chiefs of Staff Award for Excellence in Military Medicine
    for his work as an operational flight surgeon caring for Marines and
    Sailors and as a cutting-edge molecular biologist working on advanced
    malaria genomics research. His current efforts in malaria research are
    providing new and exciting avenues for malaria research and will
    accelerate the development of novel malaria vaccines and drugs.
        As other examples of scientific achievement, The former Secretary
    of the Navy, Richard Danzig, personally recognized two senior Navy
    researchers and awarded them Legion of Merit Medals. CAPT David Harlan,
    USPHS (until recently U.S. Navy), was lauded for his research into new
    strategies for the treatment of combat injuries. While a Navy
    researcher, he developed a new therapy to ``educate'' the immune system
    to accept a transplanted organ--even mismatched organs. This field of
    research has demonstrated that new immune therapies can be applied to
    ``programming stem cells'' and growing bone marrow stem cells in the
    laboratory. The therapies under development have obvious multiple use
    potential for combat casualties and for cancer and genetic disease.
        CAPT Stephen Hoffman, MC, USNR, was recognized by former Secretary
    Danzig for his pioneering work in malaria vaccine development and
    malaria genomics. He published the first report that DNA vaccines were
    safe, well tolerated, and elicited an immune response in normal,
    healthy people. His work could lead to the development of other DNA-
    based vaccines to battle a host of infectious diseases such as dengue,
    tuberculosis, and biological warfare threats.
        The Navy's OCONUS research laboratories are studying diseases at
    the very forefront of where our troops could be deployed during future
    contingencies. These laboratories are staffed with researchers who are
    developing new diagnostic tests, evaluating prevention and treatment
    strategies, and monitoring disease threats. One of the many successes
    from our three overseas labs is the use of new technology, which
    includes a hospital-based computerized data management, analysis and
    reporting software system. This technology is in use at our laboratory
    in Jakarta, Indonesia. This system will identify infectious disease
    outbreak occurrences over an archipelago consisting of some 17,000
    islands inhabited by 230 million people.
        Our researchers have designed a prototype computer system and
    lightweight flight vest that translates digital information from an
    aircraft's orientation instruments into vibrations so a pilot's sense
    of touch becomes a continuous spatial orientation cue. This research is
    especially important since future generation aircraft will have
    performance parameters that severely challenge human spatial
    orientation.
        Other achievements during this last year include development of
    hand-held assays to identify biological warfare agents, documentation
    of the immunogenicity of the first oral campylobacter vaccine and
    determination of the Norwalk-virus as a major infectious disease
    threat. Our researchers designed probability-based decompression dive
    tables for Navy divers, studied the acute effects of exposure to jet
    fuel vapors and designed a software package that estimates medical
    supply requirements based on patient flow and level of care.

    Conclusion
        Navy Medicine has covered a lot of ground over the last year and we
    face the future with great enthusiasm and hope. The new legislative
    initiatives, along with the MHS's Optimization plans join to make our
    Navy Medical Department a progressive organization. I thank you for
    making the military health care benefit the envy of other medical
    plans. You have provided our service members, retirees and family
    members a health benefit that they can be proud of. The new
    entitlements are not inexpensive and solutions to pay for them must be
    found. The MHS can no longer be under-resourced for the design of the
    benefit. We must also have predictable and stable funding levels, which
    would make planning more effective. Optimization and reengineering
    efforts can only be successfully implemented if our commanding officers
    know what resources they have to work with.
        I stressed in my statement last year the need for a predictable and
    stable funding environment, which would allow us to plan and execute
    programs over the span of a complete year, or perhaps preferably,
    multiple years. We appreciate the close attention that Congress affords
    to improving the quality of military medical care and our ability to
    resource healthcare requirements.

        Senator Stevens. Thank you very much. General Carlton.
        General Carlton. Yes, sir. Mr. Chairman, Senator Inouye,
    members of the committee: It is an honor to appear before you
    again and I look forward to addressing the issues that are
    affecting our Air Force Medical Service today. You have my
    complete statement and I would ask that it be entered into the
    record.
        Senator Stevens. Yes, sir. All of your statements will be
    entered in the record.

                                TRICARE BENEFITS

        General Carlton. Wonderful.
        2000 was an incredible year for us and 2001 is shaping up
    to be equally exciting. First, I have got to congratulate and
    thank the Congress for doing what we needed to do, and that was
    accomplishing the daunting feat of establishing TRICARE for
    Life. We are delighted that we can now restore the full benefit
    to our older retirees, our family members, if you will, and
    hope to bring as many of them back into our direct care system
    as our facilities allow. They have truly earned the right to
    this health care.

                          MAIL ORDER PHARMACY PROGRAM

        By the same token, the expansion of the mail order pharmacy
    program in April is a true triumph for our military families
    and we are eagerly preparing for its successful implementation.
    These are just two areas that the Congress has directly helped
    the military families, both older and younger, and I am
    convinced they will make a huge difference in our people's
    lives.
        I will be frank in saying that we are challenged by the
    many competing fiscal requirements, to include these new
    benefits. Like our sister services, we are working hard with
    the Office of the Secretary of Defense (OSD) and our line
    leadership to identify critical funding to make them succeed
    while maintaining the viability of our existing programs. To
    the best of our knowledge, we believe the $1.4 billion number
    is correct, in direct response to Senator Domenici's question.
        We must also address recapitalizing our direct care system.
    Investing in our facilities and infrastructure is critical if
    we are to provide the health care benefits that our
    beneficiaries have earned, especially the TRICARE for Life. It
    will be a large bill to pay, but we must recapitalize if we are
    to be competitive today and into the future.
        The Air Force Medical Service has accomplished a great deal
    this year improving services for our patients at the grassroots
    level. Each of our facilities is now fully invested in the
    implementation of our primary care optimization plan. We are
    seeing real successes, especially within the primary care
    optimization teams and between their patients. Our patients are
    happy with our more personal approach and our teams are excited
    to provide this personal level of care.

           JOINT INITIATIVES WITH THE DEPARTMENT OF VETERANS AFFAIRS

        Our primary care optimization efforts have been recognized
    as creating a cultural change based on efficient, effective,
    quality health care. In fact, many of our initiatives have been
    adopted by OSD for use across the military system. In this same
    way, we continue to expand our initiatives with the Department
    of Veterans Affairs to offer better services for our patients
    while being responsible stewards of the taxpayers' dollar.
        We now have four successful joint ventures, the newest one
    at Travis Air Force Base began in December with the opening of
    a new Veterans Affairs (VA) clinic on site outside the hospital
    at Travis. We are also very proud of our contracting
    partnership with the VA, established by our Air Force Logistics
    Office at Fort Detrick, which is saving us millions of dollars.
        Our activities in the readiness arena are equally exciting.
    We continue to refine our light, mobile, and modular deployable
    forces. Our smallest response package, or SPEARR team, the
    Small Portable Expeditionary Aeromedical Rapid Response, is a
    ten-person team deployable within 2 hours in a 1-pallet-
    equivalent small trailer. This team offers a broad scope of
    care from public health to emergency surgery and critical care.
    Air Force SPEARR teams accompanied the President last year on
    each of his trips to India, Nigeria, and Vietnam.
        Other Air Force Medical Service efforts to improve medical
    response include the establishment last July of our
    Developmental Center for Operational Medicine in San Antonio.
    It is the Air Force source to conduct rapid prototyping and
    solve the complex issues in operational medicine. This center
    worked with the Texas National Guard in early February to
    conduct a 3-day community bioterrorism exercise in San Antonio
    called Alamo Alert. The Texas Department of Health, the Army
    Medical Department (AMEDD) Center and School, and the City of
    San Antonio were co-sponsors with us. This exercise facilitated
    our ability to work together in the event of a chem-bio
    problem. We plan to expand on this type of training scenario in
    other locations.

                      GLOBAL EXPEDITIONARY MEDICAL SYSTEM

        We are also testing our Global Expeditionary Medical
    System, or GEMS, which is an exciting state of the art stepping
    stone to an integrated biohazard surveillance and detection
    system.
        We continue our outreach in humanitarian and civic
    assistance, both internationally and at home. We have now
    taught our trauma and disaster systems courses to students in
    six Central American countries, South Africa, and Turkey. By
    the end of this year we will have taught disaster courses to 20
    percent of the world's nations.
        Another example: In October we completed a mission with the
    Air Force Deployable Optometric Team to provide comprehensive
    primary eye care to remote underserved Native Alaskan villages.
    This is win-win. We get valuable training in an austere
    environment and great Americans get the care that they need.
        I am very enthusiastic about many of our initiatives and
    will limit myself to just one other. That is the work of our
    Critical Care Air Medical Transport (CCAT) Teams. When the
    U.S.S. Cole was attacked in October, our CCAT concept was truly
    validated. The teams cared for 11 of the most seriously injured
    patients, to include two ventilator patients just out of
    surgery, and delivered them safely from Djibouti to Ramstein
    Air Base, Germany, 12 hours later. These teams were composed of
    Army and Air Force team members as a joint team out of Lansdoul
    Army Medical Center in Germany. I am extremely privileged to
    lead these exceptional health care professionals.

                               PREPARED STATEMENT

        Finally, let me say that we could not accomplish all that
    we must without your support, which has been absolutely
    exceptional.
        Thank you very much for that.
        [The statement follows:]

            PREPARED STATEMENT OF LIEUTENANT GENERAL PAUL K. CARLTON

        Mr. Chairman, Senator Inouye and members of the committee, thank
    you for this opportunity to address the successes and challenges of the
    Air Force Medical Service. The year 2000 was a banner year for the
    AFMS. Never have the stakes been so high, yet the rewards so great. We
    continue to work very hard to be global leaders in health care through
    our efforts in humanitarian assistance, force health protection,
    population-based health care and primary care optimization, and have
    experienced some exciting results. First and foremost, the AFMS
    believes it is our privilege to serve in the defense of our country and
    our pleasure to serve our great American patriots in peacetime health
    care.
        As we support the Expeditionary Aerospace Force, we have recognized
    in this evolutionary time that we must be relevant to our country in
    every aspect possible. What is our purpose today, and are we fulfilling
    it in a way no one else could? We desire to step up and meet the
    crucial needs of our nation with our unique talents and assets. At the
    same time, we have to be aware of the stiff competition for limited
    resources. Our cost must be reasonable so that we may be responsible
    stewards of the taxpayers' money. How can we optimize our resources to
    be truly effective? These are the concepts that guide our decision-
    making on a daily basis.

    Air Force Medical Readiness in the Expeditionary Era
        As the Cold War military scenarios fade from our memory, and dozens
    of small-scale contingencies around the world challenge deployed
    military medics, the Air Force Medical Service has redesigned its
    medical readiness philosophy to meet the new readiness challenges of a
    changing world. We recognize that we must be able to engage the full
    spectrum of operations. To accomplish this, we must ask ourselves,
    ``What are the diverse missions faced by military medics to support
    these operations?'' ``What are our readiness roles in these uncertain
    times?''
        We view the medical readiness mission as three-fold: humanitarian
    and civic assistance (HCA), medical response to disasters, and support
    of traditional wartime operations. These three missions complement the
    DOD vision of a force that can ``Shape, Respond, and Prepare.'' For
    example, HCA missions can shape the environment of our allies to
    promote democracy, peaceful relationships, and economic vitality--
    ``preventive medicine'' against war. By responding promptly and
    appropriately to disasters, we enhance the value of our partnership
    with our allies. Both HCA and disaster response missions can create
    capability and provide lessons to deployed personnel that could be used
    in wartime operations, thus preparing for our traditional readiness
    mission, too.
        The threats faced by military medics in the post-Cold War era are
    diverse and frightening. Weapons of mass destruction (nuclear,
    biological, chemical), natural disasters (flood/hurricane, drought/
    famine, tornado/earthquake), technological (information management,
    industrial, toxins), and complex political/natural crises are among the
    scenarios that might involve military medical personnel. These missions
    could be overseas or just outside a stateside military base. Senior
    government officials and taxpayers may expect military medics to bring
    expertise and the proper gear in rapid fashion to situations involving
    any of these threats.
        Responding appropriately and rapidly means enhancing a core
    competency for DOD medics. Efficient use of airlift for rapid response
    means paying careful attention to the weight and volume of gear. Rapid
    response is often a key to mission success. A large, inflexible
    response may be delayed by transportation limitations, resulting in
    needless loss of life and limb at the site of the contingency.
        The AFMS has proposed a series of solutions: light, lean, mobile
    (``small footprint'') medical teams; a modular ``tiered and tailored''
    response, custom-built for each mission; rapid insertion of innovative
    technology concepts into deployment packages; and strategic
    partnerships with other federal agencies, our Total Force colleagues,
    and the military medical personnel of allied nations.
        ``Small footprint'' teams take full advantage of the revolution in
    medical electronic equipment. Capability that was formerly too large to
    move is now carried in one hand. Patient monitoring that was confined
    to an intensive care unit can now be done in field conditions. From
    these improvements and careful logistics, a small team with backpacks
    can provide impressive medical care quickly in any corner of the world.
    Limiting the weight of the packs to 70 pounds allows them to travel as
    normal luggage on a commercial airliner, if military airlift is not
    available.
        Modularity is another key to an appropriate medical response to
    modern threats. By creating small, multi-functional teams, the medical
    service can provide the on-scene commander with a flexible response,
    tailored for the specific contingency. These ``Medical Building
    Blocks'' permit problem-specific treatment, just as the various blood
    components of today offer flexibility over the traditional whole blood
    treatments of World War II era. With increased efficacy, small portable
    medical teams extend limited resources and maximize options for
    commanders. It is no longer necessary to task eight C-130's to haul an
    air transportable hospital when a five-person, backpack-portable,
    surgical team can provide the needed care. After hurricanes or floods,
    for example, the greatest need may be for public health and preventive
    medicine assessment. Deploying a two-person aerospace medicine/public
    health team or several such teams may be the ideal response. The first
    ``tier'' is usually the local response, followed by additional
    ``tiers'' of teams as needed. With modular teams, this type of
    individualized tasking can be done efficiently and effectively.
        There are a number of new USAF medical teams that are useful tools
    in meeting our new readiness missions. The disaster response ``force
    package'' is called the SPEARR, or the Small Portable Expeditionary
    Aeromedical Rapid Response team. Deployable within 2 hours, this 10-
    person team travels with a small trailer (one pallet-equivalent) that
    is ``sling-loadable'' (e.g., can be transported from different
    locations via a sling from a helicopter). It can thus be pulled by a
    standard pickup truck or airlifted by helicopter, and does not require
    a forklift for utilization. The team has a broad scope of care: initial
    disaster medical assessment, public health/preventive medicine,
    emergency/flight/primary care medicine, emergency surgery (general and
    orthopedic), critical care, patient transport preparation, along with
    intrinsic communication capability for aeromedical coordination,
    consultation, or re-supply. This team has completed its development
    process, including successful field validation tests in San Antonio and
    in Alaska. In fact, a USAF SPEARR team accompanied the President to
    India in March, Nigeria in August, and Vietnam in November.
        To further prepare for disaster response, we established the Air
    Force Development Center for Operational Medicine in July in San
    Antonio, Texas. The center is the single source for Air Force
    satellites to conduct medical research, education and training for all
    levels of disaster response. It was designed to help DOD identify what
    resources are available by transitioning emerging technology from
    concept to implementation.
        In early February, the DCOM conducted a three-day community
    bioterrorism exercise, called Alamo Alert, in San Antonio, Texas, in
    conjunction with the Texas National Guard, the Texas Department of
    Health and the city of San Antonio. In this tabletop exercise, Alamo
    Alert explored city, county, state and federal responses to a
    contagious biological agent. Wilford Hall and Brooke Army Medical
    Center were among the local medical response forces. Our goal was to
    help merge the plans of all the different agencies, facilitating their
    ability to work together in the event of a real terrorist attack. We
    want our personnel to understand that force protection must go beyond
    the gates of the base, and we want Americans to understand--and be
    prepared for--the very real nature of a bioterrorism threat.
        In September, we completed the fielding of our Chemically Hardened
    Air Transportable Hospitals (CHATHs). The CHATH represents the
    culmination of a joint effort of approximately 10 years to provide
    collective protection capability for patients treated in the field in a
    chemical warfare environment. As we convert our ATH assets to the new
    Expeditionary Medical Support/Air Force Theater Hospital (EMEDS/AFTH)
    program, we are pursuing development and testing of a new chemical
    protection capability for our EMEDS, using existing CHATH assets.
        Another new tool for appropriate medical response is the
    International Health Specialist (IHS) occupational track. These medics,
    hand-picked from all corps for their language, cultural, and regional
    expertise, will be interwoven with medical readiness planning offices
    and platforms throughout the U.S. Air Force. The first group of 20 is
    being assigned to their new duties, and the cadre is expected to grow
    for several years. Most selected officers and enlisted personnel will
    need additional training to assume their responsibilities, while others
    will already have the required skill set to function effectively as
    regional medical experts. These international health specialists could
    be called upon to act as advisors, advanced on-site (advon) team
    members, or to facilitate HCA or other missions into the region of
    their expertise. IHS personnel will maintain and provide regional
    medical expertise throughout their careers. This rating may be a key
    credential for a successful USAF medical career in future years.

    State-of-the-Art Expeditionary Technology
        Rapid deployment of appropriate technology is another important
    factor in optimizing medical readiness. Military medics must take full
    advantage of the revolution in equipment, computers, monitoring gear,
    and other advances. Surveillance for biological pathogens or chemical
    toxins should be state-of-the-art in DOD medical packages. The AFMS is
    pursuing this goal through our Global Expeditionary Medical System
    (GEMS). This system is in the testing phase now. It is a stepping stone
    to an integrated biohazard surveillance and detection system that will
    keep a global watch over our forces. GEMS incorporates an electronic
    medical record as a basis for real-time data analysis and back up agent
    identification with DNA fingerprinting and automated results reporting,
    and will serve as the foundation for an Air Force wide integrated
    surveillance and medical command and control (C2) network.
        Through GEMS, data collection, assessment, and trend analysis is
    automatically performed at the operational (unit), tactical (base), and
    strategic (U.S.-based centers of excellence) levels. Individual
    specific analysis will provide quick patient diagnosis through the use
    of DNA fingerprinting technologies. We hope, with ongoing site and
    regional data review, population-specific analysis will pick up disease
    trends to provide an early warning of outbreaks or potential biological
    attacks. Technology is key with portable C2-linked test
    platforms that aid the field medic in determining the nature and cause
    of the biological hazard to facilitate mitigation.
        The AFMS is also on the cutting edge in the field of telemedicine.
    For example, as soon as feasible, we will be embarking on a four-year
    program to convert facilities throughout the Air Force from standard
    film-based radiography to computed radiography. Outside of live VTC
    teleconsultation, digital imaging and teleradiology is the most
    resource intensive area in terms of computer storage capacity and
    telecommunication needs such as bandwidth. So, we're very concerned
    about setting up a communications infrastructure and Patient Archiving
    and Communications System (PACS) in the most effective way. Working
    with key industry members will facilitate our success. Complicating how
    we currently do business is the fact that the AFMS anticipates losing
    more than 50 percent of our radiologists during the next three years
    because of competition with the civilian job market.
        While teleradiology is not a panacea, it will reduce costs by
    reducing the need to buy and store films, eliminate silver reclamation,
    and also reduce by about 25 percent the need to send radiographs to
    outsourced civilian radiologists for interpretation. We believe that
    such a system, implemented ultimately throughout the DOD and other
    federal agencies, can be cost-effective in the long run--one
    preliminary analysis shows the break-even point at around seven years.
    Equally important is that this system will significantly reduce turn-
    around time between the time of interpretation by a radiologist and
    posting of the report in the patient's record at the originating
    medical facility.
        At this time, we have computerized radiography systems in operation
    at several of our larger facilities and have established connectivity
    between Robins AFB, Georgia, and Wright-Patterson AFB, Ohio, between
    systems from different vendors. At Prince Sultan Air Base in Saudi
    Arabia, we are installing teleradiology equipment and hope to have the
    system online and linked with Wilford Hall Medical Center, San Antonio,
    within the next few months. This would reduce the turn-around time for
    radiograph reports from seven to 10 days down to one to two days and
    help one of our more remote bases. In addition, we are planning for the
    teleradiology demonstration project based at David Grant Medical
    Center, Travis AFB, California, in conjunction with several outlying
    medical facilities of the Army, Navy, Coast Guard and Department of
    Veterans Affairs.
        Voice recognition is another fertile area for a rapid return on
    investment. At Wright-Patterson AFB, two of our radiologists have
    adapted a commercial off-the-shelf (COTS) voice recognition software
    package to allow direct transcribing of radiology reports. A recent
    evaluation showed that this specialized system is saving approximately
    $1,500 per month per radiologist in transcription costs! We're looking
    at this project for possible expansion throughout the AFMS.
        Teledermatology is another maturing area. In TRICARE Region 10
    (Northern California), we use a COTS software package over a virtual
    private network connected via the Internet between David Grant Medical
    Center and several military medical facilities in Northern California.
    A business case analysis showed a return on investment in as little as
    two months in heavily used outlying clinics. At Elmendorf and Eielson
    AFBs in Alaska, we have been part of a teledermatology project with the
    Alaska Federal Care partnership. In several other TRICARE regions, we,
    along with our Army and Navy brethren, utilize a teledermatology module
    developed at Walter Reed Army Medical Center, Washington, D.C. As part
    of that same initiative, within the D.C. area we provide dermatologists
    for making teleconsultations on a rotating basis.
        Curiously, we are finding that the use of some teledermatology
    systems is decreasing over time. While this may seem to indicate that
    they may have only a novelty factor that quickly subsides, what we've
    discovered is that the primary care providers are remembering their
    teledermatology cases better and learning from them, resulting in a
    lesser need for referrals.
        Finally, we are working closely with the other Services, academia
    and the commercial world to agree on standards for telemedicine
    technology applications and are evaluating lightweight, portable
    peripheral devices such as lung spirometry analyzers, EKGs and
    ultrasound probes that can attach to laptop, or even smaller, computers
    in a ``plug and play'' mode. These, in conjunction with the development
    of computerized medical records and improvements in medical
    information, patient decision support and patient tracking systems and
    telecommunications, are rapidly increasing our capability to provide
    medical care of the highest quality to our deployed airmen in even the
    most remote locations. One of our biggest tasks is integrating these
    different facets of innovative technology to work seamlessly. As we in
    the military continue to move toward a lighter, leaner posture, this
    will become increasingly important.

    Partnering
        Other issues are also critical in our expeditionary medical
    response. For example, how can we partner with our colleagues in the
    Guard and Reserve to create a seamless, well-trained and equipped
    force? We're doing this successfully with our Mirror Force initiative,
    at all levels, from the policy-making level to the grassroots of the
    unit level. I am proud to say that the AFMS has integrated the Air
    Reserve Component in daily headquarters decisions as never before. We
    have actively recruited 40 Individual Mobilization Augmentee reservists
    and attached them to the Surgeon General's Office. These reservists are
    involved in every aspect of daily operations, providing Reserve input
    to our deliberations while broadening the perspectives of our full time
    staff members. This year, at my invitation, the Air National Guard and
    Air Force Reserve each provided one general officer to work directly
    with me on developing medical responses to WMD. This will assure AFMS
    actions are fully coordinated and built from the ground up with Guard
    and Reserve input.
        Our medical reserve component personnel have proven themselves to
    be highly dedicated and competent--capable of any tasking in support of
    contingency operations or humanitarian and civic assistance missions.
    In fact, in January alone, a total of 681 personnel from the Guard and
    Reserve deployed to Macedonia, Saudi Arabia, Oman, Honduras, Peru,
    Ecuador, Germany, and Japan, plus various locations within the United
    States, in support of AFMS operations and exercises.
        In addition, both Guard and Reserve physicians, in their civilian
    location of employment, provide needed sustainment training for active
    duty surgeons and trauma specialists through affiliation agreements
    with civilian hospitals in St. Louis and Cincinnati. Our medical
    personnel receive invaluable trauma training in these civilian
    facilities due to the volume and variety of cases; something we only
    experience in our military hospitals on a limited basis.
        Finally, the reserve component continues to provide more than 85
    percent of our total aeromedical evacuation capability and has always
    performed this responsibility in an absolutely superior manner. In
    short, as with our line counterparts, the AFMS could not go to war
    without the Guard and Reserve.
        How can we create a similar partnership with our coalition nation
    military medical colleagues? One way is through sharing the new
    readiness skills and roles used in the active force. For example, U.S.
    Air Force medics have taught a trauma systems course, sponsored by the
    Expanded International Military Education and Training system, to
    approximately 390 students in six Central American countries, South
    Africa, and Turkey. In each course, military medics from adjacent
    countries have attended. Emphasis is on regional involvement, disaster
    response, trauma care, leadership, civilian-military collaboration,
    resource management, and ``Train-the Trainers'' skills.
        In El Salvador, host nation graduates of the first course, held
    last year, taught more than 100 colleagues and completely redesigned
    the Emergency Department of their Central Military Hospital to more
    efficiently handle trauma patients. They briefed a contingent of senior
    medical officers from neighboring countries on their successes at the
    second course, held recently in San Salvador. The U.S. ambassador from
    El Salvador wrote me letters of thanks after both courses. Clearly--and
    I emphasize this critical point--this type of partnership and training
    can benefit our allies and create regional political stability and
    economic prosperity, reducing the likelihood of future conflict.
        Military medics have become the ``Tip of the Spear'' in recent
    years. A USAF HCA deployment in Nicaragua in June l996 was the first
    U.S. military presence in that country in 17 years. Two more HCA teams
    followed in the subsequent two years. When recovery efforts for
    Hurricane Mitch were being assembled, the Nicaraguans reported that the
    military medical teams had created a climate of trust, and that U.S.
    military civil engineering teams were welcome to help. Without the HCA
    missions, this new relationship would not exist and the needed
    assistance would not have been requested.
        In another example, Air Force optometrists completed an inaugural
    mission in October to several underserved Alaskan villages in the
    state's northwest arctic borough region. The only way in or out of the
    villages is by airplane. The trip was the result of an interagency
    agreement between the Alaska Native Area Health Service, the Maniilaq
    Association and the U.S. Air Force. The agreement, signed in August,
    established a continuing mission to provide primary eye care to remote,
    underserved Native-Alaskan villages in the region, offering an
    opportunity to both help an underserved population and exercise the Air
    Force's Deployable Optometric Team in an austere environment. The team
    is a lightweight, self-contained, and highly mobile contingent of one
    to three members who provide comprehensive primary eye care in a
    variety of austere field conditions--team size can be rapidly expanded
    if necessary to meet mission requirements. Our team was well received
    by the Alaskans, providing care to 165 people. More than 90 percent
    examined needed and were able to obtain prescription glasses. Ten
    percent were identified and referred for advanced medical care. We look
    forward to more of these DOT missions, serving those who need us and
    gaining invaluable experience for future service to our nation.
        By the same token, five Air Force dentists deployed on a
    humanitarian aid mission to the war-torn nation of East Timor in early
    December in support of United Nations peacekeeping efforts. While
    deployed, the dental staff performed oral exams and tooth extractions
    right on the street, or wherever they could find an acceptable place
    for operating on patients. In those austere conditions, they even had
    to cold-sterilize their tools with bleach. This experience provided
    invaluable field training and inestimable personal reward.
        As USAF medics seek to fulfill their mission of ``Global
    Engagement'', other international partnerships will be needed. At this
    summer's meeting of the International Committee of Military Medicine, a
    worldwide organization of senior military medical officials, I proposed
    an effort to create regional disaster response networks among the
    membership, and to report models and successes at the next meeting in
    2002. There was strong support among developing world member nations,
    notably by several that have been devastated by disasters in recent
    years. The national representatives resolved by a 63-0 vote to support
    our plan, opening a new era of regional and worldwide cooperation
    between military medical services.
        While we are making exciting inroads in our international outreach,
    the backbone of expeditionary health care remains our aeromedical
    evacuation system. With our critical care aeromedical transport teams
    (CCATTs), we provide critical care in-flight. The CCATT mission in
    response to the apparent terrorist attack on the USS Cole in October
    was a true validation of the team's purpose. The team cared for 11 of
    the most seriously injured patients in-flight from Djibouti to Ramstein
    AB, Germany, including two intensive care patients and some who were
    just out of surgery. Other sailors traveled on ventilators and suffered
    from multiple fractures, burns, cuts and bruises. But 12 hours after
    takeoff, all arrived safely at Ramstein and were transported to nearby
    Landstuhl medical center.
        The experience proved to be a validation of our International
    Health Specialist program as well. In Djibouti, the location with the
    required level of trauma skills closest to Yemen, French doctors caring
    for the critically injured patients were appropriately concerned about
    letting these patients make the trip to Germany for care. However, two
    CCATT members, who are IHS participants and speak fluent French, were
    able to reassure their French colleagues that the wounded would be safe
    in the hands of the U.S. Air Force medical team. After talking with
    them and seeing our C-9 aeromedical airlift capabilities, the French
    doctors were very happy to allow the transfer to take place.
        By the same token, we have made headlines with the heroic efforts
    of our ECMO (Extra Corporeal Membrane Oxygenation) team, the only one
    of its kind in the world. Most recently, the ECMO team successfully
    aeromedically evacuated a newborn baby from Okinawa to Wilford Hall
    Medical Center's neonatal intensive care unit. Her grateful parents
    credit the Air Force with saving their child's life. This is just one
    example of our commitment to provide high quality health care to our
    personnel and their families wherever they are around the globe.
        While we are achieving invaluable medical readiness training
    through our global missions, the AFMS is also expanding our training
    opportunities on the domestic front by partnering with the civilian
    health care community. We are looking at a number of civilian
    facilities where Air Force medical professionals can gain training in
    trauma and critical skills. We are already partnering with Ben Taub
    Medical Center in Houston, the Center for Operational and Disaster
    Medicine at Depaul Medical Center in St. Louis, and are negotiating a
    partnership with the R.A. Crowley Shock Trauma Center in Baltimore,
    Maryland. We already have a successful trauma care agreement in place
    between Wilford Hall Medical Center and the city of San Antonio,
    however one center cannot meet all the Air Force's needs for trauma and
    critical care training of more than 1,400 personnel each year. This
    training, whether in a military or civilian facility, prepares our
    surgeons and medical teams to provide leading edge care to our patients
    at home and around the globe.
        In these many ways--through state-of-the-art technology, visionary
    planning, and creative partnering, among others--medical readiness
    remains the true core competency of military medics. By utilizing a set
    of new tools, we can meet our diverse readiness missions and ``engage
    the full spectrum of operations'' in the new millennium.

    Population Health Improvement
        During the past year, the AFMS made significant strides in our
    efforts to deliver a fit, healthy and ready force, to improve the
    health status of the people we served and to enhance the effectiveness
    and efficiency of the health care we deliver. We continue to lead the
    way in population health improvement.
        For example, we have some exciting work ongoing with the DOD
    Prevention, Safety, and Health Promotion Council (PSHPC), currently
    chaired by the Air Force. Two of the primary prevention focal areas of
    the Council include tobacco use reduction and alcohol abuse reduction.
        Tobacco use is the single most preventable cause of premature death
    in the United States, with 435,000 tobacco-related American deaths
    every year. In the DOD, the cost of direct and indirect care for
    tobacco is estimated at an annual cost of $900 million. In the Air
    Force, even healthy (under age 36) smokers' health care costs and work
    productivity loss is estimated at $107 million annually. These costs
    are roughly equivalent to all the personnel assigned to an Air Force
    base the size of Whiteman AFB, Missouri. One base, up in smoke every
    year!
        The Alcohol Abuse/Tobacco Use Reduction Committee, a subcommittee
    of the PSHPC, is actively addressing this significant public health
    issue. Partnering with civilian researchers, a $2.3 million grant
    proposal was funded to conduct a DOD-wide study identifying the optimum
    DOD tobacco cessation program. This four-year project began in October
    and is designed to include 16 military installations across all four
    services and to develop a model for installation-level tobacco
    reduction efforts.
        While DOD tobacco use, for the first time, is below a comparable
    civilian sample, our goal is to meet or exceed the new Centers for
    Disease Control Healthy People 2010 goal of reducing the percentage of
    smokers to 12 percent. This will be no small challenge, but we hope the
    initiatives in our tobacco use reduction plan will help us reach this
    goal--and in fact, the plan is currently on schedule. The plan not only
    targets prevention efforts for tobacco use, it also includes
    initiatives designed to improve access to treatment. Specifically, we
    need to improve access for our beneficiaries to combined behavior and
    pharmacological therapies that have proven effective. Thanks to our
    resale partners, we are addressing the issue of availability and
    accessibility not only of tobacco, but also of tobacco cessation
    products in our commissaries and exchanges.
        Finally, leadership support is a requirement for success of this
    initiative. The impact that instructor personnel have on young airmen,
    sailors, marines and soldiers as role models during military training
    and education cannot be overstated. They must set the example both by
    not smoking in front of our young men and women and by sending a clear
    message that tobacco use is not consistent with a fit, healthy and
    ready force.
        The PSHPC's alcohol abuse reduction team has also had a very
    successful year. Our plan targets four specific areas: (1) improved
    surveillance; (2) focused education and training; (3) identification of
    high-risk groups; and (4) assessment and development of best practice
    methodologies. I am pleased to report we are on track in all areas. We
    have been able to add alcohol-related questions to an already existing
    DOD customer satisfaction survey, enabling us to assess the prevalence
    of heavy drinking in our TRICARE beneficiaries. We have also conducted
    a thorough analysis of our service-specific unit leader prevention
    programs.
        The prevention of heavy drinking requires effective educational
    efforts and, in some cases, a cultural change. The shift toward
    population-based health care with an emphasis on force health
    protection is crucial to our efforts. The responsible use of alcohol
    needs to be conveyed from the top down. We can no longer afford the
    $600 million estimated DOD annual cost from heavy drinking.
        At the Air Force level, the concept of building a healthy community
    involves more than just medical interventions. It also includes 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. The creation of
    the Air Force Community Action Information Board (CAIB) this year
    brought a number of senior functional area representatives from across
    the Air Force enterprise together to focus on community problems. The
    CAIB now provides senior level oversight for the Integrated Delivery
    System (IDS) that provides preventive services at the base, major
    command, and Air Force level.
        The first product of our IDS is the Air Force Suicide Prevention
    Program, started in the summer of 1996, which has been very successful
    at reducing the rates of suicide in the Air Force. Although even one
    suicide is too many, the significant reduction in human lives lost to
    suicide is a model for community-wide approaches.
        A key tool for our program is the Suicide Event Surveillance System
    (SESS), a web-based information management application that provides
    secure, real-time data to all operational levels of the AFMS as well as
    participating partners within the Air Force and DOD. The development of
    SESS provides a real-time centralized data repository of all suicides
    and non-fatal self-injurious events (NFSE). This includes demographic
    variables, event characteristics (date, time, method used, substances
    used), and risk factors (marital, financial, legal, and other
    problems). E-mail notification is automatically generated from the
    input source to the Force Health Protection and Surveillance Branch,
    notifying users a new case has been generated.
        This meticulous approach to program management, complemented by
    outstanding customer teaming and leadership, produced a high quality
    product. Most important, a major new weapon is available in the force
    health protection arsenal, resulting in an enhanced ability to meet
    mission needs across the Air Force. The fact that the Centers for
    Disease Control and Prevention have expressed an interest in SESS for
    nationwide use testifies to its success.

    Primary Care Optimization
        Another way we are in the vanguard of population health improvement
    is through our primary care optimization (PCO) initiative, where we've
    been working diligently to reengineer our primary care services. This
    initiative is critical since more than 80 percent of all the care we
    deliver in the AFMS is through our primary care clinics. Our Air Force
    medical professionals in Europe paved the way with a highly successful
    training program to optimize primary care within U.S. Air Forces,
    Europe. We enhanced this program and adapted it for AFMS-wide primary
    care optimization training. The result was our initial ``Quickstart''
    training of some 800 personnel, including two primary care teams
    (provider, nurses and technicians) from each of our medical facilities,
    as well as representatives from our major commands (MAJCOMs).
        The Population Health Support Division (PHSD) and MAJCOMs are now
    providing follow-on support to sustain, refine and monitor
    implementation efforts. We've also fielded formal policy, developed a
    comprehensive PCO guide and implemented a course in population health
    epidemiology to facilitate this initiative. Each medical facility is
    fully vested in developing and implementing its PCO plan to ensure: (1)
    Each enrolled patient knows his/her provider primary care team; (2)
    Each primary care team knows the health care needs of their patients;
    (3) Each primary care team provides evidence-based care; and (4) Focus
    is on established performance measures.
        To achieve these desired goals, our facilities are aggressively
    implementing primary care manager (PCM) by name assignment. Knowing
    which patients are assigned to which PCM, allows the PHSD to provide
    demographics, preventive service needs, chronic disease burden, and
    other essential information to PCMs for their use in designing
    individual plans of care for each of their enrollees.
        Through PCO, we've gained efficiencies in health care delivery by
    restructuring our clinics, reassigning support staff to our PCMs, and
    providing additional training to improve the skills of our enlisted and
    nursing personnel. We're improving the effectiveness of our care by
    adopting the U.S. Preventive Services Task Force recommendations for
    clinical preventive services, the DOD/VA clinical practice guidelines
    for disease/condition management and other evidence-based clinical
    practices. PCO also requires that we measure ourselves against
    nationally recognized standards for childhood immunizations, breast and
    cervical cancer screening, and prenatal care in the first trimester.
    And finally, because our primary mission is to provide a fit, healthy
    and ready force, we've developed the capability to measure and
    facilitate individual medical readiness as mandated by the Joint Chiefs
    of Staff.
        Through all of these efforts, we are steadily transitioning the
    AFMS from a system of reactive sickness-based care to one of proactive,
    prevention-oriented health care delivery. We are seeing real success,
    especially within the PCO teams and between the teams and their
    patients. The relationships are one of trust and understanding that are
    reminiscent of the one-on-one care that we had from our hometown
    doctors and their office staff. Our nurses, medical technicians, and
    health service managers are now so much a part of the team and the
    delivery of health care that many patients see them as their ``Doc.''
    It's exciting for everyone involved.
        Our optimization efforts have not gone unnoticed. A tri-service
    team of functional experts, lead by the Department of Defense
    Comptroller's Office, recently recognized the AFMS for the strides we
    made in creating a cultural change thriving on efficient, quality
    health care. In fact, many of our programs have been adopted for
    implementation across the Military Health System. We are very proud of
    this recognition, but we know our efforts to date are only the
    beginning of what we can accomplish.
        Optimization demands a relevant performance metric and measurement
    system. The AFMS strengthened its performance metrics last summer. The
    focus was on primary care--a key driver to any managed care program--
    and the trends are positive. We used these results to not only identify
    areas for improvement with respect to enrollment, provider productivity
    and staffing, but to also prove the effectiveness of the many
    optimization initiatives deployed to date. It's not surprising that,
    given the success of this initiative, the tri-service performance
    metrics subsequently introduced by OASD (Health Affairs) are almost a
    mirror image of the AFMS metrics.
        The AFMS is also working closely with OASD (Health Affairs), the
    surgeons general of the Army and Navy, and senior leadership from all
    three military departments, under the guidance of the Defense Medical
    Oversight Committee. This combined effort is focused on studying
    various alternatives leading to an organized, appropriately resourced
    military health system meeting the health care requirements for today
    and the future.

    Keeping the ``Promise''
        Fiscal year 2000 was the year of military health, with more than 50
    initiatives pending in congressional legislation, and culminating in
    the military medical legislation contained in the Fiscal Year 2001
    National Defense Authorization Act. The Air Force joins our sister
    Services in gratitude to Congress for helping us to meet our commitment
    to our airmen, retirees and their family members.
        We are especially pleased at the success of congressional efforts
    to make TRICARE for Life a reality, restoring the full benefit to our
    older retirees, and we hope to provide as many of them as possible the
    quality health care they so richly deserve.
        We are also delighted with other provisions of the National Defense
    Authorization Act, such as the expansion of TRICARE Prime Remote to
    include family members, the expansion of the National Mail Order
    Pharmacy to all beneficiaries, the elimination of copayments for active
    duty family members enrolled in TRICARE Prime, and a permanent
    chiropractic benefit for active duty members, among other provisions.
        While these exciting changes were evolving, we in the AFMS were
    busy improving our services at the grassroots level. For example, we
    are proud of our customer service improvements in beneficiary
    assistance and claims processing. We now have Beneficiary Counseling
    and Assistance Coordinators at every Lead Agent and medical treatment
    facility (MTF). Our goal is to have them serve as the beneficiary
    advocate and problem-solver, interfacing with the MTF staff, managed
    care support contractors, and claims processors. Additionally, to
    prevent claims problems before they occur, we simplified our process
    and can now tout a claims processing turnaround time of 96.5 percent
    within 30 days and submission rate by providers of 97 percent--removing
    beneficiaries as the middlemen.
        If we fail to properly process a claim, beneficiaries no longer
    have to face the stress of resolving TRICARE-related debt by
    themselves. A new DOD program established a Debt Collection Assistance
    Officer at every Lead Agent and MTF to address notices or negative
    credit reports due to unpaid TRICARE bills. With this single point of
    contact, we will be able to identify how extensive the collection
    problem is for our Air Force families and take all measures necessary
    to resolve collection matters.
        Another way the AFMS is proactively reaching out to its
    beneficiaries is through our new Waiting Room Network (WRN). Recently,
    the Air Force entered into a mutual agreement with a civilian company
    to provide our stateside MTFs with a healthy lifestyle network
    specifically designed for patients. This top quality commercial product
    is being featured nationwide, with more than 20 million patient views
    per month. In our MTFs, the WRN will allow us to make the best use of
    the time our patients spend waiting for prescriptions and appointments,
    time often wasted reading old magazines and watching daytime
    television.
        Busy providers will find that basic health care information, often
    time-consuming to share effectively, and other educational programs can
    be offered to patients via the WRN. What a great way to achieve our
    goal of educating and empowering our military families to make the best
    individual decisions about their life-styles and health care choices--
    especially when they are a captive audience in the waiting room! In the
    future, we hope to access the network for a small amount of time each
    hour to pass along important information to our beneficiaries on AFMS
    and TRICARE issues.
        On Jan. 12, an agreement package was mailed out to each of our
    stateside MTFs encouraging them to move quickly on deploying these
    systems in the high volume waiting areas in each facility. We
    anticipate the full network will be operational across our targeted
    facilities by the summer. Added good news is that the AFMS worked hard
    to make this a DOD contract, making it available to other federal
    facilities who are interested.
        No discussion on patient services would be complete without
    addressing our partnership with the Department of Veterans Affairs.
    Since the enactment of the DVA and DOD ``Health Resources Sharing and
    Emergency Act,'' the Air Force community has strived to identify areas
    to promote the sharing of resources between the two departments. The
    Air Force continues to have numerous arrangements with the DVA, and we
    presently have four successful joint ventures as well. The newest joint
    venture, at Travis AFB, began in October. David Grant Medical Center at
    Travis will provide inpatient services, same-day surgery, and
    outpatient specialty services. Our other three joint ventures continue
    with great patient satisfaction at Albuquerque, Las Vegas, and
    Anchorage.
        We continue to pursue a number of joint initiatives with the DVA to
    improve mutual efficiencies. For example, The DVA and DOD are
    participating in the National Patient Safety Partnership; DOD is in the
    process of developing a reporting system based on the DVA model. We are
    also partnering on the development of several new clinical guidelines,
    such as redeployment health, substance abuse and uncomplicated
    pregnancy.
        An area we in the AFMS are particularly proud of is the VA
    contracting partnership established by our Air Force Medical Logistics
    Office at Fort Detrick, Maryland. This program, known as the VA Special
    Services (VASS), offers a tremendous opportunity to reduce contracting
    lead times, leverage buying power, and save big dollars in surcharge
    and procurement costs--and the savings from this program can be
    redirected to direct patient care. In fact, in fiscal year 2000, the
    AFMS realized a surcharge savings of more than $1 million and a cost-
    avoidance (money saved through DVA vs. a different contractor) of $7.75
    million. This partnership is exactly that--a partnership--the AFMS
    provides the infrastructure and the DVA provides the staff. It is a
    true win/win, also saving money for the DVA as they reduce prices for
    larger bulk contracts. We are always looking for new ways to partner
    with our federal colleagues whenever it makes good sense for everybody,
    especially the taxpayer.

    Quality Care, Satisfied Customers
        Quality care continues to be the hallmark of the AFMS. With all of
    our facilities accredited 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 is 97.0 percent (vs. 93.2 percent for the national average), and
    our hospitals score at an average of 92.3 percent (vs. 90.7 percent for
    the national average). In addition, we are very proud of the fact that
    90 percent of Air Force military physicians who are board-eligible are
    also board-certified.
        We are committed to ensuring the quality of our care remains
    exceptionally high. For example, Air Force personnel are vital
    participants in the DOD Patient Safety Working Group to improve health
    care by reducing medical errors and enhancing patient safety. Nellis
    AFB Hospital, Las Vegas, Nevada, is a pilot site for the Patient Safety
    Program. Eglin AFB Hospital, Ft. Walton Beach, Florida, developed a
    Medical Team Risk Management Training Program that has been adopted as
    a model for DOD and presented to the American Medical Association,
    Veteran's Administration, and the 2001 TRICARE Conference. In addition,
    Air Force Materiel Command has developed an innovative anonymous
    medical error reporting system, which has provided promising data for
    risk reduction strategies, and invested in pharmacy robotics for all
    their facilities. Finally, the Air Force has three teams participating
    in the Institute for Healthcare Improvement Patient Safety Breakthrough
    Series. All of these complementary initiatives will facilitate
    compliance with the Executive Order and National Defense Authorization
    Act directions to decrease medical errors and improve patient safety.
        These are all ways we are striving to put our patients first. And,
    according to the DOD Customer Satisfaction Survey, our patients feel we
    are succeeding! The latest results show 80 percent of the 20 top-rated
    MTFs belong to the Air Force. At the recent TRICARE conference, we also
    took the Satisfaction Awards in three of the five categories, as well
    as the Access Awards in three of the five categories. But rest assured,
    there is still room for improvement, and we will not rest on our
    laurels.
        In conclusion, we look forward to the exciting changes in the
    delivery of military health care in the coming year, but continue to
    emphasize our desire to be relevant to the health care needs of our
    military family and reasonable as we address associated funding
    requirements. We appreciate this committee's outstanding support in
    these areas.
        While it is truly our privilege to serve this great nation and our
    pleasure to serve our patriots and their families in peacetime, let me
    be clear that the two cannot be separated. The success of our medical
    readiness in wartime or disaster will be the direct result of our
    vigilance and commitment to excellence in the duties we perform in our
    daily peacetime roles. There is still much work to be done.

        Senator Stevens. Thank you.
        General Peake.
        General Peake. Chairman Stevens, Mr. Inouye, distinguished
    Senators: We have had an Army Medical Department since July of
    1975. It is a rich heritage and I feel truly honored to be here
    as the fortieth Surgeon General of the Army. It is an exciting
    time to get this job: a new century, breakthroughs in medicine
    in things like genomics and information management and
    technology in general that allow us really to know more about
    our patients than we have ever known before; interesting in
    terms of the threats around the world, interesting in terms of
    the National Defense Authorization Act, which gives us an
    opportunity to give improved services to our military members
    and their families and to rebuild the trust with the retirees
    who have served our Nation so well in the past.
        It is an excellent benefit. It is one that we have heard
    several times today about the importance of adequate and timely
    funding if we are really going to see the promises of that
    benefit come to fruition.
        It is also important to recognize that we too have a
    responsibility here in terms of making sure that we get the
    best value out of this precious taxpayer dollar. We must and we
    will get better at writing and managing our contracts. We must
    and we will continue to optimize this direct care system of
    ours.

                                    MISSION

        While it is important, it is not only for the peacetime
    care that it is important. Our mission is much larger than just
    peacetime care. In fact, it gives us the opportunity to
    increase the robustness of our direct care system, to give the
    satisfaction and quality of practice that comes from practicing
    across the full spectrum of the age group of patients that we
    are going to see in this, of having excellence in our training
    programs that train not only doctors, but nurses and our
    corpsmen as well and our medical technicians and so forth. We
    need that population to be able to have those kinds of training
    programs.
        Further, it really establishes a sustaining base that
    allows us to do all these other things, sending, deploying this
    quality worldwide whenever the Nation needs it, wherever we
    need to support our troops. It is things like Kosovo and Bosnia
    and Kuwait and Honduras and Sinai and on and on where we have
    our folks today. It is Arctic care that is going on today,
    where we are dealing with ten outlying villages in the inner
    part of Alaska. So it is more than just peacetime health care
    that we are really talking about. It is appreciated and it is
    needed.
        If I could, I would like to read just three pieces of
    correspondence, excerpts, that have come across my desk
    recently. One is from----
        Senator Stevens. Could you pull that mike a little bit
    closer, General.
        General Peake. Yes, sir.
        One is from a sailor from the U.S.S. Cole who is relating
    his experience coming through Landstuhl, Germany, our Army
    Medical Center that is jointly staffed with the Air Force, by
    the way. It says: ``Although the flight from Yemen was long and
    arduous at times, you could see it in the eyes of your
    personnel and we felt it in our hearts that we were safe and in
    good hands. For me personally, it was like being dropped in the
    arms of angels. Those who initially cared for me in the early
    hours of October 12th for all practical purposes allowed myself
    and my family here in Jacksonville to celebrate the joy of life
    once again.''
        The next is from an Army parent, someone, actually a career
    officer who has now been selected for command, who wrote it on
    the back of a critique sheet: ``If you ever need a family to
    speak about the Army medical system, please call me or my wife.
    My daughter had cancer at age 6. She is now 14. The radiation
    caused a deterioration of her eyesight. We knew this would
    happen. She is now 20-25 because of your eye doctors. There is
    no way to put a cost on the care and concern your doctors have
    given to our family. Doctors like Mary O'Hara are truly
    angels.''
        Finally, a note from a captain recruiter, a female officer
    who was trying to find obstetrics care. Our recruiters, you
    know, we put out in various places away from military treatment
    facilities so they can build the force. So she is a member of
    TRICARE Prime Remote, which is, fortunately, with National
    Defense Authorization Act (NDAA) now expanded to active duty
    family members. But she says she was having some trouble
    finding an obstetrical provider:
        ``I have spoken with Mrs. Pat Margola at the Military
    Medical Support Office--that is an assistance office--and she
    has resolved the issue. I cannot thank you enough for taking
    care of soldiers. It really meant a lot to me, my family, and,
    believe it or not, my soldiers as well. We have all regained
    faith in the system and in the chain of command.''

                               PREPARED STATEMENT

        This is military medicine across the spectrum and why it is
    important, just as you said, Senator Inouye. As General
    Shinseki said, it is all about people and quality and trust. I
    am proud to be a part of it and I really appreciate a chance to
    be here today with you.
        Thank you.
        [The statement follows:]

            PREPARED STATEMENT OF LIEUTENANT GENERAL JAMES B. PEAKE

        Mr. Chairman and Members of the Committee, I am Lieutenant General
    James B. Peake. I thank you for this opportunity to appear before your
    Committee. It is my privilege to serve as the fortieth Army Surgeon
    General.
        This morning I would like to discuss the opportunities and
    challenges that face the Army Medical Department. I will frame this
    discussion in terms of the three fundamental components of our mission;
    Projecting a Healthy and Medically Protected Force; Deploying a Trained
    and Equipped Medical Force; and Managing the Health of the Soldier and
    the Military Family.
        As we look to the future, The Army Medical Department is in
    synchrony with the Army Vision articulated by General Shinseki and we
    are linked to the Transformation that will keep the Army relevant in
    the 21st Century. His focus on People puts Army Medicine squarely in
    the middle of our Army's Well Being Campaign, both as we promote the
    health and provide the care for the force, but also in how we attract
    the best for the Army Medical Department keeping the focus on the
    quality that is a fundamental requisite. Initiatives that I will
    discuss tie directly to the need to recapitalize the legacy force;
    leverage current day technology to build the interim force, and to get
    the right axis on research, science and technology to develop the
    objective force of the future. The tenets of Army Transformation--
    agility, versatility, and responsiveness--resonate throughout the Army
    Medical Department today.

                 A HEALTHY, FIT, AND MEDICALLY PROTECTED FORCE

        This simple statement understates the extent of what must be done
    to be successful in this mission. Health is the absence of disease and
    disability. It is not only the routine endemic diseases for which we
    have a plethora of vaccines, but the uniquely military challenges such
    as Adenovirus and the vaccine shortfall that we now have because there
    is no commercial market. It is the Mental Health of our soldiers who
    may be away from home for the first time, under physical and mental
    stress either in training or on deployment. Health in relative terms
    includes the mitigation of injury in a manner that is tied to fitness
    for the mission. It is more than vaccines. It is education. It is
    surveillance for patterns of illness and of the environment. It is
    policy and procedures that all must be based on legitimate science. It
    is all of these complementing one another to provide healthy and fit
    forces.
        Among the lessons learned by military medicine from the Persian
    Gulf War is the importance of Force Health Protection and the need for
    attention to it before, during, and after the deployment. It is the
    leverage of information and information systems that will allow us to
    take this core competency of Military Medicine and make major advances.
    Ultimately, a longitudinal and queriable patient record will facilitate
    this proactive approach. The Personal Information Carrier (PIC) in the
    Army and the links to the Composite Health Care System II that we will
    soon be fielding is the right axis of advance. The link between the
    medical team in Bosnia and the redeployment site for the 49th National
    Guard Division at FT Hood, Texas, was an example of how flow of medical
    information could improve the processing of soldiers, insure that they
    have the right kinds of follow-up and access to the medical care they
    deserve, and there is a data base that can support the process.
        We are doing some fundamental reorientation of Military Medicine to
    emphasize proactive preventive services and the research to make
    changes based upon science. At Fort Sam Houston, a focused program on
    trainees entering advanced individual training has resulted in a marked
    reduction in injuries in two different battalions. Brigadier General
    Lester Martinez at the Center for Health Promotion and Preventive
    Medicine has major thrust areas in injury prevention, smoking
    cessation, women's health issues to name but a few. These efforts on
    behalf of soldiers and their families will have direct applicability to
    the civilian sector.
        Casualty prevention runs across the life cycle of the soldier. It
    includes personal protection that runs the range from sun screen-
    chemical protection combinations, to ankle braces, to vaccines to
    protect from biological weapons. But, personnel monitoring,
    environmental monitoring, and comprehensive medical surveillance are
    key to being proactive, not only to specific incidents, but to
    developing the Science and Technology questions that must be pursued to
    get us to the future. Control of environmental and occupational-health
    hazards must be accomplished in austere battlefield environments with
    tools and techniques that are strategically deployable. Battlefield
    environments are quite different than industrial settings. It includes
    providing safe food and water, and the knowledge and skills to deal
    effectively with the industrial contaminants of the modern battlefield.
    Sustaining a service member's health, in the field or at home station,
    produces a far better readiness outcome than providing health care
    after the fact of illness or injury.
        The Army is also 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 1.9 million immunizations delivered safely to over
    496,587 service members worldwide. 1,439 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.
        The Federal Strategic Force Health Protection Initiative has been
    staffed and synchronized with the Army, Department of Veterans Affairs,
    and Department of Health and Human Services. This creates a nationwide
    network of Department of Defense, Veterans Affairs and Federal
    Occupational Health clinics that 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.
        There has been recent and continued interest in the health effects
    to our armed forces as a result of exposure to depleted uranium. The
    health effects of depleted uranium have been studied for more than 50
    years and, while this metal is slightly radioactive, its primary health
    effects are from extensive exposure and due to its heavy metal
    properties. The Army Medical Department has been assessing the health
    and environmental risks from depleted uranium for decades; most
    recently in support of Office of the Special Assistant for Gulf War
    Illness exposure assessments for Gulf War Veterans. The Army Medical
    Department has historically been the lead in responding to issues
    concerning depleted uranium. The Army has implemented a training
    program to inform soldiers about depleted uranium and its effects on
    health and the environment. Only individuals in, on, or near armored
    vehicles at the time of penetration by depleted uranium might exceed
    United States peacetime safety standards for depleted uranium intake.
        The health effects of depleted uranium are being assessed by the
    World Health Organization, and the environmental levels of depleted
    uranium in the Balkans and the resulting environmental impact are being
    evaluated by the United Nations Environmental Program. Internationally
    recognized Army experts have accompanied the field scientific surveys
    and participated in the data analysis and formulation of the reports.
    Additional information on depleted uranium is available on http://
    www.gulflink.osd.mil.
        Comprehensive Medical Surveillance entails the aggregation of data
    from all elements of Force Health Protection to develop a picture of an
    emerging problem or identify future research priorities or
    countermeasures to better protect the force.
        Personnel monitoring includes programs such as the Department of
    Defense serum repository, pre- and post-deployment screenings, and
    accurate record keeping to document all care provided--either on the
    battlefield or in a fixed facility. Growing automation of medical
    systems through such efforts as the Computerized Patient Record, the
    Personal Information Carrier, and Medical Communications for Combat
    Casualty Care will dramatically increase our ability to maintain
    exposure and health-care records.
        Environmental monitoring entails knowledge of potential health
    threats in the air, water, and soil to which our service members are
    exposed. A variety of sensors are under development for both medical
    and non-medical monitoring of the environment that will allow us to
    understand and predict the exposures of an individual soldier. Army
    Preventive Medicine Units are currently assessing the occupational and
    environmental health risks to our force in Bosnia, Kosovo, Kuwait and
    numerous other locations throughout the world.
        Thanks to the tremendous efforts of the prevention communities of
    the Services' Medical Departments, most elements of Force Health
    Protection are well in place. However, there is still work to be done.
    Information systems are key enablers. Monitoring of the environmental
    threat must be automated through the development of the Defense
    Occupational and Environmental Health Readiness System, and its
    integration into military deployments through the Theater Medical
    Information Program and Medical C4I efforts.
        Even as we enter the 21st century, many longstanding health threats
    sadly remain: alcohol and tobacco abuse, injuries, and old diseases
    with new faces, like tuberculosis and malaria. Clearly the research
    axis in the Army's transformation is critical as we build the wellness
    and Force Health Protection into the Objective Force.
        Congress has entrusted the United States Army Medical Research and
    Materiel Command with the management of many congressional special
    interest research programs that will support this goal. The Medical
    Research and Materiel Command, commanded by Major General John Parker,
    ensures the sponsorship of meritorious science that can have great
    benefit for the Department of Defense. The Department of Defense has
    received high praise from Congress as well as the science and advocacy
    communities for the administration of these programs. The science that
    has come from these efforts has been remarkable.
        Since the inception of the Breast Cancer Research Program, 2,290
    awards have been made with fiscal years 1992-1999 funds and another 900
    awards are anticipated using fiscal years 2000-2001 funds. The research
    portfolio totals over $1 billion. 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 breast cancer
    treatment and quality of life, environmental carcinogenesis,
    angiogenesis, mammographic imaging, training, and infrastructure
    enhancement. The outcomes of the research supported by this program
    were reported back to the American public last summer during the very
    successful Era of Hope meeting. There were 1,018 participants including
    Breast Cancer Research Program research grant awardees, other renowned
    scientists, health care providers and clinicians representing the
    United States Army, Air Force, Navy, and Public Health Service. Over
    100 news stories resulted from interviews with local and national news
    media outlets. Over 20 interviews were broadcast live to local markets
    across the country. Time magazine (June 26, 2000) published a one-page
    article on the research funded by the Breast Cancer Research Program.
    Most recently, the Army's contributions to breast cancer research were
    highlighted in MAAM magazine (January 2001), entitled ``Three's
    Company: The Army, Women with Cancer and the Medical Community have
    Joined Forces.''
        Since the inception of the Prostate Cancer Research Program, 295
    awards have been made with fiscal years 1997-1999 funds and another 300
    awards are anticipated using fiscal years 2000-2001 funds. The research
    portfolio totals over $260 million. The Department of Defense Prostate
    Cancer Research Program is supporting innovative, multidisciplinary
    research to conquer prostate cancer. While the program is relatively
    young, the diverse portfolio of funded research is making important
    contributions to understanding the prevention, detection, diagnosis,
    and treatment of prostate cancer. The research strategy designed by the
    Prostate Cancer Research Program is yielding results that are ready for
    clinical testing and application, thus aiding in the national health
    effort to impact the well-being of all people.
        The United States Army Medical Research and Materiel Command is
    working in support of national cancer research priorities affecting the
    health of all Americans. By emphasizing innovation in the
    administration and conduct of research, major accomplishments in cancer
    research have been realized.
        The Volume AngioCAT Project is a newly conceived medical device
    that could employ, simultaneously and in real time, several imaging
    technologies to provide physicians with a new level of anatomic and
    physiologic data. 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
    aggressive new preventive interventions in patients where pathology was
    ``missed'' on routine physical examinations, thus maintaining a
    healthier active duty and retired population. We have the opportunity
    to study the value of such advances to determine if it offers real
    benefit or just greater cost. The first prototypes of a Volume AngioCAT
    will function in fixed facilities; however, the research may lead to
    the development of units that could function in deployed environments
    for rapid diagnosis of the injured warfighter.
        The Disaster Relief and Emergency Medical Services program is
    designed to leverage the resources at academic institutions to save
    lives and reduce costs for injured persons in both the military and
    civilian sectors. This project consists of three interrelated
    components that tests interactive telemedicine technologies to treat
    patients in both urban and rural settings. The diagnostic methods and
    therapies component will treat patients who are unable to receive
    advanced care quickly, and develop mechanisms to extend life beyond the
    ``golden hour.''
        The Center for Integration of Medicine and Innovative Technology
    last year yielded almost twenty-five cutting edge projects pioneering
    minimally invasive therapies in diverse research areas as
    Cardiovascular Disease, Cancer, Stroke, Trauma, and Critical Care.
    Eighty-seven publications and reports were published; sixty-five
    abstracts and presentations were done. The ``Enabling Technologies for
    Medical Simulation'' project is developing the underlying technologies
    essential to develop medical simulation training devices to train
    combat medical personnel in trauma procedures.
        The Combat Trauma Patient Simulation System program is developing a
    system of digitized mannequins that realistically respond to wound
    condition and medical treatment interventions as would the human body.
    It will enhance initial and sustainment training for medical personnel
    by simulating battlefield injuries by type, interventions and outcomes.
        The diabetes project is a coordinated effort in the diagnosis,
    management, and treatment of diabetes and diabetic retinopathy. A
    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. By jointly
    developing and implementing these research protocols, 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.
        The scientific and support staff of the United States Army Medical
    Research and Materiel Command, under MG John Parker, deserve special
    recognition for their dedication and accomplishments.

                  DEPLOY A TRAINED AND EQUIPPED MEDICAL FORCE

        General Eric Shinseki describes America's Army as ``Soldiers on
    Point for the Nation--Full Spectrum Dominance--Persuasive in Peace,
    Invincible in War.'' Facing the challenges of this new century, he has
    begun the process of transforming the Army into a force that is
    responsive, deployable, agile, versatile, lethal, survivable, and
    sustainable.
        Army medicine is integral to the capability and culture of the Army
    and has undergone significant transformation to maintain its relevance
    and value to the Army of the 21st Century. We are supporting Army
    Transformation through the reengineering of the deployable medical
    force, adoption of the best modern clinical and business practices, and
    military medical research and development that is focused on the
    protection of soldiers and care of combat casualties. We have focused
    upon the training, leader development, and enabling of soldier medics
    to operate independently and far forward with the highly mobile and
    dispersed force they will support.
        The Medical Reengineering Initiative will reshape our Corps and
    Theater level medical systems to be more modular, flexible, and
    strategically deployable to provide the capabilities needed for the
    full spectrum of military operations. We have also worked hard to
    reshape our support to division units and below. Additional medical
    support, with a special emphasis on preventive health services, has
    been placed closer to the combat soldier. Staying the course on Medical
    Reengineering Initiative parallels the Army's transformation plan,
    links directly to the recapitalization of the legacy force, and will
    facilitate the medical support to Army modernization. It assures the
    best possible Force Health Protection to the Army's most important
    asset, its soldiers.
        Medics in support enable the soldier to be on point for our nation.
    In October 2001, soldiers will begin a 16-week training program at the
    Army Medical Department Center and School to become more skilled and
    competent medics in the 21st century. The newly created 91W Military
    Occupational Specialty, Health Care Specialist, will merge today's 91B
    Military Occupational Specialty, Medical Specialist and 91C Military
    Occupational Specialty, Practical Nurse and provide additional skills
    to meet the operational combat health-support needs of the future
    battlefield. Training will be focused on emergency care, primary care,
    medical force protection, and evacuation and retrieval. All medics will
    graduate with National Registry Emergency Medical Technician
    certification and be required to routinely revalidate their critical
    medical skills. This major Military Occupational restructuring creates
    an axis of advance into the 21st century for the combat medic.
        Army graduate medical education programs provide the vast majority
    of our military medical specialists. Our fully accredited programs are
    among the best in the world. In a recent survey, the majority of our
    specialties have a 100 percent board pass rate, with the overall pass
    rate for all specialties at 87 percent. The programs produce a cadre of
    highly trained and skilled soldier--physicians. Our programs remain
    among the most effective means of recruiting and retaining quality
    physicians. In addition to the full breadth of clinical skills, Army
    graduate medical education programs are augmented with military unique
    aspects of a given specialty, which prepares physicians for the
    rigorous demands of practice in a wartime or contingency environment.
    After completing graduate medical education, this highly skilled cohort
    is among the most versatile group of professionals that can be deployed
    at all levels within the theater of operations to support the medical
    mission.
        The value of integrating military unique curriculum within graduate
    medical education programs to facilitate force transformation cannot be
    overstated. When Department of Defense mandated the implementation of
    the curriculum, there were no resources set aside to support training.
    However, each specialty program director has taken advantage of
    operational opportunities as well as formalized activities. Residents
    receive orientations and lectures concerning war zone injuries, trauma
    and military deployments. Additionally, they attend formalized training
    including a centralized combat casualty care course, advanced trauma
    life support training, medical management of chemical and biological
    casualties and bushmasters course conducted at the Uniformed Services
    University of the Health Sciences. Despite funding difficulties,
    imaginative solutions are used to incorporate military training without
    compromising training by deploying residents along with staff
    physicians during actual deployments. Concurrently, residents
    participate in medical readiness training exercises, spend time
    assigned as a brigade surgeon and participate in field training
    exercises where basic combat task training and testing is conducted.
    Feedback from our residents and staff regarding the aforementioned
    efforts has been very positive.
        Medical evacuation of wounded and injured soldiers from the
    battlefield has been the Army Medical Department's number-one priority
    for modernization for several years. Clearing the battlefield serves as
    a critical enabler for the combat commander, allowing him to
    concentrate on the prosecution of the mission. Air evacuation is the
    fastest and most flexible method, and the Army Medical Department has
    been working with the aviation community to improve the UH-60 Blackhawk
    and create a state-of-the-art evacuation platform--the UH-60Q. The UH-
    60Q has an upgraded avionics package that improves situational
    awareness for the pilots, and a reengineered interior treatment module
    to facilitate enroute care for patients.
        The Army Transformation Strategy requires a capable, recapitalized
    Legacy Force focused on the Counter Attack Corps. The Armored Medical
    Evacuation Vehicle is critical to the recapitalization of this Legacy
    Force, is intended to replace the M113-series evacuation vehicles in
    the Counter Attack Corps only. The Armored Medical Evacuation Vehicle
    uses excess M2A0 Bradley Fighting Vehicles, that have the turret
    removed and the roof squared off and raised 13 inches. This system will
    provide the medical platoons and forward medical companies with a
    ground evacuation platform that can keep up with the combat elements
    they support while providing improved protection and on-board
    capability and a common platform for maintenance for support.
        Another Army Medical Department modernization effort is exploratory
    work on the next generation of medical shelter systems. This effort is
    looking at developing a family of rigid and soft-sided containers that
    will facilitate strategic and tactical mobility while providing an
    appropriate environment for surgery and intensive care. These shelters
    will incorporate autonomous power generation and environmental control
    and be wired for digitization. They will be capable of operating in
    chemical and biological threat environments. Their multi-functional
    design will allow for quick reconfiguration for multiple medical
    applications.
        To promote tactical mobility, the Army Medical Department is
    working with the Transportation Corps to define medical requirements
    for trucks in the Family of Medium Tactical Vehicles, or FMTV. The
    FMTV-LHS consists of a truck with a pneumatic load-handling system that
    will be used to transport current and future deployable medical
    systems.
        A major initiative in support of Army Medical Department
    Transformation and Army digitization is the Theater Medical Information
    Program. The Joint Theater Medical Information Program, or TMIP, will
    let us phase out manual and stove-piped legacy automation systems and
    replace them with a fully integrated, joint medical information system.
    This is a critical enabler for Force Health Protection, automating the
    documentation health care and health surveillance, managing logistics
    and patient movement, and providing the situational-awareness for
    medical planners to tailor medical forces and increase their span of
    control. It will provide a common information environment for all the
    military medical services that are continuous from the forward-deployed
    medical elements to the sustaining base in the United States. One
    Example is the automation of patient tracking through the
    Transportation Command Regulating and Command and Control Evacuation
    System (TRAC2ES) is essential for coordinating and
    synchronizing the movement of military patients throughout the Military
    Health System in both peacetime and in war. Transportation Command
    Regulating and Command and Control Evacuation System will permit
    casualty tracking throughout the battlefield, and provide in-transit
    visibility of casualties. At the same time, it will speed the strategic
    movement of patients to the bed with the right capability to care for
    them.
        The Army will implement the Theater Medical Information Program
    through the program Medical Communications for Combat Casualty Care.
    This major acquisition program will build and support the Theater
    Medical Information Program infrastructure and provide the necessary
    integration with Service and joint command and control and combat
    service support systems.
        Using new technologies, digitization, and enhanced mobility to
    achieve a lighter, faster, more responsive medical capability will
    ensure that military medicine is there to support the deployed service
    member

            MANAGE THE HEALTH OF THE SOLDIER AND THE MILITARY FAMILY

        When I speak of ``managing care'', it can get caught up in the
    rhetoric of a focus on shareholders rather than our patients. It is the
    soldier and the soldier's family for whom we exist. It is the quality
    of their care, their trust in our system, their satisfaction with their
    treatment whether for the soldier on a battlefield or their families in
    all the places we send them across the United States and around the
    world, that is our ultimate grade. Managing in this context means the
    right care by the right provider at the right time; care delivered
    efficiently and effectively without ``hassle''. This has been
    reaffirmed by Congress with the generous medical programs in the
    National Defense Authorization Act this last year. It has been
    reinforced by the Army Leadership as Well Being has become a major
    thrust in the Army's Transformation.
        I sit before you with my fellow Surgeons General. We cannot provide
    outstanding managed care without working closely together. Each of us
    have a responsibility to support the warfighters of our own service; to
    cover the unique environments and cultures that gives us the best Army,
    Navy, and Air Force in the world. But in the business of managing care,
    we share a common passion for quality, for the improved and sustained
    health of our military families, and the links to those retirees who
    have served this nation in the past.
        TRICARE is the program that provides the military health care
    benefit for 8.1 million eligible beneficiaries throughout the Military
    Health System. TRICARE brings together the health care resources of the
    Army, Navy and Air Force and supplements them with networks of civilian
    health care professionals to provide better access and high quality
    service while maintaining the capability to support military
    operations.
        A majority of the beneficiaries receive most of their care from the
    military treatment facilities that are part of the Direct Care System.
    During the drawdown in the early 1990s, the Army Medical Department
    shrank by 34.5 percent, commensurate with the rest of the Army. The
    number of eligible beneficiaries only declined by 13 percent. This
    created a large gap between the capacity of the Direct Care System and
    the needs of the beneficiary population. This also created the
    requirement for our Managed Care Support Contract Partners.
        Since 1995, the TRICARE Management Activity, representing the
    Department of Defense, has awarded seven contracts to 5 different
    contractors to provide health care in all 12 administrative regions of
    the United States. These contractors build civilian managed care
    networks within their region(s), handle claims processing and augment
    the Direct Care System as needed at the local military treatment
    facility level. This has been an effective but expensive partnership,
    partly because, with our downsizing and changes in cash flow, we have
    seen care shift from care we can deliver to care we purchase through
    the contracts.
        One of my top priorities as Surgeon General is to optimize the
    direct care system. Optimization is essential to improve access and to
    control the costs of health care across the Military Health System.
    Increased efficiency is even more important with the recent passage of
    the National Defense Authorization Act for Fiscal Year 2001, which
    enhances the health care benefit for the military family. I have
    charged our Regional Medical Commanders with optimizing the
    productivity and utilization of our hospitals and clinics consistent
    with sound business practices. This means insuring adequate support
    staff supports the clinician, it means making the physical improvements
    needed to increase efficiency. I am not asking for a wish list, but
    rather for business plans that will clearly identify the payoffs for
    this investment. This type of targeted investment of resources in
    support of the direct care system is overdue. Successful optimization
    will decelerate the rising cost of health care. In time, it will
    relieve pressure on the services' Program Objective Memorandums and
    reduce diversion of funds to the Defense Health Program, while
    improving customer relations and patient satisfaction.
        In October 2000, optimization began in the Northwestern TRICARE
    Region (Region 11). The Lead Agent has been given expanded authority to
    allow for better decision-making. Success in Region 11 Pilot Program is
    of the highest priority and will lead the way in transforming the way
    that we do business across the Military Health System.
        But, Region 11 is not the only place striving for innovative ways
    to improve quality and efficiency. While there are many success
    stories, the following cases demonstrate the fiscal opportunities our
    medical treatment facilities can execute.
      --Tripler Army Medical Center in Honolulu, Hawaii, provides an
            example. The $3.5 million business plan initiative investment
            implemented several years ago targeted the replacement of
            certain resource sharing agreements that were not cost
            effective with medical treatment facilities staff. The
            elimination of these agreements not only returned $1.1 million
            in annual cost savings to the Government after the contractual
            bid price adjustment, it also provided the medical treatment
            facilities with greater flexibility in providing health care to
            the active duty as well as other non-CHAMPUS beneficiaries.
            Tripler Army Medical Center also plans to initiate a satellite
            pharmacy at the new Navy Exchange on the island of Oahu. The
            satellite pharmacy initiative currently being proposed is
            focused on reducing the managed care support contractor's
            claims for prescription drugs in an effort to risk share the
            cost savings this joint venture will achieve. Preliminary
            estimates project 30 percent to 40 percent savings in the
            contractor's retail pharmacy costs that we will risk share
            through the bid price adjustment process. Since the contractor
            has returned funding to the Government at each bid price
            adjustments for the TRICARE Regions 9/10/12 managed care
            support contract, this initiative should reinforce the positive
            cash flow to the Government.
      --Darnall Army Community Hospital in Fort Hood, Texas, initiated
            several business case initiatives last year focused on
            providing the full continuum of health care to their Prime
            enrollees at the military treatment facility by minimizing the
            need to purchase care from civilian sources. The military
            treatment facility is also proposing additional recapture
            opportunities this fiscal year to continue their health care
            commitment. The scope of their initiatives range from increased
            staffing to minor facility modification in their endeavor to
            maximize military treatment facility capabilities to a full
            potential. A few examples follow:
        --The obstetrics business initiative increased military treatment
                facility staffing for certified nurse midwives and support
                staff to maintain existing Obstetrics workload in-house.
                This enabled the recapture of 40 deliveries per month that
                had been previously disengaged to the civilian network. The
                investment of $1 million has a projected return of $2.3
                million and cost avoidance of $4.7 million.
        --The internal medicine business initiative increased military
                treatment facility staffing for civilian internists to
                replace lost military physicians. The investment of $417
                thousand has a cost avoidance of $1 million.
        --The orthopedic business initiative will add a civilian physician
                and support staff to the military treatment facility. The
                investment of $400 thousand has a projected recapture of
                $817 thousand in orthopedic claims currently in the
                civilian network.
        --The satellite pharmacy initiative currently being proposed is
                focused on reducing the managed care support contractor's
                claims for prescription drugs in an effort to risk share
                the cost savings this joint venture will achieve. As part
                of the resource sharing agreement the government would fund
                the facility modification costs for a satellite pharmacy to
                be located at the Fort Hood local Post Exchange. The
                contractor would provide pharmacy staffing to dispense the
                prescriptions and funding to procure the pharmaceuticals
                through government sources. A preliminary study of the top
                drugs prescribed in the civilian network projects an
                estimated 150 percent savings by using the Federal Schedule
                pricing versus average wholesale price for pharmaceuticals.
      --Madigan Army Medical Center in Fort Lewis, Washington, has recently
            implemented a multi-faceted approach towards increasing their
            inpatient ward and surgical capabilities as part of the TRICARE
            Region 11 Lead Agent Pilot Demonstration. By increasing their
            military treatment facility staff, they plan to increase their
            average daily inpatient census from 123 to 133 and expand their
            average daily operating rooms from 9 to 11. The Lead Agent's
            goal is to optimize the Military Health System and reduce
            purchased care costs currently borne by the government and the
            managed care support contractor in Region 11. Based on the
            time-phased investment plan, the region projects a $7.2 million
            overall return on investment.
      --Evans Army Community Hospital in Fort Carson, Colorado, has
            submitted a business initiative to expand their military
            treatment facility orthopedic staffing. Their goal is to
            realign the administrative Medical Board responsibilities from
            the military physicians to a physician assistant, orthopedic
            technician, and nurse. The reengineering process will avail the
            military physicians for direct patient care and surgical
            procedures at the military treatment facility. This action has
            the potential of recapturing a moderate amount of orthopedic
            civilian purchased care claims for a relatively low investment
            cost. Preliminary analysis estimates an annualized cost savings
            to the Government of $250 thousand after risk sharing with the
            managed care support contractor.
      --South East Regional Medical Command (SERMC) has submitted a
            business initiative that will enhance the management and
            efficient use of our military and civilian hospital physicians
            by reducing data entry requirements and improving patient
            documentation accuracy. The initiative proposes the use of
            voice dictation equipment and coding staff to increase provider
            productivity by four appointment template spaces per day. The
            increased appointment templates have the potential of reducing
            active duty and CHAMPUS-eligible referrals for purchased care,
            which will decrease supplemental care and managed care support
            contract costs at each bid price adjustment. Additional
            intangible benefits are improved quality of care, greater
            billing accuracy for Third Party Reimbursements and Joint
            Commission on the Accreditation Healthcare Organization
            compliance.
        Walter Reed Army Medical Center Washington, D.C. also initiated
    several business initiatives last year focused on increasing the volume
    and complexity of medical cases treated to strengthen its graduate
    medical education programs. The investments improved provider support
    staff ratios from less than 1 support staff per provider to more than
    2. The actions also increased civilian nurse salaries in order to
    better recruit and retain nurses in a highly competitive labor market.
    Early results have been favorable; not only has the complexity of the
    average inpatient disposition, measured by case mix index, increased by
    more than 7 percent, but both outpatient and inpatient workload has
    increased by nearly 10 percent. The long-term impacts of these
    investments go beyond the graduate medical education programs and
    should become evident over the next several fiscal years. The increased
    capacity in the military treatment facilities should reduce the cost of
    our TRICARE contracts and competitive salaries for civilian healthcare
    employees will improve our ability to recruit and retain the best
    personnel in a dwindling labor market. A final benefit of the
    investment is improved staff and patient satisfaction.
        There are systems issues also that contribute to this optimization.
    The Army Medical Department has been at the forefront of the Department
    of Defense in reengineering supply chain management, leveraging into
    strategic partnerships with the Military Services, the Defense
    Logistics Agency, and the Department of Veterans' Affairs to increase
    purchasing volume and obtain the best value. We have also invested in
    technologies such as Digital Imaging Networks, Point of Use systems,
    and pharmacy robotics to improve productivity, accuracy, and cost
    accounting. The Army Medical Department has embraced acquisition reform
    and electronic commerce initiatives to reduce paperwork, improve
    responsiveness, and enhance delivery of the healthcare benefit.
        The expanded pharmacy benefit beginning April 1, 2001, will include
    improved access to a wider variety of appropriate and cost-effective
    medications through the National Mail Order Pharmacy and the TRICARE
    retail pharmacy network with minimal co-pays. Beneficiaries who utilize
    the military treatment facility pharmacies may continue to do so with
    no out of pocket expense. The act further authorized access to non-
    network pharmacies with an annual deductible of $150 and a co-pay of $9
    or 20 percent per prescription, whichever is greater. Where we can
    bring this work back into our system, we will benefit from our
    favorable pricing.
        Effective October 1, 2001, eligible beneficiaries who continue to
    receive medical care from their current Medicare providers will have
    TRICARE as their second payer. TRICARE will pay their out-of-pocket
    costs for services covered under Medicare. In addition, they will have
    access to benefits that may not be covered by Medicare. To participate,
    beneficiaries must be eligible for Medicare Part A and enrolled in
    Medicare Part B. This is a step in the right direction towards keeping
    faith with our most senior retirees. Where we can leverage the existing
    infrastructure of the direct care system by covering the marginal costs
    of caring for this expensive class of patient, we will save the
    taxpayer's dollar and protect an ever dwindling Medicare trust fund.
        We continue to pursue the Information-management systems that are
    essential enablers for optimization. We are scheduled to begin
    deploying the Composite Health Care System II that augments the
    capabilities of Composite Health Care System I this summer. After a
    prolonged and exhaustive redevelopment process characterized by
    superlative collaboration between technical and functional experts,
    Composite Health Care System will provide a legible and readily
    available computerized patient-record system that will be shared across
    Composite Health Care System hosts. Through it, providers will be
    linked to laboratory, pharmacy, radiology, and other services. By
    eliminating duplication of effort in record input, it will facilitate
    interaction between providers and patients.
        Additionally, Composite Health Care System II will support best
    business practices, medical surveillance, and clinical research by
    permitting rapid data query on individuals and populations, which will
    supply critical information to providers from treatment room to Army
    Medical Department headquarters. Composite Health Care System II will
    be the heart of cutting-edge health services and will provide support
    to optimization across the Military Health System. Early success in
    optimization is critical to sustaining the Military Health System
    business reengineering momentum. However, neither optimization nor any
    other improvement in health services delivery can be accomplished
    without quality healthcare professionals. Recruiting and retaining
    quality medical personnel is a major concern of the Army Medical
    Department leadership.
        The civilian health-care industry is very attractive to our mid-
    term officers, enlisted personnel, and civilians. We need to find new
    ways to compete with the civilian health care industry. We need
    additional incentives and benefits to attract and retain quality
    people. Most importantly the quality of practice that comes from
    adequate support staff, quality facilities and a full spectrum of
    patients where the patient is the focus of the effort are the factors
    that will attract and keep our quality people on our team.
        Special pay authorities are becoming inadequate to provide
    sufficient incentive to meet aggregate end strength needs. Special pay
    rates have remained fixed (in dollar amount) since 1990, resulting in a
    climate of devaluation. This devaluation is impacting on the Army
    Medical Department's ability to retain the right number and specialty
    mix of qualified clinicians in the long-term. To that point, the
    military Surgeons General have requested the Flag Officer Review Board
    at the Office of Assistant Secretary of Defense, Health Affairs to
    evaluate and develop Legislative proposals which will address this
    issue in the fiscal year 2003 Unified Legislative and Budgeting
    process.
        These proposals will serve to increase special pays for physicians:
    variable, medical additional and incentive special pays; board
    certification pay and multiyear special pay. The dental variable and
    additional special pays; board certification pay, dental officer
    multiyear retention bonus, and the dental officer accession bonus. Also
    proposed increases in the optometry, veterinary and pharmacy special
    pays; nonphysician and diplomat board certification pays; nurse
    anesthetist incentive special pay; and the nurse and pharmacy accession
    bonuses. The increases approved in the ULB process will be submitted
    for inclusion in the President's Budget for fiscal year 2003.
        In the National Defense Authorization Act for Fiscal Year 2001
    there is a new Critical Skills Retention Bonus. The Department of
    Defense is pending implementation of this bonus to provide a financial
    incentive to positively influence retention decisions of members in
    designated critical specialties with manning shortages or skill
    imbalances, and high training or replacement costs. It is the Army
    Medical Department's desire to use this bonus as soon as available and
    appropriately funded, to pinpoint our potential and known critical
    specialist retention shortfalls.
        A 1996, Office of the Chief, Army Reserve, Study found job
    insecurity to be the primary problem that adversely affects retention
    and mobilization. Eighty-one percent of the 835 U.S. Army Reserve
    physicians surveyed responded that they could mobilize for up to 90
    days without serious impact to their civilian practices. Therefore, the
    Assistant Secretary of the Army (Manpower and Reserve Affairs) signed a
    policy initiating a test program to limit the involuntary mobilization
    period for Reserve Component physicians, dentists and nurse
    anesthetists to 90 days.
        The test program will be evaluated at the end of three years to
    determine its effectiveness for recruiting and retention. The Office of
    the Surgeon General will report findings to the Assistant Secretary of
    the Army (Manpower and Reserve Affairs) by September 30, 2002, with a
    coordinated recommendation as to whether the 90-Day Rotation Policy
    should be continued and expanded to other specialties.
        There have been major adjustments to the Defense Health Program
    since submission of the fiscal year 2001 President's Budget. Congress
    passed an emergency supplemental appropriation of $1,311 million in
    fiscal year 2000 which was used primarily to fund prior year contracts,
    contract claims, and private sector care fact of life changes. This
    past summer's program review resulted in a fiscal year 2002 Program
    Decision Memorandum which provides an additional $593 million to the
    Defense Health Program primarily for private sector care. Despite major
    adjustments to the Defense Health Program there are still critical
    funding requirements.
        Efforts have begun to address the fiscal years 2002-2007 impact of
    new health care as legislated in the National Defense Authorization Act
    for Fiscal Year 2001. Work is underway to establish the Department of
    Defense contribution to the Department of Defense Medicare-eligible
    Retiree Health Care fund and to make necessary fiscal adjustments to
    implement accrual financing procedures for financing the Medicare-
    eligible retiree benefit beginning in fiscal year 2003. These actions
    do not, however, address any fiscal year 2001 funding implications of
    the National Defense Authorization Act for Fiscal Year 2001. The three
    services with TRICARE Management Activity and the Department of Defense
    (Comptroller) are working the shortfall issues with the Defense Medical
    Oversight Committee.
        I am concerned that past and future funding problems in medical
    facilities inventory may contribute to reduced quality of care, and
    hamper our effort to transform, modernize and optimize the Army Medical
    Department. Continued problems in funding of funds to support
    maintenance, repair, and modernization of aging inventory may
    increasingly lead to systems failures that result in death or injury to
    patients; disrupt the normal delivery of health care services; risk
    regulatory compliance; lead to a less professional patient care
    environment; and significantly increase future repair requirements and
    costs. The condition of our facilities will become a quality of life
    issue that may affect recruitment/retention. Our challenge is to
    overcome the effects of long-term neglect and low funding levels which
    continue to degrade our facilities. Substandard medical facilities will
    adversely impact our ability to deliver quality health care within the
    Military Health System while increasing total major repair costs, and
    ultimately the total cost of military healthcare.
        The average annual funding level is $68.4 million for new
    construction (0.89 percent Plant Replacement Value). These funds are
    required to modernize our aging facilities and minimize chronic and
    expensive repair problems. This level of funding in this account
    results in a 125-year replacement cycle for the Army's medical
    infrastructure. Any construction funding shortfalls burden the
    shrinking maintenance and repair budget through expensive repairs of
    failing systems. Specific major construction projects requiring
    attention include the Armed Forces Institute of Pathology, the Medical
    Applied Instructional Facility, and the Center for Health Promotion and
    Preventive Medicine.
        Army Medicine is more than an HMO. Our system of integrated care,
    teaching medical centers to outlying health clinics, school house to
    research and development, form the base for supporting The Army across
    the world and across the spectrum of conflict. We do that quietly and
    on a daily basis as we field the TOE force, engage with both active and
    reserve forces, and respond to my Chief's vision of our Army's role in
    alleviating human suffering.
        There are approximately 1,400 Army Medical Department personnel
    currently deployed in 20 countries in support of Smaller Scale
    Contingencies and Peacetime Engagement Activities. In the European
    Command area of operations, approximately 700 Army Medical Department
    personnel provide medical support to Operation Joint Forge and Joint
    Guardian, conduct MEDFLAG's in Africa, MEDCEUR's with Partnership for
    Peace nations, and conduct humanitarian assistance missions in Kosovo,
    as part of Operation Provide Hope. In the Southern Command area of
    operations, approximately 150 Army Medical Department personnel provide
    medical support to Joint Task Force-Bravo, and provide medical care to
    specified host nation countries under the Medical Readiness Training
    Exercise program. These activities serve to enhance the Southern
    Command theater engagement strategy in various countries within the
    area of Operations.
        In the Pacific Command area of operations, Army Medical Department
    personnel mainly engage in and support exercises in preparation for
    their wartime missions. Deployed numbers vary depending on the size of
    the operation. Other activities include Preventive Medicine Support in
    the area of responsibility; Veterinary support to Thailand, Vietnam,
    and Singapore; and medical support to Joint Task Force Full Accounting,
    which serves to search for and identify remains of missing servicemen
    from the Vietnam war. In the Central Command area of operations, there
    are approximately 250 Army Medical Department personnel deployed to
    provide medical support to Operation Desert Spring (standing Task Force
    support in Kuwait and Saudi Arabia) and Operation Northern Watch
    (support to on-going operations in Saudi Arabia which provide oversight
    to Iraqi aircraft engagements.
        Other medical support activities engage in exercises that provide
    preparation for their wartime mission, and conduct reciprocal medical
    training between the various countries within the area of operations.
    These operations serve to enhance the Combatant Commander's theater
    engagement strategy by enhancing military to military working
    relationships through medical activities. In the Joint Forces Command
    area of operations, an average of 300 Army Medical Department personnel
    are deployed to provide medical support to the various Combat Training
    Center rotations, and other special interest events within the
    Continental United States. In addition, Army Medical Department
    personnel are actively engaged in planning the medical support to home
    station mobilization for the 29th Infantry Division (Army Reserve
    National Guard) and other reserve component units deploying to the
    Balkan region.
        United States Army Reserve Component medical units make up over
    sixty percent of the Army Medical Department's total deployable forces
    and are an integral and vital part of the Army Medical Department's
    mission capability. Our medical reserve components are being mobilized
    at a greater rate than at any other time in recent history. The Army
    Medical Department, as part of today's power-projection force, is
    different; we can only accomplish our mission using a mix of Reserve
    and Active Component forces.
        This year has marked some important milestones in the progress
    toward more effective integration of the Active Reserve Component
    medical forces. For example, today, in the Balkans, the United States
    Army Reserve is responsible for providing many of the units that, in
    conjunction with selected Active Component units, are deployed to
    comprise the medical task forces supporting our mission in that region.
    The Army Medical Department has also activated two reserve multi-
    component medical units, at Fort Sam Houston and Fort Meade, to
    increase unit readiness through blended resources. We have instituted a
    program of Active Component/Reserve Component individual personnel
    resource sharing, utilizing our Professional Officer Filler, to allow
    one component to fill readiness requirements within another component's
    unit assets.
        Army Medicine has been a part of our Army since July 1775. It has
    produced giants of American Medicine, it has advanced the science that
    benefits us all, it has expanded for World Wars, it has linked to the
    American People through the care of their sons and daughters. This
    month we celebrated the 100th Birthday of the Army Nurse Corps. Next
    month we will celebrate the 90th Birthday of the Dental Corps. As long
    as we have men and women defending this country our value set as a
    Nation demands a quality medical force to support them. I would like to
    thank this Committee for your continued commitment and support to
    quality care for our soldiers and to the readiness of our medical
    forces.

                                TRICARE PAYMENTS

        Senator Stevens. Thank you very much, General. I do not
    want you to take my comments as being critical, but I am
    worried about the cycle that we see right now. It is my
    understanding that there has been a settlement now and the
    terms for TRICARE have been renegotiated for the period from
    fiscal year 2002 to 2007 and that the net result of that
    negotiation has increased the shortfall in the predicted
    funding from $6 billion to $20 billion.
        We provided $1.3 billion in the emergency supplementals for
    the Department in 2000, as I said. $696 million of that was for
    the direct care and $616 million for TRICARE. But it is my
    understanding that the settlement for TRICARE has used a
    substantial portion of the amount of money that we thought we
    were providing for direct care.
        So I want to ask you some sort of pointed questions. Do you
    think that we made a mistake by closing too many hospitals,
    military hospitals? Are we reducing the defense military
    medical staff down to the point where we are over relying on
    TRICARE providers? Do we have the control in the future over
    the cost for TRICARE that we should have as compared to the
    controls we have over the direct care providers in our
    hospitals?
        Do you see the same problem that we see, at least I see, in
    terms of the way we are dealing with TRICARE and direct care
    now? It seems that you are paying TRICARE first and then the
    direct care. If there is a shortfall, that falls on the direct
    care providers. That seems to be in reverse. What we need in
    the event we ever have an emergency, God forbid, is we need the
    direct care providers. We are not going to be able to send
    TRICARE providers overseas somewhere.
        Our main task should be to maintain a robust system of
    direct care. It seems to be slipping back every year so that
    more and more is going to TRICARE. Am I wrong?
        Admiral Nelson. I share your concern, Mr. Chairman. Mr.
    Chairman, out of the $1.3 billion supplemental last year, the
    direct care system of Navy medicine got $52 million of that in
    2000. I think all of it or all of our part of it for 2001 went
    to the contracts.
        Senator Stevens. I am informed that you got $52 million,
    the Army $58 million, and the Air Force $38 million, but we
    thought that you got $696 million. That money went to the
    TRICARE settlement, and the future settlement is even more
    extended as far as the obligations for TRICARE in the future.
        I am not opposed to TRICARE, but I think we ought to find a
    system whereby we provide as much as possible of the medical
    care for the military through the direct care system, that will
    maintain our military medical system in the event of a crisis.
        Admiral Nelson. One of the issues that you raised and that
    the three Surgeon Generals (SG's) have argued each of the last
    3 years is pay the direct care system first, give us a
    predictable, stable budget and then let us hold the deficit
    against contracts if there is a deficit, and let us try to
    optimize our system with good investments, good business
    decisions, to take back as much of the care that has gone to
    civilian contractors as we can.
        It has been shown that we can do it less expensively. But
    that has not been the direction that has been pursued.
    Actually, I have watched for the last 3 years that my available
    resources have dropped through out the year. Resources not only
    started out low but dropped through the year. This year, right
    now, I am sitting right on the line of not having an executable
    budget.

                              TRICARE EXPENDITURES

        Senator Stevens. Well, it bothers me. We know that TRICARE
    expenditures must be paid because people go to court or go into
    some proceedings. You will have additional costs, attorney's
    fees, etcetera, if you do not pay them. On the other hand, it
    seems that, now that we have negotiated out to 2007, it is
    predictable that there is a shortfall in that system. The
    contracts have already been signed and I am sure once we sign
    contracts that TRICARE is going to be used right up to the top
    dollar.
        But that is coming right out of the direct care costs, the
    direct care allowances. Would it help you all if we had two
    separate appropriations, one that had to be used for direct
    care and one that was available for technology?
        General Carlton. Yes, sir, it would. Your observations are
    right on the money and your dollar amounts are exactly right.
    We got 10 cents on the dollar on the supplemental that was
    directed at the direct care system. We have written bad
    contracts, we know that. We are in the process of trying to fix
    that. We are in the process of looking to say, have we set this
    whole thing up correctly through our Defense Medical Oversight
    Committee.
        But the problem is deeper than that. The problem in the
    country is that we have no flexibility now to surge in the
    country, not away from the country in a wartime scenario, but
    no capability to surge in this country if we have a mass
    casualty. I believe the military is going to get called very,
    very quickly if we have a mass casualty of any sort, whether it
    is chem-bio or simple trauma, and a robust military medical
    capability is one way and one way that is very clear to assure
    the national safety.
        So your comments are exactly right on.
        Senator Stevens. I am really worried, because the net
    result of what I see is a catastrophe, and the people that get
    pushed aside are the retirees and the veterans and those who
    are really not on active duty, and that in effect will be
    breaking our promise again.

                                   SHORTFALL

        We have closed too many military hospitals. I wish someone
    would make a study of those hospitals, why we did that. I do
    not know why. I know we closed the bases, but you did not have
    to close the military hospitals when you closed the bases in my
    judgment. I hope that, somehow or other, that you gentlemen,
    you have the experience and we do not, but from where I sit the
    problem is you are paying those bills first for TRICARE.
        We look now at a funding level for 2001 and I am told that
    the Secretary's office has identified a $1.4 billion shortfall
    again, and we are going to face the problem of what we do when
    the supplemental comes up with regard to that. Everyone around
    here is really cautious about talking about supplementals. Some
    say we are not even going to have one. What I see, what we see
    in terms of funding, not just in your department but many, is
    we have been funding on the basis that there will be a
    supplemental.
        I fault the last administration for that and the process
    that we have all followed. But right now I do not know how to
    play catch-up. I would love to have your guidance in trying to
    find some way to do that. I do not see how you can execute the
    2001 program now unless we give you a supplemental for the
    balance of the year some time along the line. Do you agree with
    that?
        Admiral Nelson. Yes.
        General Peake. Sir, I agree with that. I think you are
    exactly right in terms--if I could answer first with the notion
    of have we closed too many hospitals and that whole notion that
    we could take, potentially take care of everybody within the
    direct care system. I do not think that we could do that. The
    Army Medical Department is down about 34.5 percent from what it
    was in 1989. That is about a thousand-plus less doctors than we
    were in 1989, about a thousand-plus less nurses than we were in
    1989.
        Our whole Army came down about 36 percent during that time,
    but the patient population came down only about 13 percent and
    now slightly heading back up.
        We will have to leverage, I think, sir, the civilian
    industry somehow to be able to meet our obligation to these
    people, to the over 65 now that really becomes a bigger number.
    I think we need to figure out how to do that. You talk about
    two separate pools of money. I worry about that a little bit,
    because then you start saying, well, who is the manager of this
    system.
        Senator Stevens. I better talk about it some other time. I
    yield to Senator Inouye, but I will say I do not see enough use
    of reservists and National Guard personnel in your direct care.
    I think the total force, they are over there in terms of--we
    are just back from Europe. The National Guard is over there in
    several places on active duty and I do not see that there is
    the same assistance to total force coming from the guard and
    reserve as far as your part of the defense structure is
    concerned.
        Senator Inouye.
        Senator Inouye. Mr. Chairman, I want to commend you for
    bringing up this matter, and also Senator Domenici, for
    bringing up the matter of TRICARE. We are just seeing the
    initial problems both of you have referred to. I believe there
    are 8 million eligible, is that not right?
        General Carlton. Yes, sir.
        Senator Inouye. We are currently dealing with about 3
    million people in TRICARE at the present time?
        General Carlton. Perhaps a little bit higher, but close,
    yes, sir.

                               FUNDING SHORTFALL

        Senator Inouye. If we are having all the problems with just
    3-plus million out of that 8 million, what happens when we will
    be responsible for the care of 8 million people?
        General Carlton. I think we face a bigger bill in the out
    years, yes, sir.
        Senator Inouye. So the problem that my chairman has noted
    is something that, we do not have a solution for, even though
    we know the problem exists. I hope that the surgeon generals
    will be able to come up with some useful recommendations.
        It would be a drastic step to require two separate funds in
    order to solve this problem, but that is how far we have gone
    in thinking of how to help.
        The matter of underfunding that Senator Domenici brought up
    has been a major concern to us. You have your mission of
    readiness, and your mission of providing health care to
    millions of patients, but then we find that each fiscal year
    when judgment day approaches you are underfunded.
        Now, I know what you have done, but for the record can you
    tell the public what steps you go through in order to make up
    for that underfunding and still provide patients the care they
    need.
        Admiral Nelson. You are asking, with the current shortfall,
    how will we manage the year without a supplemental? There are
    several issues involved and let me address them step by step,
    if I might. We have heard the two figures, $1.2 billion and
    $1.4 billion. The issue that worries me about $1.2 billion is
    that for the three medical departments of that $1.4 billion
    there is only about $200 million in the request for
    supplemental for the direct care system. $1.2 billion
    potentially leaves us off the board.
        Now, I say that a little bit in jest, but not entirely,
    because my concern is the direct care system is hurting. Now,
    there is the recognition, and it has been validated by the
    Defense Medical Oversight Committee (DMOC), that there is a
    requirement for $161 million 1 April to start a number of the
    initiatives that are in the NDAA. If there is not another
    source of funding found for them, it has been suggested that it
    will come out of the direct care system.

                                   SHORTFALL

        My portion of that would put me in a position that I would
    have to take very drastic measures, and I hesitate to say them
    out loud, but I would have to look at furloughs, I would have
    to look at changing access to pharmaceuticals. I would
    completely stop maintenance and repair dollars. I would have to
    make up in the neighborhood of $50 million out of a budget that
    is already--we already are looking at $8 million below what we
    call executable. I have got to make that much up already.
        So it is a very uncomfortable year for Navy medicine.
        Senator Inouye. Anything in the Air Force?
        General Carlton. Yes, sir. What we would do, as we have
    done for years, which is driving this huge managed care support
    contractor, is offload to the managed care support contractor,
    and then we see it at some multiple of price, but we do not see
    it for a year or two. There is nothing left in construction, in
    real property maintenance. Our equipment is literally well
    beyond its life expectancies. Our facilities are falling down.
        We cannot absorb if there is no supplemental. This
    profoundly--you have hit it on the head. This profoundly
    affects retention, recruitment, satisfaction. It is no wonder
    that among all of our corps our retention and recruitment are
    down. People are concerned that we do not have a viable program
    for the future.
        So you hit the nail on the head, sir, where we must
    establish a reliable, modern system. We must then recognize
    that the world has changed. With the National Defense
    Authorization, we are in a competitive group. If we do not
    provide excellent service, then we will pay for it some other
    way at much higher costs.
        General Peake. Sir, it is a cash flow issue that gets to
    exactly what Admiral Nelson was talking about. 60 percent of
    the budget at a local hospital for us is personnel, civilian
    personnel. So you wind up having to squeeze that area or
    supplies or deferring maintenance, which then puts off a bill
    for the direct care system the next year.
        What it also does, in addition to creating great
    dissatisfaction among the providers, who just do not want to
    work in a place like that, so they vote with their feet, but
    then the patients become disenfranchised as well and it creates
    a vicious cycle. Then they go downtown, as General Carlton has
    outlined, to the managed care support contractor, because they
    need the care. It is hard to park that pregnant lady. She needs
    to get that care.
        Then they get in that system, get comfortable in that
    system. It is hard to get them back when at the end of the year
    a supplemental comes and we hire some of the people back. It is
    an uncomfortable way of doing business and the lack of
    predictability is felt very, very acutely at the patient care
    level at the facilities, sir.

                UNIFORMED SERVICES UNIVERSITY OF HEALTH SCIENCES

        Senator Inouye. I have many questions. I will ask one more
    before I yield. As all of you are aware, the Uniformed Services
    University of Health Sciences, USUHS, from the time it was
    conceived has been under attack. Today there are fewer critics,
    but there are those among my colleagues and those in the
    administration that question its importance. Both Senator
    Stevens and myself are convinced we should have another one.
        Of all the military special schools in the United States, I
    believe the retention rate among graduates beyond obligation is
    over 80 percent, is that not correct?
        Admiral Nelson. It has been very high, yes, sir.
        Senator Inouye. I do not want to put on the record what it
    is for West Point or Colorado Springs or Annapolis, because
    they are below that.
        Secondly, is it not correct that we have had problems
    retaining medical personnel in the reserves since Desert Storm,
    and not very many doctors are joining the reserves.
        General Peake. If I can address that, sir, it is true we
    have a real shortfall in our reserves. There are a number of
    folks who just could not take that length of time away from
    practice. It is an area that we are addressing very hard in
    terms of recruiting and retention. But we have an aged
    population and there is a significant number of those folks who
    are coming into the retirement window, in addition to those who
    are not coming in to fill the ranks because of the Desert
    Shield, Desert Storm experience.

                                     KOSOVO

        We are working. We had two hospitals now just recently go
    into Kosovo. What we have done is with a 90-day rotation, as
    opposed to a 179-day rotation, we think that we can get reserve
    providers out of the window of vulnerability, if you will, in
    their civilian practices. We are studying that now. The first
    rotations are done. What it does is rotates people more
    frequently.
        But we are trying to be attentive and understanding of the
    needs of the reserve physicians. They are very important to us
    both in the deployment piece and in backfilling our hospitals
    here at home.
        Senator Inouye. General Carlton, one of the arguments made
    by critics of USUHS is that there are a lot of medical schools
    all over the Nation; why should we have one for the military?
    Is there such a thing as military medicine?
        General Carlton. Yes, sir. I believe our opponents do not
    understand our business. When we define our business, they say
    ``medical care'' and they envision peacetime medical care as
    the only business we are in. In fact, we have two broad
    categories of businesses. One is called readiness, the other is
    called the peacetime benefit.
        USUHS, as the best investment in readiness medicine we can
    make, provides a tremendous baseline for us. Then we train our
    Uniformed Services graduates in the benefit mission through
    residencies, but they have a foundation in readiness that we
    cannot get any place else. So we do not practice medicine in
    the military; we practice military medicine, and it is very,
    very different.
        I believe that lack of understanding is what draws this
    fire for the Uniformed Services School.
        Admiral Nelson. Senator, the three Surgeons General make up
    the Executive Board for the Uniformed Services University and
    we have direct impact on some aspects of the University. I was
    skeptical of the university years ago, but over the last 8
    years as I have commanded a major medical center and also been
    the Navy Surgeon General I have learned of the quality of the
    product of the University and the focus that it has on military
    medicine and the importance to us.
        I would be hard put to be without the graduates of the
    Uniformed Services University (USU).
        Senator Inouye. In fact, is it not correct that the
    Secretary of Defense has awarded the three of you a special
    unit award?
        Admiral Nelson. The award was to the university, yes, sir.
        Senator Stevens. Because of the work that you three have
    done.
        Admiral Nelson. Because of the work of the university, yes,
    sir.
        Senator Stevens. Could you yield?
        Could you give us a plan to develop a western university
    for military medicine?
        Admiral Nelson. How far west, sir?
        Senator Stevens. We will not answer that on the record.
        But I do believe we should know what it would cost. This
    one is running very well here, but I think to a great extent
    the people who are attending it are mainly from the East. I
    would like to check that out, too.
        Admiral Nelson. Yes, sir.
        Senator Stevens. I think we should have an additional
    medical university for defense.
        Senator Inouye. There is a lot of space out there.
        Senator Stevens. Finished?
        Senator Inouye. Yes. Thank you, Mr. Chairman.
        Senator Stevens. Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman.
        Senator Stevens made a very good point and this is
    something that I too have observed. For instance, the Navy
    built a hospital in Corpus Christi, Texas, in the nineties. It
    is now almost totally vacant. They do offer clinic services
    only. But this is a pilot training center, Corpus Christi and
    Kingsville nearby. There is no emergency facility. If a pilot
    is injured in training, they go to the emergency center in
    Corpus Christi, Texas.
        I would just ask the question if that is the most efficient
    use of those largely empty facilities? Perhaps it is, but I do
    think it is worthy of questioning. When you close a military
    hospital, then the many veterans who also have the ability to
    use those facilities on a space available basis have to go and
    get other care, which can also be more expensive.
        Certainly all of you who have been in the military know
    that military personnel believe they get better care from
    military personnel rather than civilians. Now, I know the
    civilians give wonderful care and many are civilian type
    functions. As Senator Inouye said, it is pediatricians, it is
    gynecologists. But the unique situation that military people
    and their families have in moving around and having a different
    bonding situation with their medical facilities I think does
    augur for military-trained health personnel that can deal with
    the unique problems.
        So I would just ask you to look at that. I am sure it is
    duplicated in other Air Force and Army bases where maybe we
    have available space and maybe looking at the costs both for
    active duty and retired military would bring new results. It is
    at least worth looking at.

                                PERSONEL ISSUES

        I would just ask the general questions. Obviously, health
    care is an intensive people business. There are unique
    situations for military personnel. I would just like to ask you
    what personnel issues any of you see that you think we should
    be aware of as we are reassessing how we best give this health
    care.
        General Peake?
        General Peake. The personnel issues that we are concerned
    about right now as far as the Army medicine is the issue of
    retention, making sure that we can attract and retain quality
    health care providers in our system. We want to train them well
    because those are the folks that stay with us, so we need to
    keep our graduate medical education programs strong and robust.
        Already we have alluded to the pay issue. We have a pay gap
    that is increasing the way it is. I am looking forward to the
    final report from the Center on Naval Analysis, but the
    preliminary one is showing a gap anywhere from--an increased
    gap from what we had 10 years ago. People are just saying,
    well, with this increased optempo and with everything else,
    and, oh by the way, I do not have the ancillary people to
    support me in the clinics, so the status of practice. They
    start putting those various pieces together and they will then
    decide to go ahead and leave our service.
        We need to not only increase the pay, as has already been
    discussed, we really do need to get something, I think before
    2003. There is legislation that really does not have funding
    behind it yet in the NDAA that allows us to do some bonuses for
    critical skills. So I think we need to take that on and get
    some money behind that and do that in a shorter term than the
    2003 Unified Legislation and Budgeting (ULB).
        But we also need to improve the practice, and this
    investment in the direct care system that we have all been
    talking about would help us do that, give the ancillary people
    that allow the doctor not to have to type his own Temporary
    Duty (TDY) orders or his own clinical notes and things like
    that, or change the paper on the tables, as sometimes happens,
    but to make that kind of investment for the quality of
    practice.
        Senator Hutchison. Thank you.
        Any additions?
        Admiral Nelson. I would very much agree with those. Those
    are the issues across the Navy as well. It is not just
    physicians, it is all of our folks who are involved in clinical
    health care. We are getting in critical condition on a number
    of the nurse corps positions, as well as physicians and
    readiness critical specialties.
        The analysis CNA did within the Navy identified six areas
    of particular concern to practitioners concerning retention.
    Pay, as I mentioned, was the top one, the top concern. But the
    very issues that General Peake speaks of are included in some
    of the rest of them: the administrative, lack of administrative
    and ancillary support, the things they have to do for
    themselves, the lack of good information management systems to
    help speed up that side of their health care, things that take
    away from their ability to see patients, spend time with their
    patients. Those are the factors affecting our health care
    providers, our inability to provide them with adequate support
    staff.
        In the Navy--well, across the Military Health Services
    (MHS), we have a goal of 3.5 support staff to each provider. We
    are at 1.8 in the Navy. That is just very dissatisfying to
    providers.
        Senator Hutchison. Thank you.

                               DIRECT CARE SYSTEM

        General Carlton. Yes, ma'am. I would echo what has been
    talked about. The reliability of our direct care system to pay
    for our people and a clear focus on customers--we are in danger
    of losing the trust of our customers because our funding
    profile has gone up and down so rapidly. It has to do with our
    business.
        There is a recent example in San Antonio where we picked up
    a baby in Japan, Okinawa, Japan, that needed a heart-lung
    machine for transport. Several years ago I had been told to
    shut that service down because it was not cost effective for
    the business that I was in. My response was: You do not
    understand my business. My business is to provide stateside
    quality health care around the world. I told those critics no.
        Well, we recently did that to a naval base in Okinawa. We
    picked up an Air Force family child who was dead, very nearly,
    would have been dead within an hour. In the standard of care in
    the country that they were in, that was accepted. It was not
    accepted in our standard of care.
        Our families and our members overseas understanding that we
    will guarantee them stateside quality care. We did pick the
    baby up. We did transport them back to Wilford Hall, at great
    expense, and the baby is a normal baby home with mother now.
        Our business is fundamentally different. I count that as a
    readiness business. The staff sergeant that appeared on KSAT
    News whose child this was said: ``I had no idea of my medical
    benefits until I saw what the military will go to to take care
    of my family.'' I cannot buy advertisement like that.
        So your point, it is a people-related business and
    sometimes we do things that from strictly a business
    perspective or a peacetime benefit do not make sense, but make
    sense in the great scheme of things that literally we are
    around the world.
        Senator Hutchison. Thank you very much. That is a wonderful
    story.
        Thank you.
        Senator Stevens. Thank you.
        Senator Domenici.

                                BUDGET BLUEPRINT

        Senator Domenici. Mr. Chairman, thank you very much.
        I want to ask a question with reference to, today we got a
    little blue print from the administration of their budget plan.
    It is not in great detail, but it tells us generally. The
    little blue book, what is it called?
        Mr. Cortese. The Budget Blueprint.
        Senator Domenici. Yes, the Budget Blueprint. We are
    analyzing it now, but let me ask: For 2002 do you have any idea
    what was put in for the health system that the military
    provides? Do you know what number is in that budget?
        General Carlton. No, sir. I have not seen that blue book.
        Senator Domenici. So who would know what they put in there
    and how that number was arrived at?
        Senator Stevens. Senator, we are going to have the Deputy
    Secretary testify on April 4, who will be able to answer that
    question. I do not think these gentlemen have access to it, and
    I have not seen it, either.
        Senator Domenici. I was just going to tell you, Mr.
    Chairman, if the same mistakes are made in that year's estimate
    in terms of inflation, if they are made in the 10-year plan,
    then my number is we are $18 billion short over a decade in
    terms of providing the service at today's level, which is a
    very big amount.
        If in fact it is not in there, we will make room for it in
    the budget resolution, because we cannot do otherwise.
        General Carlton. Yes, sir. The problem is that does not
    include recapitalizing our system in the new world that we are
    in with the National Defense Authorization.

                               MENTAL HEALTH CARE

        Senator Domenici. Let me include a couple of questions with
    reference to the kind of service you have. You know, in the
    United States the mentally ill population is a growing
    population. Those who are between 17 and 19, 21, 23, get a
    number of the serious mental illnesses, schizophrenia, manic
    depression, severe depression. It pops up very frequently in
    the age 17 through 23, 24. I assume you all know that, which
    causes me to think that you must have some mental health care
    that is specific to those with severe mental illnesses within
    the military system. Would that be a fair assumption?
        General Peake. Sir, it is a fair assumption. It is an issue
    that, with that population, if you look at our expenditures,
    about half in some of our regions of mental health dollars that
    we purchase are for adolescent health care for dependents for
    mental health specifically.
        Within the military, in dealing with soldiers we are all
    attentive to the notion of combat stress and bringing out those
    kinds of things. So we have units that involve themselves with
    really down at the grassroots level. They are active actually
    in Kuwait today. They spread out and they give command
    consultation and so forth to try to focus on this kind of
    issue.
        Senator Domenici. I will be more precise. Do you have
    within the direct care system all through your services, do you
    have any programs or activities that are directed at the
    mentally ill within the medical definition today of ``mentally
    ill''? I am not talking about needing counseling. I am talking
    about very sick people, schizophrenia, manic depression,
    depression.
        There has got to be some with this that are entitled to
    care in your direct system. I am not talking about the outside
    system. If that is, do you have special programs with reference
    to it and how can we find out what those programs are about and
    what they do? Would you answer that, please, all three of you?
        Admiral Nelson. I think all of us have mental health
    programs and they are of varying strengths depending on
    location and requirement. At National Naval Medical Center in
    Bethesda, I know there is an adolescent medicine or a pediatric
    and adolescent medical health unit particularly for young
    people.
        In our training center in Great Lakes we have seen an
    increasing number of serious mental illnesses in people who
    have volunteered as recruits, and we have to dismiss them from
    further service. But it is, I think, indicative of the
    population we are drawing from.
        Senator Domenici. Well, maybe I will not ask each of you to
    answer that. Maybe I will not take as much time. The reason I
    am asking this is it seems to me we are entering an era with
    reference to the treatment of the severely mentally ill that,
    if you had a group that you had to treat within the military,
    it would seem to me that that would be a very, very excellent
    and exciting research--has research potential for the seriously
    mentally ill, because if you have a population that you are
    treating there is much that you can learn from it in terms of
    the efficacy of drugs and the like, and there are very many
    modern pharmaceuticals that help this population.
        I assume it does not come to any of your minds that we have
    such a program going that could be identified?
        General Peake. Sir, if I could comment. We have psychiatric
    training programs, but those are few. We do not have a lot
    within the Army system. As I say, most of our dependent care
    with serious illness like that would go out in the adolescent
    community.
        Senator Domenici. Let me close by saying that all the
    problems that the health delivery system has in the United
    States--and believe you me, they are numerous. We really do not
    know where we are going in terms of how much America is going
    to spend on health care. But obviously, unless there are some
    big breakthroughs we are going to spend a lot more every year,
    and it is ever changing.
        I compliment you for keeping the system together.
    Obviously, the TRICARE is going to be an enormous challenge. It
    is one of the largest systems we have in the country, and you
    all will be managing it by contractors and utilizing that. I
    hope it works. I hope it does not cost a leg and an arm. But if
    it does, I guess we are going to have to pay for it. We already
    agreed to.

                            RETENTION OF SPECIALISTS

        Secondly, I would like to ask in closing if you would
    answer a question. It seems to me the specialties within the
    medical doctors at your facilities, those who are very good in
    one field and they are specialized, like surgeons, it would
    seem to me the turnover must be extremely high there. There is
    very good opportunities for those kind of specialists to get
    big jobs.
        Is the turnover in that area higher than it is for those
    that do not have specialty qualifications? Any of you, do you
    know?
        General Carlton. Yes, sir, it is. We do not retain very
    many of those people.
        Admiral Nelson. Part of the study that I will provide
    addresses that for the Navy in quite significant detail. The
    surgical specialties are the ones that we have the most
    difficult time in retaining right now, along with radiology. We
    retained no radiologist who was eligible to leave at the end of
    his initial service last year.
        Senator Domenici. General?
        General Peake. Senator, we have anesthesia, radiology. It
    periodically waxes and wanes about which tends to leave the
    most. But what it talks to is the importance of our graduate
    medical education programs, because that retains, A, the
    quality of teacher and people that want to be a part of a
    system where what they are focusing on is the patient. So that
    is why we have the kind of people that you need out at the
    military treatment facilities within the D.C. area, as an
    example.

                          TRANSFER OF UNUSED EQUIPMENT

        Senator Domenici. General Carlton, I will close on a
    personal note. This committee helped me put in language in the
    VA-HUD bill last year for the transfer of some unused equipment
    that is sitting in a hospital in Cannon Air Force Base which is
    unused. We provided that you could transfer it to a new
    community hospital that is being built.
        I am going to leave you this note because after the statute
    was passed month after month and nothing happened. It appears
    from the top level the signal is not being given that you are
    going to comply with this statute that permits the transfer of
    unneeded equipment at Cannon Air Force Base to a new community
    hospital that could use it. Would you look into that for me,
    please?
        General Carlton. Yes, sir, I certainly will.
        Senator Domenici. Thank you.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you.
        Gentlemen, if I am informed correctly, you report
    individually to your service chiefs, but you get your funding
    through the Office of the Secretary of Defense, Health Affairs,
    and the TRICARE management activity. Is that correct?
        Admiral Nelson. Yes, sir.
        General Carlton. Yes, sir.

                             JOINT MEDICAL COMMAND

        Senator Stevens. We are in a period of jointness now. Many
    people are lecturing us about jointness. What would you say as
    the surgeon generals of the respective services about a joint
    medical command? Would that help you in dealing with your
    problems?
        General Carlton. Sir, that is a structural fix to a poor
    modeling problem. Our service-specific activities are a very
    different culture in the Navy, Air Force, and Marine Corps. The
    danger of putting those two areas, the benefit mission and the
    readiness mission, closer together, which a joint command might
    do, would be that we would lose our readiness perspective.
        I do not see that rearranging boxes would help us to solve
    the financial issue.
        Senator Stevens. What would be your suggestion for solving
    the financial problem? It seems to me we are facing a problem
    at the Department level, when it has to sort of fudge a little
    bit on budgets, reduces your budget, and the people who
    negotiate your TRICARE contracts negotiate them for you and
    suddenly we find, as I said, a $14 billion gap in TRICARE now,
    right now, between 2002 and 2007.
        Now, you are telling us, and I believe you are right, that
    you need a supplemental again this year. That is because
    someone else up at the top level cut each one of your requests.
    Why would not a joint command that would be able to deal at the
    Secretary level, instead of you going to the secretaries and
    service chiefs, and they go to the under secretary or assistant
    secretary of defense, and then it goes up the line, and each
    guy up the line has got a lot of pressures on him, and they are
    cutting you back as they face modernization requests throughout
    the Department.
        I want to get out of this perennial circle of a
    supplemental for defense health financing every year. You are
    then in competition with the emergencies that have taken place
    in the country, and you do not have an emergency; you just have
    an underfunding situation. Supplementals ought to be dealing
    with emergencies and not with routine costs that are
    predictable and request in the very beginning.
        You should be asking now for the moneys for 2003, right?
        General Carlton. Yes, sir.
        Admiral Nelson. Yes, sir.
        General Peake. Right.
        Senator Stevens. You would need a crystal ball to do that.
        Admiral Nelson. Mr. Chairman, I have a little different
    view than General Carlton. I think there could very well be
    some value to a joint command. However, I think it must
    preserve the readiness side of what we do, the responsibilities
    and service culture issues that affect how we prepare for our
    readiness role and how we perform it.
        I think, properly done, it could do both.
        Senator Stevens. It should be no surprise to you that when
    we asked the people who are really involved with the readiness
    for military combat they had the same response. They do not
    like joint commands. Our problem is how are we going to deal
    with funding?
        What are your shortfalls this year? Have you got a
    projection for us on how much you are going to be short this
    year?

                               GLOBAL SETTLEMENT

        Admiral Nelson. There is a lot of if's in it, in a way. We
    started out the year feeling that we were adequate; it was not
    great, but adequate. We have had a 1 percent withhold, so that
    cost me $17 million. We did not receive, in my case, $21
    million of advances in medical practices, which was part of
    $100 million taken out. I think it was first started in 1999.
    It was taken out of the existing budget, but it was identified
    as a part that would be shared to us as we saw what the coming
    advances that had to be financed in military medicine were. At
    the current time I think that has been placed against the
    global settlement.
        The rescission, which we all understand----
        Senator Stevens. Pardon me. Did anyone request the money to
    fund that global settlement?
        Admiral Nelson. I am sorry, sir?
        Senator Stevens. Have you requested the money to fund the
    global settlement?
        Admiral Nelson. I cannot comment on whether Health Affairs
    has done that. I think part of what they are requesting in the
    $1.4 billion includes some funds for that. But that would be
    coming out of Health Affairs and Tricare Management Activity
    (TMA).
        But the recission was held entirely against the direct care
    system as well. So instead of what would have been a $3.5
    million charge to me, it is $7 million, over $7 million.
        Then with the talk of the $161 million potentially coming
    out of us, that is another $45 million against my budget. If
    all those things happen, I am approaching $140 million short.
        Senator Stevens. How about you, General?
        General Peake. Sir, I am in a very similar boat. The
    supplement last year gave for us, as an example, about $49
    million that was going to be for TRICARE Senior Prime bills and
    revised financing bills in 2001 money. That money, as an
    example, has been used for the global settlement. We had about
    $18 million in the advanced medical practice, which in fact
    pays for pharmaceuticals and appropriately pays for
    pharmaceuticals so that we can stay up with the standards of
    practice out there in the civilian world.
        You start adding those pieces together, which may come. If
    all of that is in fact included in the $1.4 billion that Health
    Affairs is talking about, I could still lay out an additional
    about $153 million of shortfall kinds of issues for this year,
    things that allow us to--we invested some money in Walter Reed
    last year, as an example, in the North Atlantic region, and it
    takes a little while, but we are seeing about a 10 percent
    increase in their productivity.
        Part of our issue is you cannot fund our venture capital or
    our initiatives in 1 year and then recoup the savings in that 1
    year. So there is opportunities for investment in our system
    that will pay off in the longer run, even with the managed care
    support contracts. Things like investing in obstetrical
    recapture at a place like Fort Hood, you can bring back, make
    $332,000 as an example, but it will not come back until another
    option period when they renegotiate or do the bid price
    adjustment on the contract.
        There is a number of examples like that, that you can pay
    for now, ultimately it is the right business decision, but
    without cash flow you cannot do that. So it is those kind of
    things that really do not show up sometimes, I think, in these
    budget submissions that you are talking about.
        Senator Stevens. General Carlton?
        General Carlton. Yes, sir. The $1.4 billion has been
    discussed. The Air Force number today is $158 million. That is
    broken down into $90 million for the direct care system, $68
    million for the contractor. But it does not include the global
    settlement nor the new National Defense Authorization Act
    (NDAA) authorizations nor recapitalization of our direct care
    system, all of which, with the world changed as a result of
    that wonderful legislation, we must work out and must solve.
        Admiral Nelson. May I correct my number? I said $140
    million and actually to fully fund us would be $151 million.
        Senator Stevens. Well, we will do our best, gentlemen. I
    think we will be getting a supplemental some time the end of
    May. We will see what happens.
        But I do appreciate your being here, and we are going to
    ask some of the questions of the panel that is coming in April
    of the type that Senator Domenici wanted to have a response to.
    I hope we can take this out of the cycle. I would hope we get
    to the day where we will not face supplementals except in
    emergencies. Then we will have greater stability,
    predictability, and I think the cost of the service that you
    provide would be less in the long run than this start and stop
    kind of funding.
        We appreciate your help. Admiral, God be with you, my
    friend, and we look forward to seeing you down the line. I am
    sure I will bump into you along the line. We thank you again
    for your service to your country.
        Admiral Nelson. Thank you very much, Senator.

    STATEMENTS OF:
            REAR ADMIRAL KATHLEEN L. MARTIN, DIRECTOR, NAVY NURSE CORPS,
                U.S. NAVY
            BRIGADIER GENERAL WILLIAM T. BESTER, CHIEF, ARMY NURSE CORPS,
                U.S. ARMY
            BRIGADIER GENERAL BARBARA C. BRANNON, DIRECTOR OF NURSING
                SERVICES, OFFICE OF THE SURGEON GENERAL, U.S. AIR FORCE

        Senator Stevens. We will now turn to the panel for the
    nurses. We will take sort of a 5-minute break.
        Gentlemen, if anyone comments to you about your responses
    to my questions, you tell them to come and see me, will you?
        This is a transition now to the chiefs of the nursing
    corps. Military nurses of all services are absolutely essential
    to providing care to the men and women in uniform so richly
    deserve. We thank you for all you do to make that happen.
        We welcome back Admiral Kathleen Martin, General Barbara
    Brannon, and General William Bester. General, I think it is
    your first appearance here, is that correct?
        General Bester. Yes, sir.
        Senator Stevens. We congratulate you on your promotion and
    your new assignment.
        Before we hear from you, let me turn to my friend Senator
    Inouye, who is sort of the godfather of the oversight of the
    nursing corps. It is better than being the grandfather.
        Senator Inouye. Before I begin, I would like to have my
    prepared statement relating to the Nurse Corps placed in the
    record.
        Senator Stevens. Without objection.
        [The statement follows:]

                 PREPARED STATEMENT OF SENATOR DANIEL K. INOUYE

        Good morning. I join the Chairman in welcoming Brigadier
    General Bester, Brigadier General Brannon, and Rear Admiral
    Martin to discuss Military Nursing Programs. It has been my
    pleasure to work with military nurses for many years, and I am
    proud to witness their numerous accomplishments.
        We have an outstanding group of leaders testifying before
    the Committee today.
        Rear Admiral Martin is appearing before this committee for
    the last time as the Director, Navy Nurse Corps. I would like
    to thank Rear Admiral Martin and commend her for her dedication
    to the Navy, the nation, and her assistance to this committee.
        Not only has she served as Deputy of the Navy Nurse Corps,
    she has concurrently served with distinction as commander of
    one of the premier Navy medical centers.
        I would like to welcome Brigadier General Bester for his
    first appearance before this committee. I hope you will find
    this hearing a worthwhile experience and it will be the first
    of many productive discussions.
        Finally, I would like to congratulate the Army Nurse Corps
    on its 100 year anniversary and thank them for the quality care
    its members have provided America's Service Men and Women over
    the past century.
        Military Nursing is a profession that is at the forefront
    of our medical mission. Military nurses continue to provide
    outstanding care to their patients in all types of clinical
    settings, and have excelled in vital leadership roles.
        The fact that three military medical centers are currently
    commanded successfully by Nurse Corps Generals or Admirals is
    testament to their ability, accomplishments, and competency as
    military officers.
        The success of these nurses also illustrates the need for
    all military nurses to enter active duty with a minimum of a
    Bachelor of Science degree in Nursing.
        Now it appears we will have a larger mission for the
    Military Health System due to the recently authorized expansion
    of TRICARE. This, in light of the current and future nursing
    shortage, will present difficult challenges to military
    nursing.
        The challenge will be to: ensure readiness; retain officer,
    enlisted and civilian nursing staff; continue to educate
    advanced practice nurses; maximize usage of nurse
    practitioners, nurse midwives, and nurse anesthetists; maintain
    a strong research foundation to answer questions to which
    nurses need answers; develop new paradigms to successfully meet
    health care delivery problems; and last, but not least,
    continue to excel in providing outstanding care anytime,
    anywhere.
        In order to meet these challenges the Nurse Corps must plan
    and implement policies that develop innovative ways to reduce
    health care costs while at the same time advocating for high
    quality health care.
        I appreciate your attendance this morning and look forward
    to hearing about retention, readiness, practice issues,
    TRICARE, and research initiatives in the Nurse Corps.

        Senator Inouye. Like many of my fellow Americans, I have
    been the beneficiary of nursing services for many, many years.
    I am pleased, Mr. Chairman, that together we inaugurated the
    nursing intern program as a program of this subcommittee. At
    this time I would like to note one of the graduates of that
    intern program. She will be succeeding Admiral Martin.
        Admiral Lescavage, are you here? Congratulations.
        Admiral Lescavage. Thank you.
        Senator Inouye. I wish to join the chairman in welcoming
    all of you here and tell you that it has been my pleasure to
    work with military nurses for many, many years. I have admired
    so many of your accomplishments.
        Today is very likely the last time, Admiral Martin will be
    appearing before this subcommittee and I join the chairman in
    thanking her for her many years of service to our Nation. We
    appreciate that very much.
        General Bester, this is your first hearing.
    Congratulations. I am glad the Army decided that the time had
    come for a man to be selected as chief of the Army Nurse Corp.
    This is one way nursing can get better recognition. This world
    of ours has not quite come to that level of enlightenment yet
    where it considers women to be the equal of men, and as a
    result nursing throughout the years has had to take a back seat
    in the health care professions.
        I recall not too long ago when all of the TV weekly shows
    on hospitals and hospital care, portrayed nurses as always
    trailing behind doctors and they were the ones who were always
    faulted for mistakes that were made. Since that time I'm glad
    to say there has been an improvement in the perception of
    nursing.
        I would also like to welcome General Brannon. We are glad
    to have you here.
        We have heard the surgeon generals testify. Admiral Martin
    I would like to know what impact TRICARE will have on nursing
    services.
        Admiral Martin. Sir, one good thing about TRICARE and
    TRICARE for Life is that it gives us many patients in which to
    enhance our competencies and retain our readiness. However,
    with TRICARE we see many conflicts with our dollars and with
    our funding, and our facilities are not configured to really
    meet the changing health care needs and health care
    environment.
        Our nurses many times look on the outside for other
    opportunities and perhaps even better pay. So TRICARE really
    has had a positive effect on our nursing community, as well as
    a negative effect on our nursing community.

                                NURSING SHORTAGE

        Senator Inouye. Admiral Martin do you think you will be
    able to recruit enough nurses to meet the growing number of
    applicants for TRICARE for Life? For example, will there be
    enough nurses who are trained to take care of the elderly?
        Admiral Martin. In the Navy we are having success with our
    pipeline programs, and those are our scholarship programs and
    our Reserve Officer Training Corps (ROTC) programs and our
    direct commissioning programs, our medical enlisted
    commissioning programs. However, when we try to recruit fully
    qualified nurses we are having difficulties. We are having
    difficulty recruiting civilian nurses for our civil service
    system. They see civilian pay, they see many of the bonuses the
    civilian hospitals are offering, and because of what I consider
    an antiquated personnel system it takes a lot longer to hire a
    civilian into our civil service program than it does for our
    civilian counterparts to hire.
        Senator Inouye. Do you have any recommendations on how we
    can reform that system? I notice that the length of time it
    takes for processing applications is about three times as long
    in the civilian sector.
        Admiral Martin. Yes, sir.
        Senator Inouye. What can we do to make hiring civilians
    easier?
        General Bester. Senator, we are working very hard with the
    civilian personnel, with our civilian personnel counterparts,
    to try to get that system streamlined. It is a large impediment
    to the way that we do business, and with the additional TRICARE
    benefit coming on line, which we are all very much in favor of,
    that was passed in the National Defense Authorization Act,
    along with that comes no increase in authorizations in military
    nurses, of course. So where we have to get those nurses is from
    the civilian sector.
        The processing times are just not conducive to allowing us
    to do that, and we are working hard with our civilian personnel
    counterparts to streamline that system. I think we have got
    interested applicants out there, but they have to wait too long
    to get hired.
        Senator Inouye. I would like to hear the nursing chiefs
    opening statements.
        Senator Stevens. Well, that is perfectly all right. I am
    sure they do not have any objections.
        Go ahead. Would you like to proceed with your questions--
    with your statement, Admiral, your statement, and then going
    Brannon and then General Bester?
        Senator Inouye. May I?
        Senator Stevens. Yes.
        Senator Inouye. Admiral Martin, we will have your testimony
    now.
        Admiral Martin. Thank you.
        Good morning, Mr. Chairman, Senator Inouye. It is my
    pleasure to testify today as the Director of the Navy Nurse
    Corps and the Commander of the National Naval Medical Center
    Bethesda. Today's testimony does mark a milestone event. For
    the first time, this committee will gain our perspectives as
    Nurse Corps Directors as well as military treatment facility
    commanders.
        First, I would like to address the military health care
    system's newest program, TRICARE for Life. As you have heard,
    this program poses special challenges for all of the services.
    The TRICARE for Life initiative provides us the opportunity to
    meet the health care needs of our beneficiaries in a way that
    we have not been able to in the past. Enrollment in TRICARE
    Prime will provide our over 65 population with access to
    comprehensive care at a time when it is most needed. For
    military medicine, TRICARE for Life will contribute to a robust
    training environment and provide the clinical competencies
    necessary to keep our personnel ready to meet operational
    missions.
        However, TRICARE for Life presents significant hurdles. The
    resource shortages that we face at the facility level have
    serious implications on our ability for us to meet our mission.
    Presently, as you heard, we are struggling to provide a limited
    benefit to our over 65 beneficiaries. Without further
    resources, we will be unable to increase services to deliver
    the proposed comprehensive benefits.
        One of the key principal resource issues is, as you
    mentioned, staffing shortfalls. Key to the success of TRICARE
    for Life is ensuring sufficient numbers of providers and
    support staff to enhance productivity and access to care. We
    continue to be successful in making effective use of our
    military personnel. However, a revamping of the civilian hiring
    process and improved funding for the entire health care
    delivery system is what we need to support that expanded
    benefit.
        When we are talking about compensation, it is not just
    limited to nurses or physicians. It is really including all of
    our health care disciplines. I would say our technicians and
    other ancillary personnel are included in this shortfall.
    Military personnel work side by side with contract staff who
    command salaries far exceeding some of their military
    counterparts. This creates additional dissatisfaction for our
    military members.
        Compensation is a very powerful driver in the decision to
    remain on active duty or to leave the service. Additionally,
    there is little elasticity left, as the health care dollar is
    stretched to cover advances in technology, escalating pharmacy
    costs, continuous training requirements, and numerous overhead
    expenses. There is a constant tradeoff of tight resources for
    upkeep and renovation of old infrastructure.
        I know you have been in our health care facilities and you
    have seen our aging buildings and their outdated
    configurations, which prevent us from keeping pace with the
    changing health care environment. Facilities are rapidly
    deteriorating due to scarce resources. These issues confront us
    daily as military treatment facility commanders.
        As Nurse Corps Directors, a significant resources issue is
    the growing nursing shortage. We must employ effective
    recruiting and retention tools to maintain a healthy force
    structure in both our active and reserve components. An
    important retention strategy is advanced education, preparing
    our nurses to effectively lead diverse technical and
    professional personnel in the delivery of quality care.
        The Federal Nursing Service Chiefs from the Army, the Navy,
    the Air Force, and the Veterans Administration partner with the
    Graduate School of Nursing at the Uniformed Services University
    to create advanced practice nursing education with a focus on
    military readiness. The nurse anesthesia and family nurse
    practitioner programs are becoming stronger as we support them
    with exceptionally talented instructors and expand the number
    of clinical training sites in our military facilities.
        In closing, TRICARE for Life is welcome news to our
    beneficiaries. As we collaborate with our fellow service
    colleagues to achieve high quality, cost effective care, our
    patients remain our highest priority. I am confident military
    nursing has the leadership skills and the professional
    expertise to lead health care into the future.
        I sincerely thank you for your support and for the
    opportunity to address you today. It has been an honor to serve
    as the Director of the Navy Nurse Corps and I assure you that
    my successor, Rear Admiral-select Nancy Lescavage, is the
    perfect choice to assume this leadership position in Navy
    medicine. I look forward, though, to our continued association
    in my position as the Commander of the Flagship of Navy
    Medicine.

                               PREPARED STATEMENT

        Senator Stevens. The commander of what?
        Admiral Martin. Commander of the flagship of Navy Medicine,
    the National Naval Medical Center.
        [The statement follows:]

             PREPARED STATEMENT OF REAR ADMIRAL KATHLEEN L. MARTIN

        Good morning, Mr. Chairman and distinguished members of the
    Committee. I am Rear Admiral Kathleen Martin, Director of the Navy
    Nurse Corps and Commander of the National Naval Medical Center. It is
    my pleasure to be here.
        Today I would like to address two major programs: TRICARE for Life
    and Military Health System Optimization, an effort to make the most
    effective use of our resources. These two programs pose special
    challenges for the Military Healthcare System of today and tomorrow.
        The TRICARE for Life initiative provides us the opportunity to meet
    the healthcare needs of our beneficiaries in a way we have not been
    able to in the past. The opportunity of the over 65 population to
    enroll in TRICARE Prime will provide them with access to comprehensive
    care at a time when their healthcare needs are becoming more complex.
    For military medicine, TRICARE for Life will contribute to a robust
    training environment and provide the clinical competencies necessary to
    keep our personnel prepared to meet operational missions.
        Both TRICARE for Life and Optimization pose significant hurdles.
    The resource challenges we face at the facility level have serious
    implications for our ability to meet our missions. Without further
    resources, we will be unable to increase services to deliver the
    promised comprehensive benefit.
        One of the principal resource issues is staffing shortfalls. A key
    to optimizing health care is ensuring sufficient numbers of providers
    and support staff to enhance productivity and access to care. We
    continue to be successful in making effective use of our military
    personnel; however, there is a need to increase the numbers of civilian
    support staff in order to make Optimization work. For that, there must
    be improved funding for the entire system and a revamping of the
    civilian hiring process. The current civilian personnel system impedes
    our efforts to bring new staff on board in a timely manner, resulting
    in loss of potential new hires to civilian employers. The antiquated
    classification system prevents us from competing with civilian
    employers in salary and professional status.
        Compensation is an issue for military staff as well. I clearly see
    this as an MTF commander. Military personnel work side by side with
    contract staff who command salaries far exceeding those of their
    military counterparts. This creates additional dissatisfaction for our
    military members. Compensation is a powerful driver in the decision to
    remain on active duty or to leave the service.
        Additionally, there is little elasticity left as the health care
    dollar is stretched to cover advances in technology, state-of-the-art
    equipment, spiraling pharmacy costs, continuous training requirements,
    and a myriad of other overhead expenses. Finally, there is a constant
    trade-off of tight resources for upkeep and renovation of old
    infrastructure. World War II era building configurations prevent us
    from keeping pace with the changing healthcare environment, and
    facilities are rapidly deteriorating due to scarce resources.
        These issues confront me daily as the commander of a military
    medical center. In my role as Director of the Navy Nurse Corps, I see
    the impact system-wide. Utilization of existing resources, advancing
    technology and an aging population are fueling the demand for multi-
    skilled, well-educated nurses to meet patient care needs in an
    increasingly intricate healthcare system. Navy Nurse Corps officers
    fulfill this need through their broad scope of professional practice.
    Basic preparation at the baccalaureate level provides leadership
    skills, critical thinking ability, and case management in addition to
    strong clinical skills. This enables them to serve in critical
    positions as clinical support staff for comprehensive care delivery as
    well as direct care providers.
        However, we are competing with the private sector for baccalaureate
    prepared nurses. In light of the growing nursing shortage, we must
    employ effective recruiting and retention tools to maintain a healthy
    force structure in both the active and reserve components. The Nurse
    Corps has implemented initiatives that assist existing recruiting and
    retention processes. In partnership with Navy Recruiting Command, we
    created a multi-step recruiting plan that seeks the best-qualified
    candidates for the Nurse Corps. The current nurse accession bonus is a
    key component of our recruiting strategy. Our recruiting success
    depends heavily on your continuation of the accession bonus and
    educational stipend programs.
        Given today's competitive health care environment, that may not be
    enough to maintain the force structure. Currently, only nurse
    practitioners, midwives and nurse anesthetists receive any type of
    special pay. That program has been a successful retention tool thus
    far, but the civilian-military pay gap is rapidly widening. Further
    retention bonuses may be needed to retain all types of nurses as
    competition increases for the dwindling supply.
        An important retention tool is advanced education for Nurse Corps
    officers, which prepares nurses to effectively lead both military and
    civilian personnel of different technical and professional levels in
    the delivery of quality care, in any setting. Of note, over 23 percent
    of our Nurse Corps is master's prepared. The Federal Nursing Service
    Chiefs partner with the Graduate School of Nursing at the Uniformed
    Services University of Health Sciences to create a pipeline for
    advanced practice nurses. The nurse anesthesia and family nurse
    practitioner programs are becoming stronger as we support them with
    exceptionally talented instructors and expand the number of clinical
    training sites in military facilities. Innovative distance learning
    programs offer military and Veterans Administration nurses the
    opportunity to complete nurse practitioner certificate programs within
    their hospitals. Uniformed Services University provides superb
    educational opportunities for military nurses, and we look forward to
    future collaboration on creative educational initiatives.
        In closing, the recent advent of TRICARE for Life and Optimization
    are welcome news to our beneficiaries, and arguably the most
    significant changes to our healthcare system since the creation of the
    Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)
    program in 1966. Navy nurses, in concert with the whole Navy Medicine
    team, look forward to using their considerable talents for the
    successful implementation of these new initiatives. But these talented
    people are not enough to achieve the task before us. I sincerely hope
    that our entire military healthcare system will be correctly supported
    so that we may meet our operational and peacetime missions.
        As we collaborate with our colleagues in all the services to
    achieve high quality, cost effective care, our beneficiaries are our
    highest priority. I sincerely thank-you for your support and for the
    opportunity to address you today, I look forward to our continued
    association during my tenure as Director of the Navy Nurse Corps and
    Commander of the Flagship of Navy Medicine.

        Senator Inouye. Thank you very much.
        General Brannon.
        General Brannon. Yes, Mr. Chairman, Senator Inouye. It is
    certainly a privilege and a pleasure to be invited back to
    testify again this year as the Air Force Assistant Surgeon
    General for Nursing Services, and this year I am also the very
    proud commander of the 89th Medical Group at Andrews Air Force
    Base, and certainly honored to be the first Air Force Nurse
    Corps officer to command a medical center.

                                   RECRUITING

        Now, I am going to speak on behalf of all the corps chiefs
    when I talk about recruiting, which we had identified last year
    as a significant challenge. This year that challenge has
    continued to grow for all of us. Nursing is a very rewarding
    profession, but with the many career options people have today
    it is not very popular with our young adults. So while the
    demand for nurses in America continues to grow, the supply is
    dwindling. It is projected that registered nurse positions will
    increase 23 percent over the next 5 years and yet baccalaureate
    nursing programs have had declining enrollments for 6
    consecutive years.
        Our nurse work force is also aging. The average age of a
    registered nurse in the United States is 45.2 years. We also
    see that 50 percent of our current nursing work force will be
    retirement eligible--that is age 65--in 2015. These trends have
    had a dramatic impact on the Army Nurse Corps. Reserve Officer
    Training Corps is their primary accession source, and as the
    school enrollments have decreased so have the scholarship
    requests, and they are down about 50 percent.

                                NURSING SHORTAGE

        The Army Recruiting Command has been able to make up a
    significant part of this shortfall. However, direct accessions
    of nurses over age 40 has become increasingly common in the
    Army. What this creates is an older, limited term, non-career
    work force for them.
        The Navy Nurse Corps has been fortunate to meet their
    recruiting goals for the past 10 years and pipeline programs
    that they first established in the early eighties have been the
    key to their success. While their recruiting goal is 290 nurses
    this year, they are only looking for 100 through direct
    accessions. The remainder will come from ROTC, medical enlisted
    commissioning, and nurse candidate programs.
        The Air Force Nurse Corps is experiencing our third
    consecutive year of potential recruiting shortfall. Now, our
    needs are somewhat different from the Navy and the Army. Our
    initial accession goal is higher and we also have a much
    greater need for nurses who already have some experience. That
    is because outpatient clinics comprise about 65 percent of our
    current Air Force military treatment facilities, and most of
    them do not afford that hands-on skill that those brand new
    novice nurses need.
        Last year, in order to work on this problem we increased
    the training capacity in all of our bedded facilities and we
    also broadened the definition of the fully qualified nurses we
    needed to access. We now include those who have a year of
    outpatient nursing experience in addition to inpatient
    experience. We have commissioned more enlisted members who have
    earned their baccalaureate degrees in nursing and we also
    doubled our number of ROTC scholarships.

                             MILITARY BONUS SYSTEM

        While each of these strategies has had some impact, I fear
    we will still fall far short of our goal this year. We all
    agree that the nurse accession bonus is critical for recruiting
    in today's environment. But the civilian world has upped the
    ante. To attract new nurses, health care organizations in many
    parts of our country are offering larger bonuses, more robust
    benefit packages, and also nursing scholarships in some cases.
    We will continue to work with our sister services to evaluate
    the effectiveness of our current military bonus system.
        We have a lot of challenges--nurse recruiting, nurse
    retention, implementing TRICARE for Life. But military nursing
    is still a great way of life. We are on the leading edge of
    health care and we are making population health a reality for
    all of our patients. Our nurse-managed clinics and our
    telephone nursing initiatives provide great support to our
    families.
        Last year we recognized the need to standardize telephone
    nursing practice and we have really improved this service by
    deploying new policies and new training programs. We also have
    a nurse triage demonstration project under way that was funded
    by the Tri-Service Nursing Research Program. The objective is
    to develop more effective and efficient procedures.
        Last year I described the Air Force's commitment to
    optimize the vast potential of our enlisted members. Since then
    we have made our technicians pivotal members in our primary
    care teams. They enhance the quality of each patient visit by
    performing initial screening, identifying preventive health
    needs, and also providing patient counseling and education. We
    have also made amazing progress in our initiative to increase
    the number of licensed practical nurses in our enlisted force,
    and we have gone from concept to students in the classroom in
    less than a year. Our first class of 23 students will graduate
    from an accelerated civilian program in June.

                                   READINESS

        Now, although many of our efforts have concentrated on
    peacetime health care, readiness remains job one. Our Air Force
    nursing motto is ``Global Nursing, Precision Care,'' and it
    reflects our commitment to our patients and to our Nation.
    Military nursing stands ready to respond any time, anywhere, in
    peace or in war.
        I think a great example of this was our joint participation
    in MedFlag 2000. That was a State Department-sponsored
    humanitarian effort in Cameroon, West Africa. I was able to
    visit one of those villages during the deployment. I got to see
    our medics in action as they immunized over 19,000 African
    children to protect them from meningitis. I truly will never
    forget the looks on the faces of those African mothers, because
    they stood in line for many hours, but they recognized that our
    care could make a difference between life and death for their
    children.

                                NURSING TRAINING

        Nursing is critical to the success of our Nation's
    partnership in peace initiatives and other contingency
    operations. Research is also vital to readiness. Your enduring
    support of the Tri-Service Nursing Research Program enabled
    nurses at Wilford Hall Medical Center to validate deployment
    readiness of our Air Force nurses. They used web-based training
    programs in a simulation laboratory to assess 200 nurses, and
    their study will help us determine the training frequency
    required to maintain critical wartime skills.

                               PREPARED STATEMENT

        Mr. Chairman and distinguished members of the committee, on
    behalf of my colleagues I really thank you for allowing me to
    share some of the achievements and the challenges of military
    nursing. We are very grateful for your enduring and tremendous
    support.
        [The statement follows:]

           PREPARED STATEMENT OF BRIGADIER GENERAL BARBARA C. BRANNON

        Mr. Chairman and distinguished members of the committee, I am
    Brigadier General Barbara Brannon, Director of Air Force Nursing
    Services and Commander of Malcolm Grow Medical Center at Andrews Air
    Force Base. It is an honor and privilege to represent today the 19,000
    dedicated members of the active and reserve components of Air Force
    Nursing Services. Thank you for this opportunity to report on our
    achievements and challenges, and for your continued advocacy and
    support of our many endeavors. My comments will focus on recruiting and
    retention, nursing leadership and optimization, readiness, and
    research.

    Recruiting
        The national nursing shortage is having a devastating effect on
    staffing throughout the healthcare industry, and the Air Force Medical
    Service is no exception. For the third consecutive year, we are
    experiencing shortfalls in accessions. We were 85 nurses, or 30
    percent, short of our nurse recruiting goal in fiscal year 1999. In
    spite of revising the goal last year from 300 to a ``remotely
    achievable'' 225, only 205 new nurses joined the Air Force in fiscal
    year 2000 by direct commissioning. Unfortunately, current reports
    project an even more serious shortfall of nurses this year.
        This is despite several initiatives implemented during the past
    year to enhance recruitment. We changed the operational definition of a
    ``fully qualified nurse'' to include those with one year of outpatient
    nursing, as opposed to only accepting those with inpatient acute care
    experience. The Air Education and Training Command redesigned the Nurse
    Transition Program and we increased training capacity at our larger
    inpatient facilities that enabled us to recruit nurses with no
    experience for the first time in over three years. We also commissioned
    twice the number (from 12 to 23) of enlisted members who had earned
    their baccalaureate degree in nursing by removing the cap on that
    accession source. The number of ROTC scholarships doubled to 50 from
    the original goal of 25 set three years ago. Anticipating a severe
    shortage of Certified Registered Nurse Anesthetists, we instituted, for
    the first time ever, a loan repayment program that grants reimbursement
    of education costs up to $24,000. Innovative incentives like this are
    essential as we struggle to meet our recruiting goals in critical
    nursing specialties.
        Other incentives designed to enhance our officer recruiting efforts
    have been discussed, but could not be supported last year by our sister
    services due to differences in our personnel management systems and our
    recruiting goals. One proposal was to change Department of Defense
    policy to reduce the minimum term of service from three years to two
    years. We believe this proposal would attract nurses not interested in
    a longer active duty commitment.
        We would also like to evaluate the nurse accession bonus. It is our
    belief that the five thousand dollar accession bonus no longer competes
    favorably with the employment bonuses offered in the civilian market
    place. Newspaper advertisements and our recruiters tell us that some
    civilian hospitals offer as much as $10,000 in sign-on bonuses. We will
    continue to work with our sister services to find mutually acceptable
    legislative answers to the bonus question.

    Retention
        Our current end strength reflects our accession shortfalls, the
    final year of the Air Force Nurse Corps voluntary draw down program,
    and an unexpected increase in the separation of nurses after their
    initial active duty commitment. At the end of fiscal year 2000, there
    were 4,048 nurses on active duty, 165 nurses below our authorized
    endstrength. This is the first time in over a decade that we have been
    below endstrength.
        I have directed that every nurse who voluntarily separates from the
    Air Force be interviewed by the Chief Nurse, or a senior Nurse Corps
    officer. The standardization of exit interviews will help identify the
    factors that are influencing our nurses to separate early from active
    duty military service. Trend analysis of information provided by the
    survey will potentially enable us to target both the timing and type of
    incentives needed to improve retention.
        Retention of our enlisted members has also become a challenge. For
    example, the retention goal for first term medics is 55 percent. Last
    fiscal year, the medical technician retention rate was 51 percent, the
    lowest in seven years. Retention among career enlisted members, those
    with ten to fourteen years in service, was also below goal. A selective
    reenlistment bonus was instituted to improve the declining retention
    for our first termers. Little improvement has been noted, with the
    January 2001 reenlistment rate for first term medical technicians at
    only 43.9 percent.
        Quality of life issues, including child care, housing, benefits,
    and workload, is often cited as a major factor when our people make
    career decisions. Continued congressional support of legislation that
    focuses on improving military quality of life will bolster recruiting
    and retention of our officer and enlisted forces.

    Nursing Leadership Opportunities
        The Air Force has a solid progressive leadership track, and nurses
    as commanders are no longer a novelty. I am very proud to be the first
    Nurse Corps officer selected to command an Air Force medical center.
    Active duty nurses now command 22 percent of our medical groups.
    Thirty-one Nurse Corps colonels met the most recent Medical Commander
    Selection Board. Forty-two percent were identified as command
    candidates, and of those 13 nurses, 6 were selected for group command.
    Compared to the previous year, the selection rate increased 12 percent
    and the match rate decreased 8 percent.
        Active duty nurses currently command 19 percent of our squadrons.
    On the last selection board, 39 nurses were identified as squadron
    command candidates and comprised 24 percent of all AFMS candidates.
    Twenty-two nurses were selected as squadron commanders and filled 25
    percent of the requirements. Nurses command 32 percent of the Air
    Reserve medical squadrons and 13 percent of Air National Guard medical
    squadrons, representing a 3 percent increase for the Air Reserve and a
    2 percent decrease for the Guard.

    Nursing Optimization
        Air Force nurses are also on the leading edge in the implementation
    of new health delivery models. Primary Care Optimization, and its
    overarching strategy of population health management, remains the focus
    of our peacetime health care system. Although challenges are great, we
    enjoyed many successes this past year. I am as excited about the role
    of the Health Care Integrator this year, as when I spoke of it in last
    year's testimony. These nurses work at the facility level as ``air
    traffic controllers,'' ensuring our patients get the right care at the
    right time, from the right provider. Prevention and disease management
    are essential ingredients of the health care integrator function. For
    example, the Health Care Integrator at Tyndall Air Force Base in
    Florida managed the follow-up care of over 800 patients seen in local
    civilian emergency departments. By returning these patients to the
    military treatment facility, the nurse ensured continuity of care and
    reduced costs per patient by eliminating duplication in services. As
    this role continues to evolve across our health system, I am optimistic
    that there will be even greater improvement in services and higher
    cost-savings.
        Another success story revolves around telephone nursing practice,
    telehealth that is based on a philosophy committed to the goals of
    delivering quality, cost effective, and safe nursing care. Our nurses
    in our outpatient clinics reported in a recent survey that 50 to 60
    percent of their duty time was spent providing telephone support to
    patients, assisting them in meeting their health care needs. This is
    equivalent to the time our civilian counterparts report that they spend
    in the same activities. Our nurses use the telephone to triage,
    educate, and coordinate care for patients.
        Because of the amount of time spent on the telephone, there was a
    demand to standardize Air Force telephone nursing practice. We
    developed guidelines, training materials, and other support tools that
    were deployed to the field late last year. This tool kit was well
    received and stimulated improvements throughout the Air Force Medical
    Service. In addition, we are conducting a triage demonstration project
    to evaluate access to care, clinical outcomes, patient and staff
    satisfaction, and required resources. This project is funded through
    the TriService Nursing Research Program. Although the demonstration is
    just underway, there are early lessons learned to validate that support
    of nurses in the triage function was much needed. I look forward to
    reporting our results next year.
        We have also made great strides in optimizing the role of our
    enlisted members providing patient care services. As a result of
    Primary Care Optimization, our enlisted personnel have become pivotal
    members of the healthcare team. They are responsible for initial
    patient screening, identification of preventive health needs, and many
    aspects of patient counseling and education. Their work improves the
    quality of the patient visit by enhancing the efficiency of the
    physicians, nurse practitioners, and physician assistants.
        Last year I spoke of the vast untapped potential of our enlisted
    force. We have made great progress in our initiative to increase the
    number of Licensed Practical Nurses in our skill mix. We entered a
    partnership with a civilian college and our first class of 23 students
    are now attending an accelerated program to earn a practical nurse
    certificate.
        Much work was done this past year to develop an inpatient staffing
    model to correct the skill mix imbalance prevalent in our bedded
    facilities. The goal is to ensure the patient receives the right level
    of care from the appropriate nursing staff member. The model was field-
    tested last summer and the new standards were applied in the fiscal
    year 2003 manpower programming cycle.
        We are now focused on developing new staffing models for our
    specialty services. Advanced practice nurses can play a critical role
    as we expand population health and condition management programs. We
    believe that increasing the number of advanced practice nurses in
    ambulatory care settings will increase access to care, improve patient
    satisfaction, and enhance the efficiency and effectiveness of our
    health care delivery.
        Deployment of ``TRICARE for Life'' will also present another
    opportunity to capitalize on the talents of nursing personnel. We are
    delighted that we may be given the opportunity to welcome our over-age
    65 retirees and their families back to our healthcare facilities. It is
    absolutely the right thing to do, and will also allow our people to
    practice the full scope of nursing, and maintain those skills critical
    to our medical readiness.

    Readiness
        We are at the nation's call and must be prepared to respond any
    time anywhere. We capitalize on every opportunity to sustain top
    clinical skills and to gain experience in a variety of settings. Two
    hundred Air Force medics participated in MEDFLAG 2000, a United States
    European Command (USEUCM) three week medical readiness exercise in
    Cameroon, West Africa. The 86th Aerospace Expeditionary Group, from
    Ramstein Air Force Base, Germany, was the lead agency of the joint team
    that also included medical personnel from the Army and the Navy. I made
    a personal visit to one village and witnessed our medics in action as
    they conducted a massive immunization campaign protecting over 19,000
    African children from meningitis. I will always remember those parents
    who patiently waited in line for hours, knowing that our help could
    mean the difference between life and death for their children. Nursing
    is critical to the success of our nation's ``Partnership for Peace''
    missions.
        In Southeast Asia, our Independent Duty Medical Technicians (IDMT)
    supported Joint Task Force Full Accounting, a mission to search for and
    recover remains of Americans Missing In Action. Our IDMTs also deployed
    to the Federated States of Micronesia in support of civil engineering
    teams, and provided immunizations and routine medical care to the local
    population. These contingency operations help our people gain new
    skills and sustain clinical competencies essential for medical
    readiness.

    Research
        The continued support of the TriService Nursing Research Program
    enabled us to study military nursing practice models and new
    technologies in the patient care environment. Nurses at Wilford Hall
    Medical Center in San Antonio, Texas, conducted research on wartime
    nursing competencies. This initiative used a web-based computer
    assisted training program and an innovative simulation laboratory to
    verify the readiness skills of over 200 clinical nurses. A key outcome
    of this study is the validation of the training frequency required to
    sustain necessary skills.
        We also received a grant from the TriService Nursing Research
    Program that will help us deploy ``Medical Team Management'' throughout
    the Air Force Medical Service. Using the aviation crew resource
    management concept well-known to our flying community, a team at Eglin
    Air Force Base, Florida, designed a program to improve patient safety
    by enhancing communication and collaboration between nursing staff and
    other healthcare disciplines. During the past year, over 1,500 Air
    Force medics were introduced to the elements critical to building a
    successful safety culture. The initiative also produced a Hospital
    Safety Index to measure staff attitudes toward patient safety. Analysis
    of preliminary data is pending.

    Closing remarks
        Mr. Chairman and distinguished members of the Committee, it has
    been a pleasure to share the most recent chapter of our Air Force
    Nursing story with you today. Our motto, ``Global Nursing, Precision
    Care'', reflects our commitment to our nation and our patients, in
    peacetime and in war. We thank you for your tremendous support of
    military nursing.

        Senator Stevens. Thank you very much.
        General Bester.
        General Bester. Mr. Chairman, Senator Inouye, it is indeed
    a pleasure for me to be asked to come here today to testify.
        Over the last year, all three of us nursing chiefs have
    worked very closely on issues that affect all three of the
    services. Today what I would like to discuss primarily is the
    manning issue, both military and civilian. Last year, you will
    recall, all the armed services stressed the need for continued
    incentives to attract and retain military members in light of
    the present and the projected future nursing shortages. The
    need for incentives to retain military nurses remains critical.
        According to a policy statement from the Tri-Council of
    Nursing Organizations--and that is comprised of the American
    Association of the Colleges of Nursing, the American Nurses
    Association, the American Organization of Nurse Executives, and
    the National League for Nursing--today's nursing shortage is
    very real and very different from any experienced in the past.
    The new nursing shortage is evidenced by fewer nurses entering
    the work force, acute nursing shortages in certain geographic
    areas, and a shortage of nurses adequately prepared to meet
    certain areas of patient care needs in a changing health care
    environment.
        Enrollments in all basic register nurse (RN) preparation
    programs have declined each year for the last 5 consecutive
    years. According to the National League for Nursing, between
    1995 and 1999 the number of nursing programs of all types
    actually increased in the United States by 2.6 percent. Despite
    this overall growth in the number of nursing programs, the
    number of students enrolled and graduating from nursing
    programs has actually declined 13.6 percent. The clear trend is
    toward an increase in the number of programs occurring
    simultaneously with a decrease in the number of enrollments and
    graduations from these programs.
        Currently our greatest retention challenge is at the
    lieutenant and captain level, the 01 through 03 level, which
    really is the heart of the military work force for all the
    services. Each of the services has targeted this group through
    open communication and via interviews with upper level
    management to ascertain the reasons the junior officers depart
    the military. We are closely monitoring this group and working
    those retention issues that are within our power to effect
    change and resolution.
        Last month the Army Nurse Corps hosted the Charles J. Ready
    Leader Development Conference. That conference is designed to
    develop and mentor future nursing leaders from all three of our
    services. Participants address critical issues affecting their
    development as military nurses.

                               SPECIALTY NURSING

        Most appropriate to today's environment was answering the
    key question: Why are the mid-level officers leaving the
    military today? The service chiefs received a very powerful
    message from them. In addition to quality of life issues,
    participants made it clear that educational opportunities and
    pay and incentives were a top priority to them. Current
    civilian sign-on bonuses, flexible work schedules, compensation
    packages and benefits are attractive alternatives to our cost-
    cutting environment.
        The reality is that the competition with the civilian
    nursing market has increased dramatically over the last few
    years. Continued erosion in our health education and training
    budgets for our military nurses adversely impact our ability to
    provide the professional development necessary to prepare our
    officers for the rigors of senior leadership and advanced
    nursing practice.
        I am happy to report that we have been extremely successful
    over the past few years with specialty and certification pay
    for our nurse practitioners, our certified registered nurse
    anesthetists, and our certified nurse midwives. I would ask
    that we continue with additional economic incentives that are
    necessary to encourage military nurses to enter low-density
    specialty areas and remain in practice longer than the current
    1-year post-training obligation.
        Our civilian work force, comprising anywhere from 33 to 55
    percent of our nursing force structure, presents equal
    challenges. Current vacancy rates range from 27 percent on the
    high range to 7 percent on the low range. Coupled with costly
    15 to 35 percent turnover rates and significant differences in
    hiring practices between the government and the private
    sectors, we are unable to maintain an adequate level of
    civilian nurses to meet our needs.
        Our civilian competitors are able to provide timely hiring
    actions, in some instances as little as one week from
    application to the first day they arrive in the facility.
    Conversely, the average length of time to bring a new RN into a
    military treatment facility is 93 days. Civilian hiring
    practices constrain and entangle what should be an expeditious
    process for us.
        We have all worked diligently here at the front table to
    overcome these barriers through innovative practices. The Army
    Nurse Corps has partnered with the Air Force, utilizing Air
    Force nurses to temporarily fill civilian vacancies until
    hiring actions are completed. The Navy similarly has used
    extensive resource-sharing agreements and contracts to meet
    their needs.
        Teams of civilian and military leaders have met to discuss
    ways to streamline civilian recruitment and hiring processes
    and identify sorely needed revisions in outdated civilian
    standards to assist us in meeting our current needs. We must
    create a system that is not cumbersome and one that does not
    threaten human resource availability. We must have the funding
    to develop and implement accession programs that meet the
    current critical need for swift hiring of highly qualified
    candidates and to continue to develop an effective career
    progression ladder for them.
        Funding civilian training and incentive programs that
    enhance professional development, leadership skills, and work
    force productivity is absolutely essential. With the passage of
    the 2001 National Defense Authorization Act that expands, of
    course, our health care to a greater number of our
    beneficiaries, the numbers of beneficiaries enrolled in our
    military health care facilities is expected to rise, as is the
    severity of illness of those patients. The increased demand for
    health services, the aging of the population, and the need to
    maintain the appropriate mix of patients necessary to maintain
    both our clinical proficiencies and our readiness posture
    mandate that we have sufficient nurses to provide these much
    needed health care services. We must act expeditiously in order
    to allow us to continue to adequately support this critical
    patient care mission.

                               PREPARED STATEMENT

        In closing, I want to thank you, Mr. Chairman, Senator
    Inouye, for the opportunity to address these critical issues
    with you. We are all at this table very, very grateful for your
    assistance in keeping our military nursing corps strong and
    ready for the challenges that face us in the future.
        Thank you.
        [The statement follows:]

           PREPARED STATEMENT OF BRIGADIER GENERAL WILLIAM T. BESTER

        Mr. Chairman and distinguished members of the committee, I am
    Brigadier General William T. Bester, Assistant Surgeon General for
    Force Projection and Chief, Army Nurse Corps. I am both pleased and
    honored to testify before you today. I look upon my appointment as the
    21st Chief of the Army Nurse Corps as both an honor and a privilege.
    The opportunity to serve with and direct some of the finest men and
    women in the Army Medical Department (AMEDD) is a professional reward
    that far surpasses anything that I could have thought possible some
    twenty-seven years ago when I first joined this outstanding
    professional nursing organization. I have an absolute commitment to
    serve the Army Nurse Corps with the same tenacious spirit of my
    predecessors.
        In that same context, I stand committed to fully support The Army
    Surgeon General in his quest to maintain our high quality of peacetime
    healthcare while, at the same time, being trained, equipped and capable
    of supporting the medical needs of our deployed forces. In an
    environment of limited resources, he has charged me to be actively
    engaged in our corporate business plans that will allow us to generate
    the greatest benefit from the resources, both human and fiscal, that we
    have available to us.
        This morning my focus will highlight three important concerns that
    relate to the ability of the Army Nurse Corps to serve the nation:
    manning, the impact of operational deployments and the importance of
    the congressionally sponsored TriService Nursing Research Program. I
    would first like to begin by discussing manning.
        Manning: The demand for professional nurses in America is
    increasing while the supply of professional nurses is declining;
    according to a policy statement from Tri-Council members, The American
    Association of Colleges of Nursing (AACN), The American Nurses
    Association (ANA), and The American Organization of Nurse Executives
    (AONE) dated 31 January 2001. Last year, you will recall, all armed
    services stressed the need for continued incentives to attract and
    retain military members in light of the present and future nursing
    shortages. We greatly appreciate the Senate directing the Health
    Professionals Retention/Accession Incentives Study (HPRAIS), currently
    being conducted by the Center for Naval Analyses (CNA), that is
    evaluating the adequacy of special pays and bonuses for military health
    care professionals. We are hopeful that this study will identify the
    need for incentives for both our military nurse force and our
    Department of Army (DA) civilian nurse workforce.
        The Bureau of Labor Statistics reports that Registered Nurse
    positions will increase 23 percent by 2006. According to the policy
    statement form the Tri-Council members, AACN, ANA, and AONE,
    enrollments in all basic RN preparation programs have declined each
    year for the last five consecutive years. According to the National
    League for Nursing (NLN), between 1995 and 1999, the number of programs
    of most types has increased in the United States 2.6 percent. Despite
    this overall growth, the number of students enrolled in and graduating
    from nursing programs has declined 13.6 percent. The clear trend is
    toward an increase in the number of programs occurring simultaneously
    with a decrease in the number of enrollments and graduations from these
    programs. For the fourth year in a row, Bachelor of Science in Nursing
    (BSN) enrollments are down 5 percent. Attractive, competing career
    options with greater compensation are luring young adults away from
    nursing as a career choice. To compound the shortage, the current
    workforce of civilian nurses is rapidly approaching retirement age. The
    average age of civilian RNs is 45.1 years. By 2010 it is estimated that
    more than 40 percent of the nursing workforce will be over the age of
    50 and by 2015 approximately 50 percent of the nursing workforce will
    be retirement eligible.
        These trends--decreased nursing school enrollments and an aging
    workforce--have a dramatic impact on our ability to attract and retain
    qualified military and civilian nurses. In the early 1990's our Corps
    made a commitment to use the Reserve Officers' Training Corps (ROTC) as
    our main source of accessions. With the nursing shortage of the last
    three years however, we have seen a decline in scholarship requests and
    our ROTC accession numbers have decreased 50 percent, from a high of
    228 in 1996 to a projected low of 113 for 2001. Although U.S. Army
    Recruiting Command (USAREC) has made up a significant part of this
    shortfall, direct accessions of nurses aged 40 years and over have
    become much more common. This creates an older, limited-term, non-
    career track force. This approach further shrinks our already eroding
    mid- and late-career captain and major ranks that supply the majority
    of our expert clinical specialty base. Having to recruit a greater
    number of working nurses means we must compete with the civilian
    institutions for the same critical specialties at a time when they are
    offering streamlined hiring practices and significant recruitment and
    retention bonuses. Furthermore, continued erosions in our health
    education and training budgets for our military nurses adversely impact
    our ability to provide the professional development necessary to
    prepare our officers for the rigors of senior leadership and advanced
    practice. Our junior officers look to these educational offerings as a
    means to advancement and a critical motivator for retention.
        Our civilian ranks present a more acute dilemma. Within our current
    AMEDD nursing structure approximately 50 percent of nursing care is
    provided by Department of Army (DA) civilian nurses. Over the last
    three years our inventory has not met the level of need. The reasons
    are varied. Current vacancy rates for authorized positions vary by
    region from a high of 27 percent to a low of 7 percent. Coupled with
    costly 15 percent to 35 percent turnover rates and significant
    differences in hiring practices between the government and private
    sector, expeditious hiring is tenuous at best. The average processing
    time from application to hiring is 93 days.
         Much has been done to alleviate current and future shortages.
    Recruitment bonuses and specialty course guarantees continue to attract
    nurses to the military. The Army Nurse Corps has partnered with the Air
    Force utilizing Air Force nurses to temporarily fill civilian vacancies
    until hiring actions are completed. Army civilian and military leaders
    are exploring ways to streamline civilian recruitment and hiring
    processes. Further action and support are needed if we are to develop a
    responsive hiring system.
        Several key initiatives must be realized to ensure that a robust
    force of civilian and military nurses is available to care for our
    ever-increasing number of beneficiaries seeking care at our Army
    Medical Treatment Facilities. Achieving recruiting goals at the entry
    level and retention past initial and subsequent tours is of great
    concern. The success of recruitment bonuses proved its worth and now
    must be expanded to retention bonuses for officers completing their
    first tour. Furthermore, economic incentives are necessary to encourage
    military nurses to enter specialty areas and remain in practice longer
    than the current one-year post-training obligation. The current
    specialty and certification pay for our nurse practitioners, certified
    nurse anesthetists, and certified nurse midwives, demonstrates the
    success of such initiatives.
        Even greater efforts must be dedicated to achieving dramatic
    improvements in our civilian recruitment and retention initiatives.
    Government hiring practices are archaic, cumbersome, and threaten human
    resource availability. Wages are set by law and not easily adapted to
    market forces. We must have the flexibility to develop and implement
    accession programs that meet the current critical need for the swift
    hiring of highly qualified candidates. Funding civilian training and
    incentive programs that enhance professional development, leadership,
    and work force productivity, such as the revision of the Army Civilian
    Training Education Document System and civilian tuition assistance
    programs, are a must. We ask this committee to support necessary
    changes to simplify or eliminate outmoded hiring rules and produce a
    modern, streamlined personnel system, one that is more responsive to
    our needs.
        Making such changes now will enable the military treatment
    facilities to execute innovative business plans designed to provide for
    the preventive, acute, and chronic health care needs of its
    beneficiaries. With the passage of the 2001 National Defense
    Authorization Act expanding health care for a greater number of
    beneficiaries, the numbers of beneficiaries enrolled in our military
    health care facilities is expected to rise, as is the severity of
    illness of our patients. The increased demand for health services,
    aging of the population, and the need to maintain the appropriate
    ``mix'' of patients necessary to maintain our clinical proficiency and
    readiness, mandate that we have sufficient nurses to provide health
    care services. We must act expeditiously in order to allow us to
    continue to adequately support this critical patient care mission.
        Deployments: In an environment of persistent personnel shortages,
    Army Nurses continue to provide services around the world whenever and
    wherever they are needed. In fiscal year 2000, 444 Army Nurse Corps
    Officers deployed to over 10 countries consuming 12,116 man-days not
    available to deliver the TRICARE benefit. For fiscal year 2001 we are
    on a glidepath to exceed that amount by 23 percent, with 227 Army
    Nurses who have already deployed, consuming 6955 man-days.
        Army nurses continue their expert performance in support of the
    worldwide missions. During the 6-month deployment of the 212th Mobile
    Army Surgical Hospital (MASH) to Bosnia, Army nursing personnel were
    responsible for daily health support to over 10,000 Kosovo Force 4
    (KFOR) soldiers and emergent care for over 250,000 local nationals.
    These personnel provided direct care to over 339 trauma and major
    medical patients, including victims of motor vehicle accidents, gunshot
    wounds, and grenade and mine blast injuries. In the course of providing
    host nation medical support, the 212th MASH's medical and nursing staff
    provided weekly visits to the rural town of Gnjilane to instruct the
    local hospital staff in basic and emergency medical care. Their efforts
    significantly increased the host nations' ability to provide competent
    regional healthcare. Shortly after their arrival at Eagle Base in
    Bosnia, the 249th General Hospital's (Forward) nursing personnel
    actively collaborated in establishing a telemedicine link with four
    isolated base camp aid stations establishing weekly telemedicine
    conferences. Such conferences significantly reduced numbers of
    evacuated patients through prompt diagnoses and treatment and increased
    unit level education for division medics. Task Force Med Eagle received
    recognition as a Training Site for the National Registry for Emergency
    Medical Technicians. This site now facilitates the 91W transition
    training for all follow-on units. This action has far reaching
    implications, ensuring that up-to-date combat medic training and
    enlisted professional career development continues, even when our
    soldiers are deployed. The 67th Combat Support Hospital was
    instrumental in rebuilding a local hospital and educating the local
    national staff, ensuring its ability to treat trauma patients.
    Additionally, in just 3 months, this unit volunteered countless hours
    to repair a badly damaged local school void of heat, electricity,
    water, and functional classrooms, and stock it with donated school
    supplies from Germany and the United States. While participating in
    Joint Task Force Bravo in Honduras, US military nursing personnel and
    Honduran military personnel conducted a comprehensive Health Project at
    the Honduran Department of Defense in Tegucigalpa. This activity
    enhanced international medical cooperation between Honduran and
    American armed forces through education, information sharing, and
    interdisciplinary collaboration.
        Not only are our active duty Army Nurse Corps Officers fully
    engaged, but our reserve family is in full support of our deployed
    forces as well. In August of 2000, the 914th Combat Support Hospital
    from Backlick, Ohio traveled to the southwestern valleys of Columbia,
    South America for a 15-day Medical Readiness Training Exercise. During
    the 10 days the clinics were in operation, the staff treated over 6,400
    patients. Currently the 313th Combat Support Hospital (Hospital Unit
    Surgical), from Springfield, Missouri is staffing Task Force Med Falcon
    in Kosovo, continuing to provide quality healthcare to the
    approximately 10,000 NATO soldiers in the sector.
        These few examples serve to highlight once again that Army Nurses
    possess the expert clinical skills, critical thinking abilities and
    dedication necessary to execute the most challenging mission in the
    most austere of environments, never compromising patient care.
        Nursing Research: Thanks to your continued support, the TriService
    Nursing Research Program (TSNRP) continues to increase our
    understanding of the most critical issues facing the delivery of
    military nursing care today. One example is the staffing shortages
    mentioned earlier in the testimony and their current impact on our
    ability to deliver timely and quality nursing care. With the aid of
    TriService Nursing Research funding, Army nurse researchers are working
    with experts from the California Nursing Outcomes Coalition and the
    University of California, San Francisco to establish an Army-wide
    nursing database that uses standard definitions and data extraction
    techniques to measure patient outcomes. The Army nursing Outcomes
    Database will be used in three key ways. First, participating MTFs will
    use the data for internal quality improvement efforts. Second, the data
    will provide a foundation for research and other systematic studies
    assessing the impact of skill mix, educational level, and other factors
    on indicators of health, quality and safety. Third, data will be used
    to make evidence-based Army health care policy decisions that affect
    patient safety, educational planning, health systems design, and nurse
    staffing. This year I provided direction to Army nurse researchers to
    re-prioritize nursing research programs within the Army Medical
    Department. These programs will focus on the most compelling problems
    over which we have an ability to influence outcomes. Among these are:
    (1) identification of specialized clinical skill competency training
    and sustainment requirements; (2) deployment health challenges (nursing
    care requirements during current mobilization and operations other-
    than-war situations); (3) issues related to the nursing care of our
    beneficiaries in garrison; (4) identification of acute care nurse
    staffing requirements and their relationship to patient outcomes; (5)
    issues related to civilian and military nurse retention in this era of
    critical shortages;) and finally, (6) program evaluation of our core
    education programs for nursing personnel. I am confident that Army
    Nurse researchers will continue to add to the scientific body of
    knowledge underlying military nursing practice.
        Your support of the TriService Nursing Research Program is
    fundamental to the success of military nursing research. I would like
    to share some brief examples of our successes. In a series of
    TriService Nursing Research funded studies, two self-diagnosis kits
    were developed that can accurately determine the presence of vaginal or
    urinary tract infections in deployed female soldiers. These kits will
    allow self-diagnosis and treatment. Implications for military women
    deployed in austere environments include less time away from duty,
    increased manpower availability for mission-related operations, and
    greater health and comfort levels.
        Research not only answers questions; it frequently uncovers gaps in
    what we know. In a study evaluating intravenous catheter insertion by
    nursing personnel wearing chemical-biological protective gear, nurse
    researchers discovered that some personnel encountered difficulties
    with task completion due to claustrophobia associated with the
    confinement of the protective clothing. Based on this finding, further
    study will address this issue in an attempt to find the means to
    improve nurses' performance in the chem-bio environment.
        The TriService Research Advisory Group, fully supported by all
    Federal Nursing Chiefs, has developed a strategic plan that prioritizes
    the most critical and relevant topics for future military nursing
    research. These topics include: (1) deployment health--studies that
    analyze factors that affect operational readiness before, during, and
    after deployment; (2) development and sustainment of skills--studies
    that address the acquisition and maintenance of key nursing
    competencies; (3) clinical practice outcomes management--studies that
    determine the most effective health care interventions across the full
    spectrum of care from health promotion to disease management in
    military populations; (4) recruitment and retention--studies that
    identify strategies to improve force management of military and
    civilian nurses within the Department of Defense (DOD); and (5)
    clinical resource management--studies that determine staffing models
    that optimize the utilization of DOD nursing personnel.
        Military nurses are ever vigilant of the health care needs of those
    we serve. We possess a unique understanding and knowledge to provide
    the care required by our beneficiaries. Continued congressional support
    for the TriService Nursing Research Program is essential for military
    nurse researchers to conduct studies to improve practice and develop
    policy within the DOD.
        Army Nurses are a key spoke in the wheel of Army Medicine.
    Collaboration with our sister Corps within the Army Medical Department
    will insure that we capitalize on every opportunity to support The Army
    Surgeon General's vision of providing the highest quality of patient
    care predicated on evidenced-based practice and business plans that
    utilize our fiscal and human resources in the most efficient and
    effective way possible.
        Finally, I would like to express my unqualified support of the
    Uniformed Services University of the Health Sciences (USUHS). The
    Graduate School of Nursing has been instrumental in providing trained
    Certified Registered Nurse Anesthetists and Family Nurse Practitioners.
    Most importantly, USUHS has become the sole educator of our Family
    Nurse Practitioners, saving the Army Medical Department in excess of
    $300,000.00 annually in Health Education Funds. Graduates of the USUHS
    programs have excelled masterfully and have enjoyed a 100 percent pass
    rate on their certification exams. Our continued affiliation with USUHS
    is a must if we are to maintain sufficient numbers of practitioners
    necessary to support our primary care mission.
        In a closing note, on February 2, 2001, the Army Nurse Corps
    celebrated 100 years of nursing service to our country. Army Nurses
    reflected on our illustrious past and applauded our accomplishments of
    service to our soldiers. Now we are poised and ready to address the
    challenges of the future, with the same drive, professionalism and
    dedication as our predecessors. We will be successful. Army Nurses
    remain Ready, Caring, and Proud. Thank you for this opportunity to
    address Army Nursing. We are grateful for your assistance in keeping
    the force strong for the future.

        Senator Inouye. I thank you very much, General Bester, and
    congratulations on your new mission.
        General Bester. Thank you, sir.
        Senator Inouye. May I proceed?
        Senator Stevens. Yes.

                            PROCESSING APPLICATIONS

        Senator Inouye. General Bester, you have noted that it
    takes an average of 93 days to process applications for new
    nursing positions. Who is responsible for processing civilian
    nursing applications, your offices or some other organization?
        General Bester. No, sir, our civilian personnel challenges.
    There are a number of steps in the process and we have blocked
    those steps with our folks and we are trying to decrease the
    processing time, which by the way, sir, we have decreased some
    already since we have started addressing the issue.
        But it really needs to come down much more than it already
    has, because what happens is is we get very interested
    applicants. Let me use Brooke Army Medical Center down in San
    Antonio for a recent example. We had a job fair down there and
    had 100 very interested nurses who were interested in working
    at that beautiful health care facility that we have. The issue
    is that the processing time was so long that they took other
    offers downtown, not so much because they were being offered
    any more money, which they may have been, but they were really
    interested in working at Brooke Army Medical Center, but they
    were not interested in waiting 2, 3, or 4 months to be
    processed.
        Senator Inouye. Why did it take so long?
        General Bester. We have, sir, built-in obstacles in our
    hiring system that just prevent us from expeditiously bringing
    people on into our civilian nursing system.
        Senator Inouye. Who is responsible for the hiring of
    nurses?
        General Bester. Our civilian----
        Senator Inouye. Your office?
        General Bester. No, sir. We identify the individuals that
    we want hired, but we have to go through the civilian personnel
    office to hire those individuals.
        Senator Inouye. Would it make a difference if you got the
    responsibility?
        General Bester. Yes, sir.
        Senator Inouye. Would the others feel the same way?
        Admiral Martin. Yes, sir.
        General Brannon. Yes, sir.
        Senator Inouye. So right now you depend upon another
    office, which is not in your profession, to do the recruiting?
        Admiral Martin. Yes, sir, for civil service personnel the
    Office of Personnel Management (OPM) recruits and hires all
    these individuals.
        Senator Stevens. What about uniformed people?
        Admiral Martin. No, sir, we do that.
        General Brannon. We do that.
        Senator Stevens. You do it directly?
        Admiral Martin. Each service has some type of a recruiting
    command where we actually have active duty nurses
    participating.
        Senator Stevens. He is asking, are you doing it? You
    recruit your own people?
        Admiral Martin. Yes, sir.
        Senator Inouye. But not the civilians?
        Admiral Martin. No, sir.
        Senator Inouye. If you had the authority to recruit
    civilian nurses, it would be done much more expeditiously,
    would it not?
        Admiral Martin. Yes, sir.
        Senator Inouye. Would the surgeons general oppose this?
        General Carlton. No, sir. We support it fully.
        Senator Inouye. You support it.
        Senator Stevens. We will have to discuss that with the
    Government Affairs Committee, but I understand you are
    interested.

                 CERTIFIED REGISTERED NURSE ANESTHETISTS (CRNA)

        Senator Inouye. How successful has the Army, Navy, and Air
    Force Nurse Corps been in retaining the USUHS Graduate School
    of Nursing advanced practice nurses?

                               NURSE ANESTHETISTS

        General Brannon. I think we struggle a little bit, sir,
    with retaining our certified registered nurse anesthetists.
    Many of them will retire, but often they do not stay past their
    20-year obligation because of the compensation benefits in the
    civilian world. But that school has been very successful in
    producing full-up, readiness-ready CRNA's who perform
    outstanding service while they are with us.
        Senator Inouye. All of them--I gather you have a 100
    percent pass rate?
        General Brannon. Absolutely. We are very proud of that
    quality education, sir.
        Senator Inouye. It is the only nursing school that has done
    that in this Nation.
        One of the problems we seem to have from underfunding, as
    noted by the surgeon generals, is the fact that we have to
    either postpone or cut back programs as we get close to the end
    of the fiscal year. One program that suffers every fiscal year
    is the continuing education program. Has that affected the
    nursing profession in your experience?
        Admiral Martin. Yes, sir, it has. As our dollars become
    tighter, we then cut down on sending nurses to professional
    education programs, certification programs, and so forth. You
    need to continuously train and send professionals to either
    challenging courses or updates for professional education.
        Senator Inouye. Do you have common problems, for example,
    in recruiting active duty personnel? In the Air Force do you
    find it a bit easier recruiting than the Army? Do the services
    find that women would rather go into the Army or the Air Force
    or the Navy?
        General Bester. Senator, I think they all want to come in
    the Army.
        Admiral Martin. I believe they like our uniform better.
        General Brannon. They all want to be flight nurses.
        We all have our advantages, I think, sir.
        Senator Inouye. Recently, General Bester, there was a
    revision in the Army regulations affecting the standard of
    practice for certified registered nurse anesthetists. How is
    that working out?
        General Bester. Sir, I can report that that is moving along
    very well. General Peake approved that revision last November,
    which is our Army Regulation 40-48, which really defines our
    scope of practice for CRNA's. What it really has done is codify
    the way we have been practicing anesthesia for a number of
    years now, and we have got that new revision implemented in
    most of our facilities. The last couple facilities that it will
    be coming on line here, it will be implemented there very soon.
        So I can report to you that it is moving along very well,
    being supported by both the surgeon general and the Chief of
    the medical corps, Major General Kevin Kylie.
        Senator Inouye. Are the anesthesiologists satisfied?
        General Bester. Probably not every one, sir. But we are
    working the issues in particular institutions and I think we
    are working through the issue very well.
        Senator Inouye. Do you think that will have an impact on
    retention?
        General Bester. Retention for us, sir, for CRNA's? Yes,
    sir. I think the practice environment, that coupled with the
    $15,000 bonus that they currently get that you approved some
    years back, I think are the two factors that allowed us to come
    from about a 73 percent fill rate in the early nineties to
    where we currently are, which is over 90 percent fill in our
    CRNA positions, which is a really good news story.

                             FLIGHT NURSE TRAINING

        Senator Inouye. Is there a different type of training for a
    flight nurse as compared to an Army nurse?
        General Brannon. Well, flight nurse is an additional
    training and we send our nurses to a specific school that
    teaches them some of the physiological changes of flight and
    some of the nursing procedures and things that they need to
    know. So it's certainly a postgraduate training for that
    specific job. Not everyone gets to be a flight nurse, but we do
    have some opportunities for that.
        Senator Inouye. We have a situation where the Marines have
    no medical corps. What sort of arrangement does the nurses
    corps have with the Marines?
        Admiral Martin. We have nurses that are assigned to various
    Marine Corps units right now throughout the world. We have
    quite a few nurses that are assigned with the Marines.
        Senator Inouye. Who is responsible for the training of the
    corpsmen in the Marines?
        Admiral Martin. The corpsmen all go through a field medical
    program that is an established program before they go to the
    Marines. There are physicians working in the Marine battalions
    and detachments and there are also various nurses working with
    them as well to keep up their skills.
        Senator Inouye. Mr. Chairman, I have many other questions,
    but I would like to submit them to the surgeon generals and the
    nurses as well.

                              RECRUITING PROGRAMS

        Senator Stevens. We all recognize Senator Inouye's
    leadership in dealing with your services.
        I do not have any questions, but I have two areas I would
    like to talk to you about. One, what kind of outreach do you
    have to the universities, the State universities, and other
    institutions that do graduate nurses? I ask that because one of
    the things that happened in my State is we found there are an
    overwhelming number of people that wanted to take the nurses'
    courses, but then they did not have any opportunity for
    employment, they have so few facilities in the State.
        Do you really reach out to those universities for
    recruitment, like the other services do, in the early part of
    their training? What is the outreach that you have?
        Admiral Martin. I can say for the Navy, we have Navy Nurse
    Corps recruiters assigned throughout the United States and they
    make it a point to visit all of the colleges and universities
    in their areas. When they have the various professional days
    and recruitment programs, they participate in those.
        Senator Stevens. They are your people or they are just Navy
    recruiters?
        Admiral Martin. No, sir, they are Navy nurses.
        Senator Stevens. Do you do the same thing, General?
        General Bester. Yes, sir. We also have recruiters in every
    State and in Puerto Rico. We have Navy nurses assigned to the
    recruiting command and then we have recruiters that are
    identified specifically to the nurse recruiting mission.
        General Brannon. Ours is a little different and I think
    that is a problem, Senator Stevens. We do not have a lot of
    nurses actually assigned to primary recruiting responsibility
    where they are out making that interface with potential nurse
    recruits. They are often enlisted members or other corps. What
    we have done to try to fill that gap is I have written a letter
    to each recruiting service and volunteered my services and
    those of nurses in nearby facilities to go out and speak with
    groups. I speak at any national conference I can where I know
    there will be civilian nurses. I will be going to the Student
    Nurse Association meeting and taking recruiters with me so we
    can potentially get out there.
        But I think we would have an advantage if there were more
    nurses in the recruiting business for the Air Force.
        Senator Stevens. All right. Let us get just to our basic
    business here, which is money. Are you all caught up with the
    shortfall? Are you going to be part of that request for
    supplementals this year? Admiral?
        Admiral Martin. Sir, that will all be a part of our
    proposed budget, yes, and we will be caught up in it.
        Senator Stevens. Your funds are included in moneys for the
    surgeon generals?
        Admiral Martin. Yes, sir. Yes, sir.
        Senator Stevens. How extensive is your shortfall?
        Admiral Martin. Would you like for me to speak as the
    Director of the Nurse Corps or as the commander of Bethesda?
        Senator Stevens. I would like for you just to tell me the
    truth.
        Admiral Martin. Well, as the Director of the Nurse Corps,
    we do not put a direct price tag on all the education that goes
    on within all of our various facilities. So I do not fund that
    out of a central Nurse Corps fund. Each of our medical facility
    commanders funds the number of nurses that they have out of
    their direct health care dollars working right at their
    commands for any of their education.
        Senator Stevens. You do not get a budget and then you
    fulfill the needs for your service?
        Admiral Martin. No, sir. That comes out of the command
    funds.
        Senator Stevens. Well, how do they treat you?
        Admiral Martin. Pardon me?
        Senator Stevens. Are you getting your requests fulfilled?
        Admiral Martin. Well, each of the nurses at the various
    commands, they go to their commanding officers to request funds
    for any type of programs and so forth. What we do look for as
    far as central funds is any type of bonuses that we request or
    augmentation of bonuses. Our school programs are funded out of
    the central command when we send individuals to various
    training programs, say to become certified nurse anesthetists
    or nurse practitioners.

                                VENTURE CAPITAL

        General Bester. Senator, if I may, I think along these
    lines, and what General Peake referred to a little bit earlier,
    is the venture capital issue when we are asking for these
    additional dollars is very, very important, because as we need
    additional nurses, for example, those come in the form of the
    business plans that General Peake referred to, and that venture
    capital up front will pay you dividends down the road, but it
    might not be seen for a year or 2 years or 3 years down the
    road.
        But it is absolutely essential that we get that venture
    capital, so we then can go up and purchase those nurses and
    work those increases with this increased benefit population
    that we are going to get via the National Defense Authorization
    Act.
        Senator Stevens. You do not get line item funding from us?
        General Bester. No, sir.
        Admiral Martin. No, sir.
        Senator Stevens. Would you like to get it?
        Admiral Martin. No, sir.
        General Bester. No, sir.
        General Brannon. I cannot separate what we do as nursing
    from what our medical service does. We are team members and all
    of our programs are really woven in with the total benefit. So
    I could provide more robust nursing services and support to
    patients, but if we did not provide those programs it would not
    really help very much.
        I think the entire system needs to be resourced. We are
    certainly getting our fair share. However, it just is not
    adequate to progress as we would like.
        Admiral Martin. For example, sir, as the commander of
    Bethesda I have a nursing shortage. I need civilian nurses to
    fill vacant billets right now. But I buy those out of my
    command funds. I pay for those positions, those nursing assets,
    out of my command funds, not out of a central Nurse Corps fund.
        Senator Stevens. I am worried about, and I think Senator
    Inouye is, too, about the word we are getting that there is a
    crisis in nurse staffing generally in the country. I assume
    that you are suffering from that as much as civilian hospitals
    are. If your recruiting is done by your own people, where do
    you get the payment for those? You say you send out people to
    do recruiting. It is not done by the medical corps, right?
        General Bester. We have authorized positions, though, sir,
    that are authorized into those slots. So we have been
    authorized the moneys in the military pay system to pay for
    those individuals who are on the recruiting command doing those
    jobs.
        Senator Stevens. Do you have a sufficient number? If
    recruiting is going down, I would like to find out what we do
    to build it up. Where do we put money to give you some
    additional boost in getting more people?
        General Bester. Sir, I think if we can funnel some moneys--
    we are going to continue to work hard, of course, in the
    recruiting effort for our active duty divisions. But if we can
    get the money that we have discussed here for our civilian
    nurses and if we can streamline that process, I think that that
    will answer the mail on a lot of the problems that we are
    currently having.
        Senator Stevens. What are the education requirements for
    you people to come in as just recruits, new recruits as nurses?
        General Bester. Baccalaureate degree.
        Senator Stevens. Same with you?
        Admiral Martin. Yes, sir.
        Senator Stevens. Same with you?
        General Brannon. Yes, sir.
        Senator Stevens. Well, Senator, do you have anything
    further?

                         RESERVE OFFICER TRAINING CORPS

        Senator Inouye. I would like to follow up by asking a crazy
    question. When I was in high school I was in ROTC. I am
    certain, although we do not admit this matter publicly, one of
    the major reasons to keep the ROTC program on college campuses
    and high school campuses is it helps in recruiting. Have you
    ever considered setting up ROTC for nurses?
        Admiral Martin. Yes, sir. We have a nursing ROTC program in
    the Navy.
        Senator Inouye. Where do you have them?
        Admiral Martin. We have them at any of the colleges or
    universities that have a Navy ROTC program.
        Senator Inouye. Not in high schools?
        Admiral Martin. No, sir. In college.
        General Bester. Senator, we also have an Army nurse ROTC
    program, but we do not have any in the high schools.
        Senator Inouye. Is it successful?
        General Bester. It has been in the past for us. I know the
    Navy is very successful. We are not successful at the current
    time and I think it is because of some issues, some decisions
    we made a few years ago. We have corrected those and we are
    already starting to see a swing back up.
        The unfortunate thing, of course, about ROTC is you do not
    see anything come out of the pipeline for 3 or 4 years once you
    make your decision. So I think in the next 3 or 4 years we will
    see that turned around. But at the current time, this year, for
    example, Senator, we had planned on ROTC bringing in 175 nurses
    and we are going to bring in 113.
        Senator Inouye. And the Air Force?
        General Brannon. We do have an Air Force college level ROTC
    program. It is small, but we are increasing those numbers, and
    we have been thus far successful in bringing folks in under
    that. I am thinking we are at the level of 25 this year, so it
    is small.
        Senator Stevens. Do you get anyone from academies who come
    in to you?
        Admiral Martin. No, sir.
        Senator Stevens. You?
        General Bester. No, sir.
        General Carlton. Yes, we have a program at the Air Force
    Academy training folks directly.
        General Brannon. Yes, sir.
        Admiral Martin. The Naval Academy does not have that
    option.
        Senator Inouye. Let us know of ideas you have on recruiting
    and retention for nursing.
        Senator Stevens. Let me ask you another question that is
    sort of off the wall. Do you keep track of the people that have
    been in your services who go on and are working in civilian
    hospitals throughout the country?
        General Bester. We try to recruit, sir, as they leave
    active duty, we try to recruit to go into the reserves. We talk
    to each and every one as they leave active duty. And we have
    recovered--we had a very low select rate in the Army about 3
    years ago and we have recruited some of those folks that were
    asked to leave the Army in the 1997 time frame. We have now
    brought those back from active duty.
        Senator Stevens. I am not talking about active duty. I am
    looking at what kind of a cadre we would have to deal with that
    high school ROTC if we decided to start one. I do not know how
    many of your people who have been in the service are out there
    in the civilian community and to what extent they might be
    available to be members of a guard or reserve component that
    would help us deal with the ROTC.
        We are very familiar with the fact that the ROTC has
    worked. A fellow named Colin Powell, who attended City College
    of the City of New York, is a good example. And they come
    through the high school ROTC. A great number of our people have
    come in through that channel. I would like to explore it.
        Anything else, Senator?

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Inouye. No. I have got a whole flock of questions
    here, but it is lunch time.
        Senator Stevens. Well, we do thank you very much and we are
    proud of what you do. As we said, both of us have been
    beneficiaries of your services and we thank you for the kind of
    people you recruit and train and how you really effectively
    serve our country.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                 Questions Submitted to Lt. Gen. James B. Peake

                   Questions Submitted by Senator Ted Stevens

                         FISCAL YEAR 2000 SUPPLEMENTAL

        Question. How much relief has your direct care system received from
    the fiscal year 2000 Emergency Supplemental?
        Answer. In fiscal year 2000 the Army Medical Department (AMEDD)
    direct care system received $96.9 million from the fiscal year 2000/01
    Emergency Supplemental. These funds resourced Army military treatment
    facility (MTF) incremental expenditures for the Tricare Senior Prime
    (TSP) demonstration, the escalating costs of pharmaceuticals, and
    revised financing expenditures that exceeded programmed funding.
        The multi-year nature of the appropriation gave us the flexibility
    to carry forward funds not essential in fiscal year 2000 to satisfy
    fiscal year 2001 requirements. The Army carried forward $49 million for
    the TSP demo and revised financing cost over-runs. However, in fiscal
    year 2001 the OSD Comptroller redirected the residual $49 million to
    the global settlement of managed care support contracts.
        Language in last year's bill allowed the Department flexibility in
    determining how the supplemental money would be used. Unfortunately,
    the rise in private sector costs and the decision to globally settle
    outstanding obligations to our managed care contractors limited the
    direct system benefit from the supplemental.
        Question. What happens when your MTFs are the first to pay the
    bills, or the last to receive any funding relief?
        Answer. When funds are diverted from the direct care system to
    cover private sector care bills or when our MTFs are the last to
    receive funding, we must initiate actions to curtail spending.
    Expenditures on real property maintenance (RPM) and equipment are
    limited to emergency items only. These areas recover most readily if
    funds are delayed. Other actions taken include: Curtail all non-mission
    essential travel to include Continuing Medical Education; freeze all
    hiring for vacancies, both civilian and contractor; defer purchases of
    supplies until the next fiscal year; defer contracts for items such as
    hospital maintenance; limit pharmacy refills to 30 days; defer elective
    surgery to the next fiscal year; and direct operative cases and
    procedures into the managed care network. However, it is difficult if
    not impossible to recover from these actions. Deferrals create
    tremendous backlog in our operations and a bill to be paid in following
    years; actions that reduce capability in the MTF result in increased
    private sector care costs.
        Care not provided in the MTFs ultimately shifts to the more costly
    private sector. Such a shift only delays the inevitable. The DHP must
    pay the managed care support contract bills from next year's budget
    thereby reducing funds available for the direct care system.
    Investments in the MTFs would facilitate their recapture of expensive
    care from the private sector and contain the cost of the DHP.

                      CURRENT YEAR DHP FUNDING SHORTFALLS

        Question. Do you have enough funds to fully execute your fiscal
    year 2001 program? Where are your shortfalls?
         Answer. The Army Defense Health Program (DHP) has a total
    projected ``direct care'' shortfall in fiscal year 2001 of $330.2
    million, however some of Army's shortfall is addressed in OASD(HA)'s
    $1.398 billion DHP draft unfinanced requirements list. Full funding of
    OASD(HA)'s unfinanced requirements would reduce Army's shortfall to
    $207.1 million. Army owes the AMEDD $53.5 million in RPM ($16.5 million
    from fiscal year 2000 and $37 million in fiscal year 2001). If these
    funds are received by the AMEDD the shortfall is further reduced to
    $153.6 million. This shortfall is in addition to any shortfall
    identified by TRICARE Management Activity related to the private sector
    care Managed Care Support Contract (MCSC). Army's DHP direct care
    shortfall can be broken down into four distinctive groups:
      --Survival/Fact of Life: replacing lost military with civilian labor
            to maintain current patient workload level of effort to
            preclude sending patients out to the Managed Care Support
            Contract (MCSC) contractors; TRICARE Senior Prime demonstration
            project and Revised Financing bills; unachievable outsourcing
            and privatization (A-76) savings; funding for data quality
            medical coders; AFIP lease and Real Property Maintenance (RPM);
            and across the board utility/energy increases. The shortfall
            $330.2 million also assumes TMA does not release to MEDCOM
            funding held by TMA in a withhold account and Advances in
            Medical Practices (AMP) pharmacy dollars not yet distributed to
            MEDCOM. The TMA withhold shortfall will be programmatic for it
            is calculated in MEDCOM's fiscal year 2001 Total Obligation
            Authority.
      --New Mission/New Programs: IM/IT special pay bonuses and dollars
            needed to ramp up MTFs in support of new benefits authorized by
            the Fiscal Year 2001 National Defense Authorization Act (NDAA)
            for Medicare-eligible military retiree.
      --Infrastructure Sustainment: a sufficient level of maintenance is
            needed to maintain MTFs and avoid infrastructure decay. The RPM
            shortfall includes funding medical facilities at 2.73 percent
            PRV (category 500 medical buildings at 3 percent) versus
            current funding levels and RPM funding owed MEDCOM as a result
            of fiscal year 1999 PBD 041 directive, yet not received by
            MEDCOM.
      --Business Initiatives: investment capital needed to increase the
            AMEDD's capacity to render cost effective, quality care in the
            direct system as an alternative to purchasing contract care.
            These funds are needed for health care infrastructure
            improvements such as enhanced provider/patient staff ratios,
            more appropriate support staff/provider ratios, and facility
            modifications.
         Question. Is your direct care system fully funded in fiscal year
    2001? How will your fiscal year 2001 shortfalls impact delivery of care
    in your hospitals and clinics?
         Answer. Our direct care system is experiencing a significant
    funding shortfall in fiscal year 2001. The Army Defense Health Program
    (DHP) has a total projected ``direct care'' shortfall in fiscal year
    2001 of $330.2 million. The $1.398 billion request from OASD(HA) will
    partially address this requirement. Full funding of the OASD(HA)
    unfinanced requirements would reduce Army's shortfall to $207.1
    million. This shortfall will be further reduced by $53.5 million, funds
    to be paid to the Army Medical Department (AMEDD) by the Army for
    essential real property maintenance. After the above actions, our
    direct care system will still face a $153.6 million unfinanced
    requirement.
        Without adequate funding our hospitals and clinics must initiate
    management actions to reduce spending such as: enforce hire lag; defer
    maintenance and repair of facilities; defer purchases of supplies and
    equipment; limit pharmacy refills to 30 days; defer elective surgery;
    curtail non mission essential travel to include Continuing Health
    Education. All of these actions are detrimental to hospital and clinic
    operations. Hire lag produces artificial savings in that delays in
    filling key personnel positions force our hospitals and clinics to
    refer patients to the private sector for their care. Ultimately such
    actions are more costly for the military health system (MHS), but those
    costs are deferred to either later in the year or the next fiscal year.
    Similarly, curtailment of all but emergency real property maintenance
    only creates an unmanageable backlog that in the long run produces more
    emergent conditions. Eventually repairs must be made or hospitals will
    not meet JCAHO standards.
        Recruiting and retaining quality medical personnel is a major
    concern of the Army Medical Department (AMEDD). We must retain optimal
    aggregate number and specialty mix of qualified clinicians. To
    accomplish this we must ensure our physicians have the opportunity to
    treat the full spectrum of care required to support the graduate
    medical education program, to maintain certification and to function
    using industry standard technology and standards of care. Continued
    under-funding of our military treatment facilities impairs our efforts
    to transform, modernize and optimize the AMEDD.

                                TRICARE FOR LIFE

        Question. To arrive at a cost for ``Tricare for Life'', has DOD
    used accurate assumptions for medical and pharmacy inflation rates?
        Answer.
    Inflation Rates
        In the direct care system, we are restricted to using the Bureau of
    Labor Statistics Medical CPI for medical expenses (supplies and
    contracts) and we used a slightly higher rate for pharmaceuticals (5.5
    percent vs. 3.9 percent in fiscal year 2000).
        Increased Health Care costs are often incorrectly represented as
    simple inflation.
        When the media say inflation costs for Prescription Drugs are going
    up 10-20 percent they usually mean expenditures. The Consumer Price
    Index (CPI) and the Producer Price Index (PPI), measure price changes
    only, not total expenditures.
    Cost Growth is more than Inflation
        Cost Components.--A traditional inflation definition does not
    capture changes in:
      --Standard of Care (more comprehensive tests are routine now, a newer
            hi-tech ancillary service is required, more intensive drug
            therapies, etc.) Technology advances increase the cost of every
            area of healthcare from drugs to hand-pieces to sutures to
            MRI's.
      --Changing Demographics of the patient population (population is
            aging and they use both a greater volume of services and the
            more expensive services.)
      --Increased usage by our beneficiaries (new benefits cause an
            increased demand. A benefit with little out of pocket for the
            consumer will show an even greater increase in demand because
            of human behavior).
        Cost Control.--Unlike private sector health care organizations, the
    military cannot elect out of unprofitable or high cost markets. The
    Army maintains hospitals and clinics in areas of the country, which
    have less than optimal business environments due to mission
    requirements. This diminishes our ability to control costs.
        DOD Pharmacy Estimate.--DOD Pharmacy and Therapeutics Committee is
    estimating expenditures to be up 15 percent between fiscal year 2000
    and fiscal year 2001. This figure includes both inflation and cost
    growth components.
        Civil Health Insurance.--In the health insurance industry, the
    Employment Cost Index (ECI) from the Bureau of Labor and Statistics is
    showing an 8.5 percent increase in the average civilian health
    insurance premiums for the calendar year 2000. Once again, Health care
    costs are rising faster than inflation or even the medical component of
    the CPI or PPI.
        FEHBP.--HMO premiums nationwide have outpaced inflation for several
    years. Premiums will increase between fiscal year 2000 and fiscal year
    2001 an average of 8.5 percent. Fee-for-service plans will increase an
    average of 10.9 percent from fiscal year 2000 to fiscal year 2001.
    Alternative indexing
        While CPI and PPI do a good job of reflecting inflation, some other
    tool would be more appropriate to gauge the increase in health care
    costs because of other influences (Standard of care, changing
    demographics, usage rates, technology leaps, etc.)
        Milliman & Robertson, Inc., a recognized leader in Health Care cost
    forecasting, publishes a Health Cost Index (HCI). This index contains
    inflation and other components such as utilization, leverage and mix/
    intensity. Their HCI (ALL BENEFITS category) has been 5.15 percent for
    fiscal year 1998, 6.6 percent for fiscal year 1999, and 6.5 percent for
    fiscal year 2000. The Pharmacy component for the HCI has been 14.1
    percent for fiscal year 1998, 18.4 percent for fiscal year 1999 and
    17.2 percent for fiscal year 2000 (See attached chart).
        The use of the HCI published by Milliman & Robertson or a similar
    product would be a more accurate tool for projecting health care costs
    in the DOD.
        Indexing to FEHBP HMO premiums or fee-for-service increases would
    be another alternative using a federal measure.
        Question. On October 1st, where do you believe retirees will go for
    their new benefit--to the MTF or in the network?
        Answer. Approximately 220,000 Medicare-eligible beneficiaries live
    near an Army MTF. Retirees who do not live near an MTF will undoubtedly
    continue to use their Medicare authorized provider, and have TRICARE
    act as 2nd payer. A survey performed by the TRICARE Management Activity
    (TMA) in January 2001 confirmed that those who currently use an MTF for
    at least some of their medical care, wish to continue to use the MTF.
    As faithful stewards of our taxpayers' dollars, I firmly believe that
    we must provide as much of their care as possible within our MTFs. I
    believe that many retirees prefer using military facilities. They enjoy
    continuing their relationship with the military family and have over
    the years been most patient and loyal to our health care system.
    However, base realignment and closures (BRAC) eliminated many MTFs, the
    large drawdown of the military reduced the availability of services at
    remaining MTFs and the creation of the TRICARE program reduced their
    access to our facilities. Supporting this population is important, not
    only to keep our promise, but to allow our physicians full range of
    complexity of patient diagnoses to maintain their skills at a level
    required for our clinicians who could deploy with relative short
    notice. If we cannot provide service that meets these beneficiaries
    expectations, they will seek care in the community at significantly
    greater cost to the government. We have one opportunity to succeed;
    failure to accurately resource our healthcare system to provide this
    level of care will ultimately drive higher costs through Medicare, a
    significantly greater pharmacy cost, and a less robust and ready
    military healthcare system.
        Question. If the retirees go to your MTFs, is your system ready and
    funded for the new workload?
        Answer. If the retirees continue being seen in our MTFs at their
    current numbers and utilization, then we are funded for them in our
    base. The NDAA changes their benefit and also their patient category.
    If more of them begin to be seen in our MTFs or the ones we presently
    see want more complete coverage within the MTF, then we will need
    supplemental funding.
        Our present plan has us continuing our present scope of care for
    Tricare Senior Prime (TSP) enrollees with costs in the civilian market
    shared with HCFA. We also plan to convert our present space available
    care to equivalent lives and provide them the same level of care as
    TSP. Our military readiness requirements model requires another 30,000
    65+ beneficiaries for which we are not presently funded but which we
    could do by leveraging our sunk costs if our budget is augmented. A top
    line increase in our budget is required for that.

                FULL FUNDING OF THE DEFENSE HEALTH PROGRAM (DHP)

        Question. Is your DHP funding stable and predictable? If not, how
    does that instability impact your healthcare system?
        Answer. The DHP has experienced chronic, recurring shortfalls for a
    number of years. These shortfalls have necessitated infusion of funds
    during the execution year through budget amendments, reprogramming
    actions and supplemental appropriations. Unfortunately these
    adjustments are made to the execution year only with no increase to the
    top line funding for following years and so do not provide a stable and
    predictable funding environment. As a result, we return the next year
    once again requesting additional funding. The Department of Defense has
    ameliorated some of the out-year shortfalls through reprogramming of
    funds from the Service line to the DHP. However, these funds will
    primarily dampen the affect of escalating private sector care costs.
    Funds reprogrammed to the direct care system resourced pharmaceutical
    inflation.
        However, the direct care system experiences cost growth that
    exceeds the allowable inflation factors. Pharmacy increases are
    attributable not only to inflation but to demand factors as well. The
    DOD Pharmacy and Therapeutics Committee estimates cumulative
    expenditures will increase by 15 percent between fiscal year 2000 and
    fiscal year 2001, far exceeding the 5 percent inflation factor allowed
    for pharmaceuticals. Furthermore, the inflation factors do not resource
    the military facilities for costs associated with maintaining industry
    level standards of care nor do they recognize requirements to
    incorporate technological advances in our MTF medical practice.
        Furthermore, authorized entitlements without commensurate
    appropriated funds exacerbate an already problematic situation. For
    example, we anticipate increased usage of the military health system
    when new benefits produce an increased demand. However, benefits
    authorized without commensurate appropriated funds destabilize the DHP
    and ensure perpetual requests for supplemental funding.
        Stable and predictable funding is necessary to increase physician
    satisfaction, retention, and readiness, avoid cost shifting to MCSC and
    deliver on commitment to DOD beneficiaries. Absent steady and reliable
    funding stream, we can't make wise investment decisions or develop
    reasonable investment strategies (i.e. labor, capital expense
    equipment). This leads to expensive, stopgap, and insufficient business
    operations. Instability can result in cost shifting to MCSC and
    increased reliance on the private sector care. Cost shifting to our
    managed care support contractors is a losing proposition for both
    parties since we jointly share the financial risk of providing health
    care. Continued under-funding of our military treatment facilities
    impairs our efforts to transform, modernize and optimize the AMEDD.
        Without adequate funding our hospitals and clinics must initiate
    management actions to reduce spending such as: enforce hire lag; defer
    maintenance and repair of facilities; defer purchases of supplies and
    equipment; limit pharmacy refills to 30 days; defer elective surgery;
    curtail non mission essential travel to include Continuing Health
    Education. All of these actions are detrimental to hospital and clinic
    operations and can ultimately be more costly for the military health
    system (MHS), but those costs are deferred to either later in the year
    or the next fiscal year. Similarly, curtailment of all but emergency
    real property maintenance only creates an unmanageable backlog that in
    the long run produces more emergent conditions. Eventually repairs must
    be made or hospitals will not meet JCAHO standards.
        Our direct care system is experiencing a significant funding
    shortfall in fiscal year 2001. The Army DHP has a projected ``direct
    care'' shortfall in fiscal year 2001 of $153.6 million, not addressed
    in the $1.398 billion request from OASD(HA). Annual top line funding
    must reflect both inflation and cost growth not related to inflation.
    Absent an annual top line increase (programmatic fix) the DHP will
    continue to require emergency supplemental funding. Potential impacts
    of not adequately funding Medical Treatment Facilities include
    providing standard of care but to fewer beneficiaries with leakage to
    more costly private sector, and endangers physician certification,
    military recruitment and retention and patient satisfaction.
        Question. Has the DHP budget accurately forecast ``cost savings''
    and ``efficiencies?'' Have these savings materialized? Have you had a
    loss in buying power over the years?
        Answer. The combination of utilization management wedges, notional
    adjustments and overly optimistic A-76 savings have created a
    significant loss in buying power for the DHP and challenges from fiscal
    year 1996 through the present, and well into the POM years. The
    cumulative impact of these reductions equals $279.5 million from fiscal
    year 1996 through the present as shown below:

                                       CUMULATIVE LOSS OF MEDCOM ``BUYING POWER''
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year--
             Program or Requirement          -----------------------------------------------------------------------
                                                 1996        1997        1998        1999        2000        2001
    ----------------------------------------------------------------------------------------------------------------
    UM & Notional Adjustments...............    (81,525)   (193,792)   (272,989)   (272,989)   (272,989)   (272,989)
    A-76 ``Savings'' Decrement..............  ..........  ..........  ..........  ..........     (2,637)     (6,485)
    Total loss in fiscal year 2000 constant     (81,525)   (193,792)   (272,988)   (272,989)   (275,626)   (279,474)
     dollars................................
    ----------------------------------------------------------------------------------------------------------------

                   VENTURE CAPITAL FOR THE DIRECT CARE SYSTEM

        Question. Please tell us about your plans to make your hospitals
    and clinics more productive.
        Answer. Optimizing productivity is a main effort for the Army
    Medical Department today. Military treatment facility commanders know
    that their performance will be judged in great part on the
    effectiveness of their clinics and hospitals in meeting the full
    spectrum of medical needs of the beneficiaries who have signed up for
    care. Of course, clinic productivity means more than the simple volume
    of patients seen each day. Individual efforts are taking place at each
    facility to maximize the throughput, the health and the satisfaction of
    our patients. Our productivity plans include focusing on being sure our
    patients receive their appropriate preventive medicine interventions so
    that their health is maximized and their need for visits and admissions
    is less. These combined are likely to be the real secret for more
    productivity in our medical system today.
        At the corporate level, we have been developing a comprehensive
    enrollment capacity model that shows us a detailed picture of the ``as-
    is'' at our facilities and allows us to explore and prioritize future
    changes and investments. The current model looks at primary care
    managers, populations served and enrolled, support staff and exam rooms
    available. PCM panel size, FTE availability, and support staff
    limitations are documented; and potential effects of suggested
    improvements can be examined. Parameters such as support staff and exam
    room shortages can be compared across the entire enterprise and
    prioritized for intervention based on the highest potential impact.
    This model is being expanded into specialty care areas over the coming
    months.
        In its final form, the model will provide a virtual laboratory in
    which different assignments of PCMs, specialists and support staffs can
    be modeled and best outcomes chosen. Assignments can be based on best
    productivity outcomes for the Army as a whole, not one facility at a
    time. This effort and others in our overall optimization effort will
    directly and positively impact our productivity and provide more
    quality care across the entire Army.
        As a recent example, additional efforts include deploying such
    advances in medical practice as a new method for processing Pap smears
    for our female beneficiaries for a $4.8 million investment this year.
    This computer controlled liquid cytology system will result in 90,000
    fewer patient visits needed to provide effective screening for cervical
    cancer at a cost avoidance of nearly $6 million annually. Those saved
    visit appointments can be used to provide additional access to our
    clinics for needed care while our female patients require fewer visits
    for repeat testing. The system will be operational later this year with
    improved processes in place during next year.
        Question. Do funding constraints keep you from optimizing your
    system? Would a ``venture capital'' fund, or a ``Surgeon General's
    Investment and Initiative Fund'' allow you to operate your system more
    smartly and at less expense?
        Answer. Funding constraints for the Defense Health Program (DHP)
    have prevented full optimization of the Military Health System (MHS)
    going back as far as fiscal year 1986. For the DHP as a whole, this has
    meant chronic, recurring shortfalls, resulting in the need for
    recurring plus-ups from the President's Budget position. The
    chronological portrait below demonstrates the problems with chronically
    underfunding an ``entitlement'' program.

                                         INCREASES AFTER THE PRESIDENT'S BUDGET
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                             Between PB     During
                     Fiscal Year                      Reprogramming or Supplemental Type    & Execution   Execution
    ----------------------------------------------------------------------------------------------------------------
    1986.........................................  Reprogram & Supp.......................           $0         $360
    1987.........................................  Supplemental...........................            0          425
    1988.........................................  Reprogramming..........................            0          529
    1989.........................................  Reprogramming..........................            0          152
    1990.........................................  Reprogramming..........................            0          706
    1991.........................................  Reprogramming..........................            0          278
    1992.........................................  None...................................            0            0
    1993.........................................  None...................................            0            0
    1994.........................................  Appropriation Act......................          290            0
    1995.........................................  None...................................            0            0
    1996.........................................  None...................................            0            0
    1997.........................................  Appropriation Act......................          475            0
    1998.........................................  Budget Amendment.......................          274            0
    1999.........................................  Amend. & Reprog........................          304            0
    2000.........................................  Supplemental...........................            0        1,311
    ----------------------------------------------------------------------------------------------------------------

        For the U.S. Army Medical Command, the combination of utilization
    management wedges, notional adjustments and overly optimistic A-76
    savings has created significant challenges from fiscal year 1996
    through the present, and well into the POM years. The fiscal year 2001
    cumulative impact of fiscal year 1996-2001 reductions equals $279.5
    million.

                                       CUMULATIVE LOSS OF MEDCOM ``BUYING POWER''
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year--
             Program or Requirement          -----------------------------------------------------------------------
                                                 1996        1997        1998        1999        2000        2001
    ----------------------------------------------------------------------------------------------------------------
    UM & Notional Adjustments...............    (81,525)   (193,792)   (272,989)   (272,989)   (272,989)   (272,989)
    A-76 ``Savings'' Decrement..............  ..........  ..........  ..........  ..........     (2,637)     (6,485)
    Total loss in fiscal year 2000 constant     (81,525)   (193,792)   (272,988)   (272,989)   (275,626)   (279,474)
     dollars................................
    ----------------------------------------------------------------------------------------------------------------

        Because there is currently no source of external dollars for
    funding a ``venture capital'' fund, or a ``Surgeon General's Investment
    and Initiative Fund'', these dollars would need to be resourced through
    an internal reallocation process. In application this would mean that
    each of our medical treatment facilities (MTFs) would be taxed a
    certain amount from their base operating budgets, in order to find the
    dollars to create a venture capital investment and initiative fund.
    This would have two potentially negative results. First, not every
    facility will share in venture capital dollars, which means that many
    facilities will see only negative growth in their operating budgets as
    a result of this program. Secondly, and depending on how extensively
    this corporate ``venture capital withhold'' tax might be, we could even
    see recipients of venture capital investment dollars rechanneling these
    dollars into core shortfalls, rather than using them for their intended
    use as recapture initiative start-up dollars. In either case,
    internally funding of venture capital initiatives, from a system that
    is already constrained by inadequate funding levels can only produce
    sub-optimal results.
        An inadequate level of funding in each fiscal year's budget results
    in the medical treatment facilities attempting to sustain the previous
    year's level of healthcare services versus seeking to recapture patient
    care workload performed in the more expensive private sector. Funding
    is not available to hire the additional ancillary support staff
    required to optimize the health care providers' capabilities to treat
    patients. Funding shortfalls in the Real Property Maintenance Activity
    (RPMA) account prevent the renovation of the medical treatment
    facilities to accommodate each provider having two exam rooms and the
    associated ancillary staff to efficiently provide patient care in
    accordance with current standards of practice. Computers are an
    integral component to the efficient delivery of quality healthcare
    services. The sustainment of the existing operational computers for
    designated staff members and the associated local area network (LAN)
    infrastructure requirements to support the computers is a challenge for
    medical treatment facilities in the present fiscal environment. There
    is no funding for the acquisition of computers that support the
    technological advances in software, such as Operating Room Management
    Applications, necessary to maximize the providers' efficiency.
        We believe that the appropriate infusion of venture capital,
    external to the MEDCOM's operational budget, would greatly enhance our
    internal capabilities and the ability to recapture workload. By
    optimizing the military health system we can increase physician
    satisfaction, retention, and readiness; reduce the cost associated with
    increased reliance on private sector care; and finally to deliver on
    our commitment to all DOD beneficiaries.
        Question. If such a fund were established, please explain how the
    ``best business case'' approach would be used to identify, select and
    fund projects.
        Answer. The Army Medical Command has developed a five-step process
    for identifying, selecting and funding ``best business case''
    initiatives:
        1. The subordinate commands identify ``best business case''
    initiatives through a nomination process. These nominated ``best
    business case'' initiatives are submitted to the Army Medical Command
    in a standardized business case analysis format. Use of the business
    case analysis format ensures that the funding requirement, capacity
    modeling, demand assessment and qualitative impacts are clearly
    articulated.
        2. The Army Medical Command collects all of the nominated ``best
    business case'' initiatives and has them validated and prioritized by
    an interdisciplinary working committee. The criteria used by the
    committee to prioritize the initiatives take into account the
    initiative's return on investment, the timeliness of the initiative's
    ROI, the strategic alignment of the initiative with The Surgeon
    General's priorities, the initiative's qualitative return to the
    soldiers/patients, the complexity of implementing the initiative, and
    the interdependencies of the initiative with other initiatives. The
    interdisciplinary working committee is composed of subject matter
    experts from resource management, managed care, program and analysis,
    health facilities planning, and clinical care. Other subject matter
    experts are added to the team as unique initiatives are submitted.
        3. Once the initiatives have been validated and prioritized by the
    working committee, a Council of Colonels and General Officers then
    review the list and adjudicate any discrepancies between the working
    committee and the submitting commands. Once approved by the senior
    staff, the prioritized list is submitted to The Surgeon General for
    final review.
        4. The top initiatives will then be developed into business plans
    and await funding.
        5. When funding becomes available, The Surgeon General will select
    the top business plans and approve them for execution.
        The Army Medical Command initiated this process in March 2001 and
    is currently in the process of validating and prioritizing ``best
    business case'' initiatives submitted by the subordinate commands. The
    goal is to have an ``approved'' and prioritized list of business case
    initiatives by late June 2001.

                             ORGANIZATIONAL REFORM

        Question. Would the creation of a ``Joint Medical Command'' or a
    ``USMEDCOM'' remedy some of the problems experienced with DOD medical
    programs?
        Answer. USMEDCOM potentially offers a more coherent command
    structure than the current medical organization within DOD. In a Joint
    Medical Command concept, one uniformed officer would have operational
    control of the Military Health System. This officer would also have
    responsibility for the programming, budgeting and execution of the
    Defense Health Program. This single point of accountability should
    improve budgeting and associated administrative processes.
        Question. Is there clear authority and accountability in the DOD
    medical programs today? Would a ``USMEDCOM'' foster better lines of
    responsibility for DOD medical programs?
        Answer. In my view, authority and accountability for DOD medical
    programs are in need of improvement. Establishing a USMEDCOM would
    offer a clearer command and control structure. This would enhance unity
    of effort for the DOD medical mission. I support the continued
    assessment of the proposal to establish a USMEDCOM. However, there
    should be a close examination of operational, staffing and resource
    issues at the detail level before any final decision is rendered.

                       RECENT TRICARE SATISFACTION SURVEY

        Question. Have there been recent improvements in customer
    satisfaction with TRICARE? What remains to be done to further improve
    satisfaction with the TRICARE program?
        Answer. On February 22, 2001, the Center for Naval Analyses/
    Institute for Defense Analyses (CNA/IDA) released the results of a
    Congressionally mandated evaluation. The CNA/IDA study uses the Annual
    Health Care Survey of beneficiaries and demonstrated a trend of
    increased satisfaction with TRICARE. Survey results show positive
    progress in the areas of customer satisfaction with access and overall
    quality of care. The percentage of all TRICARE Prime enrollees who were
    satisfied with their access to care was 74 percent, compared to 63
    percent prior to TRICARE. In the regions where TRICARE Prime has been
    in place for three or more years, satisfaction with access to care
    improved from 70 percent prior to TRICARE to 83 percent. This is higher
    than recent civilian managed care data, which reported that 79 percent
    of beneficiaries were satisfied with access to care.
        Satisfaction with overall quality of care increased from 73 percent
    prior to TRICARE to 82 percent. Satisfaction with quality of care
    improved from 79 percent to 90 percent in regions where TRICARE has
    been in place for three or more years.
        The Army continues to work to increase beneficiary satisfaction.
    The following steps are being taken: enhance MTF health care delivery
    in order to improve beneficiary access; standardize appointment types;
    develop web-based appointing; increase access in remote areas; and
    implement the benefit improvements of the National Defense
    Authorization Act of 2001.

                        MEDICAL RECRUITING AND RETENTION

        Question. How is your service doing in recruiting and retaining
    medical professionals?
        Answer. In the last four years, the United States Army Recruiting
    Command has made 94 percent of their medical active duty mission for
    officers. This equates to around 1,200 new personnel per year. While
    each of the Corps presents its own set of challenges, without a robust
    student program we would be in far worst shape. Unfortunately, we have
    not received the production that we would like from Cadet Command in
    recent years. This organization provided us the majority of our non-
    allied science Medical Service Corps officers and Army Nurse Corps
    officers. The economy has made it difficult to recruit some specialty-
    specific medical officers, dental officers and pharmacy officers. The
    total number of officers we must recruit has remained fairly constant
    over the last five years. What have altered are the programs necessary
    to get that number. Without the increase in student scholarship
    programs we would continue to decline. We must now essentially buy our
    officer force.
        Prior to fiscal year 1992, the average loss rate for the Army
    Medical Department was approximately 9 percent of the force each year.
    The average for the last four years is 11 percent. This increase in
    loss rate is a combination of factors. These factors include OPTEMPO in
    shortage skills, lure of larger compensation in the civilian job market
    and completion of pre-accessioning incurred obligations.
        We ended fiscal year 2000 at 97.7 percent of our strength.
    Currently we are projecting to end fiscal year 2001 at approximately
    the same percentage.
        Question. Is the current special and incentive pay structure
    adequate to keep your force manned?
        Answer. No, it isn't. Neither optimization nor any other
    improvement in health services delivery can be accomplished without
    quality healthcare professionals. Recruiting and retaining quality
    medical personnel is a major concern of the Army Medical Department
    leadership. The civilian health-care industry is an attractive
    alternative to our officers. We need funding to support additional
    incentives to attract and retain quality health care professionals.
        Current special and incentive pay structure are becoming inadequate
    to provide sufficient incentive to meet aggregate end strength needs.
    Special pay rates (particularly entitlement pays) have remained fixed
    (in dollar amount) since 1990, resulting in a climate of devaluation.
    Maximum amounts allowed for discretionary pays have remained similarly
    fixed, precluding certain specialties which reached the maximum years
    ago from the possibility of any further increases. It is perceived that
    this devaluation, as well as escalating civilian practice salaries, is
    impacting on the Army Medical Department's ability to retain the
    optimal aggregate number and specialty mix of qualified clinicians in
    the long-term. To that point, the military Surgeons General have
    requested the Flag Officer Review Board at the Office of Assistant
    Secretary of Defense for Health Affairs to evaluate the current special
    pay rate structure, and develop Legislative proposals which will
    address rate increases in the fiscal year 2003 Unified Legislative and
    Budgeting (ULB) process.
        In light of the current situation and projected trends associated
    with continuing to hold compensation at current levels, every effort is
    being made to effect a change as quickly as possible. In order to do
    this, the Army Medical Department wishes to use the Critical Skills
    Retention Bonus (CSRB) authorized in the Fiscal Year 2001 National
    Defense Authorization Act while the ULB initiatives are pending. The
    CSRB would be used as a contractual agreement to pay retention bonuses
    for specified amounts in return for obligated service. The amount of
    the bonus would depend on the specific specialty, for example--
      --Physician CSRB would take the existing pay structure and present a
            bonus with a range of $12,000-$28,000/year. Specific medical
            specialties would then be targeted based on criticality.
      --Dentist CSRB could be used to combine the proposed increases in
            entitlement pay and additional special pay (ASP) to result in a
            similar variable rate bonus for the critical retention years as
            follows: less than 4 years equals $15,000/year; 4 but less than
            10 years equals $24,000/year; 10 but less than 13 years equals
            $17,000/year; 13 but less than 24 years (maximum YOS for CSRB)
            equals $15,000.
      --Veterinarian and specific clinicians in the nurse, specialists and
            service corps would likewise be identified with a bonus to
            supplement the existing pay structure until the proposed
            increases are enacted, with a range of $6,000-$12,000/year.
        The desired effect is to stop the rapid departure of our health
    care providers to the civilian health care sector. But we need the
    immediate authority and additional funding to support these
    initiatives.
        Shortly, the Office of the Secretary of Defense for Health Affairs
    will provide a report on a recent study by the Center for Naval
    Analyses to the House and Senate Armed Services Committees. I believe
    this will quantitatively demonstrate that there is a pay disparity that
    we must continue to address in order to attract and retain quality
    health care professionals.
        Question. Where do you have the most difficulty recruiting and
    retaining medical professionals? What specialties are most undermanned?
        Answer. Currently our most critical recruitment challenges are
    Dental Corps officers and Pharmacy Officers. Even with a robust student
    scholarship program, we are over 100 dental officers below our budgeted
    end strength. While we are doing well within these student programs,
    our ability to attract fully trained dentists is minimal. Likewise, the
    starting salaries for trained pharmacists in the civilian marketplace
    simply puts us out of the competition without significant incentives.
    We are attempting to utilize the Health Professions Loan Repayment
    Program to attract more Pharmacy officers, but we have not offered the
    program for a sufficient length of time to be able to access its
    impact. Our retention in Optometry officers is less than optimal. The
    majority of our officers are from the Health Professions Scholarship
    program who separates upon completion of their active duty service
    obligation. Recruitment of Certified Registered Nurse Anesthetists is
    very difficult. Again, if we were not training our own, we would be in
    a more difficult state than we are now.
        The most critical specialties right now are:
    Dental Corps
        General Dentists
        Comprehensive Dentists
    Medical Corps
        Anesthesiologists
        Diagnostic Radiologists
        Psychiatry
    Medical Service Corps
        Pharmacy Officers
        Optometry Officers
    Army Nurse Corps
        Operating Room Nurses
        Certified Registered Nurse Anesthetists

                                HEALTHCARE NEEDS

        Question. I would like to ask the members of panel one to comment
    on DOD plans to meet the healthcare needs of military personnel,
    dependents and veterans living in rural areas with no local access to
    military healthcare facilities.
        What is the status of demonstration projects that seek to address
    these problems?
        Answer.

    1. Active Duty Service Members in Remote Areas
        TRICARE Prime Remote.--The concept of providing TRICARE Prime in
    remote areas was tested in a demonstration program in Region 11 in
    1996. TRICARE Prime Remote (TPR) was implemented CONUS-wide on 1
    October 1999 and is the program to provide a Prime-like benefit for
    active duty service members who live and work greater that 50 miles
    from a military treatment facility (MTF). Most recent estimate show
    that there are 44,790 eligible active duty service members serving in
    remote areas (60 percent of these are Army and Army National Guard).
    These soldiers include recruiters, professors of military science at
    various universities, active Guard and Reserve members, etc. Over 90
    percent of these soldiers are currently enrolled in TPR. Military
    oversight of active duty service member medical and dental care is
    maintained by the tri-service Military Medical Support Office (MMSO)
    located at Great Lakes, Illinois. In areas where TRICARE reimbursement
    to non-network providers is a barrier to access for active duty
    soldiers, waiver of the CHAMPUS Maximum Allowable Rate (CMAC) rates can
    be granted by the Regional Lead Agents.

    2. Active Duty Family Members with their Sponsor in Remote Areas
        Geographically Separated Unit Program (GSU).--The managed care
    support contracts in Regions 1, 2, 5, and 11 contain requirements to
    establish and maintain TRICARE Prime networks for dependents of
    soldiers eligible for or enrolled in TPR. Like TPR, this program was
    established as the result of the demonstration program conducted in
    Region 11 in 1966. Unlike TPR, this program is not yet available CONUS-
    wide. The TRICARE Prime Remote for Family Members (TPRFM) program will
    replace the GSU program and is scheduled to be implemented CONUS-wide
    in April, 2002. To provide interim financial relief to eligible remote
    family members who are paying TRICARE Standard cost shares and
    deductibles (except pharmacy), all cost shares, deductibles and co-
    payments are waived from 30 October 2000 until TPRFM begins. Procedures
    to implement this one time waiver are to begin in August 2001.

    3. Active Duty Family Members not Residing with Their Sponsor in Remote
            Areas and Retirees under the Age of 65 in Remote Areas
        These beneficiaries must rely on TRICARE Standard or Extra (if
    available) to share the costs of medical care. They may use the
    National Mail Order Pharmacy, network pharmacies or non-network
    pharmacies under the new TRICARE pharmacy benefit. They may utilize the
    TRICARE contractor health care finders to locate TRICARE participating
    providers in their areas and may use the toll free Health Care
    Information Line to obtain health care information.

    4. Retirees Over the Age of 65 in Remote Areas
        TRICARE Senior Supplement Demonstration (TSSD).--There are two
    demonstration sites, encompassing approximately 11,100 eligible
    beneficiaries: the Santa Clara County area of California, and the
    Cherokee County area in Texas. To date, out of the 368 beneficiaries
    enrolled, 266 (74 are Army) are enrolled at the Texas site and 102 (32
    are Army) at the California site. California enrollment is so low
    because many of the beneficiaries have a BRAC pharmacy benefit.
    Congress mandated the TSSD under Section 722 of the Fiscal Year 1999
    National Defense Authorization Act.
        TSSD facilitates DOD payments on behalf of Military Health System
    (MHS) beneficiaries receiving Medicare benefits while enrolled in the
    TRICARE Program as a supplement to Medicare. An eligible beneficiary is
    described as a member or former member of the Uniformed Services, a
    dependent of a member of the Uniformed Services, or a dependent of a
    member of the Uniformed Services who died while on active duty for a
    period of more than 20 days. Those eligible must meet the following
    requirements: (1) 65 years of age or older; (2) entitled to hospital
    insurance benefits under Medicare Part A; (3) enrolled in the
    supplemental medical insurance program under Medicare Part B; and (4)
    reside in a demonstration program area.
        Each eligible beneficiary who enrolls in the TRICARE Program under
    the TSSD Program is required to pay an enrollment fee. Payment of the
    enrollment fee can be made annually or quarterly. The enrollment fee
    has been established at $576 per person per year. The Medicare Part B
    Premium is $50.00 per month. Enrollees in the TSSD may not receive
    health care in military hospitals or clinics, including pharmacy
    services, while they are enrolled in TSSD.
        TRICARE is the primary payer for pharmaceutical benefits, and
    beneficiaries pay Standard CHAMPUS Non-Active Duty Dependents (NADD)
    cost-sharing premiums. Beneficiaries also have access to the National
    Mail Order Pharmacy (NMOP). The demonstration is currently scheduled to
    end December 31, 2002.
        Federal Employees Health Benefit Project (FEHBP-65).--In 10
    randomly selected sites of the United States including the vicinity of
    Coffee County, Georgia, and extensive parts of southern Georgia, the
    Federal Employees Health Benefit Project (FEHBP-65) is being offered to
    many Medicare-eligible Uniformed Services retirees and their family
    members. An important feature of the project includes coverage that can
    be extended to family members who are not Medicare-eligible. The
    project is also open to certain other individuals who are not eligible
    for Medicare, such as surviving dependents and certain unmarried former
    spouses. The demonstration extends the same health care benefits as the
    federal government's health benefits program for its career civilian
    employees. In order to participate, otherwise-eligible persons must
    live within the ZIP codes that encompass one of the demonstration
    sites.
        The FEHBP-65 demonstration is a three-year trial congressionally
    mandated and jointly sponsored by the Department of Defense (DOD) and
    the Office of Personnel Management. It started in January 1, 2000, and
    is currently scheduled to end December 31, 2002.
        DOD makes eligibility determinations through the Defense Enrollment
    Eligibility Reporting System (DEERS), at the time of enrollment. The
    project has not proven to be popular with military retirees. As many as
    129,112 uniformed services retirees and family members were eligible to
    participate but only about 7,751 lives are covered and represent 5.85
    percent of those eligible. The total enrollment is 5,734 (representing
    7,751 lives). The Army's enrollment tally is about 2,999 or 52.30
    percent of the total enrollment (5,734). A site by site comparison
    showed low enrollment in those project sites near military treatment
    facilities with strong pharmacy services. At the end of the project,
    the Department of Defense will submit two evaluation reports along with
    their recommendations. One will be submitted to Congress and the other
    one to the Government Accounting Office (GAO). In collaboration GAO,
    the Office of Personnel Management (OPM) and DOD designed the survey
    instrument to satisfy the congressional requirement for an evaluation
    of FEHBP-65. Currently, the survey results are pending and there is no
    official data available, as yet.
        Pharmacy Redesign Pilot Program.--The DOD implemented a Pharmacy
    Redesign Pilot Program on July 1, 2000 for DOD beneficiaries over the
    age of 65 at two sites selected randomly. The pilot locations are
    Fleming County, Kentucky (including selected areas of Kentucky, Ohio
    and West Virginia), and Okeechobee County, Florida. The benefit for the
    eligible beneficiaries is equivalent to the TRICARE Extra pharmacy
    benefit with an enrollment fee of $200, which can either be paid in a
    one-time lump sum of $200 or can be paid in two $100 installments every
    six months, plus the applicable co-payments. The co-payments are 20
    percent for up to a 30-day supply of medication from a TRICARE Retail
    Network Pharmacy or $8 for up to a 90-day supply of medication from the
    National Mail Order Pharmacy. There were only approximately 600 who
    signed up for this program. The project closes on 1 April 2001, when
    the TRICARE Senior Pharmacy Program is implemented nationwide. Those
    who signed up for the program above will have their annual enrollment
    fee refunded based on a ``prorated'' basis.
        New Senior TRICARE Pharmacy Benefit.--Effective 1 April 2001, all
    beneficiaries over the age of 65 become eligible for the same pharmacy
    benefits as other military beneficiaries. After April 2001,
    beneficiaries who become eligible for Medicare Part B must have it to
    be eligible for this benefit. This includes the National Mail Order
    Pharmacy, TRICARE network pharmacy--or if necessary--non-network
    pharmacies.
        TRICARE as Second Payer to Medicare.--On 1 October 2001, for
    military beneficiaries over the age of 65 who have Medicare Part B,
    TRICARE becomes second payer to Medicare. This is expected to
    significantly lower or eliminate the out of pocket costs for medical
    care for older retirees in remote areas.
        The Army Medical Department in collaboration with the Air Force and
    the Navy has implemented numerous best business practice improvements
    to the DOD Pharmacy benefit. These include the simplification and
    standardization of the pharmacy co-pays to a tiered co-pay structure
    which parallel the ``industry trend'' with civilian pharmacy benefit
    management companies. The co-pays have been realigned and will be based
    on drug formulary status regardless of the pharmacy point of service
    the beneficiary utilizes. The co-pays will be $3 for Generic drugs and
    $9 for Brand name formulary drugs. There will continue to be no co-pay
    for prescriptions filled at medical treatment facility (MTF)
    pharmacies. Additionally, to ensure patient safety remains a primary
    focus as pertains to drug therapy, the Pharmacy Data Transaction
    Service (PDTS) is currently being implemented nationwide which will
    integrate the MTF Pharmacy patient medication profile with the National
    Mail Order Pharmacy (NMOP) and the retail pharmacy network. This system
    will screen for duplicate drug therapies as well as significant drug-
    drug interactions and will provide instant messaging back to the
    provider or pharmacist for appropriate interventions. Joint
    Pharmaceuticals contracting initiatives continue with our VA partners
    for the major high cost drug classes where clinically appropriate and
    economically feasible. In fiscal year 2000 these joint contracting
    initiatives resulted in over $64 million in cost avoidance for the
    major drug classes. Lastly, aggressive efforts continue in implementing
    a Uniform Formulary and expanding the DOD Basic Core Formulary which
    will ensure more uniform availability of drugs to meet a majority of
    our patients primary care needs.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                           TRICARE BUSINESS PRACTICES

        Question. Last year I asked if the amendment that provided for
    increased reimbursement levels for TRICARE was adequate, particularly
    in areas where our military personnel could not get a provider to see
    them. I was told last year that we had seen an improvement by all three
    Surgeons General. Additionally, reports from Dr. Clinton's office also
    say that providers and patients are happier, but I can tell you though
    that is not the information that I am receiving from my constituents to
    include patients and providers. Many say they cannot locate a provider
    that will accept TRICARE for the very reasons that we talked about
    before, inadequate reimbursement, delay in payment and inadequate fee
    structures that do not compare with their civilian counterparts.
    Currently TRICARE reimbursement is at the 45 percent rate allowable,
    like MEDICARE reimbursement. It is my understanding that under the old
    CHAMPUS program, providers were reimbursed at 80 percent. An increasing
    number of MEDICARE providers are leaving networks because of this low
    reimbursement rate.
        Gentlemen is this adequate?
        Answer. In military treatment facility catchment areas with large
    concentrations of military beneficiaries, large numbers of a broad
    spectrum of providers, and relatively small effect of competing other
    health insurance, the present reimbursement rates appear to be
    adequate. Access to care is usually good given these circumstances.
    Fortunately, much of the active duty military beneficiary and many of
    the retiree population in CONUS are located at such sites.
        However, access problems do exist in certain remote locations under
    certain circumstances. These include states where there are no MTFs,
    locations where there are small TRICARE beneficiary population
    concentrations, areas where TRICARE rates are significantly lower than
    other health insurance rates, areas that are truly medically
    underserved, regions where speed of claims payment has been a problem
    in the past, and regions of the country where anti-government, anti-
    managed care sentiment is a factor.
        Question. Will this impact the number of providers available to our
    over 65 year old beneficiaries?
        Answer. Our over 65 beneficiaries who have Medicare Part B and who
    are not being seen at an MTF are already accessing health care under
    Medicare, Medicaid, the Veterans Administration and/or other health
    insurance. TRICARE as second payer to Medicare and the new senior
    pharmacy benefit should be a significant enhancement to the care they
    are already receiving. Because this infrastructure is already in place,
    we do not foresee that TRICARE reimbursement rates will have a negative
    effect on the numbers of providers that see our older beneficiaries.
        Question. In areas such as Dallas, which has approximately 100,000
    beneficiaries, and there is not a military medical treatment facility,
    how are we addressing issues of access to providers?
        Answer. Dallas is an area distant from an MTF where the managed
    care support contractor for Region 6 was required to develop a TRICARE
    Prime network. Network adequacy is evaluated quarterly using the
    government prescribed network adequacy standards (access standards,
    drive time standards, ratio of specialists to population, PCM panel no
    larger than 2000, etc.) in the Region 6 managed care support contract.
    The network in Dallas is in compliance with these standards. There have
    been periodic problems with network providers leaving the network, but
    according to the Region 6 Lead Agent, contractor teams are sent to the
    area and these deficiencies have always been resolved. Beneficiaries
    who are having difficulty finding a provider may call the contractor
    health care finder at 1-800-406-2832 at the TRICARE service center to
    locate a network provider near them.
        Question. Some of my constituents are concerned about the quality
    of provider you get when you reimburse at 45 percent as opposed to 80
    percent. Are you offering our soldiers and their families the best of
    the best medical care or second rate medical care through TRICARE?
        Answer. Based on the standards set in the managed care support
    contracts for civilian and institutional providers to be in the managed
    care support contractor network, all network providers are screened
    against established quality indicators. The standards for becoming a
    network provider include:
      --Must be CHAMPUS authorized (verification of educational, post-
            graduate training, fellowship certificates and board
            certificates for requested clinical privileges or scope of
            practice, evidence of current state license(s), statement of
            physical and mental health status, chronology of practice
            experience, letters of recommendation, statement of malpractice
            history, DEA certificate, current report from National
            Practitioner Data Bank, non-board certified physicians
            practicing as specialists shall have two letters attesting
            their clinical competence by physicians certified in that
            specialty).
      --Additional criteria and information is required for mental health
            practitioners.
      --Hospitals, home health agencies, etc. must be JCAHO accredited (or
            other recognized national accrediting authority).
        Provider is re-appointed no more than every two years and provider
    file is kept updated.
        Question. What do you believe are the key issues in attracting and
    retaining providers?
        Answer. Adequate reimbursement rates, prompt payment of claims, and
    a reduction in the administrative requirements of managed care.

                                TRICARE FOR LIFE

        Question. I can tell you that the TRICARE For Life is a most
    welcomed program for those retirees that we made the promise to so many
    years ago. The 2001 National Defense Authorization Act, calls for the
    implementation of the pharmacy benefit on 1 April 2001 and the TRICARE
    For Life implementation 1 October 2001. A concern that I have is the
    number of military retirees who never enrolled in Part B of Medicare.
    This is a requirement of the new plan. An estimated 10 percent of
    eligible military retirees in San Antonio never enrolled in Part B of
    Medicare. Medicare eligible retirees who turned down enrollment in Part
    B face a 10 percent penalty on monthly premiums for every year they are
    past age 65 when they enroll. For a 75 year old that would be $91 a
    month, twice as much as someone who enrolled at age 65.
        Can you comment on your meetings with HCFA on identifying those who
    did not enroll in B and what solution is needed to waive this penalty?
        Answer. Representatives of the TRICARE Management Activity and the
    Office of the Assistant Secretary of Defense for Health Affairs have
    met with HCFA to work on procedures for DOD computer systems to access
    HCFA databases and identify who has Medicare Part B. We have been told
    that will be possible prior October 2001. Throughout the dual eligible
    population, we estimate 6 percent have not enrolled in Part B when they
    turned 65.
        Waiving the Part B penalty will probably require legislative
    action. The Army supports a one time waiver for the Medicare Part B
    penalty for those over 65 Medicare eligibles who did not enroll in Part
    B at the age of 65.
        Question. What marketing plan is planned to educate the over 65
    retirees about about TRICARE For Life?
        Answer. The over 65 retiree population is a well informed and well
    networked group that is already participating robustly in the ten
    TRICARE Senior Prime Demonstration sites. With the TRICARE Senior
    Pharmacy Program (TSPP), effective 1 April 2001, and TRICARE for Life
    (TFL), effective 1 October 2001, the TRICARE Management Activity (TMA)
    along with the Services has been conducting and implementing numerous
    communications and customer service initiatives. These initiatives
    include, for each respective program, periodic news releases, Coalition
    and Alliance Briefings, TRICARE website updates and links specifically
    for these two programs, TRICARE Conference Sessions to update medical
    personnel, the NDAA ``101'' briefing distributed to the TRICARE
    community world wide and web accessible, DEERS/Medicare letter sent to
    all DEERS enrolled retirees and their family members, TFL and TSPP
    Frequently Asked Questions (FAQs) on the TRICARE website, the toll free
    number, 1-877-DOD-MEDS, for TSPP, the TSPP brochure sent to 1.5 million
    potential beneficiaries, identification and mail outs to Congressional
    Medal of Honor recipients concerning eligibility for TRICARE, to
    mention a few. These initiatives are part of the TFL and the TSPP
    Communications Plans developed last year and implemented continuously,
    primarily at the Office of the Lead Agent and military medical
    treatment facility (MTF) levels.
        The Army also annually conducts Retiree Appreciation Days, seminars
    at major Army installations or metropolitan areas, providing up-to-date
    information on retirement benefits, including TRICARE. There are 33
    Retiree Appreciation Day events scheduled across the country beginning
    April 26 and ending in November.
        The TMA marketing plan implementation addresses many of the key
    issues of outreach to ``hard to reach'' beneficiaries and providers.
    Many of the initiatives are accomplished at the Office of the Lead
    Agent and Medical Treatment Facility levels. A sampling of marketing
    events is provided below:

    TFL Marketing Steps: (Office of the Lead Agent (OLA) and MTF level
            actions)
        1. MTFs provided complete info package as information is known
      --Preliminary sources on TMA website as guide
      --OLA teleconferences (monthly and as necessary)
      --OLA sponsored Regional Beneficiary Counseling and Assistance
            Coordinator (BCAC) training conference
        2. Contractor line informed and modified
      --Contingent on contract modification approvals
        3. Website modifications (use links into TMA whenever possible)
        4. MCSC briefing schedule (contingent on contract modifications)
      --Supplement with briefs from MTF in catchment areas
      --Supplement with OLA briefs in non-catchment areas
        5. Articles for Installation newspapers
      --Using only official releases due to gaps in program
      --As program details finalized new articles to be made available
        6. Send press release to all Congressional offices in Region 1
      --OLA action when contract modifications are approved
        7. Visit with all Congressional offices
      --OLA action--education of congressional admin staffers (field
            offices)
        8. News release to retirement organizations and commercial news
      --TMA, SG or OLA levels
        9. Meetings with retiree organizations
      --OLA for non-catchment and state levels
      --MTF coordination in catchment areas
      --MCSC (contingent on contract mod approvals)
        10. Direct mailing to over-65
      --TMA or SG level (not cost effective at MTF level)
        11. Publication of new brochure
      --TMA level
          --Not cost effective at local levels
          --Reduces chance of misinformation or error
        12. MCSC education of network providers
      --Contingent on contract modifications

        Question. Can you comment on how the implementation of TRICARE For
    Life will impact your resources? (Physician contacts per year average
    12 per year in those over 65 as compared to 4.6 per year in ages 15-
    44). (Days of Hospital Care per year average 269 days of care per one
    thousand persons in those over 65 as compared to 54.6 per one thousand
    persons in ages 15-44).
        Answer. This group of patients will stress our capacity to handle
    primary care patients with the primary care managers we now have within
    our system. To answer your question about the need to account for the
    increased utilization of older patients, I can tell you that the
    standard panel size for each PCM in our model has been adjusted to
    allow for just the increased workload. Our models for specialty care
    will also account for the added workload. These older patients will be
    welcomed not just because they are members of the Army family, but also
    because they bring serious medical and surgical problems to our medical
    providers that will maintain and even improve their medical readiness.
    The bottom line is that we can handle a portion of the eligible
    population under the Tricare For Life program as we fully optimize our
    existing facilities.
        TFL is a step in the right direction towards keeping faith with our
    most senior retirees. However, to meet this increase in workload will
    require an increase in resources and a renewed vigilance to ensure
    maximum efficiency of our health care resources. Where we can leverage
    the existing infrastructure of the direct care system by covering the
    marginal costs of caring for the older retirees who have higher average
    expenses. We will save the taxpayer's dollar and protect an ever
    dwindling Medicare trust fund. The key is an infusion of dollars that
    will allow us to fully utilize our MTF's capacity. We are continuing
    work on a model that will allow marginal expansion of our MTFs to bring
    a greater number of retirees back to the MTF.
        Question. Gentlemen, will you be able to meet the goals of TRICARE
    For Life and still be able to provide care to the active force based on
    your projected budgetary guidelines?
        Answer. Our primary mission is threefold: project and sustain a
    healthy and medically protected force; deploy a trained and equipped
    medical force that supports deployed Army forces; and manage the care
    of the soldier and the military family. As currently structured, there
    are no additional funds for TFL within the Direct Care System. There
    are budget projections that will allow TRICARE to act as second payer
    to Medicare in the civilian sector. We support expanding our limited
    Space Available capacity and formalizing a relationship with more
    retirees that allows them to receive care in the MTF within the
    clinical capability of that MTF. This would require funds earmarked for
    the marginal costs of taking care of additional beneficiaries.

                               MEDICAL PERSONNEL

        Question. Are you able to recruit the professionals you need to
    meet medical personnel requirements (Active and Reserve Components)?
    (All three services identify recruiting and retention of nurses as an
    important shortfall).
        Answer. No, we have not been able to recruit the number of health
    care professionals we need to meet the medical personnel requirements.
    In the last four years, the United States Army Recruiting Command has
    made 94 percent of their active duty mission. This equates to around
    1,200 new personnel per year. While each of the Corps presents its own
    set of challenges, without a robust student program we would be in far
    worst shape. Unfortunately, we have not received the production that we
    would like from Cadet Command in recent years. This organization
    provided us the majority of our non-allied science Medical Service
    Corps officers and Army Nurse Corps officers. The economics of the
    country have made it extremely difficult to recruit specialty-specific
    medical officers, dental officers and pharmacy officers. We now must
    utilize larger student programs to obtain the same number of
    individuals. I believe that this is an important point. The total
    number of officers we must recruit each year has remained fairly
    constant over the last five years. We have altered the programs
    necessary to get that number. Without the increase in student
    scholarship programs we would continue to decline. We must now
    essentially buy our officer force.
        Specifically, nurses are not at our budgeted end strength. With the
    nursing shortage, we have seen a decline in the Reserve Officers'
    Training Corps (ROTC) scholarship requests; thus our ROTC accession
    numbers have decreased significantly. Recruiting Command has made up
    for some of this shortfall. Having to recruit a greater number of
    working nurses means we must compete with civilian institutions for the
    same critical specialties at a time when they are offering streamlined
    hiring practices and significant recruitment and retention bonuses. As
    in the civilian sector, we have critical shortages in the critical
    care, nurse anesthesia and perioperative specialties. Currently we are
    experiencing low fill rates in the majority of our specialty
    development courses. Although we are engaged in an aggressive marketing
    campaign to increase our seat fill, if these current fill rates
    continue we will have a severe shortage of these clinical specialties
    in the out years.
        For COMPO 2 requirements there are shortfalls in the nurse
    anesthetist and perioperative nurse populations.
        Question. Are medical professionals able to sustain their clinical
    skills at a high level? (We have funded the Joint Trauma Training
    Center at Ben Taub which is a Triservice program).
        Answer. The principal means whereby Army Medical Department (AMEDD)
    healthcare providers sustain their clinical skills is through the
    delivery of healthcare to active duty soldiers, dependents, and retired
    personnel in our Military Treatment Facilities (MTFs). In particular,
    the care of trauma patients provides a valuable training environment
    that more closely duplicates the rigors of combat casualty care. To
    ascertain if our healthcare providers are caring for trauma patients,
    we analyzed AMEDD Standard Inpatient Data Records (SIDRs) for fiscal
    year 1995-99 from Army Community Hospitals (ACHs) and Army Medical
    Centers (AMCs). During fiscal year 1995-99, there were a total of
    41,815 trauma admissions; 22,273 (53.3 percent) trauma admissions to
    AMCs and 19,542 (46.7 percent) trauma admissions to ACHs. Over the
    period of analysis, the number of MTFs decreased by 26.3 percent (38 to
    28), and the annual number of trauma admissions decreased by 51.9
    percent (11,698 to 5,622). The decrease in annual trauma admissions was
    most pronounced in ACHs (64.1 percent) compared to AMCs (38.7 percent).
    While standards for continuing competence in all disciplines of
    medicine are under development, these data suggest significant erosion
    of trauma readiness training in our MTFs, especially our ACHs. The
    AMEDD is not unaware of these statistics and the implications for
    medical readiness.
        In our AMCs, directors of graduate medical education programs
    routinely supplement training our residents receive with rotations at
    American College of Surgeons (ACS)-verified Level I trauma centers.
    These rotations ensure our training programs meet certification
    requirements, and our residents graduate with the requisite clinical
    skills. To enhance sustainment of clinical skills among healthcare
    providers assigned to deployable medical units, the AMEDD is an ardent
    supporter of the Joint Trauma Training Center (JTTC) at Ben Taub
    Hospital in Houston, TX. Our Forward Surgical Teams (FSTs) receive a
    one-month training rotation at Ben Taub Hospital every two years. The
    JTTC program has had clear, demonstrable results in enhancing
    individual and team trauma care skills and improving the medical
    readiness status of FSTs. Currently, we are exploring ways to expand
    trauma care delivered by one or more of our AMCs and integrate ACH
    healthcare providers and deployable units in these AMC trauma care
    programs. Based on the success of trauma simulators at the JTTC, we are
    also considering expanded use of advanced trauma simulations to augment
    trauma training. We anticipate these analyses will be complete the end
    of fiscal year 2001.
        Question. Does the current medical structure meet military
    readiness and force projection requirements?
        Answer. The current medical structure is a legacy force that was
    designed to support the ``Cold War'' scenario. It is a large, heavy,
    somewhat cumbersome force that cannot offer the Combatant Commanders
    the flexibility or versatility required of a modern military medical
    force. The medical force structure is currently undergoing a Force
    Design Update under the Medical Reengineering Initiative (MRI). This
    redesign will provide the Army with the medical structure to support
    the Interim Force and pathway to the Army Objective Force. MRI
    emphasizes deployability, modularity and split-based operational
    capability. MRI provides a flexible medical force enabling split-based
    operations and employs reach-back technologies. Due to Army resource
    constraints, the current medical structure is supporting a mixed force,
    part legacy structure and part MRI reengineered. Presently, the Army
    can only convert 42 percent of its medical operational structure to the
    MRI medical force by the end of fiscal year 2006. Although this ``mixed
    force'' does support the Army transformation priorities, its
    sustainment poses operational support difficulties for personnel,
    training and equipping. Warfighting is complex--providing Combat Health
    Support (CHS) is equally complex. A MRI medical force would provide a
    well-balanced fully interoperable CHS capability that can gain medical
    dominance at every point in the spectrum of operations. Conversion of
    the entire medical force structure would provide full spectrum CHS to
    the Army as an integral part of the joint force that can rapidly deploy
    with sufficient capability to meet the most demanding missions.
        Question. What have been the military medical requirements for the
    Balkans, Southwest Asia, and other deployments? What is the impact?
        Answer. Total AMEDD deployed in support of the following missions:
    JTF-B SOUTHCOM: 56 AMEDD personnel; MEDRETE (SOUTHCOM monthly aver) 35
    AMEDD personnel; Desert Spring (CJTF-Kuwait) 128 AMEDD personnel; OSW-
    Saudi Arabia (MEDEVAC Crew) 15 AMEDD personnel; MFO Sinai 25 AMEDD
    personnel; ARCENT Area Support 22 AMEDD personnel (monthly aver);
    Bright Star Exercise 250 AMEDD personnel; Operation Joint Forge-SFOR
    351 AMEDD personnel; Operation Joint Guardian-KFOR 198 AMEDD personnel;
    RSOI FE UFL Exercise to PACOM 120 AMEDD personnel; Cobra Gold Exercise
    to Thailand 150 AMEDD personnel; and GME backfill to Korea 18 AMEDD
    personnel (for aver 120 days).
        The analysis covers only USA MEDCOM overseas deployments for fiscal
    year 2000 and fiscal year 2001, as of 2 April 2001.
        Combined for fiscal year 2000 and the first six months of fiscal
    year 2001 U.S. Army MEDCOM has deployed 956 military personnel totaling
    68,592 mandays in overseas supported activities.
        The following is a summary break out of the support provided:
        CENTCOM--60 personnel totaling 6,439 mandays.
        EUCOM--397 personnel totaling 41,914 mandays.
        PACOM--388 personnel totaling 7,463 mandays.
        SOUTHCOM--111 personnel totaling 12,776 mandays.
        Total officers soldiers deployed equal 523 personnel totaling
    44,227 mandays.
        (Note: the above officer bullet includes MC/DC totals) Analysis of
    the total officers deployed reflects U.S. Army MEDCOM provided 290
    Medical Corps and Dental Corps Officers totaling 23,244 mandays.
        Total enlisted soldiers deployed equal 333 personnel totaling
    24,365 mandays.
        Operational impact in regards to FTE (full time equivalent) yield
    the following summary:
        Total FTE cost (Officer and Enlisted), $30.57 million.
        MC/DC FTE cost, $16.9 million.
        All other Officer FTE cost, $8.4 million.
        Enlisted FTE cost, $5.27 million.
        Formula: (Mandays/220)(per FTE cost)=FTE total.
        1 military FTE = 220 days in a year.
        FTE cost per enlisted, $47,600.
        FTE cost per officer (minus MC/DC), $87,600.
        FTE cost per MC/DC, $160,000.
        Question. How does the third party collection system currently work
    within the Military Medical Treatment Facilities?
        Answer. The Third Party Collection Program (TPCP) at the MTFs is
    responsible for billing the health insurance of eligible beneficiaries
    to recover the costs of health care services provided. The MTF uses
    these collections to enhance health care to our patients through the
    purchases of supplies and services that may not otherwise be available
    within the hospital's budget.
        At this time, the TPCP utilizes the diagnosis-related group (DRG)
    billing methodology for inpatient services and an all-inclusive charge
    for outpatient services. Each outpatient clinic, with an assigned MEPRS
    code, has their own clinic rate charge. The all-inclusive charge covers
    the cost of the clinic visit itself, the professional fee of the
    clinician, and any and all ancillary services that may (or may not) be
    provided within the visit itself.
        The billing methodology will change from an all-inclusive to an
    itemized billing rate effective 1 October 2001. Instead of sending one
    bill for the health care services rendered, the clinic charge (hospital
    or facility service fees), professional fee of the clinician and any
    and all ancillary charges (radiology, pathology and pharmacy) will
    generate a separate bill based on the CPT code of the service provided
    and priced using an adjusted (for region) CMAC rate.

                            THIRD PARTY COLLECTIONS

        Question. What is the impact on Medical Treatment Facilities of
    providing the medical services and collecting for those services (for
    example at Wilford Hall and Brook Army Medical Center in San Antonio)?
    Is the money returned to the Medical Treatment Facilities that provided
    the services?
        Answer. Under a memorandum of understanding between Bexar County
    Hospital District (dba University Health System (UHS)), Brooke Army
    Medical Center (BAMC) and the Air Force's Wilford Hall Medical Center
    (WHMC), a trauma network was established to facilitate the appropriate
    acceptance and transfer of Code III trauma victims for Bexar County and
    non-Bexar County patients.
        In consideration of the military medical treatment facilities (MTF)
    support, UHS will pay to the MTFs a total sum of $3 million annually.
    The annual sum is paid in four equal installments of $750,000,
    alternating the quarterly payments between BAMC and WHMC. While WHMC
    receives this money directly, BAMC does not. These funds are received
    by the Army Medical Command (MEDCOM) who reimburses BAMC based on per
    episode of care provided to non-beneficiaries, civilian emergency
    patients when other collection efforts are exhausted.
        The cost of civilian trauma patients to BAMC is $13.1 million
    annually. Approximately $3 million is reimbursed through insurance
    collections, $7.3 million is received from MEDCOM under this agreement
    and debt management processing, leaving a shortfall to the MTF of $2.8
    million.
                                     ______

               Questions Submitted by Senator Ernest F. Hollings

                         BLOOD-RELATED DISEASE RESEARCH

        Question. Under Congressionally Directed Medical Programs, is there
    on-going research targeted on blood-related diseases such as leukemia
    or lymphoma? Is blood-related disease research to be consistent with
    the mission of DOD medical research?
        Answer. The Navy has, for several years, received congressionally
    directed increases in RDT&E funds to support the National Bone Marrow
    Program, which provides a bone marrow registry and supporting research
    on methods for tissue typing and matching. The National Bone Marrow
    Program directly supports the treatment of leukemia, as well as other
    diseases, through the matching of prospective bone marrow recipients
    with suitable donors. Funding for the program was $34 million in fiscal
    year 2001. There is no on-going research within the Air Force or Army's
    Congressionally Directed Medical Research Programs that is targeted on
    blood related diseases, to include leukemia or lymphoma.
        The answer depends in part on how broadly the phrase ``blood-
    related disease'' is to be interpreted. Blood diseases, as they are
    generally defined, are not a consequence of most military activities or
    threats. The major exception is radiation exposure, which can severely
    depress bone marrow function with profound hematological and immune
    system effects, and can induce cancers in cellular elements of the
    blood system. Radiological effects are considered by the Armed Forces
    Radiobiology Research Institute (AFRRI). Aside from this impact, blood
    diseases are not considered within the mission of DOD medical research.
    This fact notwithstanding, there may be military applications of
    knowledge gained through blood disease research. The military
    applications of such knowledge are for the most part peripheral to the
    diseases themselves and do not benefit victims of these diseases.
    Certain research projects on blood-related diseases may be consistent
    with the DOD medical research mission if the anticipated findings can
    be clearly demonstrated to have direct relevance and applicability to a
    militarily unique need. All such projects need to be considered on a
    case by case basis.
        The principal area of potential application is in combat casualty
    care. Hemorrhage resulting from trauma is the primary cause of
    battlefield deaths, and the DOD medical research mission is accordingly
    concerned with the development of hemorrhage countermeasures, to
    include the application of clotting enhancers that were originally
    identified through studies of clotting disorders. Clotting disorders
    are also occasionally associated with trauma-induced hemorrhagic shock,
    reperfusion, and hypothermia; such disorders represent secondary
    complications of trauma that are much less important than hemorrhage as
    a cause of battle-related morbidity and mortality, but are nonetheless
    consistent with the mission of DOD medical research. In addition,
    studies on platelet function may be consistent with the DOD mission if
    they can be related to the development of improved (field-expedient)
    means for platelet preservation and storage. More broadly, the DOD is
    interested in substances that can improve oxygen flow to organs under
    hemorrhagic conditions where blood flow is reduced. To the extent that
    studies of anemic conditions or therapies for these conditions can be
    related to the development of pharmacological or other countermeasures
    that could be employed in a field trauma management setting, they may
    be consistent with the DOD medical research mission.
        If one considers blood-related disease more broadly, there are a
    number of infectious disease pathogens of military importance that are
    blood-borne and cause symptoms directly through their effect on blood
    cells or blood vessels. Examples include malaria, HIV, and a number of
    viruses that can cause hemorrhagic fevers. However, such diseases are
    not typically considered to be blood diseases, per se. Within the DOD
    medical research mission, they are instead addressed through strategies
    targeted at the infecting organisms. Because the primary focus of this
    component of DOD mission research is on prevention of disease,
    symptomatic treatments targeted at a particular organ system such as
    blood are not of military relevance. Research on the pathogenic effects
    of these organisms on blood components are only studied insofar as is
    necessary to understand the life cycle of the organism, identify
    appropriate targets for intervention (i.e., through vaccines or drugs),
    and identify and understand correlates of protection that are essential
    to the evaluation of product efficacy.
        Question. Has any work been done to identify the occurrence rate or
    prevalence of blood-related diseases resulting from environmental
    exposure in the theater of war?
        Answer. The Army Medical Department, through the Army Medical
    Surveillance Activity at the U.S. Army Center for Health Promotion and
    Preventive Medicine, tracks the incidence and prevalence of all serious
    diseases and injuries that affect soldiers, sailors, airmen, and
    Marines, deployed and non-deployed. Several studies focused on the
    health of troops deployed to Bosnia have been completed. Although these
    studies were not specifically designed to examine blood-related
    diseases, results did not indicate any increased risk of these diseases
    in military personnel deployed to Bosnia.

                           HEALTH OF AMERICAN TROOPS

        Question. The National Academy of Sciences and the Institute of
    Medicine issued a report in January which made recommendations to the
    Department of Defense about improving the health of soldiers deployed
    to the theater of war. The Institute's recommendations are compelling
    and, if implemented, would make a strong commitment to the health of
    American troops. Are you familiar with the Committee's recommendations?
    Do any of the individual services, or the Department of Defense, have
    implementation plans for the any of the Committee's recommendations? If
    not, why not?
        Answer. The IOM report included 32 recommendations grouped under
    six strategies for action by DOD. Army actions, some in conjunction
    with the other Services and the Office of the Assistant Secretary of
    Defense (Health Affairs), have acknowledged the themes included in many
    of these recommendations and strategies. Below are two current Army
    activities that directly address these strategies and recommendations.
        First, under the leadership of the Deputy Assistant Secretary of
    the Army for Environment, Safety, and Occupational Health, the Army is
    finalizing policy to implement requirements of DOD Instruction 6490.2
    and other relevant DOD force health protection policies. The Army
    policy will outline roles and responsibilities for Army organizations
    to provide effective, continuous medical surveillance of Army
    personnel, improve information-sharing concerning medical threats and
    countermeasures, and reduce short- and long-term health risks to Army
    personnel through the operational risk management process. This effort
    reflects several IOM recommendations, including recommendation 2.2
    ``DOD should integrate expertise in the nuclear, biological, chemical,
    and environmental sciences for efficient environmental monitoring of
    chemical warfare agents and toxic industrial chemicals for both short-
    and long-term risks''. This policy will be stated in a numbered
    Department of Army policy letter to be released in May 2001. Plans for
    implementation of this policy are due within 120 days of publication of
    the letter. We expect that the implementation plans will highlight
    those areas in which the Army will achieve measurable progress in
    addressing the recommendations in the IOM report.
        Second, we are developing an Army Health Strategic Plan which
    includes three goals for Army health: Project and sustain a healthy and
    medically protected force; Deploy a trained and equipped medical force
    in support of the Army transformation; Manage and promote the health of
    the soldier and the military family. Several long term objectives and
    strategies of this plan address the strategies and recommendations of
    the IOM committee. For example, the long-term objectives under the
    first goal address:
      --Optimizing the individual fitness and health of soldiers pertaining
            to pre-deployment readiness,
      --Maintaining the health of soldiers while deployed,
      --Developing more robust hazard and health surveillance capabilities,
      --Developing knowledge and materiel solutions to deployment health
            problems.
        This strategic plan provides the basis for the Army Medical
    Department Balanced Scorecard through which specific initiatives to
    reach these goals will be developed and tracked. The Balanced Scorecard
    is designed to provide the appropriate focus so that concrete progress
    toward the goals may be measured. The Scorecard is targeted for release
    in 3QTR fiscal year 2001.
                                     ______

                 Questions Submitted by Senator Robert C. Byrd

                          OUTCOMES MANAGEMENT PROJECT

        Question. Last year, at my request, and with the concurrence of
    Chairman Stevens, the Committee on Appropriations added $10 million for
    the Walter Reed Army Medical Center to conduct an Outcomes Management
    demonstration project for targeted disease. I am advised that, not only
    has this project been successful at Walter Reed, but that the work here
    should serve as the model for the Military Health System to evaluate
    Clinical Outcomes and accountability of the system to beneficiary
    needs. Would you care to elaborate on that?
        Answer. Medical Outcomes Metrics are the measures by which ours,
    and every other medical system, should be evaluated and ultimately
    funded. Due to advances in both information technology and medical
    science, we now have the ability to collect and process data that
    reflects our system's performance based on how much better our patients
    feel or how well they are progressing through their illness or injury.
    What is happening at WRAMC is unique in that the software that has been
    developed is owned by the government, and was developed to work with
    the CHCS software package. Perhaps what makes this program most unique
    is the dedication and hard work of those developing it. Through the
    visionary leadership and support of the Hospital Commander, few
    programs can claim greater success given the rapid development and
    fielding of this effort. I feel the outcomes management Program at
    WRAMC can serve as a cost and time efficient example of how to build
    the next generation of patient management software and serve as the
    standard bearer of the future. This program will take us into an era of
    accountability not only for how well we practice the healing
    disciplines, but also for how well we serve our patients.
        Question. It is clear to me that this work is important not only to
    the Military Health System, but as well to the Nation. Does your vision
    include plans to expand the scope of this effort to include other
    Federal agencies, Civilian Academic Institutions, or State Health
    Organizations?
        Answer. The WRHCS Outcomes Management Program has demonstrated
    preliminary (the program is just being initiated) outcomes improvement
    in a number of chronic conditions--Diabetes, Congestive Heart Failure,
    Chronic Obstructive Pulmonary Disease, Pediatric Asthma, Breast Cancer,
    Hepatitis C and Stroke--and in a number of prevention measures. The
    Program is linked to MEDCOM's DOD/VA Clinical Practice Guidelines. I
    believe that this high quality, evidence-based program can be applied
    to any healthcare organization. We will make our results and protocols
    available to any health care organization that is interested prior to
    actual publication of results.
        Currently we are in discussions with the Department of Veterans
    Affairs to determine how we can share our software packages and to work
    with DVA experts in defining and evaluating our efforts. The greatest
    benefit of this effort will be within the DOD and DVA health care
    systems, due to the similarity of patient management systems. We are
    also working to identify partners who are interested in rural and other
    underserved populations that can assist us in determining how to best
    disseminate the results of our work to maximize the quality of care for
    these populations by empowering the physicians who care for them. I do
    intend to aggressively seek other opportunities within state and local
    health systems, particularly those who primarily serve poor and
    underserved populations.
        Question. I understand that in order to sustain the impact and
    momentum of the progress made so far in the improved Provision of Care
    for the Walter Reed Health Care System, and to assure that the progress
    made so far is not lost, an additional $16 million will be necessary
    for fiscal year 2002. Would you outline how these funds will be
    invested?
        Answer. Monies provided to this program in fiscal year 2001 were
    used in the rapid definition and deployment of this program. In fiscal
    year 2002 we anticipate utilizing these additional funds to
    significantly expand the number of patients participating in the
    program, and to increase the number of disease states included in the
    program. In addition, we anticipate fiscal year 2002 monies to be used
    to develop an exportable program package, which we will begin to deploy
    in fiscal year 2003. Fiscal year 2002 funding includes monies to
    support travel to other medical facilities to train healthcare
    providers via a ``train-the-trainer'' philosophy which has been shown
    to be the fastest way to indoctrinate the existing culture with a new
    sense of accountability and expectations. Though we have accomplished
    much this fiscal year, funding for fiscal year 2002 is crucial for the
    success of this program and to realize the dividends on investments
    made this fiscal year.
        Question. Given the importance of this effort and the skill and
    proven success of the Walter Reed Management team, how can you insure
    that the Outcomes Management Program is fully funded in the future to
    insure that the benefits realized by our investment are not lost?
        Answer. There are two things I intend to do in order to insure this
    important work is not lost. First, my staff is working to incorporate
    the fiscal needs of the program into the fiscal year 2003 budget
    request. I expect the program to be fully funded within the 5-year
    budget plan. Secondly, I have directed that Walter Reed will develop an
    exportable program that each Army regional command Tricare region can
    implement. I have directed the Program Office to begin deployment of
    the initial software/program support modules beginning second quarter
    fiscal year 2003. As previously stated, I believe the medical outcomes
    management program presents us with the opportunity to actually gauge
    our ability to serve patients and too justify our continued level of
    service. As such I will insure that, as rapidly as possible, the
    program will be funded under the POM and that the knowledge and
    expertise we have gained is replicated throughout the Army Medical
    Department.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy

                                HOSPITAL SYSTEM

        Question. As the Army develops lighter, more deployable units and
    equipment, is the Army developing an equally mobile hospital system to
    deploy with this force. I understand the service's current hospital
    system is aging, obsolete, and bulky. I also worry that the Army's
    current forward-deployable medical hospital does not offer protection
    from nuclear, chemical, and biological weapons. I would appreciate your
    telling us about what steps the Army is taking to upgrade this
    essential capable to meet the needs of the Army's broader
    transformation. Specifically, what plans has the Army developed to
    modernize the mobile hospital systems? What funds has the service
    dedicated to carry out that plan in the fiscal year 2002 budget? Can
    you additionally please provide any relevant data on this effort to the
    Subcommittee?
        Answer. The Army Medical Department's (AMEDD) has worked to ensure
    that the medical capabilities possess responsiveness, mobility,
    survivability, agility, and versatility in support of the CSA's
    Transformation to the Objective Force. Since 1998, the Directorate of
    Combat and Doctrine Development (DCDD) of the AMEDD Center and School
    (AMEDD C&S) has been involved in identifying operational requirements
    for a future medical shelter system (FMSS) which could plausibly
    replace the current hospital system. The operational requirements
    address strategic deployability, tactical mobility, integrated support
    systems (environmental control, power, water distribution, medical
    gases), NBC protection as well as state-of-the-art medical capabilities
    and integrated telecommunications/digitization. Phase 1 of this effort
    resulted in a virtual reality design of a mobile surgical unit, and
    Phase 2 will provide actual engineering schematics. Advances in
    technology, composite materiels, as well as other advancements have
    indeed made the Deployable Medical System or DEPMEDS ``dated'', in need
    of a major overhaul, and it will reach the end of its life cycle before
    the end of this decade. We must capitalize upon emerging and future
    technologies that will provide a system that is a ``quantum leap
    ahead'' of any system that is known today, and then identify the
    funding to resource that system.
        The AMEDD is working with the Transportation Corps to define
    medical requirements that promote tactical mobility for the Family of
    Medium Tactical Vehicles Load Handling System (FMTV/LHS). The AMEDD
    transformation strategy demands a Combat Health Support (CHS) system
    that is rapidly deployable, yet fully supportive of the deployed force.
    The FMTV-LHS will require one trained soldier approximately six minutes
    to attach and emplace/displace a shelter. The PM-MTV has committed
    funding to initiate design and development of the FMTV-LHS prototype by
    Stewart & Stevenson and Cargo Tec.
        In September 1998, DCDD AMEDD C&S in conjunction with Medical
    Research and Materiel Command (MRMC), U.S. Army Tank and Automotive
    Command (TACOM) and Mobile Medical International Corporation (MMIC)
    were involved in a collaborative team effort to define requirements for
    the development of a mobile surgical unit. For the FST capabilities,
    the concept envisioned a 2-container system that could be deployed in
    two C-130 sorties and transported on one FMTV/LHS and one Medium
    Tactical Vehicle--Load Handling System (MTV/LHS) trailer. The FMTV-LHS
    consists of a truck with a pneumatic load-handling system that will be
    used to load, unload, and transport current and future deployable
    medical systems. The maximum weight of the container with equipment
    shall not exceed 8.8 STons. Each container will be equipped with
    environmental control, self-internal power, telecommunication, and NBC
    protection. This concept evolved into a family of systems, which MMIC
    termed the 21st Century Mobile Hospital System (21CMHS). The concept
    and resulting virtual reality design, based upon combat developer user
    requirements, was evaluated as having merit as a future shelter system
    for the FST and as a possible follow-on to DEPMEDS. It was recommended
    that funding options be explored. Phase 2 of this initiative involves a
    continuation and refinement of system requirements. An AMEDD C&S led
    Integrated Concepts Team comprised of DCDD, MRMC, Oak Ridge National
    Labs (ORNL), OCAR, and USAF personnel have partnered with the National
    Automotive Center (NAC) to refine the operational requirements and
    concepts for the FMSS. The FMSS is the AMEDD's modernization effort for
    the next generation of medical shelter systems. This effort is looking
    at developing a family of rigid and soft-sided containers that will
    facilitate strategic and tactical mobility consistent with Army
    Transformation while providing an appropriate environment and state-of-
    the-art medical facilities for surgery, intensive care, and other
    hospital support services. These shelters will incorporate autonomous
    power generation and environmental control and be wired for
    digitization and communications. They will be capable of operating in
    chemical and biological threat environments. Their multi-functional
    design will allow for quick reconfiguration for multiple medical
    applications.
        ORNL possesses technologies, capabilities, and some of the projects
    that support an initiative to include a new type of a Tactical Quiet
    Generator (QTG) that is lighter, quieter than the existing QTG and has
    25 percent better fuel consumption that could be integrated into the
    shelter system for emergency power. ORNL added that they could develop
    a shelter that will be the same height as the MTV cab and will expand
    upward. The employment of the FMSS in the theater of operation was
    discussed to include strategic deployability and tactical mobility and
    strategic mobility requirements. In addition, the Forward Surgical Team
    (FST) must be capable of deploying as far forward as the Battalion area
    given the capability of the MTV-LHS. Congress provided $8 million for
    procurement of the Advanced Surgical Suite for Trauma Care (ASSTC)
    shelters. The ASSTC, though, does not meet the AMEDD's operational
    requirements. It is anticipated that the Office of the Secretary of
    Defense (OSD) will release $7.3 million for research and development
    before the end of May 2001 and the total $8 million must be committed
    by 30 September 2001. It has been recommended that these funds be
    redirected and utilized for concept maturation, requirements
    refinements, and advanced prototyping of an integrated medical hospital
    system in support of the future Objective Force. The AMEDD has
    developed requirements for a containerized shelter system to support
    far forward surgical capability as well as other areas of combat health
    support. At the present time, there is no dedicated continued funding
    for either of these two initiatives.
        The current DEPMEDS, in and of itself, does not provide protection
    from NBC weapons. Under development, though, is the Chemically
    Protected Deployable Medical Systems (CP-DEPMEDS) which possesses the
    capability to chemically and biologically harden existing DEPMEDS
    equipped hospitals and is a Joint Service effort with the U.S. Air
    Force. It provides an environmentally controlled collective protection
    for Level III medical treatment facilities that will support healthcare
    in an environment contaminated with biological or chemical warfare
    agents.
        Under the Medical Reengineering Initiative (MRI), this collective
    protection will be applied to the 84-bed and 164-bed MRI Corps Combat
    Support Hospitals. Under the Medical Force 2000 (MF2K) structure, CP-
    DEPMEDS is applied to the hospital unit base (HUB) of the Combat
    Support Hospital. CP-DEPMEDS will be part of Operations Project Stock
    and will be centrally stored/maintained in depot, and as pre-positioned
    assets in theater. Another current and related program, Chemically
    Biologically Protected Shelter System (CBPSS), addresses the need to
    provide collective protection to medical units operating farther
    forward on the battlefield. CBPSS, which is an integrated system, will
    be provided to medical treatment squads that provide Level I medical
    treatment. Future testing and evaluation will validate the feasibility
    of providing CBPSS to Level II Medical Companies and Forward Surgical
    Teams. While not addressing forward deployed medical hospitals, CBPSS
    does demonstrate the AMEDD's efforts to provide collective protection
    to medical units wherever it is deemed necessary on the battlefield.
    NBC protection is a requirement for future medical shelter initiatives
    to ensure that this protection is available. There is dedicated funding
    for both CP-DEPMEDS and CBPSS through Joint NBC Defense Program and
    Army funding. The current fiscal year 2002 Budget figures are as
    follows: CPDEPMEDS--3 systems, $3 million; CBPSS--32 systems, $15.7
    million. Training sets will be issued to AMEDD C&S and Regional
    Training Sites--Medical sites.
        The AMEV program implements the Army's Transformation Vision by
    recapitalizing and remanufacturing excess Bradley M2A0s to enhance and
    modernize the capabilities of the Legacy Force. Without the AMEV,
    medical ground evacuation assets will remain essentially unchanged
    since the 1960's. The AMEDD proposes fielding AMEV's to enhance
    mobility in the Counter Offensive Force. With at a per unit purchase
    cost of $870,000, the unfunded requirement for 280 AMEVs is
    $243,600,000. The UFR is recognized/validated by OCDSOPS as a level III
    UFR competing against all other combat systems within the Maneuver BOS.
        The total objective force requirement for the UH-60Q(HH-60L/HH-60M)
    is 385 MEDEVAC aircraft; 356 for the warfight and 29 for the
    operational readiness float account. Of the warfight 356 aircraft, 191
    go to the Active Component and 165 to the Army National Guard. The
    current modernization projections for the UH-60Q(HH-60L/HH-60M)
    complete the 117 aircraft requirement identified in TAA-05 for Force
    Package One by 2013 and the 75 aircraft in Force Package Two by 2018.
    At a cost of $4.6 million per UH-60Q(HH-60L/HH-60M), the 117 Force
    Package One aircraft will cost $538 million and the 75 Force Package
    Two aircraft will cost $345 million; cost of the entire program is $883
    million.
                                     ______

               Questions Submitted to Vice Adm. Richard A. Nelson

                   Questions Submitted by Senator Ted Stevens

                         FISCAL YEAR 2000 SUPPLEMENTAL

        Question. How much relief has your direct care system received from
    the fiscal year 2000 Emergency Supplemental?
        Answer. In fiscal year 2000, Congress provided an Emergency
    Supplemental to the Operations and Maintenance (O&M), Defense Health
    Program (DHP) account totaling $1.2 billion. From this Supplemental,
    Navy medicine received $52 million for our direct care system. We used
    the $52 million to purchase collateral equipment for new construction
    that was being completed in the near-term, and to buy forward-funded
    health care contracts within our Medical Treatment Facilities and
    Dental Treatment Facilities. Navy medicine did not have a significant
    backlog of unfunded issues as we started fiscal year 2001 but changes
    made by the TRICARE Management Activity (TMA) have reduced our
    available funding and together with new healthcare benefits have
    created a significant funding shortfall. Of note is the fact that the
    workload produced by Navy medicine actually increased from fiscal year
    1999 to fiscal year 2000.
        Question. What happens when your MTFs are the first to pay the
    bills, or the last to receive any funding relief?
        Answer. The Navy Medical Treatment Facilities [MTFs] which make up
    the Direct Care System have operated each of the last three years on a
    severely constrained funding profile which we define at the sustainable
    range of operations just above minimally executable. This allows us to
    merely sustain current operations and does not allow the Direct Care
    System to make needed improvements to patient care capabilities,
    renovations of buildings that are continuing to deteriorate, replaced
    outdated equipment, pursue additional continuing medical education for
    our health care providers, nor fully implement new healthcare benefits.
    The funding situation we have been in over the past three years has
    seen new TRICARE benefits being added, thereby increasing the bills for
    care in the Military Health System (MHS). Of necessity, what we cannot
    provide in-house is referred to the private sector, via the Managed
    Care Support Contractors. This has caused a requirement within the
    Defense Health Program and the Office of the Secretary of Defense
    (Comptroller) to continually seek offsets from the Direct Care System
    to help defray a portion of those increased private sector costs. Our
    MTF Commanding Officers are placed in the position where they do not
    replace medical equipment when needed, and conduct only ``breakdown''
    maintenance, that is, repair the breakdown, for both medical equipment
    and facilities since we cannot afford to put in place regular
    maintenance contracts which might preclude the breakdowns in the first
    place. At the same time replacement of current medical equipment with
    newer technology is not being accomplished and we have seen significant
    downturns in equipment expenditures in the past three years.
        The constrained funding environment described above also causes a
    further degradation of the morale of our medical personnel as evidenced
    by the Center for Naval Analysis study which shows the above issues are
    having a negative impact, along with the low compensation issue, and
    causing our mid-grade providers to leave the Naval Service, most often
    without replacements being available.

                      CURRENT YEAR DHP FUNDING SHORTFALLS

        Question. Do you have enough funds to fully execute your fiscal
    year 2001 program?
        Answer. There is a Defense Health Program (DHP) unfunded
    requirement of $1.4 billion which the Surgeons General testified to as
    a need for an Emergency Supplemental DHP Appropriation. $220 million of
    the $1.4 billion is identified for the three Service's Direct Care
    Systems. Of the $220 million, Navy Medicine's portion may be $40
    million (depending on TRICARE Management Activity (TMA) distribution).
    If the $1.4 billion emergency supplemental is passed, Navy Medicine
    would get back the TMA 4th quarter loan of $45.1 million, in addition
    to the $40 million noted above for a total of: $85.1 million.
        The $85.1 million would still not meet the unfunded fiscal year
    2001 requirements of $90.0 million leaving unfunded items such as:
    Optimization efforts; NMC San Diego TRICARE Senior Prime Supplies; DHP
    Health Professional Scholarship Program shortfalls; Pharmacy Advances
    in Medical Practice (AMP) Tail from fiscal year 2000; Maintenance and
    Repair (MRP) and new Immunizations. Fully funded, the Navy Medicine
    budget requirement is $150.9 million.
        A key issue/concern over the emergency supplemental involves the
    timing of the bill passage and the provision of the funding to the
    Services. If it is not passed and funding provided until August then
    Navy Medicine will be unexecutable in the 4th quarter because funding
    [$45.1 million] has been moved forward into the third quarter. Navy
    Medicine would have to implement draconian actions to even start the
    4th quarter. TMA has identified that they will go into violation in
    mid-July 2001 if funding is not provided and Navy Medicine would not be
    far behind them. This information has been reviewed with TMA on 1 March
    2001.
        Question. Where are your shortfalls?
        Answer. We have a total of $90 million that is unfunded within our
    fiscal year 2001 program.
        This includes the following items:

                                                                 In Millions

    Submitted and Validated unfunded requirements..................... $40.0
        Revised Financing.............................................  29.0
        Pharmacy......................................................   4.3
        Immunization Tracking.........................................    .6
        Data Quality..................................................   3.2
        Expense Equipment.............................................   2.9
    Additional Revised Financing......................................   8.6
    Pharmacy AMP tail.................................................  14.9
    Immunizations (1/2 year Prevnar)..................................   5.9
    HPSP Shortfall....................................................   3.5
    Utilities (29 Palms)..............................................    .4
    NMC San Diego TRICARE Senior Prime Supplies.......................   3.0
    Optimization......................................................  13.7
                                                                      ______
          Total.......................................................  90.0

        These are funding requirements that take us to a solvency level,
    where our mission operations are considered to be sustainable.
        Along with the actions already taken to remove the $17 million
    withhold, not providing the $21 million Advances in Medical Practice
    funding, and having the entire $7.1 million rescission impact held
    totally against the Direct Care System, Navy Medicine becomes
    unexecutable.
        To fully fund Navy Medicine in fiscal year 2001 the following
    funding is required:

                                  [In millions]

    Unfunded Requirements [from above]:............................... $90.0
    Increase MRP from 2.23 percent to 3.0 percent (the Medical Target)  24.4
    Fund fourth quarter NDAA Implementation...........................  45.1
                                                                      ______
          SUBTOTAL.................................................... 159.5
                            =================================================================
                            ________________________________________________
    Unallocated Funds Available.......................................   8.6
                            =================================================================
                            ________________________________________________
          TOTAL....................................................... 150.9

        Question. Is your direct care system fully funded in fiscal year
    2001?
        Answer. We have previously identified Navy Medicine's fiscal year
    2001 shortfall of $150.9 million. That funding requirement, which is
    due in part to identified shortfalls and various offsets already taken
    by the TRICARE Management Activity, would provide funding to bring Navy
    Medicine to a fully funded program. We have included in that figure the
    additional $24.4 million for Maintenance and Repair (MRP) which would
    bring that program to a funding level of 3 percent of Plant Replacement
    Value which is the ASD (HA) Medical Standard. TMA has used funding
    withheld from the Service budgets to fix various fact of life changes
    in the Managed Care Support Contracts. Even if a supplemental is
    approved at the $1.4 billion level, Navy Medicine's Direct Care System
    will only receive benefit of approximately $79 million and would still
    have a requirement for additional funds of approximately $72 million to
    achieve the $150.9 million noted for fully funding our Direct Care
    System.
        Question. How will your fiscal year 2001 shortfalls impact delivery
    of care in your hospitals and clinics?
        Answer. We have focused funding reductions in the non-patient care
    areas, such as Maintenance and Repair of Property (MRP), initial
    outfitting of our new construction facilities, and other general areas
    such as travel and equipment. At the same time, cost drivers which
    affect the way we provide healthcare (the practice of medicine) are
    being absorbed by our Medical Treatment Facilities (MTFs). An example
    is pharmacy costs which are escalating at rates above ten percent yet
    funded essentially level with last year. Navy MTFs are paying the
    pharmacy bill and giving up something else in the MTF to afford these
    increased costs. My fear is that we are coming dangerously close to not
    performing required maintenance, replacing our medical equipment, and
    impacting on our continuing medical education programs.

                                TRICARE FOR LIFE

        Question. To arrive at a cost for ``TRICARE for Life'', has DOD
    used accurate assumptions for medical and pharmacy inflation rates?
        Answer. The funding estimates for the TRICARE For Life (TFL)
    benefit in fiscal year 2002 are still working. I am reluctant to even
    state the latest number as the estimates are still being worked
    extensively between the Assistant Secretary of Defense (Health Affairs)
    (ASD[HA]), the TRICARE Management Activity (TMA), the Services, the
    Department of Defense (DOD) Actuary and others to derive the best
    estimate of the costs for the wide range of benefits coming on line. I
    can tell you that the latest estimate is around $4 billion for the DHP
    in fiscal year 2002 which would drop off considerably in fiscal year
    2003 because of the kick-in of the accrual financing methodology.
        Question. On October 1st where do you believe retirees will go for
    their new benefit--to the military treatment facility or in the
    network?
        Answer. Those retirees who have developed substantial relationships
    with providers in military treatment facilities (MTFs) will continue to
    rely on the MTF for their care and will likely have higher expectations
    regarding the delivery of services. Those retirees who have not
    utilized MTF services other than perhaps pharmacy services will likely
    not ``come back'' to the MTFs. The vast majority of those retirees who
    intermittently use the MTF will be swayed by specific MTF capabilities
    including access, availability of services, reliability, enhancements,
    comprehensive management including care coordination and case
    management, and customer service. For those retirees who have current
    relationships, it is important to recognize that they too will
    eventually migrate away from the MTF if the above capabilities and
    expectations are not met. Of particular importance in being able to
    provide comprehensive care and high quality customer service will be
    the ability to predict the health care requirements and then resource
    for those needs. Partial commitment and marginal funding will result in
    a spiral of attrition which will quickly accelerate and impact both our
    ability to live up to the intent of Tricare For Life and our need to
    serve these important beneficiaries to maintain a robust Military
    Health System.
        Question. If the retirees go to your MTFs, is your system ready and
    funded for the new workload?
        Answer. Navy Medical Treatment Facilities (MTFs) currently provide
    care on a space available basis to retirees age 65 and older except at
    Naval Medical Center San Diego which is a TRICARE Senior Prime
    Demonstration site with an enrolled 65+ population. The performance of
    this level of effort for the Medicare Eligible Retirees accounts for
    approximately 16 percent of the healthcare performed at our three
    Medical Centers, 9 percent of the care performed at our Family Practice
    Teaching Hospitals, 8 percent of the care at our non-teaching community
    hospitals and much smaller percentages across the remainder of the
    Navy's Ambulatory Care Centers and Clinics. The care provided by our
    Medical Centers and Teaching Hospitals is in direct relationship to the
    higher morbidity cases that this population presents for our residency/
    training programs and is supportive of the medical readiness
    requirements for our healthcare professionals.
        We believe many 65+ beneficiaries who have established
    relationships with civilian providers will maintain those
    relationships, particularly now that TRICARE will be second payer. But,
    at the same time, we anticipate an increased demand by our 65+
    population for care in our military treatment facilities (MTF). Our
    number one priority is the health and welfare of our active duty
    forces. To ensure the operational forces are ready to deploy and that
    our medical personnel maintain the skills necessary to support the
    operational forces, we must balance our workload to meet readiness and
    graduate medical education requirements, and our commitment to our
    active duty families and other retirees and their families. Our plan is
    to provide as much service as possible in-house, and then rely on
    available private sector care (where Medicare is first payer and
    TRICARE second payer) for the remainder. However, the Military Health
    System's ability to meet the health care needs of our entire
    beneficiary population is contingent upon full funding of our current
    requirements as well as those new benefits contained in the Fiscal Year
    2001 National Defense Authorization Act.

                FULL FUNDING OF THE DEFENSE HEALTH PROGRAM (DHP)

        Question. Is your DHP funding stable and predictable?
        Answer. The short answer to this question is no. The best example I
    can give of this is what is happening this year, and is somewhat
    typical of the past two fiscal years. We started out fiscal year 2001
    at a funded level which was in the low sustainable range. Since the
    beginning of the fiscal year we have had $17 million withdrawn from our
    direct care funding for a 1 percent withhold at TRICARE Management
    Activity (TMA), we have not received Advances in Medical Practice
    funding in the amount of $21 million to initiate pharmacy actions and
    pay for the tail on advances in medical practice implemented during
    fiscal year 2000, we have had a $7.1 million reduction placed against
    the Direct Care System associated with the Congressional Rescission
    which was taken totally against the Direct Care System and none against
    the Private Sector Care arena thus effectively doubling the financial
    impact of the rescission.
        Finally, we have been informed of a TMA proposal to withdraw $45.1
    million from the fourth quarter to pay for implementation bills
    associated with the Fiscal Year 2001 National Defense Authorization
    Act. In total that would amount to an impact of $90.2 million and would
    make us unexecutable during the remaining portion of this fiscal year.
    Subsequently, TMA withheld $45.1 million from the fourth quarter to pay
    for the implementation of the Fiscal Year 2001 National Defense
    Authorization Act.
        Question. If not, how does that instability impact your healthcare
    system?
        Answer. The impacts have been significant! First and foremost, this
    instability prevents our Commanding Officers from putting a healthcare
    plan in place for their command that they are confident they can
    accomplish. They are placed in a position of merely reacting to the
    next set of reductions to their financial planning figures. This lack
    of stability causes important equipment replacement, facility repairs
    and upgrades, and continuing medical education requirements to be
    placed on hold until such time as either a supplemental or a
    reprogramming action takes place and provides funding at an adequate
    level to the Direct Care System. These supplementals usually take place
    late in the fiscal year and although the funding is needed and
    appreciated, it does not allow us to project that funding over the
    entire year to achieve the greatest level of benefit.
        Question. Has the DHP budget accurately forecast ``cost savings''
    and ``efficiencies?''
        Answer. In the past our budgets have reflected efficiencies and
    savings. ``Utilization Management'' was an example of these type of
    efforts. Through adopting managed care practices we have been able to
    make some savings, but we are presently affected by the same cost
    drivers as in the civilian healthcare community.
        Question. Have these savings materialized?
        Answer. At the same time there are moderate savings, new healthcare
    benefits have been implemented that has required the reinvestment of
    those savings. As demonstrated by the number of times we have had
    reprogramming and supplemental appropriations, the budgeted savings
    have almost never materialized in the form of actual savings as the
    healthcare program requirements have outstripped any savings
    identified.
        Question. Have you had a loss in buying power over the years?
        Answer. Loss of buying power is a certainty. Again, we must only
    look to pharmacy were we are allowed to budget for inflation at 5.9
    percent while costs are escalating at over ten percent. Over the past
    several years there have been numerous articles in the civilian sector
    referring to cost increases for various healthcare plans. These
    articles and the literature fully support that the medical inflation
    rate is close to 10 percent while the Office of Management and Budget
    has continued to use a standard inflation rate across the entire DOD
    between 3.9 percent and this year 5.9 percent. Rising costs have also
    affected our facilities maintenance program and limited our medical
    equipment replacement program.

                   VENTURE CAPITAL FOR THE DIRECT CARE SYSTEM

        Question. Please tell us about your plans to make your hospitals
    and clinics more productive.
        Answer. The Navy Primary Care Optimization Model (PCOM) was
    developed to assist corporate and medical treatment facilities (MTFs)
    with calculating actual and potential enrollment capacity, while
    providing baseline health system information. Many commands have
    recently reported moderate capacity increases.
        Clinic support, time management techniques, space utilization and
    equipment support are several of the means used to increase provider
    availability, ensure appropriate clinic operations and utilization, and
    increase provider and clinic productivity.
      --Clinical manpower support has been increased through resource
            sharing, direct contracting, and relocating internal staff.
            Increases in clinical support positions include appointment and
            secretarial personnel, and medical record coders. In addition
            to these efforts, reserve personnel are used to augment clinic
            staff and increase clinic productivity. The recent transfer of
            operational control of the Naval Reserve medical community to
            BUMED will improve the ability to identify and coordinate
            reserve support for both provider and clinical support staff.
      --Time management techniques that increase provider availability in
            the clinic include: minimizing collateral duties (assignments
            in addition to clinical duties) and committees assigned to
            providers; designating specific days and hours for command wide
            administrative, training and meeting times; and establishing
            guidelines to coordinate care team schedules (provider, nurse,
            corpsman).
      --Space utilization--An adequate number of examination rooms per
            provider is required to maximize provider/clinic productivity.
            Many sites have increased the number of provider examination
            rooms by consolidating administrative spaces and converting
            administrative spaces into examination rooms.
      --Equipment support--Additional investments in support equipment
            include auto reminder systems, advanced phone systems, mobile
            dictation, voice recognition technologies and pagers for triage
            nurse.
        In addition to the above mentioned efforts to improve provider
    availability and ensure their appropriate utilization, and increase
    clinic productivity, there is significant interest in developing clinic
    management practices, improving appointment scheduling processes, and
    further developing Fleet/Marine Corps Liaison Programs:
      --A clinical management course is in progress throughout Navy
            Medicine. The course provides guidance on incorporating
            business rules, developing roles and responsibilities of the
            different clinic staff, using data systems, monitoring
            population health, and developing appointment scheduling
            templates and schedule management. The course emphasizes clinic
            organization and operations that will maximize efficiency for
            patent care.
      --Appointment scheduling processes focus on improving bookable hours
            (the actual time available for appointments). Many clinics have
            altered their clinic hours or have changed appointing
            procedures to maximize bookable hours. Several sites have
            implemented web-based appointing and other e-health initiatives
            to improve patient access. We have received favorable reports
            from Naval Medical Clinic Patuxent River regarding open access
            appointing.
      --Fleet/Marine Corps Liaison Programs--There is continued development
            within most commands reporting full-time liaison with direct
            access to senior leadership. Proactive measures to identify and
            meet the health care needs of operational forces include
            advance consult reviews, pier side visits, senior leadership
            visits and appointing privileges for liaison staff. A Fleet/
            Marine Liaison instruction is currently under review.
        Question. Do funding constraints keep you from optimizing your
    system?
        Answer. Yes, funding constraints are affecting the rate at which we
    can optimize the Navy Medical System. While we have done a number of
    optimization improvements, we do not have adequate funding to initiate
    some basic improvements like two exam rooms per provider, adequate
    support staff, and support for accurately coding patient encounters.
    These optimization efforts require continuous and reliable infusion of
    capital if we are to be successful.
        Question. Would a ``venture capital'' fund, or a ``Surgeon
    General's Investment and Initiative Fund'' allow you to operate your
    system more smartly and at less expense?
        Answer. The operating budget for Navy medicine's direct care system
    has grown steadily over the past several years. However, this growth
    has been barely sufficient to support new or expanded benefits as well
    as new programs. Fiscal discipline and sound financial management at
    all levels of the organization have been necessary to ensure a
    consistent level of health care services. Navy medicine has lacked the
    resources and financial flexibility to make strategic investments that
    will provide long term stability.
        Private sector medical organizations recognize the need to make
    ongoing invests which produce future revenues. The current budget
    structure for Navy medicine does not offer a similar opportunity. The
    establishment of a Surgeon General Investment Fund would provide a
    vehicle for financing moderate to long term investments that can be
    supported by a disciplined business case analysis process.
        Establishment of such a fund would require specific guidance from
    Congress to ensure the monies were used for the intended purpose. The
    fund must be clearly identified as separate from the O&M,DHP account,
    and funding for the direct care system cannot be offset because
    investment funds are provided. Multi-year, ``no color'' funds would
    provide maximum flexibility. Each of the Surgeons General should be
    provided an investment fund to avoid non-productive competition for the
    available dollars. Use of the fund would be predicated on a sound
    business case analysis. Periodic reports to Congress would
    appropriately include the business case analysis for each investment,
    the execution status, and the monitoring for Return on Investment.
        Such an investment fund could have a wide range of applications.
    For example, it could be used to procure digital radiology for all of
    Navy medicine. This would provide efficiencies in how x-rays are read,
    stored, and distributed. Other optimization efforts would also be
    logical candidates for the investment fund.
        A Surgeon General Investment Fund would provide an appropriate
    vehicle for supporting business driven decisions with a moderate to
    long term Return on Investment.
        Question. If such a fund were established, please explain how the
    ``best business case'' approach would be used to identify, select and
    fund projects.
        Answer. Navy Medicine relies heavily on the philosophy and concepts
    associated with a strong business case analysis process. For over a
    year, the Bureau of Medicine and Surgery (BUMED) has had a formalized
    process and management structure to be used at the headquarters level
    as well as the clinic level. The documentation and processes can be
    found on the Navy Medicine web site (https://bumed.med.navy.mil/med03/
    tools/default.asp).
        The strategic element of a business case analysis is harvesting the
    potential opportunities and using the analysis to lead to correct
    decision making. Our commands remain very active in formulating new and
    innovative ways of doing business either at the local military
    treatment facilities or impacting on the entire Navy Medicine System.
    The Department of the Navy recently articulated its Business Values and
    Goals (BVG) in a major step toward transforming our business culture
    and practices. In short, the Department of the Navy Business Vision
    states that the Department will continue to provide the dominant global
    naval force and develop future capabilities to safeguard the nation. It
    will achieve this vision through:
      --Innovation.--Continually fostering conceptual, technological, and
            operational superiority.
      --People.--Recruiting, engaging and retaining the best people--
            military and civilians.
      --Decision Support Systems.--Deliver recognizable value for every
            dollar spent.
      --Organizing Work.--Creating business environment focused on teamwork
            and outcomes.
        The release of BVG is opportune as we in the Navy Medical
    Department seek to refine our focus on Best Business Practices. Our
    fiscal realities dictate that we derive the best value per dollar spent
    through the application of best business practices. Values may be
    viewed in terms of reduced cost, reduced cycle time, improved quality,
    increased productivity, or increased return on investment.
        Objectives falling under our Best Business Practices goal clarify
    my expectations--Consistent, complete, relevant, timely and reliable
    data on cost and performance will come through as an imperative. We
    expect all of Navy Medicine to explore civilian and military health
    care innovations and business practices and rapidly adopt those that
    have demonstrated success. BUMED has introduced a Best Business
    Practice section on our homepage (https://bumed.med.navy.mil/med08/
    bestpractices/bestPractices.htm) to facilitate this.

                             ORGANIZATIONAL REFORM

        Question. Would the creation of a ``Joint Medical Command'' or a
    USMEDCOM'' remedy some of the problems experienced with DOD medical
    programs?
        Answer. Any reorganization effort alone will not solve chronic
    financial shortfalls in the Defense Health Program. A combination of a
    new organizational structure, better business practices, and an
    improved purchased care contracting strategy will together strengthen
    the Defense Health Program, but must be accompanied by addressing the
    financial baseline.
        Question. Is there clean authority and accountability in the DOD
    medical programs today?
        Answer. There are not clear lines of authority and accountability
    in DOD medical programs today, outside of Service command and control
    relationships extant in each medical departments' own organizational
    structure. For the Defense Health Program, resources and policy flow
    from an organization with no command and control over the healthcare
    system. This has been problematic in attempts to establish regional
    healthcare markets where multi-service military treatment facilities
    combine with centrally managed healthcare contract funds to provide
    care and control costs. Support and coordination of readiness
    requirements often conflict with attempts to minimize purchased care.
    The current organizational structure does not facilitate resolution of
    this conflict at a single office.
        Question. Would a ``USMEDCOM'' foster better lines of
    responsibility for DOD medical programs?
        Answer. A CINC or USMEDCOM, if constructed under Joint doctrine,
    would foster better lines of responsibility for DOD medical programs by
    having direct command and control where needed. A set of regional Joint
    Medical Task Forces (JMTF), with command and control over all military
    treatment facilities and funding for purchased care, would be in a
    position to optimize care and control costs in a given region.
        Service Component Commanders, under command and control of the
    CINC, would be required to deliver to each JMTF a fully funded and
    ready military treatment facility, capable of meeting its readiness
    mission and delivering a defined capacity of medical care. To make this
    executable, all Direct Care system funds must flow through the Service
    Component Commanders. The JMTF commanders, to meet the remainder of
    regional health care demand, must have control over all purchased care
    funds.

                       RECENT TRICARE SATISFACTION SURVEY

        Question. Have there been recent improvements in customer
    satisfaction with TRICARE? What remains to be done to further improve
    satisfaction with the TRICARE program?
        Answer. Yes, there has been steady improvement in customer
    satisfaction as reported in the 2001 Stakeholders Report--an
    independent evaluation of TRICARE provided by the Center for Naval
    Analyses and the Institute for Defense Analyses. In the eight regions
    where TRICARE data is available for at least a year or more, our
    patients report that it is easier to get an appointment and there is a
    shorter waiting period to see providers. We are seeing increased
    satisfaction with the quality of care and note that the satisfaction
    increases as our patients become more familiar with TRICARE.
        My Commanding Officers are all aware of the emphasis I place on
    customer service and the realization that our challenge and efforts in
    this area will never diminish. I have the ability to view what their
    patients report on a monthly basis and take pride in the steady
    improvement that I have seen in the data. For example, I was pleased
    when Naval Hospital, Jacksonville was recognized by TRICARE Management
    Activity as the number one military treatment facility in the area of
    customer service for fiscal year 2000.

                        MEDICAL RECRUITING AND RETENTION

        Question. How is your service doing in recruiting and retaining
    medical professionals?
        Answer. The status of Medical Corps recruiting and retention must
    look separately at trained specialists and at scholarship programs.
        Recruiting and retaining fully trained specialists are difficult,
    especially for the critical wartime specialties. While the overall
    annual Medical Corps loss rate is around 10.5 percent, annual loss
    rates for fully residency-trained specialists clusters around 20
    percent. Some communities historically can only achieve 80 percent
    manning (general surgery, orthopedic surgery). The Officer Community
    Manager (OCM) at Naval Personnel Command projects that 11 of 23
    communities will fall below 90 percent manning by fiscal year 2007. The
    Center for Naval Analysis (CNA) report ``Physician Satisfaction
    Survey'' documented that unobligated retention rates have significantly
    decreased since fiscal year 1992, and that higher military-civilian
    pay-gaps are associated with lower unobligated retention. Physicians
    leaving the service cite increasing pay differentials with their
    civilian counterparts, along with other dissatisfiers. The Center for
    Naval Analysis is conducting a 3-phase Health Professions' Retention-
    Accession Incentives Study (HPRAIS) to provide a more indepth analysis
    of the effectiveness of retention and accession initiatives. We are
    reviewing the results of Phase 1 of this study and planning necessary
    actions.
        About 94 percent of our Medical Corps officers, and hence
    specialists, enter the Naval Service through the Uniformed Services
    University Health Services (USUHS), the Armed Forces Health Professions
    Scholarship Program (AFHPSP) and the Financial Assistance Program
    (FAP). Data suggests longer time in uniformed service prior to
    completing specialty training predicts longer service on active duty as
    a specialist.
        Applicant pool and funding determine whether USUHS, AFHPSP and FAP
    will deliver sufficient numbers of appropriately qualified physicians.
    Total U.S. medical school applications are down significantly,
    increasing the competition for the most qualified applicants.
    Qualifications remain high for selectees for USUHS and AFHPSP, but
    declining applicant numbers and quality are concerning. Of more
    immediate concern is that funding for AFHPSP and FAP appears to be
    falling behind rising program costs. Fiscal year 2001 recruiting goals
    for AFHPSP (320) and FAP (51) required to meet future requirements may
    have to be revised downward because of funding limitations.
        For the Dental Corps, we are beginning to experience degradation in
    our ability to recruit and retain dental officers in the Navy. After a
    decade of being significantly undermanned we were able to achieve full
    end strength in fiscal years 1999 and 2000. This was accomplished as a
    result of aggressive recruiting efforts, new Health Professions
    Scholarship Program opportunities and legislative pay initiatives from
    fiscal years 1997 and 1998. However, as of February 1, 2001 we are down
    to 97 percent of end-strength, a shortfall of approximately 40 Navy
    dentists. Data available to us, such as a 44 percent increase in
    resignation requests from junior officers over last year, indicates
    that this trend will worsen over the next 3-5 years if there is no
    intervention.
        The Navy Nurse Corps has met recruiting goals for the past 10
    years. Higher than expected retention rates over the past four years
    have kept recruiting targets at manageable levels, even in the face of
    a developing nationwide nursing shortage. As the shortage has worsened,
    nurse recruiters have increased efforts by using Nurse Corps volunteers
    from active and reserve units who desire to help recruit nurses into
    the Navy. The volunteers speak at high schools, nursing schools, and
    professional nursing conferences. The accession bonus is critical to
    our efforts to recruit nurses.
        In the Medical Service Corps, we are currently on target to meet
    recruiting goals in less than half our specialties. We have good
    recruiting success when we offer scholarship and internship options,
    but funding only permits us to offer such options to less than 20
    percent of our recruits. Although optometrists, pharmacists,
    psychologists and environmental health officers present the greatest
    challenges at present, we are also having difficulty recruiting enough
    health care administrators, audiologists, industrial hygienists,
    entomologists, and microbiologists. Although our overall loss rate is
    about nine percent, our success varies greatly between specialties. Our
    licensed professionals and doctorate prepared specialties have rapidly
    increasing educational debt loads and a substantial pay gap between the
    private sector, which are adversely affecting retention. Because we
    have been meeting the greatest needs by offering educational
    incentives, we are recruiting, training, then losing our experienced
    professionals to the private sector. This is leaving us with limited
    experience or gaps of up to 20-45 percent in fields such as optometry,
    psychology, pharmacy, and some advance health care administrator
    specialties.
        For Hospital Corpsman and Dental Technicians, currently the U.S.
    Navy recruiters can fill all quotas given to them. However the quotas
    given to the recruiters have not been sufficient to fulfill our
    requirements. Numerous shortages exist in our inventories impacting our
    peacetime and wartime capabilities. A plan was submitted to the Chief
    of Naval Personnel to increase enlisted accessions to recruit to our
    requirements.
        Question. Is the current special and incentive pay structure
    adequate to keep your force manned?
        Answer. Recruiting and retention are most difficult for the
    specialties where the gap between military and civilian pay is highest.
    The Center for Naval Analysis (CNA) report ``Physician Satisfaction
    Survey'' documented that inadequate pay was the top reason for
    dissatisfaction with continued service. In a supplemental report,
    ``Comparison of Navy and Private-Sector Physicians' Total Compensation,
    by Medical Specialty,'' CNA found that Navy physicians' compensation is
    2-56 percent below comparable civilian compensation by specialty and
    similar career points. While CNA also found total career compensation
    for 20-year retirement-eligible Navy physicians who work in the private
    sector until age 65 comparable to civilian physicians, 86 percent of
    physicians forego retirement eligibility to leave service early for
    civilian practice with its higher salaries.
        Data also shows that as the military-civilian pay gap increases,
    physicians without remaining service obligation are more likely to
    leave service.
        Calculated median retention by source of accession supports the
    notion that specialists exit early. Overall, the median length of non-
    obligated service for specialists averages only 4.4 years. That average
    drops to 2.9 years when Uniformed Services University accessions are
    excluded.

    ----------------------------------------------------------------------------------------------------------------
                                                                                   Median Lengths of
                                                                                 Retention (in years)       Median
                                                                                         from:            Length of
                                                                   Percent of --------------------------     Non-
                           Source of Entry                         Accessions                  End of     obligated
                                                                                 Start of     Initial    Service \1\
                                                                               Active Duty    Service        as a
                                                                                             Obligation   Specialist
    ----------------------------------------------------------------------------------------------------------------
    Uniformed Services University...............................         12.8         17.5         10.5          9.0
    AFHPSP--Direct Entry........................................         56.7          8.5          4.5          4.0
    AFHPSP--1 year delay........................................          7.4          4.5          1.5          4.0
    AFHPSP--NADDS...............................................         13.3          4.3          1.3          1.5
    Direct Accessions...........................................          3.8          6.0          4.0          4.0
    Voluntary Reserve Recall....................................          2.5          9.0          7.0          7.0
    Financial Assistance Program................................          3.7          3.8          1.8          1.3
                                                                 ===================================================
    Weighted Average............................................  ...........          8.5          4.6          4.4
    ----------------------------------------------------------------------------------------------------------------
    \1\ No obligation for initial service or training.
    AFHPSP = Armed Forces Health Professions Scholarship Program.
    NADDS = Navy Active Duty Delay for Specialty-training.

        For Navy Dentistry, the current special pay structure is not
    adequate to keep it fully manned. Two factors are the primary
    contributors to this. First, many of our dentists, especially junior
    officers, suffer under crushing debt burdens. We are only able to bring
    60-70 percent of our new dentists onto active duty under the Health
    Professions Scholarship Program meaning that the remainder typically
    have significant educational loans. Servicing this debt burden, which
    frequently exceeds $100,000, on a junior officer's income is a distinct
    hardship. (Note--Educational loan debts for dentists were highlighted
    during testimony before the Senate Finance Committee on February 14,
    2001) Secondly, there is a well established pay gap between military
    dentists and their civilian counterparts. In some instances this pay
    gap is over 70 percent.
        For the Nurse Corps, we believe not. Currently, only nurse
    practitioners, midwives and nurse anesthetists receive any type of
    special pay for retention. Although the existing special pays have been
    successful retention tools thus far; the civilian-military pay gap in
    some fields continues to grow, most notably for the entry-level
    certified nurse anesthetists. In order to more accurately gauge
    compensation gaps for both generalist and advanced practice nurses, the
    Nurse Corps is included in the Center for Naval Analyses study on
    Health Professions Retention/Accession Incentives. Results of the study
    will provide a tool for future strategies. Further retention bonuses
    and flexibility to use these bonuses may be needed to retain all types
    of nurses as competition increases for the dwindling supply.
        For the Medical Service Corps, special pays have not been updated
    for over 10 years and some pays, such as optometry special pay have not
    been updated in 20 years. At its present rate of $100 per month, the
    optometry special pay no longer assists with retention. Special pay and
    accession bonuses have recently been approved by Congress for
    pharmacists but have not yet been funded. Expansion of educational debt
    repayment options could significantly benefit both recruitment and
    retention.
        For the Hospital Corpsmen and Dental Technicians, retention needs
    to remain a priority and the best way we can accomplish this is to
    increase program dollars to ensure that our enlisted communities
    receive additional special duty assignment pays and reenlistment
    bonuses.
        Question. Where do you have the most difficulty recruiting and
    retaining medical professionals?
        Answer. Recruiting and retention are most difficult for the
    specialties where the gap between military and civilian pay is the
    highest.
        Question. What specialties are most undermanned?
        Answer. The most undermanned specialties currently are general
    surgery and all surgical subspecialties, orthopedic surgery, diagnostic
    radiology, anesthesiology and urology.
        Many of these specialties are critical wartime specialties and
    shortfalls could have a negative impact on medical readiness. In a
    peacetime setting, we augment services in these specialties by using
    civilian providers at a substantial cost to the MTF/Military Health
    System.
        The following military physician specialties are experiencing
    shortages within Navy Medicine:

                                                              Percent manned

    Surgical Critical Care............................................   8.0
    Adolescent Medicine...............................................  30.8
    Neurosurgery......................................................  78.5
    General Surgery...................................................  77.0
    Radiology.........................................................  81.0
    Cardiothoracic Surgery............................................  31.0
    Gastroenterology..................................................  86.0
    Orthopedic Surgery................................................  86.0
    Urology...........................................................  83.0

        For the Dental Corps, the greatest retention challenges are for
    junior dental officers at the end of their initial active duty
    obligation and recently trained specialists at the end of their active
    duty obligation for training. We are fortunate to have the majority of
    our specialties manned at authorized levels. This is largely the result
    of the Dental Officer Multi-year Retention Bonus. It should be noted
    that the obligation period for many of these bonus contracts expires
    October 1, 2002 and we anticipate a wave of resignations and
    retirements when this occurs. As always, recruiting minority and female
    dental officers is problematic, but the subject of intense efforts.
        The Navy Nurse Corps has the most difficulty recruiting Certified
    Registered Nurse Anesthetists, and experienced perioperative; maternal-
    infant, psychiatric and critical care nurses. Shortages in these
    specialties also exist in the civilian sector where ``sign-on'' bonuses
    and generous salary packages make it very difficult to recruit theses
    nurses into the military.
        In the Medical Service Corps, we have not met recruiting goals for
    optometrists for at least 10 years and are having difficulty retaining
    the ones we do recruit. Other licensed clinical professionals such as
    pharmacists, and psychologists have traditionally also been difficult
    to recruit and retain but we are having some recruiting success with
    current scholarship and training incentives for these communities.
    Retention continues to be an issue for psychologists however. Although
    optometrists, pharmacists, psychologists and environmental health
    officers present the greatest challenges at present in the Medical
    Service Corps, we are also having difficulty recruiting enough health
    care administrators, audiologists, industrial hygienists,
    entomologists, and microbiologists. Overall, the Medical Service Corps
    is well manned at present but our concern is that increasing
    educational debts and civilian pay disparities are causing both
    recruitment and retention problems which could rapidly change our
    balance. The specialties most undermanned at present are optometrists,
    biochemists, and some health care administrator subspecialties.
        The most difficult area for recruiting in our enlisted community
    are the Morticians. Unlike our other Navy Medicine enlisted members
    there is no Navy equivalent school for this specialty so we have to
    recruit from the professional sector vice recruit from within.
    Retaining Sailors in specialized areas such as Reconnaissance Corpsman,
    Laboratory, Psychiatry, Respiratory, Physical Therapy and Surgical
    Technicians remains difficult. Increased special duty assignment pay
    and reenlistment bonuses would not only enhance program management, but
    also retain and attract our most talented Sailors.
                                     ______

                Questions Submitted by Senator Richard C. Shelby

        Question. What is the status of demonstration projects that seek to
    address these problems? Retiree and dependent access to military
    healthcare in remote areas has become problematic. I know this is true
    in a number of areas, including rural areas of Alabama. I would like to
    ask each of the members of panel one to comment on DOD plans to meet
    the healthcare needs of military personnel, dependents and veterans
    living in rural areas with no local access to military healthcare
    facilities.
        Answer. Navy and Marine Corps personnel stationed 50 miles from a
    military treatment facility are currently covered under a health care
    program called TRICARE Prime Remote. This program, which started in
    1996 and became effective throughout the country on October 1, 1999,
    was developed to provide the ``Prime'' benefit to eligible Active Duty
    Service Members in remote areas. Several surveys reported widespread
    dissatisfaction among active duty members in remote areas in regard to
    excessive travel time for medical care and claims processing delays.
    This program has been expanded to cover Family members beginning
    October 2000.
        We are aware that all of our beneficiaries do not live near
    military treatment facilities. The TRICARE Management Activity (TMA)
    and our Regional Lead Agents monitor access to determine if providers
    are not seeing our beneficiaries. One indicator we monitor is the
    physician participation rate. The most recent report shows that
    physicians are participating in 96 percent of all TRICARE claims; that
    is, there is no balance billing of beneficiaries on 96 percent of the
    claims filed under TRICARE. This is an all time high level of physician
    acceptance of our payment rates and billing procedures. In addition,
    TMA monitors the adequacies of the networks that the managed care
    support contractors are required to develop. When we become aware of
    areas where providers do not accept Medicare or TRICARE, we work with
    the Regional Lead Agent to provide options for care to the beneficiary.
        We also have a number of partnerships with the Veteran's
    Administration. Their Hospitals are key members of our TRICARE
    networks. The Veterans Administration facilities also contribute
    greatly by caring for active duty patients with head injuries for
    expeditious care and rehabilitation.
        Even with the coverage of civilian provider networks, participating
    providers, TRICARE Prime Remote, Veteran's Administration facilities
    and Designated Providers there are still areas that we must station our
    active duty force where there may be a paucity of services. We continue
    to identify these areas and work hard to meet their needs and the needs
    of their families.
        Question. The committee is aware that significant effort has been
    directed during the past two years to analyze, understand and
    incorporate some commercial best practices for administering
    prescription drug benefits. I would like to ask each of the members of
    panel one to update the status of DOD's review of commercial best
    practices and DOD's view on incorporating some of these practices for
    administering prescription drug benefits.
        Answer. Department of Defense (DOD) has incorporated or is in the
    process of incorporating several commercial best business practices
    aimed at providing a uniform, consistent and equitable pharmacy benefit
    while optimizing available resources. A few are highlighted below:
      --The Pharmacy Data Transaction Service (PDTS), developed and
            implemented by TMA, is a centralized patient prescription
            profile that integrates prescription data from all DOD direct
            care pharmacies, the National Mail Order Program (NMOP), and
            the TRICARE Managed Care Support Contractors retail pharmacy
            networks. The PDTS ensures that any prescription filled for a
            TRICARE beneficiary is checked against all other prescriptions
            for that beneficiary. The PDTS helps to assure that patients do
            not receive duplicate prescriptions or prescriptions for drugs
            that interact negatively with other drugs. PDTS significantly
            enhances the ability of the doctor and pharmacist to prevent
            medication errors and provides DOD with aggregate prescription
            information that can be used to assess and identify cost saving
            measures and enhance patient care decisions.
      --Restructured/simplified tiered pharmacy benefit copayments for use
            of the NMOP and retail pharmacies (effective April 1, 2001)
            which closely mirrors co-payment structures in the commercial
            best business practice of pharmacy.
      --Continue to pursue joint ventures with Veterans Administration (VA)
            in the areas of joint pharmaceutical contracts, where
            clinically appropriate.
        DOD/VHA are exploring the feasibility of utilizing VA's
    Consolidated Mail Outpatient Prescription System (CMOPS) to process
    refills generated through our direct care pharmacies; alleviating
    congestion at MTFs and providing relief to understaffed military
    pharmacies.
        Question. Admiral Nelson, 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. Acute Lung Injury Research is a topic area in the fiscal
    year 2000 Congressional language for the Peer Reviewed Medical Research
    Program. This program is managed by the U.S. Army Medical Research and
    Materiel Command as part of the Congressionally Directed Medical
    Research Program. For fiscal year 2000, there were 20 proposals
    received for acute lung injury research. These proposals underwent a
    two tiered review process, including scientific peer review and
    programmatic review. None of the 20 proposals were selected for
    funding. Acute lung injury research will also be a topic area for the
    fiscal year 2001 program.
        The Naval Health Research Center Toxicology Detachment, at Wright-
    Patterson Air Force Base, had animal model research into acute lung
    injury until this fiscal year. Funding was not continued, and the
    research has ceased.
        A study by the National Institute of Occupational Safety and Health
    (NIOSH) assessed incidence of sarcoidosis among Navy enlisted personnel
    and suggested a relationship of sarcoidosis with assignment aboard
    aircraft carriers. Navy has initiated a Congressionally-funded study
    through Navy Health Research Center to correlate results of the NIOSH
    study with a pathologic review of tissue samples at the Armed Forces
    Institute of Pathology taken from naval personnel during the 1960s and
    1970s. While not a study of ``acute'' lung injury, this information may
    be of interest as well. The study is in the very earliest stages, and
    no data are available.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                           TRICARE BUSINESS PRACTICES

        Question. Last year I asked if the amendment that provided for
    increased reimbursement levels for TRICARE was adequate, particularly
    in areas where our military personnel could not get a provider to see
    them. I was told last year that we had seen an improvement by all three
    Surgeons General. Additionally, reports from Dr. Clinton's office also
    say that providers and patients are happier, but I can tell you though
    that is not the information that I am receiving form my constituents to
    include patients and providers. May say they cannot locate a provider
    that will accept TRICARE for the very reasons that we talked about
    before, inadequate reimbursement, delay in payment and inadequate fee
    structures that do not compare with their civilian counterparts.
    Currently TRICARE reimbursement is at the 45 percent rate allowable,
    like MEDICARE reimbursement. It is my understanding that under the old
    CHAMPUS program, providers were reimbursed at 80 percent. An increasing
    number of MEDICARE providers are leaving networks because of this low
    reimbursement rate.
        Gentlemen is this adequate?
        Answer. Through the Managed Care Support Contractors, the TRICARE
    Management Activity (TMA) and our Regional Lead Agents we monitor
    access to determine if providers are not seeing our beneficiaries. One
    indicator we monitor is the physician participation rate. The most
    recent report shows that physicians are participating in 96 percent of
    all TRICARE claims; that is, there is no balance billing of
    beneficiaries on 96 percent of the claims filed under TRICARE. This is
    an all time historically high level of physician acceptance of our
    payment rates and billing procedures. In addition, the TMA monitors the
    adequacies of the networks that the managed care support contractors
    are required to develop. The contractors are required to provide to TMA
    and the Regional Lead Agents a quarterly report on the status of the
    network and the activities they are taking to ensure that an adequate
    number of providers, with space, are available for our beneficiaries.
        Question. Will this impact the number of providers available to our
    over 65 year old beneficiaries?
        Answer. Because Medicare is the primary payer, because TRICARE's
    reimbursement rates are tied to Medicare's rates, and because
    Medicare's reimbursement rates are widely accepted by physicians, we
    expect high levels of physician participation and access to needed
    health care services.
        Question. In areas such as Dallas, which has approximately 100,000
    beneficiaries, and there is not a ``military'' medical treatment
    facility, how are we addressing issues of access to providers?
        Answer. The managed care support contractor in Region 6, Health Net
    Federal Services, is required under their contract to establish a
    TRICARE Prime network in the Dallas-Ft. Worth area. The most recent
    network adequacy report documents a strong network of primary and
    specialty care providers totaling over 1,900. Recent surveys and
    contractually-required reports from Health Net Federal Services
    indicate that access standards are being met, and 90 percent of the
    network providers have open panels and are accepting new patients.
    Also, CMAC rates for 2001 increased approximately 4 percent in the
    aggregate, while some ``difficult to obtain'' specialties'
    reimbursement rates were increased even more.
        We also monitor physician participation in the TRICARE Standard
    program, and are pleased to report that it is above 90 percent. By
    ``participation'', we mean that on 90 percent of all TRICARE claims
    filed for this area, there is no balance billing of the beneficiaries.
        Question. Some of my constituents are concerned about the quality
    of provider you get when you reimburse at 45 percent as opposed to 80
    percent. Are you offering our soldiers and their families the best of
    the best medical care or second rate medical care through TRICARE?
        Answer. We always strive for and truly believe our beneficiaries
    deserve the best of the best. Department of Defense's reimbursement
    rates are established pursuant to Section 1079(h)(l) of Chapter 55 of
    U.S.C. Title 10. This statutory provision states that the TRICARE
    maximum physician payment amounts should be set at no more then
    Medicare's level of physician payments. We think that TRICARE maximum
    allowable payment levels (known as the CMACs) are equal to about 58
    percent of the providers' billed charges, not 45 percent. Due to
    provider network discounts, the actual payment levels are about 50
    percent of billed charges. This is consistent with many private
    insurance payers, who have established rate schedules that are
    considered reasonable even though actual payments are less than billed
    charges. The inception of TRICARE marked the first time that defined
    networks of credentialed providers were available to our beneficiaries.
    Prior to TRICARE, beneficiaries relied on yellow pages and word of
    mouth for providers. Those providers that accept TRICARE and are in our
    TRICARE Networks must meet tough requirements in our credentialing
    process, as required by our contracts, before they can see our
    beneficiaries. Network physicians are typically Board-certified. We
    believe the quality of care through TRICARE is higher than ever before
    because of these credentialing requirements.
        Question. What do you believe are the key issues in attracting and
    retaining providers?
        Answer. For Active Duty Physicians, the Center for Naval Analysis
    (CNA) report ``Physician Satisfaction Survey'' prioritized the top
    reasons cited by physicians for dissatisfaction with continued service:
      --Insufficient Monetary Compensation.
      --Inadequate Administrative and Technical Support.
      --Devaluation of Clinical Excellence.
      --Poor Business Practices.
      --Decreasing Professional Growth Opportunities/Career Issues.
      --Lack of Recognition and Value of Physician Contributions.
        For the Dental Corps, the Health Professions Scholarship Program
    (HPSP) has been the single most useful tool for attracting dentists to
    the Navy. We consistently have 3 times as many applicants as we have
    scholarships to award. Unfortunately, the dental 4-year HPSP
    scholarship has been in existence for a short period of time and only
    accounts for approximately 60 percent of our new accessions each year.
    In contrast, the Medical Corps attracts over 90 percent of new
    accessions with the HPSP scholarship. Because of this, a significant
    percentage of our corps is still burdened with the staggering debt
    accumulated during dental school (average debt > $80,000). To retain
    these experienced, well-qualified dental officers, we will need to
    dramatically increase both military pay and benefits. The pay disparity
    between military and civilian dentists continues to grow as an on-going
    study by the Center for Naval Analysis has demonstrated. Their findings
    indicate a ``pay gap'' ranging from 24 percent to over 70 percent
    depending on time in practice/service and whether or not the individual
    is a general dentist or a specialist. When junior officers were queried
    as to the amount of pay increase it would take to make them ``likely to
    remain on active duty'' the dollar amount exceeded $12,000 annually.
        For the Nurse Corps, compensation is one factor and a powerful
    driver in a nurse's decision to enter or remain in the service. Other
    significant factors include teamwork, opportunities for advanced
    education, promotion and quality of life issues, including child care,
    housing, benefits, and workload.
        In the Medical Service Corps, scholarship options, training
    opportunities and the type of work experience and diversity we offer
    are key issues in both attracting and retaining providers. While these
    factors attract high caliber professionals to the Navy, maintaining
    adequate pay comparability is critical to both recruitment and
    retention.
    Civilian TRICARE Network Providers
        In reference to TRICARE network providers, the three major
    ingredients have been and continue to be: (1) adequate reimbursement
    rates; (2) prompt payment of claims; and (3) a reduction in the
    administrative requirements. The TRICARE Management Activity along with
    staff from each of the Surgeons General offices have made great strides
    over the past year in improving prompt payment and reducing
    administrative problems. Through these combined efforts, claims
    deferrals have declined, over 100 pre-pay edits have been eliminated,
    the number of claims adjustments have been reduced, and auto-
    adjudication rates have increased. Along with TMA, Navy Medicine is
    continuing to look at additional ways of improving service to our
    TRICARE network providers. Future improvements aim toward increasing
    the ability to use Electronic Media Claims, In Office Adjudication
    processing which would provide instant feedback to the provider and a
    number of internet applications for Claims Customer Service such as the
    one used by Palmetto Government Benefit Administrators (myTRICARE.com)
    and claim submissions. There may always be a few areas of the country
    where the CMACs will be considered insufficient. There are criteria for
    requesting waivers to CMAC rates where there is severe impairment of
    access to health care as a result of our CMAC payment rates. However,
    we continually monitor physician participation rates, and the latest
    report indicates a 96 percent rate. That is, on 96 percent of TRICARE
    claims filed, there is no balance billing to the beneficiaries.

                                TRICARE FOR LIFE

        Question. I can tell you that the TRICARE For Life is a most
    welcomed program for those retirees that we made the promise to so many
    years ago. The 2001 National Defense Authorization Act, calls for the
    implementation of the pharmacy benefit on 1 April 2001 and the TRICARE
    For Life implementation 1 October 2001. A concern that I have is the
    number of military retirees who never enrolled in Part B of Medicare.
    This is a requirement of the new plan. An estimated 10 percent of
    eligible military retirees in San Antonio never enrolled in Part B of
    Medicare. Medicare eligible retirees who turned down enrollment in Part
    B face a 10 percent penalty on monthly premiums for every year they are
    past age 65 when they enroll. For a 75 year old that would be $91 a
    month, twice as much as someone who enrolled at age 65.
        Can you comment on your meetings with HCFA on identifying those who
    did not enroll in B and what solution is needed to waive this penalty?
        Answer. My staff has participated in several meetings, led by
    Health Affairs (TRICARE Management Activity) staff, with HCFA staff. It
    is anticipated that Department of Defense (DOD) will be conducting a
    data match with HCFA this summer that will identify those persons
    eligible for TRICARE for Life (who must have Medicare Part B). This
    data match will also provide a list of those military retirees and
    family members that do not have part B, thus would not be eligible for
    TRICARE for Life. In reviewing the testimony provided by both DOD and
    HCFA, we understand that a legislative action would be required to
    waive the penalties associated with a group of beneficiaries not
    choosing Medicare Part B when they turned 65 and wanting to purchase it
    at a later date. I would support a legislative waiver, because it would
    facilitate our ability to provide the full benefit this group deserves.
        Question. What marketing plan is planned to educate the over 65
    retirees about TRICARE for Life?
        Answer. TRICARE Management Activity in conjunction with the
    military services has created a detailed marketing and communication
    plan. The plan uses news releases, web services, marketing materials,
    and letters and education briefings. Our facilities have access to this
    information and we have incorporated the briefings into our internal
    and external communications. TRICARE Management Activity is utilizing
    all avenues to ``get the word out about the TRICARE For Life program''
    Examples include their weekly meetings with the Military coalition, the
    mailing of 1.5 million copies of the Senior Pharmacy information
    trifold and an informative web site that posts frequently asked
    questions and additional information. The Navy is augmenting this plan
    with close collaboration among Bureau of Medicine and Surgery, Bureau
    of Naval Personnel, the Deputy Chief of Staff for Manpower and Reserve
    Affairs, and Headquarters Marine Corps.
        Question. Can you comment on how the implementation of TRICARE for
    Life will impact your resources? (Physician contacts per year average
    12 per year in those over 65 as compared to 4.6 per year in ages 15-
    44.) Days of Hospital Care per year average 269 days of care per one
    thousand persons in those over 65 as compared to 54.6 per one thousand
    persons in ages 15-44.)
        Answer. We recognize that the 65+ beneficiary population consumes
    significantly more resources than beneficiaries in other age groups. We
    welcome the opportunity to provide additional care to these
    beneficiaries, but we have limited remaining capacity in our military
    treatment facilities (MTF). Our number one priority is the health and
    well being of our active duty service members to ensure the operational
    forces are ready to deploy and that our medical personnel maintain the
    skills necessary to support the operational forces. Our plan is to
    provide as much care to 65+ beneficiaries as we can in the MTFs while
    balancing our workload to meet readiness and graduate medical education
    requirements, and our commitment to our active duty families and other
    retirees and their families. We will also rely heavily on available
    private sector care, where Medicare is first payer and TRICARE will be
    the second payer, to provide services not available in our MTFs.
    However, the Military Health System's ability to meet the health care
    needs of a greater percentage of our beneficiary population is
    contingent upon full funding of our current requirements as well as
    those new benefits authorized by the Fiscal Year 2001 National Defense
    Authorization Act.
        Question. Gentlemen, will you be able to meet the goals of TRICARE
    for Life and still be able to provide care to the active force based on
    your projected budgetary guidelines?
        Answer. At this time the Budget has not been submitted. Without
    that final product it is difficult to state unequivocally that the
    budget does not have adequate funding for TRICARE For Life (TFL). Our
    number one priority is the health and welfare of our active duty
    service members. We must ensure that the operational forces are
    medically ready to deploy, and that our medical personnel maintain the
    skills necessary to support the operational forces. Therefore, we must
    maintain a balanced workload in our military treatment facilities (MTF)
    that meets our needs for readiness as well as graduate medical
    education, and our commitment to our active duty families and other
    retirees and their families. We welcome the opportunity to provide
    additional care to our 65+ population, but we have limited remaining
    capacity in our military treatment facilities (MTF). Our MTFs cannot
    provide all needed services for the over 1 million 65+ beneficiaries
    eligible for TRICARE for Life. We are confident that the right
    combination of available MTF care coupled with private sector care
    (where MEDICARE is first payer and TRICARE second) will not only meet
    the needs of this population, but of Navy Medicine's commitment to
    readiness. However, the Military Health System's ability to meet the
    health care needs of our entire beneficiary population, including those
    65+, remains contingent upon full funding of our current requirements
    as well as those new benefits authorized by the Fiscal Year 2001
    National Defense Authorization Act.

                               MEDICAL PERSONNEL

        Question. Are you able to recruit the professionals you need to
    meet medical personnel requirements (Active and Reserve Components)?
    (All three services identify recruiting and retention of nurses as an
    important shortfall).
        Answer. Beginning in fiscal year 2003, the Navy Medical Corps will
    have a manning shortfall. It is projected to worsen through fiscal year
    2007 when overall retention of specialists is projected to drop below
    90 percent. Virtually all specialties will be affected, but critical
    wartime specialties will be most affected, i.e., general surgery and
    surgical subspecialties, orthopedic surgery, anesthesiology, urology
    and diagnostic radiology. These are the specialties where the gap
    between military and civilian pay is highest.
        The Navy Medical Corps is critically dependent on scholarship
    programs. 94 percent of Navy physicians are products of the Uniformed
    Services University (12.8 percent), the Armed Forces Health Professions
    Scholarship Program (AFHPSP) (77.4 percent) and the Financial
    Assistance Program (FAP) (3.7 percent). Funding for AFHPSP and FAP
    appears to be falling behind rising costs. Fiscal year 2001 recruiting
    goals for AFHPSP (320) and FAP (51) required to meet future
    requirements are being revised downward because of funding limitations.
        From the late 80's until about 2 years ago, the Navy Dental Corps
    was consistently unable to meet end-strength. Recently, due in large
    part to the successful use of scholarships, we have been able to meet
    our recruiting goals for general dentists. Because of the low monetary
    compensation, however, we have been unable to attract specialists to
    the military. Additionally, future demographic trends indicate that we
    will be competing with civilian opportunities for a decreasing pool of
    applicants.
        For the Nurse Corps, we are not able to recruit all the
    professionals we need. Although we meet our recruiting goals in terms
    of numbers, we are not able to recruit specialty nurses in the areas of
    perioperative, maternal-infant, critical care and nurse anesthetists.
    Therefore we must train to these requirements once the nurses join the
    Navy.
        In the Medical Service Corps, we have good success recruiting to
    our scholarship and internship opportunities. However, we offer no such
    incentives for over half our new officer positions and in those cases,
    recruiting success varies tremendously between specialties. The
    optometry community has not met recruiting goals for over ten years.
    Other licensed clinical professionals such as pharmacists, and
    psychologists have traditionally also been difficult to recruit and
    retain but we are having some recruiting success with current
    scholarship and training incentives for these communities. Although we
    historically have success in most of our specialties, right now we are
    on target for this year's recruiting goals in only half our
    specialties. The Medical Service Corps Reserve Components are currently
    well manned and anticipating no shortages.
        Navy Medicine's enlisted member's retention statistics compared to
    Navy Line communities are slightly higher. The HM and DT communities
    have been above U.S. Navy percentages in first, second and third term
    retention rates.
        Current retention rates: 1st term HM/DT 52 percent--Line Navy 36
    percent; 2nd term HM/DT 51 percent--Line Navy 49 percent; and 3rd term
    HM /DT 52 percent--Line Navy 48 percent.
    Reserve Components
        Based on overall manning levels versus funded reserve requirements,
    the Medical, Dental and Medical Service Corps are accessing members at
    a level sufficient to meet wartime requirements. However, the Nurse
    Corps is currently manned below requirements. Reserve nurse shortfalls
    are predominately in the critical care areas. The Naval Reserve offers
    incentive programs to nurses with critical care experience.
        In addition, both the Medical Corps and Nurse Corps are
    experiencing attrition that exceeds accessions rates. An in depth
    assessment of the four officers corps shows there is a need to improve
    recruiting at the specialty level to meet skills requirements. The most
    crucial area is the Hospital Corpsman rating. Current reserve inventory
    is 62 percent of total requirements with an attrition rate that has
    exceeded accessions for the past several years. The reserve Dental
    Technician Rating is meeting reserve-recruiting requirements and is
    manned at 100 percent.
        Question. Are medical professionals able to sustain their clinical
    skills at a high level? (We have funded the Joint Trauma Training
    Center at Ben Taub, which is a Tri-service program).
        Answer. Peacetime case mix for general surgeons does not provide
    adequate experience with combat trauma injuries. The Joint Trauma
    Training Center (JTTC) at Ben Taub provides one option for augmenting
    the peacetime clinical experience for trauma surgeons. The training
    received has favorably impressed the Navy trauma training coordinator,
    but one center alone cannot support trauma training for all DOD general
    surgeons. There is a planned opening of a second center at Los Angeles
    County Medical Center in 2002, and the Air Force is planning on opening
    2 additional centers. Four centers will hopefully provide sufficient
    training throughput. In addition, training only surgeons in a JTCC/Ben
    Taub program does not provide combat trauma training for the entire
    trauma surgical team. Broadening the program scope to train trauma
    teams is a reasonable next step for project demonstration.
        Peacetime caseload supports skill maintenance for most other
    specialties. Maintenance of medical licenses and credentials is
    becoming increasingly tied to Continuing Medical Education (CME). The
    Center for Naval Analysis (CNA) report ``Physician Satisfaction
    Survey'' listed decreasing professional growth opportunities as one of
    the top reasons cited by physicians for dissatisfaction with continued
    service. Licensure is considered a ``requirement for employment,'' and
    licensure fees are excluded from reimbursement under U.S.C. The
    services can and do reimburse costs for board certification, an
    important credentials item. Most board certificates are now time
    limited, and renewal requires some combination of re-examination and/or
    CME. The Navy funds one CME course per year as resources permit. Many
    mid-level and senior physicians have credentials and board
    certifications in multiple areas, and their positions require
    continuously maintaining all credentials and board certifications. The
    fiscal strain on military health care funding has reduced funding
    available for CME, resulting in significant constraints on CME
    opportunities. Civilian health care organizations use CME funding as a
    competitive recruiting tool. Expanding and fencing funding support for
    CME may be a cost-effective option to help medical professionals
    maintain clinical skills, update credentials and improve retention.
        For Dental Corps, our general dentists have no problems maintaining
    their clinical skills. Some specialists--for example, Oral and
    Maxillofacial Surgeons--who are assigned to some operational platforms,
    such as aircraft carriers, do experience degradation of their clinical
    skill levels.
        For Nurse Corps, skill sustainment, particularly for wartime roles,
    is highly dependent on the ability to use the skills in daily patient
    care delivery. Nurses at the medium to large Navy treatment facilities
    develop and maintain skills at a high level. Nurses rotate through the
    larger facilities on a periodic basis, which serves as skill refresher
    training. Some treatment facilities with lower workload and acuity
    levels send nurses to the civilian sector for skill maintenance, if
    there is no military facility nearby for that purpose.
        Medical Service Corps Officers and Navy Medicine Enlisted members
    are able to maintain their operational and technical skills while
    performing their daily duties.
        For the reserve components--The vast majority of Medical and Dental
    Corps reservists are practicing their specialty in the civilian
    community on a daily basis and as a rule are very competent. The
    Medical Service Corps and Nurse Corps is a mixture of practicing
    professionals and those who must supplement skills maintenance via
    reserve weekend drills and annual training. Skills are monitored by the
    Centralized Credentials Review and Privileging Department (CCPD) based
    on the standards of the Joint Commission on Accreditation of Health
    Care Organization (JCAHO). Those not able to sustain competence are no
    longer privileged to practice as a member of the Naval Reserve.
    Sustainment of clinical skills for reserve Hospital Corpsmen and Dental
    Technicians is a recognized issue that is currently being addressed.
    Efforts are underway to enhance training in coordination with Hospital
    Corps School and CNET. Recruiting policies are being reviewed to
    enhance the ability to access more clinically active individuals who
    possess required technical skills.
        Question. Does the current medical structure meet military
    readiness and force projection requirements?
        Answer. In terms of total numbers of personnel, Navy Medicine can
    meet military readiness and force projection requirements, however Navy
    Medicine does not have the proper mix of specialties. Medical officer
    deficits exist in Internal Medicine, Orthopedics, and Surgical sub-
    specialties where General Medical Officers serve as substitutes. Other
    officer shortages exist in anesthesiology (anesthesiologists and nurse
    anesthetists) and perioperative nurses. Enlisted personnel have
    shortages in aviation physiology technicians and reconnaissance
    independent duty corpsmen.
        Question. What have been the military medical requirements for the
    Balkans, Southwest Asia, and other deployments?
        Answer. The following list depicts the deployments (greater than 30
    days) of Navy Medicine assets. This list does not include organic
    assets forward deployed with Carrier Battle Groups, Amphibious Ready
    Groups, long-term (permanent change of station) assignments to shore
    facilities worldwide, or exercises (less than thirty days and are part
    of the normal training cycle).
        Task Force Medical Falcon in support of Kosovo Forces: 1 Nurse
    Anesthetist.
        Medical Crisis Support Team--Bahrain: 1 General Surgeon, 1
    Orthopedic Surgeon, 1 Anesthesiologist, 1 Operating Room Nurse, 1
    Surgical Technician.
        Kuwait Army Hospital (rotate with Army and Air Force): 1 General
    Surgeon, 1 Orthopedic Surgeon, 1 Anesthesiologist, 1 Operating Room
    Nurse, 1 Surgical Technician.
        Provide Hope--Tblisi, Georgia (train local personnel on use of
    medical equipment donated by the U.S.): 1 Family Practice Physician, 1
    Primary Care Physician, 1 Operating Room Nurse, 1 Surgical Technician,
    6 Biomedical Repair Technicians, 7 General Duty Corpsmen.
        Question. What is the impact?
        Answer. There was minimal impact of these deployments on patient
    access to care in the Medical Treatment Facilities (MTF). Drawing
    resources from several different Navy MTFs for these deployments
    reduces the impact on any one Navy MTF. However, some workload does
    shift from the Navy MTFs to the more expensive civilian network while
    military providers are deployed.

                            THIRD PARTY COLLECTIONS

        Question. How does the third party collection system currently work
    with the Military Medical Treatment Facilities?
        Answer. The Third Party Collection Program (TPCP) is statutorily
    enabled to bill health insurers and health benefit plans for medical
    care provided to family members of active duty personnel, retirees, and
    retiree family members. The TPCP does not cover active duty members.
    Claims are prepared based on the diagnostic related group (DRG) coded
    in the patient's record for inpatient care, much the same as in a non-
    government hospital. For outpatient services, a claim is prepared based
    on the clinic that the patient visited in the Medical Treatment
    Facilities (MTFs). All Department of Defense MTFs use this methodology.
    The MTF Billing Office sends the claim to the health benefit plan and
    reimbursement is subject to the terms of the plan purchased by the
    patient. When the MTF receives payment, funds are deposited to the
    current year operating account of the MTF.
        Question. What is the impact on Medical Treatment Facilities of
    providing the medical services and collecting for those services (for
    example at Wilford Hall and Brook Army Medical Center in San Antonio)?
        Answer. Because Wilford Hall and Brook Army Medical Centers are not
    Navy Medical Treatment Facilities (MTFs) we cannot comment on their
    Third Party Collection Program (TPCP) operations. However, within Navy
    Medicine, the TPCP does have a significant impact on the funding
    available to the MTF. Total Navy billings for fiscal year 2000 were
    approximately $67 million while at the same time collections for fiscal
    year 2000 were $24.9 million. These third party collections are
    equivalent to approximately 2 percent of the MTF operating budgets. At
    the MTF level funds are used to directly supplement the operating
    budget of MTFs and Clinics.
        Question. Is the money returned to the Medical Treatment Facilities
    that provided the services?
        Answer. The Bureau of Medicine and Surgery monitors billings and
    collections by MTFs. Collections under the TPCP that are realized at
    the MTF remain at the MTF. The fact that funding is left at the MTF
    level and does not become a ``corporate level'' asset incentivizes the
    MTFs to pursue collections to the greatest legal extent possible from
    the local level.

                     CIVILIAN HEALTH PERSONNEL RECRUITMENT

        Question. In your testimony today you have noted problems
    maintaining enough physicians in the military, are there specific
    issues or obstacles you face in reference to hiring civilian
    physicians?
        Answer. Yes. Hiring civilian physicians to cover shortfalls in
    military physicians presents a two-sided problem.
        (1) Based on Hay Group compensation data for salaried physicians
    employed by group practices, HMOs and hospital-based practices, the
    average annual compensation for comparable civilian physicians would be
    $268,000. This is $86,000 more than the average total annual
    compensation for uniformed physicians (CNA Report ``Comparison of Navy
    and Private-Sector Physicians' Total Compensation By Medical
    Specialty.'')
        Outsourcing works when excess, lower cost labor is available and
    fixed-cost infrastructure can be reduced or eliminated. Unfortunately,
    in most markets, civilian physicians are a labor pool that is not in
    excess and commands higher salaries. Infrastructure must be maintained,
    allowing no opportunity to reduced infrastructure or fixed costs.
        (2) Hiring civilian physicians increases dissatisfaction among
    military physicians. In many cases, contract civilian physicians are
    exempted from after-hours call and weekends watches. Civilian
    physicians have none of the military responsibilities or ancillary
    duties of the military physicians, and are not liable for deployment.
    The military physicians discern that they are paid substantially less
    for greater workload and responsibility.
        Question. Are there similar problems hiring enough support staff
    for physicians?
        Answer. Similar issues are probably germane for support staff. The
    Bureau of Medicine and Surgery (BUMED) recently completed a staffing
    analysis addressing clinical support staff assigned to each Primary
    Care Provider (PCP). BUMED has determined that each PCP has 1.9
    clinical support staff available. It is BUMED's goal to increase this
    ratio to the civilian levels of 3.5 support staff per provider. This
    goal is also necessary to support DOD's Military Health Systems (MHSs)
    Optimization Plan, which will recapture workload from contractors.
                                     ______

               Questions Submitted by Senator Ernest F. Hollings

        Question. Under Congressionally Directed Medical Programs, is there
    on-going research targeted on blood-related diseases such as leukemia
    or lymphoma? Is blood-related disease research to be consistent with
    the mission of DOD medical research?
        Answer. Congressionally Directed Medical Programs are managed by
    the U.S. Army Medical Research and Materiel Command. Therefore, Navy
    defers to Army for this response.
        While not specifically under the Congressionally Directed Medical
    Programs, Navy is involved in a study under the Congressionally
    Mandated DOD Coastal Cancer Control Program. This is a collaborative
    study between the Naval Health Research Center and the Hollings Cancer
    Center, Medical University of South Carolina. This study will determine
    the rate of leukemia in active-duty military personnel and compare this
    rate with rates for the general U.S. population. Risk of leukemia by
    occupation within the DOD will also be studied.
        Cancer studies and studies of other blood-related diseases in
    active-duty personnel are consistent with the mission of DOD medical
    research to help ensure a fit and healthy force.
        Question. Has any work been done to identify the occurrence rate or
    prevalence of blood-related diseases resulting from environmental
    exposure in the theater of war?
        Answer. Three research efforts by Navy Research Health Center
    workers have addressed blood-related diseases in veterans of the Gulf
    War. These articles address numerous disease categories, including
    ``neoplasms'' and ``blood diseases''. Articles in the peer-reviewed
    literature resulting from these studies include:
      --Gray GC, Smith TC, Knoke JD, Heller JM. The postwar hospitalization
            experience of Gulf War veterans possibly exposed to chemical
            munitions destruction at Khamisiyah, Iraq. American Journal of
            Epidemiology, 1999, Volume 150, pages 532-540.
      --Gray GC, Smith TC, Kang HK, Knoke JD. Are Gulf War veterans
            suffering war-related illnesses? Federal and civilian
            hospitalizations examined, June 1991 to December 1994. American
            Journal of Epidemiology, 2000, Volume 150, pages 63-71.
      --Gray GC, Coate BD, Anderson CM, Kang HK, Berg SW, Wignall FS, Knoke
            JD, Barrett-Connor E. The postwar hospitalization experience of
            U.S. veterans of the Persian Gulf War. New England Journal of
            Medicine, 1996, Volume 335, pages 1505-1513.
        The first-listed study addresses possible exposure to chemical
    munitions destruction, which is a form of ``environmental exposure''.
    In these studies, a link between deployment to the Persian Gulf and
    later development of ``neoplasms'' and ``blood diseases'' was not
    established.
        Question. The National Academy of Sciences and the Institute of
    Medicine issued a report in January which made recommendations to the
    Department of Defense about improving the health of soldiers deployed
    to the theater of war. The Institute's recommendations are compelling
    and, if implemented, would make a strong commitment to the health of
    American troops. Are you familiar with the Committee's recommendations?
    Do any of the individual services, or the Department of Defense, have
    implementation plans for the any of the Committee's recommendations? If
    not, why not?
        Answer. Navy Medicine considers protecting the health of deployed
    personnel to be a high priority. Navy is working with the other
    Services, through the Joint Preventive Medicine Policy Group, to
    complete work on the Joint Service Instruction on Deployment Health
    Surveillance and Protection. This document will provide Service
    implementation policy for Department of Defense Instruction 6490.3,
    Implementation and Application of Joint Medical Surveillance for
    Deployments, and will address many of the concerns of the Institute of
    Medicine Report. It is anticipated that the draft instruction will be
    ready for final coordination by June 1, 2001.
        Navy Environmental Health Center has published Technical Manual
    NEHC-TM PM 6490.1 (September 2000), titled Implementing Guidance for
    Deployment Health Surveillance. While this document is non-directive,
    it serves as interim guidance pending release of the Joint Service
    Instruction on Deployment Health Surveillance and Protection.
        Navy is developing four Forward Deployable Preventive Medicine
    Units to provide specialized field capabilities in Epidemiology, Health
    Surveillance, Preventive and Occupational Medicine, Risk Communication,
    Environmental Health, Vector Control, Microbiology, and Industrial
    Hygiene (including environmental sampling). These Units will be rapidly
    deployable and mission specific (task-organized), so operational
    commanders will have a tailored functional unit available in the
    theater of operation. FD-PMUs are expected to come on line during
    fiscal year 2002 through 2005, and will make significant contributions
    to many of the recommendations in the Institute of Medicine Report.
        Question. Vice Admiral Nelson, in the testimony you provided to the
    Committee you stated that the Navy is committed to optimizing the
    health care services it provides. You mentioned the Navy completed an
    analysis of its direct care system and found that many of the Treatment
    facilities were not optimally staffed or were not functioning at
    optimal levels. Is the Charleston Naval Hospital functioning at an
    optimal level? If not, will you comment on the challenges facing the
    Charleston Naval Hospital in providing services to the Charleston
    metropolitan area? How will the changes to the TRICARE system affect
    services being provided at Charleston Naval Hospital?
        Answer. Over the last 3 years Charleston Naval Hospital has been
    one of the Navy's leaders in re-engineering for optimization. With the
    help of Palmetto Government Benefits Administrators (PGBA) we formed a
    model partnership with the Trident Hospital System for inpatient
    services. We seamlessly integrated the over 4,000 Navy Nuclear Power
    Training Command personnel into receiving health care services as that
    Command moved from Orlando, FL to Charleston. We increased access and
    beneficiary satisfaction through the implementation of a new
    appointment and scheduling system. The hospital has earned both the DOD
    access award, as judged by responses of beneficiaries and the Federal
    Executive Association's Team Award.
        Changes to the TRICARE system will require some adjustments of the
    services that are currently delivered to the over 65 population in the
    Charleston area but the impact should be minimal. In fact, there have
    historically been 1,500 to 2,000 over 65 beneficiaries empanelled at
    Charleston. Most of these beneficiaries were patients during the time
    the Family Practice training program was open. The hospital has
    continued to provide this population with primary care and outpatient
    specialty services. Naval Hospital Charleston will continue to do so.
    TRICARE for Life provides our very important beneficiaries with an
    excellent benefit for which Naval Hospital Charleston will do their
    part.
        The current facility was constructed in 1973 and is configured as a
    general hospital for a population far in excess of the current
    beneficiary population in Charleston. A new ambulatory care ``super-
    clinic'' if constructed at the Naval Weapons Station, Charleston, in
    proximity to the Navy Nuclear Power Training Command, would optimize
    outpatient care delivery to our current beneficiaries.
                                     ______

                Questions Submitted to Lt. Gen. Paul K. Carlton

                   Questions Submitted by Senator Ted Stevens

                         FISCAL YEAR 2000 SUPPLEMENTAL

        Question. How much relief has your direct care system received from
    the fiscal year 2000 Emergency Supplemental?
        Answer. The fiscal year 2000 Emergency Supplemental provided funds
    for several different years, though most went against fiscal year 2000-
    2001 requirements. The Air Force Medical Service (AFMS) received $37.8
    million of the $148.1 million, which was used to fund fiscal year 2000
    direct care requirements. None of the supplemental was used to fund
    fiscal year 2001 direct care requirements.
        Question. What happens when your MTFs are the first to pay the
    bills, or the last to receive any funding relief?
        Answer. There is absolutely no flex in today's funding levels.
    Every dollar intended for the direct care system that is directed
    elsewhere comes at the expense of our facilities' infrastructure,
    medical equipment, and supplies necessary to provide direct patient
    care.
                      CURRENT YEAR DHP FUNDING SHORTFALLS

        Question. Do you have enough funds to fully execute your fiscal
    year 2001 program? Where are your shortfalls?
        Answer. The Defense Health Program (DHP) is experiencing a $1.4
    billion shortfall. The AFMS' share is $158 million. These shortfalls do
    not include $72.5 million in unfunded fact-of-life requirements such as
    pharmacy growth, skyrocketing fuel costs, and Air Evac overruns based
    both on fuel costs and increased flying hour costs. Another $37 million
    was recently advanced from our 4th quarter funding line to pay for
    requirements driven by the Fiscal Year 2001 National Defense
    Authorization Act. We are concerned about these shortfalls and are
    working with our line and department leadership to resolve them.
    Current funding levels will lead to a significant impact on direct care
    services in early July 2001. If we are not able to continue current
    levels of service, patients will be referred to the civilian sector, at
    a higher cost to the government. We will potentially see this pattern
    reflected in higher private sector care bills in the out-years.
        Question. Is your direct care system fully funded in fiscal year
    2001? How will your fiscal year 2001 shortfalls impact delivery of care
    in your hospitals and clinics?
        Answer. The DHP is experiencing a $1.4 billion shortfall. The AFMS'
    share is $158 million. These shortfalls do not include $72.5 million in
    unfunded fact-of-life requirements such as pharmacy growth,
    skyrocketing fuel costs, and Air Evac overruns based both on fuel costs
    and increased flying hour costs. Another $37 million was recently
    advanced from our 4th quarter funding line to pay for requirements
    driven by the Fiscal Year 2001 National Defense Authorization Act. We
    are concerned about these shortfalls and are working with our line and
    department leadership to resolve them. Current funding levels will lead
    to a significant impact on direct care services in early July 2001. If
    we are not able to continue current levels of service, patients will be
    referred to the civilian sector, at a higher cost to the government. We
    will potentially see this pattern reflected in higher private sector
    care bills in the out-years.

                                TRICARE FOR LIFE

        Question. To arrive at a cost for ``Tricare for Life'', has DOD
    used accurate assumptions for medical and pharmacy inflation rates?
        Answer. Per the TRICARE Management Activity (TMA), DOD calculated
    the TFL cost estimates for fiscal year 2002 based on the most current
    inflation rates available. These rates are consistent with the recent
    Congressional Budget Office (CBO) testimony before the Committee on
    Ways and Means, Subcommittee on Health, on March 27, 2001. The
    Department assumed a 15 percent total cost growth for pharmacy between
    fiscal year 2001 and fiscal year 2002 (approximately 10 percent
    inflation and 4.5 percent increased utilization). DOD assumed a 4
    percent cost growth for TRICARE benefits not covered by Medicare and as
    second payer to Medicare (beneficiary coinsurance and deductible).
        Question. On October 1st where do you believe retirees will go for
    their new benefit to the MTF or in the network?
        Answer. TRICARE For Life is an exciting step towards restoring the
    promise made to these great American patriots by opening the doors of
    our military treatment facilities (MTFs) and welcoming them back into
    the military family.
        Approximately 40 percent of all Medicare-eligible military retirees
    and their families do not live near an MTF and will initially utilize
    providers who accept assignment from Medicare, with TRICARE as the
    second payer. The Air Force is working closely with the TRICARE
    Management Activity (TMA) to partner with the Health Care Financing
    Administration (HCFA) to expand options for these men and women,
    including forming Employee Health Benefit Plans.
        There are approximately 377,000 Medicare-eligible beneficiaries who
    live near an AF MTF. A survey performed by the TRICARE Management
    Activity (TMA) in January, 2001 confirmed that those who currently use
    an MTF for at least some of their medical care are likely to continue
    to do so. At this time, we are unable to reliably predict what level of
    care they will expect to receive at an MTF, versus from a civilian
    provider who accepts assignment from Medicare. At a recent pilot
    program for Medicare-eligible beneficiaries in Florida, approximately
    30 percent of those who lived near the MTF asked to enroll in the
    program. As faithful stewards of our taxpayers' dollars, I firmly
    believe that we must provide as much of their care as possible within
    our MTFs. I also clearly recognize that if we cannot provide service
    that meets their expectations, they will seek care in the community at
    significantly greater cost to the government. We have one opportunity
    to succeed; failure to accurately resource our healthcare system to
    provide this level of care will ultimately drive higher costs through
    Medicare and a less robust and ready military healthcare system.
    Continued underfunding of the direct care system at the expense of our
    managed care support contracts threatens not only our ability to
    provide comprehensive care for the men and women affected by this new
    benefit, but also for current TRICARE beneficiaries.
        In those areas with large, integrated MTFs, we would like to offer
    beneficiaries a TRICARE Senior Prime-like option after further
    negotiations with HCFA. At medium-sized Air Force facilities, we are
    working to deploy a program similar to the demonstration program at
    MacDill AFB that has been so well received by beneficiaries in that
    area. Some of the smallest MTFs do not have the staff or resources to
    meet the healthcare needs of our older retirees, and we anticipate
    partnering closely with HCFA to ensure that these men and women receive
    the care they need with TRICARE as the second payer.
        Question. If the retirees go to your MTFs, is your system ready and
    funded for the new workload?
        Answer. Air Force military treatment facilities (MTFs) are eager to
    welcome these great American patriots back to the military family. The
    men and women of the Air Force Medical Service are working hard to
    provide high-quality, cost effective care to as many beneficiaries as
    possible with the resources currently available.
        We will need full funding of our current requirements, as well as
    resources to provide additional care. No MTF currently has sufficient
    resources to provide all necessary care for all Medicare-eligible
    beneficiaries who live near the MTF. Because the accrual fund will not
    provide any funding in fiscal year 2002, we are carefully considering
    options to fund care for Medicare-eligible beneficiaries, while
    maintaining our commitment to provide excellent healthcare to our
    fighting force and our current TRICARE Prime beneficiaries. The impact
    of the recent global settlement on the direct care system's ability to
    continue even its current level of effort over the next 6 months is
    unclear. As previously stated, we estimate that the annual costs of
    implementing these new benefits will range from $4.1 billion in the
    first year to $6 billion per year in later years. No amount of
    increased efficiency in our system will allow us to reallocate
    sufficient resources to meet this challenge.

                FULL FUNDING OF THE DEFENSE HEALTH PROGRAM (DHP)

        Question. Is your DHP funding stable and predictable? If not, how
    does that instability impact your healthcare system?
        Answer. Yes, our funding levels are relatively stable and are
    projected out over the future years defense plan (FYDP). These
    projected levels, though greatly improved after OUSD(C) input, still do
    not adequately address the medical inflation issue, especially
    regarding pharmaceutical cost increases. Additionally, the direct care
    portion is at risk due to cost increases in the MILPERS account and
    private sector care. Given the extremely tight budgets, we have no
    ability to handle execution-year changes (such as we have seen this
    year with skyrocketing fuel prices and increasing pharmaceutical
    growth) within existing funds. So, although the funding is stable and
    predictable, it continues to be inadequate.
        Question. Has the DHP budget accurately forecast ``cost savings''
    and ``efficiencies?'' Have these savings materialized? Have you had a
    loss in buying power over the years?
        Answer. The Air Force Medical Service (AFMS) feels we have
    accurately predicted cost savings and efficiencies for those programs
    we are able to control and to which we have had input (for example, our
    fiscal year 2000 initiative regarding Medical Center optimization).
    Projected cost savings and efficiency programs that are levied upon us
    are often less realistic. In my opinion, little to no savings have been
    realized by these levied programs (for example, the savings that was
    supposed to be saved by consolidating the Lead Agents--the
    consolidation never occurred; however, projected savings were
    subtracted from the budget). The Office of the Undersecretary of
    Defense Comptroller, OUSD(C) has assisted, with some limited success,
    in regaining these dollars.
        The ``buying power'' is fairly difficult to answer quantitatively,
    due to medical benefit changes, population changes, and restructuring/
    rightsizing in the AFMS. However, looking at the Consumer Price Index
    for ``U.S. City Average, Medical care, All Urban Consumers,'' we see
    that medical inflation since 1992 has been 137 percent. Based on our
    actual fiscal year 2000 funding, the AFMS has approximately 27 percent
    less buying power today than we did in 1992. We estimate that our
    actual delta between dollars received (in fiscal year 2000) and dollars
    required, per this index, is about 7.35 percent, or $239 million.

                   VENTURE CAPITAL FOR THE DIRECT CARE SYSTEM

        Question. Please tell us about your plans to make your hospitals
    and clinics more productive.
        Answer. The Air Force Medical Service (AFMS) has been a leader
    among the Services in its efforts to make Military Treatment Facilities
    (MTFs) the most efficient operations possible. One example is the
    Primary Care Optimization (PCO) initiative in which the AFMS is already
    experiencing some very encouraging results. PCO maximizes a provider's
    ability to care for patients by providing appropriate support staff,
    facilities, equipment and systems.
        Re-capitalization of our infrastructure and equipment has suffered
    the last several years as a result of inadequate and/or suppressed
    funding. Our re-capitalization plan attempts to restore our Real
    Property Maintenance (RPM) and equipment accounts so we may continue to
    provide quality health care with state-of-the-art equipment in a
    functional and safe environment. Additional funding for RPM, military
    construction (MILCON), Information Management/Information technology,
    and medical investment/expense equipment would need to be phased in
    over several years. For example, the lead-time for MILCON is such that
    the first wave of re-capitalization funds will not be needed until
    fiscal year 2005.
        Question. Do funding constraints keep you from optimizing your
    system? Would a ``venture capital'' fund, or a ``Surgeon General's
    Investment and Initiative Fund'' allow you to operate your system more
    smartly and at less expense?
        Answer. Funding constraints limit our optimization efforts. When we
    are forced to function year to year (rather like living paycheck to
    paycheck), we are unable to optimally plan out-year facility
    maintenance and upgrade projects, medical equipment buys, adaptations
    to changes in medical care delivery, etc. Sometimes we do not make the
    most effective use of our funds, specifically, when funds come all at
    once at the end of the year. In such situations, funds go toward valid
    projects of opportunity that are not our highest priorities because our
    highest priorities have phasing and milestones that prevent their
    execution by the end of the fiscal year. Additionally, the project
    tends to cost more than if we had been able to properly plan for/spend
    those dollars.
        A venture capital fund needs to be considered. Such a fund should
    provide near term flexibility for unexpected requirements in the
    budget/execution year and innovative projects where a positive return
    has been determined.
        Question. If such a fund were established, please explain how the
    ``best business case'' approach would be used to identify, select and
    fund projects.
        Answer. All proposed ``draws'' on the fund require a business case
    analysis. A tri-service process and forum, consistent with current
    processes/forums, could be easily adapted to accommodate venture
    capital projects. It's imperative that approval of fund withdrawals be
    a joint decision, i.e., no single Service or agency has the authority
    to approve ``takes'' from the fund.

                             ORGANIZATIONAL REFORM

        Question. Would the creation of a ``Joint Medical Command'' or a
    ``USMEDCOM'' remedy some of the problems experienced with DOD medical
    programs?
        Answer. Reorganization for the sake of reorganization is not a
    solution. It is not clear to me how an organizational change to the
    Military Health System will solve the current fiscal crisis or
    necessarily be more efficient. The current fiscal problems we have are
    a result of four factors: poor financial modeling, unrealistic
    inflation estimates, run away contract costs, and changes to the
    benefit.
        I am concerned that a USMEDCOM is being looked at solely as the
    mechanism to manage cost as opposed to managing the proper balance
    between benefit and readiness. We need to strike the right balance of
    interdependency between benefit and readiness in light of each
    service's unique culture and doctrine, otherwise, we will dilute
    readiness.
        While we don't believe a USMEDCOM will solve our funding problems,
    we do need centralized management of the Military Healthcare System
    with a focus on business aspects and readiness. This could be
    accomplished by minor realignment of responsibilities and putting more
    bite into components of the current structure such as the Defense
    Medical Oversight Committee (DMOC). Establishing a direct link from the
    DMOC to the Secretary of Defense (SECDEF) and Joint Chiefs of Staff
    (JCS), which does not exist in the current construct, would serve to
    facilitate the cross service coordination, optimization, and
    accountability we need.
        Question. Is there clean authority and accountability in the DOD
    medical programs today? Would a ``USMEDCOM'' foster better lines of
    responsibility for DOD medical programs?
        Answer. Accountability for medical costs requires dual efforts. The
    Defense Health Program (DHP) is currently highly scrutinized and
    examined in great detail at multiple levels. However, true medical
    costs to the Department necessitate an examination of the entire
    Military Healthcare System (MHS), which includes both DHP costs and
    those borne by the Line Components. Examples of these other costs are
    line funded programs and line funded manpower (both military and
    civilian positions). When examined together, the true costs of medical
    support to the government become clearer and more accurate, while
    additional opportunities for efficiencies can then be best considered.
        While we don't believe a USMEDCOM will solve our funding problems,
    we do need centralized management of the Military Healthcare System
    with a focus on business aspects and readiness. This could be
    accomplished by minor realignment of responsibilities and putting more
    bite into components of the current structure such as the Defense
    Medical Oversight Committee (DMOC). Establishing a direct link from the
    DMOC to the SECDEF and JCS, which does not exist in the current
    construct, would serve to facilitate cross service coordination,
    optimization, and accountability we need.

                       RECENT TRICARE SATISFACTION SURVEY

        Question. Have there been recent improvements in customer
    satisfaction with TRICARE? What remains to be done to further improve
    satisfaction with the TRICARE program?
        Answer. In 1994, prior to TRICARE, 63 percent of beneficiaries
    reported they were satisfied with their access to care. By 1998, that
    had increased to 74 percent and in December 2000, to 78 percent. In
    those regions where TRICARE has been in place for more than three
    years, 83 percent of those surveyed were satisfied with the care they
    had received. This compares very favorably with customer satisfaction
    data from a recent study of beneficiaries in civilian managed care
    plans that reported that on average 79 percent were satisfied with
    their plan. Similarly, satisfaction with overall quality of care has
    increased from 79 percent to 90 percent. I, and all the leadership of
    the Air Force Medical Service, review customer satisfaction data as
    part of the Air Force Performance Measurement Tool. At the last TRICARE
    conference, I was particularly proud that Air Force facilities won
    three of the five awards for customer satisfaction, as well as three of
    the five awards for access.
        However, there is always room for improvement. We are continuing to
    improve access through aggressive, enterprise-wide improvements in our
    appointing systems, including web-based appointing, improved telephone
    systems, after-hours clinics, and an increased emphasis on preventive,
    rather than reactive healthcare delivery. Beneficiaries have been
    included in many of the groups developing these initiatives in order to
    insure that changes met their needs.

                        MEDICAL RECRUITING AND RETENTION

        Question. How is your service doing in recruiting and retaining
    medical professionals?
        Answer. The Air Force is definitely having difficulty recruiting
    and retaining medical professionals. Accession rates lower compared to
    average rates over the last three years. Loss rates are higher compared
    to average rates over the last three years. Lower accession rates and
    higher loss rates are applicable to most Corps. The bottom-line is that
    losses are greater than gains over the last three fiscal years.
        The Air Force has found the use of the Health Professions
    Scholarship Program extremely effective in recruiting high quality
    applicants. However, the challenge occurs trying to retain them past
    their year of payback for their education. We believe our difficulty in
    retaining providers stems from the pay disparity in some specialties
    with the civilian sector, the increased student debt loan, and the
    competitive job market for health professionals. Additionally, the work
    environment, job satisfaction and assignment location/stability also
    may play a part in retention. A Center for Naval Analysis study,
    currently in progress, will help to validate the reasons providers
    choose to leave military service.
        Question. Is the current special and incentive pay structure
    adequate to keep your force manned?
        Answer. Absolutely not. Special and incentive pays have not changed
    in 10 years for the health professions. The recently published Center
    for Naval Analyses (CNA) study, Health Professions' Retention-Accession
    Incentives Study Report to Congress, February 2001, offered these
    findings:
      --A pay gap does exist between uniformed and private-sector civilians
            for the 24 physician specialties examined.
      --A significant uniformed-civilian compensation gap exists between
            dentists, optometrists, and clinical psychologists at all
            career junctures, ranging from 13-42 percent.
      --A 16-percent uniformed-civilian compensation pay gap exists for
            pharmacists at entry level, narrows to 9 percent at the mid-
            junior junction, and then reaches parity at later career
            points.
      --Uniformed Certified Registered Nurse Anesthetists (CRNAs)
            experience a 10-percent compensation gap with their private-
            sector counterparts at the entry level.

        Note: The civilian pay comparisons for the CNA study were based on
    conservative salary estimates from the private sector.

        Question. Where do you have the most difficulty recruiting and
    retaining medical professionals? What specialties are most undermanned?
        Answer. The Air Force Medical Service has determined the following
    as critical specialties, where current personnel are below 90 percent
    of requirements:
        Physicians: anesthesiologists (76 percent), psychiatrists (83
    percent), dermatologists (82 percent), pathologists (83 percent),
    radiologists (77 percent), and neurologists (76 percent).
        Dentists: endodontists (86 percent), prosthodontists (54 percent),
    general dentists (68 percent), periodontists (85 percent), and oral/
    maxillofacial surgeons (89 percent).
        Biomedical Sciences: pharmacists (80 percent), optometrists (80
    percent), dietitians (89 percent), and biomedical engineers (86
    percent).
        Nurses: nurse anesthetists (90 percent by June 2001).
                                     ______

                Question Submitted by Senator Richard C. Shelby

                    ACCESS TO MILITARY HEALTHCARE FACILITIES

        Question. Retiree and dependent access to military healthcare in
    remote areas has become problematic. I know this is true in a number of
    areas, including rural areas of Alabama. I would like to ask each of
    the members of panel one to comment on DOD plans to meet the healthcare
    needs of military personnel, dependents and veterans living in rural
    areas with no local access to military healthcare facilities. What is
    the status of demonstration projects that seek to address these
    problems?
        Answer. The TRICARE Prime Remote (TPR) program, available
    throughout the country since 1 October 1999, provides the ``Prime''
    benefit to active duty service members who are not stationed near an
    MTF. The TRICARE Management Activity (TMA) closely monitors access and
    network adequacy for all Prime beneficiaries. As of 30 October 2000,
    family members whose active duty sponsor serves in a remote location
    were eligible for waiver of cost-shares, deductibles, and co-pays.
    Beginning 1 October 2001, these family members will be able to enroll
    in TRICARE Prime Remote. Also beginning 1 October 2001, Medicare-
    eligible retirees in remote locations will be eligible for TRICARE for
    Life as part of the 2001 National Defense Authorization Act (NDAA).
    TRICARE then becomes second payer to Medicare, with DOD paying cost-
    shares, deductibles, and co-pays for this population.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                           TRICARE BUSINESS PRACTICES

        Question. Last year I asked if the amendment that provided for
    increased reimbursement levels for TRICARE was adequate, particularly
    in areas where our military personnel could not get a provider to see
    them. I was told last year that we had seen an improvement by all three
    Surgeons General. Additionally, reports from Dr. Clinton's office also
    say that providers and patients are happier, but I can tell you though
    that is not the information that I am receiving from my constituents to
    include patients and providers. Many say they cannot locate a provider
    that will accept TRICARE for the very reasons that we talked about
    before, inadequate reimbursement, delay in payment and inadequate fee
    structures that do not compare with their civilian counterparts.
    Currently TRICARE reimbursement is at the 45 percent rate allowable,
    like MEDICARE reimbursement. It is my understanding that under the old
    CHAMPUS program, providers were reimbursed at 80 percent. An increasing
    number of MEDICARE providers are leaving networks because of this low
    reimbursement rate.
        Gentlemen is this adequate?
        Answer. TRICARE reimbursement to civilian providers, by law, is
    linked to Medicare fee schedule rates. Beneficiaries in TRICARE
    Standard pay 20 percent co-pay and TRICARE pays the remaining 80
    percent of the bill up to 115 percent of the Civilian Health and
    Medical Program of the Uniformed Services (CHAMPUS) Maximum Allowable
    Charge (CMAC). After 1 April 2001, TRICARE will pay 100 percent of the
    bill for dependents of active duty personnel who are enrolled in
    TRICARE Prime for authorized services. For military retirees (and their
    Medicare-eligible dependents) who also have Medicare Part B, Medicare
    will pay 80 percent of the allowable charge, and TRICARE will pay the
    remaining 20 percent after 1 October 2001. Our most recent data shows
    that only 4 percent of providers do not accept our current payment
    rates and billing procedures. For calendar year 2000, overall physician
    CMACs increased 7.5 percent, on a dollar-weighted basis. Although
    TRICARE uses Medicare's payment model in most cases, we have found it
    necessary to create ``carve outs'' with higher reimbursement rates in
    areas in which we have had difficulty attracting enough providers to
    serve our beneficiaries (i.e., Alaska). Provider recruiting is also
    enhanced by the fact that hospitals that accept Medicare must also
    accept TRICARE.
        Question. Will this impact the number of providers available to our
    over 65 year old beneficiaries?
        Answer. We expect high levels of participation of those providers
    who currently accept Medicare because the combination of Medicare and
    TRICARE For Life for our Medicare-eligible beneficiaries will cover 100
    percent of the allowable charges as of 1 October 2001.
        Question. In areas such as Dallas, which has approximately 100,000
    beneficiaries, and there is not a military medical treatment facility,
    how are we addressing issues of access to providers?
        Answer. Health Net Federal Services (formerly Foundation) continues
    to develop a robust network of over 1,900 primary care and specialty
    providers to care for TRICARE Prime, Standard and Extra beneficiaries
    in the Dallas Area. Beneficiaries who enroll in TRICARE Prime are
    guaranteed the same access standards as beneficiaries who enroll in
    Prime at a military treatment facility. Recent surveys and reports have
    shown that access standards are being met and that 90 percent of
    providers have open panels and are accepting new TRICARE patients. The
    Dallas situation is similar to other areas of large beneficiary
    populations that do not have access to a military medical treatment
    facility. Many beneficiaries in this area are eligible for additional
    benefits because of the Base Realignment and Closure program.
        Question. Some of my constituents are concerned about the quality
    of provider you get when you reimburse at 45 percent as opposed to 80
    percent. Are you offering our soldiers and their families the best of
    the best medical care or second rate medical care through TRICARE?
        Answer. TRICARE maximum physician payment amounts, by law, should
    be set at no more then Medicare's level of physician payments. We think
    that TRICARE maximum allowable payment levels (known as the CMACs) are
    equal to 58 percent of the provider billed charges, not 45 percent. Due
    to provider discounts, the actual payment levels are about 50 percent
    of billed charges. Those providers that accept TRICARE must meet tough
    requirements in our credentialing process as required by our contracts
    before they can see our beneficiaries. Network physicians are typically
    Board-certified. Clinical outcomes studies at military treatment
    facilities have shown results comparable or superior to those at
    similarly sized civilian facilities. I am aware of civilian providers'
    concerns about Medicare reimbursement rates, but I am unaware of any
    data demonstrating that TRICARE beneficiaries are receiving second-rate
    medical care.
        Question. What do you believe are the key issues in attracting and
    retaining providers?
        Answer. Adequate reimbursement rates, ease of submitting claims and
    timeliness of claims payments. We have made substantial progress in all
    of these areas and continue to improve. The latest data from our
    TRICARE Managed Care Support Contractors shows that 96 percent of all
    claims are being paid within 30 days, and nearly 100 percent of claims
    are being paid within 60 days. We are making significant progress in
    developing and deploying electronic claims submissions and web-based
    tools to further streamline claims filing and processing.
        Question. Can you comment on your meetings with HCFA on identifying
    those who did not enroll in B and what solution is needed to waive this
    penalty?
        Answer. My staff has carefully reviewed available data and it
    appears that approximately 7 percent of military retirees and family
    members who are Medicare-eligible do not have Medicare Part B. The
    TRICARE Management Activity (TMA) and the Health Care Financing
    Administration (HCFA) have continued to meet to explore options to best
    ensure that these great American patriots are served. HCFA and TMA are
    pooling data to facilitate this effort. In the absence of legislative
    relief to waive the 10 percent per year penalty, these beneficiaries
    will have to either pay the penalty or apply on an individual basis to
    their congressional representatives for a waiver to participate in
    TRICARE For Life. I strongly support removing this remaining impediment
    to restoring the promise made to our over-65 retirees and their
    families. I am also anxious to partner more closely in devising an
    equitable mechanism to care for those patients for whom DOD and HCFA
    have a shared risk: taxpayers should only have to pay this bill once.
    This will require a significant change in approach for both of our
    organizations, along with additional legislative assistance.
        Question. What marketing plan is planned to educate the over 65
    retirees about about TRICARE For Life?
        Answer. In January, a letter was sent to every military retiree
    and/or family member who is Medicare-eligible or who would be on 1
    April 2001. This letter briefly outlined some of the benefits created
    by the Fiscal Year 2001 National Defense Authorization Act and strongly
    encouraged them to enroll in Medicare Part B. In February, the TRICARE
    Managed Care Support Contractors mailed detailed information on the
    TRICARE Senior Pharmacy program to this group. Detailed information has
    also been shared via TRICARE Management Activity (TMA), Air Force local
    web sites and publications. In addition, every Military Treatment
    Facility (MTF) has developed local marketing strategies including signs
    and flyers in the MTF, articles in the base/local paper, etc. The Air
    Staff is refining additional marketing toolkits for distribution to AF
    MTFs later this spring. TMA has indicated that official DOD educational
    pamphlets will be available this summer. The Coalition and other
    retiree groups, with input from the Services and TMA, have been
    advertising and marketing the TRICARE For Life benefit across the
    United States.
        Question. Can you comment on how the implementation of TRICARE For
    Life will impact your resources? (Physician contacts per year average
    12 per year in those over 65 as compared to 4.6 per year in ages 15-
    44). (Days of Hospital Care per year average 269 days of care per one
    thousand persons in those over 65 as compared to 54.6 per one thousand
    persons in ages 15-44).
        Answer. We consider serving the great patriots of this nation and
    their dependents both a privilege and a pleasure. TRICARE For Life
    ``restores the promise'' to those who have sacrificed so much. Our
    primary mission is to ensure the health and well being of all active
    duty service members, to ensure our forces are ready to meet any
    contingency on the global spectrum, and to ensure our medics are well
    trained to support the operational forces. Our plan is to maximize
    existing MTF capability in order to provide as much care as possible to
    our 65+ beneficiaries, without compromising our primary mission. Review
    of our TRICARE Senior Prime experience showed that our Medicare-
    eligible beneficiaries averaged as many as 21 outpatient encounters per
    year. Increasing workload at military treatment facilities (MTFs) will
    increase resource requirements. We face unique challenges for prudently
    managing our limited resources in fiscal year 2002.
        We must ensure that our readiness mission, graduate medical
    education requirements and care to active duty families and other
    retirees and their families is not compromised. We will rely on private
    sector care to help provide the complete medical benefit, where
    Medicare is first payer and TRICARE second payer. In order to best
    serve all beneficiaries, the Military Health System must have full
    funding of our current requirements, as well as the new benefits
    authorized by the Fiscal Year 2001 National Defense Authorization Act.
        Question. Gentlemen, will you be able to meet the goals of TRICARE
    For Life and still be able to provide care to the active force based on
    your projected budgetary guidelines?
        Answer. Our commitment to the health and readiness of our fighting
    force is unchanged. They are our first priority. It is also critical
    that we maintain a robust patient population so that the providers who
    care for our service members and their families maintain their clinical
    skills. Successfully accomplishing these two mandates while
    implementing TRICARE For Life will require full funding of our current
    resource requirements as well as additional funding for additional
    workload. We must apply a balanced approach in our MTFs that ensures we
    are mission ready, that our graduate medical education requirements are
    met, and that the health needs of active duty families and other
    retirees and their families are not compromised. We consider it a
    privilege and pleasure to serve the 65+ population, but have limited
    capacity at our MTFs. We will not be able to provide care to all
    TRICARE For Life beneficiaries in our MTFs. We will rely on private
    sector care to help provide the complete medical benefit, where
    Medicare is first payer and TRICARE second payer.

                               MEDICAL PERSONNEL

        Question. Are you able to recruit the professionals you need to
    meet medical personnel requirements (Active and Reserve Components)?
    (All three services identify recruiting and retention of nurses as an
    important shortfall).
        Answer. The Air Force is definitely having difficulty recruiting
    and retaining Active Duty medical professionals. Loss rates are higher
    compared to average rates over the last three years. Lower accession
    rates and higher loss rates are applicable to most Corps. The bottom-
    line is that losses are greater than gains over the last three fiscal
    years. We have determined the following as critical specialties, where
    current personnel are below 90 percent of requirements:
        Physicians: anesthesiologists (76 percent), psychiatrists (83
    percent), dermatologists (82 percent), pathologists (83 percent),
    radiologists (77 percent), and neurologists (76 percent).
        Dentists: endodontists (86 percent), prosthodontists (54 percent),
    general dentists (68 percent), periodontists (85 percent), and oral/
    maxillofacial surgeons (89 percent).
        Biomedical Sciences: pharmacists (80 percent), optometrists (80
    percent), dietitians (89 percent), and biomedical engineers (86
    percent).
        Nurses: nurse anesthetists (90 percent by June 2001).
        The Air Force has found the use of the Health Professions
    Scholarship Program extremely effective in recruiting high quality
    applicants. However, the challenge occurs trying to retain them past
    their year of payback for their education.
    Air National Guard
        The Air National Guard (ANG) has been fairly successful to date in
    the area of medical recruiting. However, their new requirement to stand
    up critical care teams and surgical teams will be a challenge. The ANG
    is facing the same challenges as the other components, such as their
    need to offer more incentives and increase the size of their recruiting
    staff to help their recruitment and retention initiatives. The status
    of the ANG medical recruiting program is:
        Physicians.--Currently filled at 94 percent overall. However, this
    year we are facing increased requirements of Internal Medicine
    Specialists. In addition new requirement for critical care physicians
    and various type of surgeons have been added.
        Dentists.--Currenly filled at 85 percent. There will be an increase
    this year for the Air Force Specialty Codes (AFSCs) that support this
    Corps. It is anticipated that this percentage will drop if the
    incentives do not remain in place to support not only recruiting but
    also retention.
        Biomedical Sciences.--Currently filled at 79 percent. There will
    actually be a decrease in requirements this year and it is anticipated
    that the fill rate will go up.
        Nurses.--Currently filled at 105 percent. Concern is with new
    requirements for critical care nurses, nurse anesthetists, surgical
    nurses, and operating room (OR) nurses.
        Medical Administrators.--Currently filled at 116 percent. No
    recruiting concerns.
    Reserves
        Reserve Center (AFRC) reports that, in most cases, it can recruit
    the medical professionals they need given adequate funding for
    incentives. Their main reason for shortfalls is due to the inability to
    find certain specialties to fill vacancies in specific areas.
    Currently, their significant shortages include: general surgeon (84
    percent), family physician (83 percent), public health officers (83
    percent), optometrists (82 percent), orthopedic surgeon (80 percent),
    bioenvironmental engineer (68 percent), internal medicine (66 percent),
    and critical care medicine (44 percent). In the physician areas,
    specifically Critical Care Medicine, there are too few critical care
    physicians in the United States. This reduced recruiting pool, along
    with the requirements of their civilian practice, makes it quite
    difficult to draw this limited group into the Air Force Reserve. Their
    experience from the Desert Storm deployment and its impact on private
    practice make some physicians hesitant to assume a similar risk in
    today's environment. For optometrists, there are no real incentives for
    an optometrist to reduce their incomes in their private practice to
    make a percentage of that as an Air Force Reserve member. Also, the Air
    Force Reserves can't currently offer incentives to any of the non-
    physician shortages area.
        Question. Are medical professionals able to sustain their clinical
    skills at a high level? (We have funded the Joint Trauma Training
    Center at Ben Taub which is a Tri-service program).
        Answer. From the primary care standpoint, the answer is yes.
    Emergency Medicine physicians, Family Practice physicians, Internal
    Medicine physicians, Pediatricians, Nurse Practitioners, and Physician
    Assistants can practice full scope of care in the military medical
    treatment facilities.
        Some of the Internal Medicine subspecialists and Surgical
    specialists cannot practice full scope of care at every military
    treatment facility. In fact, there is concern that peacetime healthcare
    is not adequate preparation for deployment medicine. As a result, the
    Air Force has developed ``mission ready'' currency requirements for the
    skills and knowledge critical to deployment medicine. New training
    platforms have been developed. One example is the Joint Trauma Training
    Center (JTTC) at Ben Taub General Hospital in Houston, Texas where
    approximately 65 Air Force nurses and physicians rotate annually to
    upgrade their experience. The JTTC is a prototype effort to provide
    military medical personnel with real world, hands on trauma experience.
        Question. Does the current medical structure meet military
    readiness and force projection requirements?
        Answer. Yes, the current medical structure does meet military
    readiness and force projection requirements. The Air Force Medical
    Service (AFMS) ensures that these requirements are met through the
    Medical Resources Letter (MRL) to source identified requirements. The
    MRL (which includes manpower, equipment, and supplies validated for
    programming, acquisition, and maintenance) ensures that the AFMS has
    enough personnel postured into Unit Type Codes to meet sustainment and
    wartime requirements. The MRL is accomplished approximately once every
    six months with the full involvement from each Major Command, Air
    Reserve, and Air National Guard components.
        Question. What have been the military medical requirements for the
    Balkans, Southwest Asia, and other deployments? What is the impact?
        Answer. We currently have approximately 200 of our Air Force
    Medical Service (AFMS) men and women on the ground in the Southwest
    Asia and European theaters providing direct support to our sustainment
    operations. We also have another 1,375 medical personnel in our ongoing
    Aerospace Expeditionary Force ``on call'' system (90-day rotational
    standby for rapid deployment) which maintains a continuous readiness
    posture permitting their rapid deployment in support of a CINCs
    requirement. This on-call status is transparent to most, in that these
    providers and support staff continue to provide beneficiary health care
    in our medical treatment facilities (MTFs) on a day-to-day basis during
    their respective rotations. But to have and maintain this capability
    there is an impact, both positive and negative.
        On the positive side, the medical care and/or support given by our
    providers is unequalled. From resuscitative surgery to preventive
    medicine, we have extremely competent and clinically current providers,
    as well as other professionals, who consistently step up when needed.
    This force health protection aspect is often critical when supporting
    U.S. forces in austere locations, hours from fixed/capable hospitals.
    Secondly, the operational exposure these providers gain in the deployed
    setting is immeasurable and cannot be replicated in our MTFs or
    civilian communities.
        The downside is that to maintain a clinically current AFMS member,
    requires a training tail that can be expensive in both time and/or
    money. The time commitment necessary may also constrain the
    availability of that provider in the beneficiary health care system.
    This is important to the AFMS, as we are ardent supporters of new
    legislation that is bringing back the care of our retired members and
    their dependents. That said, a fundamental question that, as Air Force
    Surgeon General, I am addressing is how best to plan for and balance
    our operational requirements with those responsibilities and
    requirements supporting our beneficiary healthcare programs. A good
    example is the optimization of our critical care providers assigned to
    our rapid response teams, called Small Portable Expeditionary Aerospace
    Rapid Response teams (SPEARR), and their assignment to our major
    medical centers. This concept will offer the best forum to maintain
    currency of clinical skills, and deployment of these personnel will
    have less of an impact on beneficiary access because of the depth of
    manning of the facility.

                             THIRD PARTY COLLECTION

        Question. How does the third party collection system currently work
    within the Military Medical Treatment Facilities?
        Answer. The third party collection program (TPCP) is one of three
    reimbursement programs in which the Medical Treatment Facility (MTF)
    participates. The Medical Service Account (MSA) collects dollars
    directly from patients or agencies for reimbursement of medical
    services (i.e., inpatient stays, civilian emergencies, pay patients
    OCONUS, etc.). The Medical Affirmative Claims/Third Party Liability
    (MAC/TPL) program seeks to recoup dollars expended by the government
    when a third party is responsible for invoking the need for care (e.g.,
    automobile accident, food poisoning, etc.). Funding for both programs
    are deposited directly back into the O&M of the facility that provides
    the care.
        The TPCP is governed by 10 USC, Sec. 1095, chapter 55, implemented
    by 32 CFR Part 220, and seeks to recoup dollars for care given to
    eligible beneficiaries when they are covered by other health insurance.
    The beneficiaries under this program are never liable for amounts
    billed to their insurance policy or any amount not paid (balance
    billing). The dollars collected under the auspices of the TPCP are
    deposited directly back to the MTF's O&M and are used to enhance health
    care operation or TPCP collection operations.
        Question. What is the impact on Medical Treatment Facilities of
    providing the medical services and collecting for those services (for
    example at Wilford Hall and Brook Army Medical Center in San Antonio)?
    Is the money returned to the Medical Treatment Facilities that provided
    the services?
        Answer. Providing medical services for civilian trauma patients and
    receiving reimbursement for those services help maintain critical
    readiness skills for our provider and support staffs. All
    reimbursements for these services are collected and retained by the
    Medical Treatment Facility (MTF). There are no plans to implement
    elsewhere within the AFMS, for Wilford Hall Medical Center is the only
    Air Force MTF licensed to provide Level 1 trauma care.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye

                             BIO-CHEMICAL TERRORISM

        Question. General Carlton, from your testimony the committee heard
    about the bio-terrorism exercise called ``Alamo Alert''. Based on your
    after-action evaluation report and the ever present real threat from
    terrorism, what role does the Military Health System plan for itself in
    response to a bio-chemical attack in the civilian community?
        Answer. Senator Inouye, thank you for your time and question about
    our military health system's response to chemical and biological
    attacks within our civilian communities. The Air Force Medical Service
    (AFMS) is aggressively pursuing a variety of initiatives that will
    improve early warning and response to chemical and biological terrorism
    events. We are determined to provide the very best defense of the
    nation and partner with our civilian counterparts to leverage training,
    exercise opportunities, advances in the revolution in biotechnology and
    informatics. One of our most promising interoperability initiatives
    will leverage our clinical laboratories in a nation-wide network called
    the National Laboratory Response Network (NLRN). The Center for Disease
    Control and Prevention (CDC) established the NLRN, a collaborative
    effort between the CDC and the Association of Public Health
    Laboratories (APHL). The NLRN is an early warning network to detect a
    covert release of pathogenic agents by utilizing procedures established
    by the CDC. It is based on grouping laboratories into one of four
    different levels, A through D, according to their ability to support
    the diagnostic needs presented by a bioterrorism event. Laboratories
    able to conduct basic tests to rule out a particular biological agent
    can operate at Level A. Recognizing that most DOD clinical laboratories
    currently have the capability to operate at Level A, and that this
    added capacity would enhance the NLRN, the CDC is looking at DOD
    laboratories to enhance its NLRN. Additionally, the CDC and USAF
    Surgeon General have entered into a Memorandum of Agreement to support
    the establishment and coordinate collaboration towards the development
    of a National Medical Early Warning System of which the NLRN is an
    important component.
        Another initiative is the United States Air Force weapons of mass
    destruction (WMD) first responder enhancement program predicated on
    interoperability with local and state authorities and agencies. The
    program's purpose is to enhance First Responder (firefighters, disaster
    preparedness, explosive ordnance disposal, security forces, and medical
    staffs) planning, training and equipment capabilities to improve an
    installation's ability to detect, assess, contain and recover from a
    peacetime WMD terrorist (non state actors) incident involving
    biological, nuclear/radiological, incendiary, chemical, explosive
    devices. Where appropriate, response planning criteria includes the
    activation and use of local memoranda of agreement with local
    authorities. The Air Force program provides for an initial response
    capability using fire protection, hazardous materials, disaster
    preparedness, security, medical, and, where available, explosive
    ordnance disposal personnel for improvised explosive devices, as the
    core response elements. The initial responding elements assess and
    determine the extent of the problem (within capability), take actions
    to implement contamination avoidance measures, contain the spread of
    contaminants, and provide initial casualty care capability. All Air
    Force installations are required to have mutual aid support agreements
    for security, fire protection, hazardous material, medical, and
    explosive ordnance disposal. Memoranda of Agreement (MOAs) ensure an
    effective coordinated response between the Air Force and civilian
    communities. Bases address exercises, training and interoperability of
    equipment during coordination of MOAs between installations and
    localities through the Local Emergency Preparedness Committee (LEPC) or
    Area Contingency Plan (ACP) representation. These written agreements
    and exercises extend to terrorist WMD incidents.
        In another force multiplying effort, the United States Air Force
    (USAF) surgeon general's office provided planning information and
    capability description for its deployable and in-place medical assets
    as an annex to the Chairman of the Joint Chief's of Staff Instruction
    (CJCSI) 3110.16, ``Military Capabilities, Assets, and Units for
    Consequence Management Operations.'' This annex is maintained by the
    Defense Threat Reduction Agency (DTRA) as an information resource for
    joint planners. The Air Force Medical Service (AFMS) is actively
    involved with the Joint Task Force--Civil Support (JTF-CS), ensuring
    that Air AFMS assets are written into its deliberate plans for a
    homeland or nuclear/radiological, biological or chemical terrorism
    event. Additionally, the USAF/SG is creating new deployable assets to
    better provide bioterrorism consequence management situational
    awareness to the JTF-CS commander and his supported state and local
    first responders.
        As I noted at your hearing on February 28, 2001, the USAF, Texas
    National Guard, and City of San Antonio conducted exercise ALAMO ALERT
    in January 2001. Alamo Alert, and its component gaming simulation, CODE
    SILVER-San Antonio, were designed to provide the impetus for continued
    development of joint, integrated military /civil response plans. This
    exercise clearly illustrated the need for expanded cooperation among
    the civilian and military communities, with particular emphasis on
    health care providers and public health functions. The CODE SILVER-San
    Antonio game discussions revealed several areas of continued concern.
    These included: the complex nature of public affairs in a contagious
    bioterrorism event; the challenges of interagency communications in the
    initial stages of a response; the importance of early recognition of
    terrorist-induced disease outbreaks; the central role of infection
    control procedures in containing an outbreak; and the need for a
    strategic approach to infection control. Other topics were the need for
    comprehensive planning to provide a health care ``surge capacity'' to
    metropolitan areas and the requirement for mass vaccination planning in
    concert with the Centers for Disease Control.
        In addition to these specific issues, the broad lessons of Alamo
    Alert related to strategy, resources, and planning. In two critical
    areas of the response, infection control and public affairs stood out
    as critical items, reinforcing the need for the development of
    strategic approaches based upon sound thinking and with a ``big
    picture'' view of the unfolding situation. Finally, the exercise
    participants learned the importance of crisis decision making in a
    bioterrorism situation. The ``will to win,'' to make difficult
    decisions, will be necessary if a community hopes to successfully
    overcome bioterrorism. The need for crisis decision making and
    leadership to be realistically and honestly exercised was apparent
    throughout Alamo Alert. The AFMS has a similar training and exercise
    program ongoing in the Pacific Theater--AFMedPac2000. This effort
    stresses chemical and biological planning and awareness at our medical
    treatment facilities, encouraging commanders, staff and readiness
    personnel to critically evaluate their plans, resources and
    interoperability with local, state and national assets. The summer 2000
    exercise at Elmendorf AFB in Anchorage, Alaska featured an integrated
    state and local response. Hickam AFB in Honolulu, Hawaii will exercise
    in July 2001.
        Disease early warning and surveillance are life savers in a
    bioterrorism event. The results of the May 2000 TOPOFF exercise in
    Denver highlight how local communities--indeed even state and national
    assets--can be quickly overwhelmed in catastrophic and contagious
    biological agent attack. The AFMS is the lead for a Department of
    Defense dual-use science and technology program called the Lightweight
    Epidemiology Advanced Detection and Emergency Response System
    (LEADERS). This system is designed to provide military commanders,
    civilian authorities and medical personnel with the enhanced ability to
    mitigate the consequences associated with response to a biological
    warfare event or the onset of a significant natural disease. Rapid
    identification of the medical threat and effective and ongoing
    communications between medical facilities and Command personnel is an
    essential element in minimizing loss of life and the potential for
    disaster. The LEADERS System provides an integrated collection of
    medical surveillance capabilities, including real-time, easy-to-use
    mechanisms for collecting, storing, analyzing, and viewing critical
    medical data, along with an Incident and Event Management capability to
    facilitate a rapid, effective response. LEADERS is currently in stage 1
    proof of concept development. Prototypes were involved with local
    hospitals during the Democratic and Republic National Conventions last
    summer, the Presidential Inauguration in January 2001, and the AFMS is
    working through the Defense Threat Reduction Agency for possible
    LEADERS deployment to the Winter Olympic Games at Salt Lake City, Utah
    in 2002.
        The biotechnological revolution may be the most profound revolution
    in modern times--and the AFMS is leveraging this fast-paced
    technological juggernaut to improve our nation's defense. One example
    of a new research initiative launched by USAF Surgeon General is the
    Ecogenomics in Outbreak and Surveillance (EOS) project. Its primary
    objective is to develop a rapid detection microarray capable of
    detecting respiratory pathogens in a controlled population of USAF
    basic military trainees (BMT) and technicians. This model system will
    demonstrate the effectiveness of microarray technologies in pathogen
    classification. EOS will start with detection of viral respiratory
    pathogen-specific sequences, but this system proposed can be expanded
    to bacterial, fungal, and chimerics. Development efforts for EOS have
    emphasized future capabilities that allow not only direct hybridization
    capabilities, but also biochemical reaction assessments and proteomics
    capabilities simultaneously. This will be accomplished with HydroGel
    chip technology from Packard Biosciences and Qdots particles from
    Quantum Dot Corporation (QDC). Stanford Research Institute (SRI) will
    provide a handheld microarray reader unit that will detect Qdots and
    the technical expertise to miniaturize the sample processor and
    microarray reader unit towards a field-capable system. An additional
    goal of the EOS project is to serve as a model for producing additional
    disease-specific microarrays that can be utilized when rapid
    identification of an organism in an outbreak investigation is required.
    Success with this methodology will be the first step in changing the
    steps of the current outbreak investigation paradigm.
        Numerous potential applications for genomics in the chemical and
    biological warfare (CBW) are possible. EOS will focus on infectious
    disease pathogen identification in a real-world controlled population
    as a step towards rapid detection of CBW agents of interest to the
    Department of Defense (DOD). However, any CBW projects utilizing the
    methods developed as part of the EOS project will be coordinated with
    the U.S. Army as the lead agent. The high incidence density of
    respiratory illness in this controlled military population presents a
    starting model for future assessments of the impact of biological,
    chemical, physical and social exposures at the molecular level (i.e.,
    ecogenomics) and will provide improved technology for the detection and
    identification of biological threat agents.

                        MAINTAINING WAR READINESS SKILLS

        Question. General Carlton, in your testimony this morning regarding
    the Primary Care Optimization initiative, you stated that 80 percent of
    the Air Force Medical Service (AFMS) care is delivered in primary care
    clinics. You also reported on some very exciting and ambitious State-
    of-the-Art Expeditionary Technology as well as Air Force Readiness
    Plans. Given the current retention status of the Air Force Medical
    Service how will you implement these initiatives across the Air Force
    Medical System and at the same time have a trained medical staff able
    to perform the traditional medical intensive interventions required in
    a large scale battle scenario?
        Answer. Although our manpower losses have been greater than our
    gains over the past three years, I am confident that we can maintain a
    trained medical staff capable of performing our medical readiness
    mission as well as implement ``state-of-the-art'' initiatives.
        We currently have 200 Air Force Medical Service (AFMS) personnel on
    the ground in Southwest Asia and European theaters providing direct
    support to our sustainment operations. We also have 1,375 medical
    personnel assigned to deployable medical units that support the
    Aerospace Expeditionary Force (AEF). We have several specialized teams
    (rapid response, critical care, surgical, public health) that can be
    deployed in building block fashion to support the CINC's requirements.
    Our deployment teams pull 90-day rotational standby for rapid
    deployment in support of AEF. We are working hard to insert man-
    portable technology into these deployable teams to bring medical
    center-level care to the front line. These technologies include
    ultrasound, radiology, and other high tech monitoring capabilities
    through lap top computers.
        We have centralized our assignment of deployable surgical and
    critical care medical team personnel to our medical centers and large
    hospitals. The advantages are two-fold. First, the medical center
    environment provides a rich clinical environment to sustain critical
    readiness skills. We can also have enough depth in services and
    staffing so that the deployment of our readiness teams will have less
    of an impact on our peacetime beneficiaries' access to care. Our
    smaller facilities and clinics have a readiness mission of force
    readiness and protection--to proactively ensure that all Air Force
    personnel are medically fit and ready to support the Air Force mission
    as well as support the deployable preventive medicine teams.
        In addition to moving our deployable medical readiness assets to
    medical centers, we have also implemented the Readiness Skills
    Verification Program. This program identifies those critical skills
    needed for every team member and outlines training programs to meet
    those needs. To ensure our critical care personnel have current trauma
    skills, we send them for extensive training in civilian medical centers
    with trauma units. We are currently at Ben Taub in Houston, TX, and
    will begin at Baltimore Shock Trauma in Baltimore, MD this fall.
                                     ______

               Questions Submitted by Senator Ernest F. Hollings

                         BLOOD-RELATED DISEASE RESEARCH

        Question. Under Congressionally Directed Medical Programs, is there
    on-going research targeted on blood-related diseases such as leukemia
    or lymphoma? Is blood-related disease research to be consistent with
    the mission of DOD medical research?
        Answer. There is no on-going research within the Congressionally
    Directed Medical Research Programs that is targeted on blood related
    diseases, to include leukemia or lymphoma.
        Is blood-related disease research to be consistent with the mission
    of DOD medical research? The answer to this question depends in part on
    how broadly the phrase ``blood-related disease'' is to be interpreted.
    Blood diseases, as they are generally defined, are not a consequence of
    most military activities or threats, and so are not considered within
    the mission of DOD medical research. This fact notwithstanding, there
    may be military applications of knowledge gained through blood disease
    research. The military applications of such knowledge are, for the most
    part, peripheral to the diseases themselves and do not benefit victims
    of these diseases. Certain research projects on blood-related diseases
    may be consistent with the DOD medical research mission if the
    anticipated findings can be clearly demonstrated to have direct
    relevance and applicability to a militarily unique need. All such
    projects need to be considered on a case-by-case basis.
        The principal area of potential application is in combat casualty
    care. Hemorrhage resulting from trauma is the primary cause of
    battlefield deaths, and the DOD medical research mission is accordingly
    concerned with the development of hemorrhage countermeasures, to
    include the application of clotting enhancers that were originally
    identified through studies of clotting disorders. Clotting disorders
    are also occasionally associated with trauma-induced hemorrhagic shock,
    reperfusion, and hypothermia; such disorders represent secondary
    complications of trauma that are much less important than hemorrhage as
    a cause of battle-related morbidity and mortality, but are nonetheless
    consistent with the mission of DOD medical research. In addition,
    studies on platelet function may be consistent with the DOD mission if
    they can be related to the development of improved (field-expedient)
    means for platelet preservation and storage. More broadly, the DOD is
    interested in substances that can improve oxygen flow to organs under
    hemorrhagic conditions where blood flow is reduced. To the extent that
    studies of anemic conditions or therapies for these conditions can be
    related to the development of pharmacological or other countermeasures
    that could be employed in a field trauma management setting, they may
    be consistent with the DOD medical research mission.
        If one considers blood-related disease more broadly, there are a
    number of infectious disease pathogens of military importance that are
    blood-borne and cause symptoms directly through their effect on blood
    cells or blood vessels. Examples include malaria, Human
    Immunodeficiency Virus (HIV), and a number of viruses that can cause
    hemorrhagic fevers. However, such diseases are not typically considered
    to be blood diseases, per se. Within the DOD medical research mission,
    they are instead addressed through strategies targeted at the infecting
    organisms. Because the primary focus of this component of DOD mission
    research is on prevention of disease, symptomatic treatments targeted
    at a particular organ system such as blood are not of military
    relevance. Research on the pathogenic effects of these organisms on
    blood components are only studied insofar as is necessary to understand
    the life cycle of the organism, identify appropriate targets for
    intervention (i.e., through vaccines or drugs), and identify and
    understand correlates of protection that are essential to the
    evaluation of product efficacy.
        Question. Has any work been done to identify the occurrence rate or
    prevalence of blood-related diseases resulting from environmental
    exposure in the theater of war?
        Answer. There have been extensive studies among deployed forces
    including Gulf War (currently a $155 million portfolio, over 190
    research studies), Southwest Asia (SWA), and Bosnia veterans. The Army
    Medical Surveillance Activity (AMSA) is the principal DOD surveillance
    group with the DOD Deployment Health Research Center located at the
    Navy Health Research Center (NHRC) as the principal custodian of in-
    depth exposure research. The NHRC is completing a study looking at Gulf
    War, SWA, and Bosnia veterans and health outcomes. Additionally, NHRC
    has begun the Millennium Cohort Study, the largest Department of
    Defense prospective cohort study ever conducted, which will attempt to
    answer the question ``Does military service, in particular, operational
    deployment, result in a higher risk of chronic illness among military
    personnel and veterans?'' The probability-based sample of 140,000
    military personnel will be surveyed every 3 years over a 21-year
    period. The first questionnaire, scheduled to be released in summer
    2001, will be sent to 30,000 veterans who have been deployed to
    Southwest Asia, Bosnia, or Kosovo since August 1997, and 70,000
    veterans who have not been deployed to these conflict areas. Twenty
    thousand new participants will be added to the group in each of the
    years 2004 and 2007 to complete the study population of 140,000.
        The final White House document on DOD research efforts regarding
    exposures during the Gulf War can be found at http://www.mvhcb.gov/
    GWsummary/GWI%20Summary%20Page.htm.

                           HEALTH OF AMERICAN TROOPS

        Question. The National Academy of Sciences and the Institute of
    Medicine issued a report in January, which made recommendations to the
    Department of Defense about improving the health of soldiers deployed
    to the theater of war. The Institute's recommendations are compelling
    and, if implemented, would make a strong commitment to the health of
    American troops. Are you familiar with the Committee's recommendations?
    Do any of the individual services, or the Department of Defense, have
    implementation plans for the any of the Committee's recommendations? If
    not, why not?
        Answer. The National Academy of Science's Institute of Medicine
    (IOM) final report Protecting Those Who Serve: Strategies to Protect
    the Health of Deployed U.S. Forces is an important work regarding DOD
    strategies for Force Health Protection (FHP). It has been reviewed by
    the Air Force (AF) leadership and distributed to our medical
    facilities. This document will serve as a baseline to identify
    opportunities for improved FHP approaches across the Air Force. Many
    parts of the six outlined strategies have already been implemented or
    are being developed in the Air Force and other Services, but challenges
    particularly remain in the areas of documenting and tracking exposures
    in relation to individual personnel as well as fully computerizing
    patient records.
        FHP arose from earlier initiatives to change and improve the
    Military Health System's response to deployments and the health of
    deployed forces. A January 1996 policy memorandum had directed a
    detailed medical surveillance and health protection plan for U.S.
    military forces deploying to Bosnia. In August 1997, DOD issued a
    directive DODD 6490.2, ``Joint Medical Surveillance,'' and an
    accompanying instruction, DODI 6490.3, ``Implementation and Application
    of Joint Medical Surveillance for Deployments,'' which addressed many
    shortfalls in the Military Health System's response to health and
    health protection during deployments. In mid 1998, the Air Force
    Medical Operations Agency directed United States Air Force Major
    Command Surgeons to implement DODD 6490.2 and DODI 6490.3 in interim
    guidance. Later in December 1998, the Joint Staff, in collaboration
    with the Assistant Secretary of Defense for Health Affairs, specified
    the preventive actions that must take place before, during, and after
    deployments to assure better health protection and properly documented
    health care. Joint Staff Memorandum MCM-251-98 (4 December 1998)
    requirements superseded the interim guidance. Our Air Force Preventive
    Medicine (PM) and Bioenvironmental Engineering (BEE) staff are
    currently working with J4-MRD, the Services PM representatives and the
    Joint Preventive Medicine Policy Group on revisions of the Joint Staff
    Memorandum, now in second draft. We are also preparing an Air Force
    Instruction jointly with the other Services to institutionalize
    comprehensive health surveillance in deployments (expected completion
    date (ECD) 31 December 2001).
        The following documentation groups several specific initiatives
    completed or in progress according to the six strategies proposed by
    the IOM:

        Strategy 1. Use a systematic process to prospectively evaluate non-
    battle risk associated with the activities and settings of deployments.
        The Armed Forces Medical Intelligence Center (AFMIC) collects
    detailed information on a continuing basis on worldwide disease and
    environmental hazard data and links this data to appropriate preventive
    medicine countermeasures. Recently, AFMIC has been expanding its
    mission and capability to include more detailed information on
    environmental hazards. A major product of the AFMIC is the Medical
    Environmental Disease Intelligence and Countermeasures CD-ROM, an aid
    widely distributed throughout the Services to assist operational
    planners and others in preventive medicine planning for deployments.
        The recent deployment of U.S. troops to Bosnia and Kosovo
    exemplifies how DOD is integrating comprehensive environmental risk
    assessment data with troop deployments. Realizing that deployments of
    troops in close proximity to industrialized areas presents increased
    Force Health Protection concerns, the DOD in preparing for this
    deployment used medical intelligence data in selection of deployment
    sites and surveillance efforts.

        Strategy 2. Collect and manage environmental data and person
    location, biological samples, and activity data to facilitate analysis
    of deployment exposures and to support clinical care and public health
    activities.
        During a period of 12 months, over 800 environmental samples from
    Bosnia and Kosovo were analyzed for over 6,600 separate factors. This
    analysis was done in theater, allowing for quick turnaround, with
    results usually available to operational commanders within 10 days.
    Similar environmental sampling is being conducted in Southwest Asia.
    Ongoing environmental surveillance in accordance with existing policy
    outlined in DODI 6490.3, ``Joint Medical Surveillance for
    Deployments,'' has ensured environmental risks are minimized and
    environmental exposure data are collected, analyzed, and assessed for
    potential health impact.
        The Defense Medical Surveillance System (DMSS), a Joint capability
    managed by the Army Medical Surveillance Activity (AMSA), U.S. Army
    Center for Health Promotion and Preventive Medicine (USACHPPM) (see
    detailed description under Strategy 4), provides the link between
    health surveillance data and specimens in the DOD Serum Repository,
    which contains more than 26 million frozen serum specimens from
    military personnel. As part of routine screening for Human
    Immunodeficiency Virus (HIV) infection, these specimens are routinely
    collected during military service and before major deployments and are
    available for analysis when new health questions arise. In addition,
    Joint Task Force Surgeons can request additional serological sampling
    when required by concerns that arise during or after a specific
    deployment. Serological surveys using specimens from the repository
    have successfully provided evidence-based answers regarding the
    prevalence of such infections as Hepatitis C and Lyme disease in our
    troops. Access to the serum bank is limited and is coordinated through
    AMSA.

        Strategy 3. Develop the risk assessment, risk management, and risk
    communication skills of military leaders at all levels.
        A major goal of FHP is to make military members partners in
    protecting their health by supplying them with the knowledge, skills
    and resources needed to stay healthy during military service. Risk
    communication on health risks and preventive countermeasures is a
    required element before, during and after deployments.
        One example of this component of FHP is the Health Risk
    Communication Office at the U.S. Army Center for Health Promotion and
    Preventive Medicine. Their mission is to develop risk communication
    skills throughout the U.S. Army and DOD by (1) providing risk
    communication expertise and training, (2) delivering consultation to
    senior leadership, (3) developing health risk communication
    publications, and (4) responding to emergency situations. The Health
    Risk Communication Office sponsors training workshops on effective,
    evidence-based tools and techniques for risk communication in high-
    concern, sensitive, or controversial situations.
        Another communication initiative is the DOD Deployment Health
    Clinical Center at the Walter Reed Army Medical Center. A primary
    mission of the clinical center is to develop and implement clinical
    risk communication strategies. Veterans and clinicians need and want
    sound and timely information regarding deployment-related exposures and
    deployment-specific health outcomes. The center is developing a dynamic
    web site to sustain a dialogue with those it is charged with protecting
    and their clinicians regarding exposures, diseases, health concerns,
    and medically unexplained symptoms.
        An interagency initiative supporting improved communication is the
    Health Risk Communication Working Group of the Military and Veterans
    Health Coordinating Board. This working group provides recommendations
    and coordination for the health risk communication efforts of the DOD,
    VA, and the Department of Health and Human Services (DHHS) for military
    members, veterans, deployed civilians, and their families. The working
    group's primary focus is on health risk communication before, during,
    and after combat operations and other major deployments.
        The Office of the Special Assistant for Gulf War Illnesses
    (OSAGWI), since renamed the Office of the Special Assistant for Gulf
    War Illnesses, Medical Readiness, and Military Deployments (SAGWIMRMD),
    developed and implemented a comprehensive risk communication program to
    respond to the concerns of Gulf War veterans, service members, and
    their families. The program had its inception with a toll-free hotline
    (1-800-497-6261) set up by the Persian Gulf Illnesses Investigation
    Team in 1995. SAGWIMRMD has communicated directly with more than 16,000
    veterans since 1996. GulfLINK (www.gulflink.osd.mil), the Special
    Assistant's award winning internet home page has been the single place
    that all DOD documents relating to Gulf War illnesses can be found.
    Typically, GulfLINK gets over 60,000 home page ``hits'' in any given
    week.

        Strategy 4. Accelerate implementation of a health surveillance
    system spanning the service member life-cycle and beyond.
        One of the more innovative aspects of improved surveillance has
    been establishment of the Defense Medical Surveillance System. In March
    1997, the Assistant Secretary of Defense for Health Affairs directed
    the Army to establish a Defense Medical Surveillance System by
    transitioning from an Army-specific system. The Army Medical
    Surveillance Activity U.S. Army Center for Health Promotion and
    Preventive Medicine developed and now operates the new surveillance
    system. The DMSS contains up-to-date and historical data on diseases
    and medical events (e.g., hospitalizations, ambulatory visits,
    reportable diseases, HIV tests, immunization tracking data and health
    risk appraisals) and longitudinal data on personnel and deployments.
    The Defense Medical Epidemiology Database application provides
    authorized users worldwide with real-time access through the Internet
    to user-defined queries of aggregate data in the surveillance system.
        The Recruit Assessment Program (RAP) is a pilot DOD program for the
    routine collection of demographic, medical, psychological,
    occupational, and risk factor data from military recruits at the time
    of accession. If successful, the RAP will initiate a longitudinal
    health record for military personnel at accession and provide
    comprehensive, baseline health data on military recruits. The RAP is
    currently in pilot testing at several recruit centers, with plans for
    more extended implementation. Pilot testing has been funded by Gulf War
    related research funds through the Naval Medical Research Center.
        The Military Health System (MHS) uses the Health Enrollment
    Assessment Review (HEAR) as a self-reporting tool for TRICARE PRIME
    beneficiaries, including active duty, but compliance problems have been
    encountered in collecting the information. In response, the Air Force
    has moved to implement a ``stand-alone'' HEAR to improve data
    collection and availability. The HEAR is designed to be collected
    annually on Air Force active duty as a part of the Preventive Health
    Assessment (PHA). The TriCare Management Activity (TMA) has the lead
    for implementing HEAR in the DOD and/or developing and fielding a
    better health status self-reporting instrument(s). Currently, TMA has
    contracted with researchers at Yale University to evaluate the utility
    and validity of the HEAR and other self-reporting tools for use in
    establishing health status and risk factors periodically for military
    members.
        In 1999, OASD(HA) established DOD Deployment Health Surveillance,
    Research, and Clinical Centers. One of the major initiatives of these
    Centers is the Millennium Cohort Study. The Millennium Cohort Study is
    a prospective study of U.S. military forces scheduled to begin this
    year. This study will systematically collect population-based
    demographic and health data on over 100,000 Armed Forces personnel to
    evaluate health throughout their military careers and after leaving
    military service. The principal objective of the study is to evaluate
    the impact of military deployments on various measures of health over
    time including medically unexplained illnesses and chronic diseases
    such as cancer, heart disease and diabetes.

        Strategy 5. Implement strategies to address medically unexplained
    symptoms in population that have been deployed.
        As noted earlier, the Millennium Cohort study is one effort that
    may help elucidate the nature of medically unexplained symptoms in
    deployed populations. Another major initiative of the Deployment Heath
    Centers may also help in this regard. The Deployment Health Clinical
    Center, in cooperation with the Department of Defense/Veterans Affairs
    (DOD/VA) Clinical Practice Guidelines working group, has developed the
    Post-Deployment Health Clinical Practice Guidelines. These guidelines
    will help improve the management of post deployment illnesses in
    general, but also contain a module that specifically addresses
    medically unexplained physical symptoms. The Deployment Health Clinical
    Center plans on-line, web-based support of these guidelines, in
    addition to various other implementation aids. The Deployment Health
    Clinical Center is actively engaged in research activities to identify
    diagnostic and treatment strategies that will improve our approach to
    these challenging conditions.

        Strategy 6. Implement a joint computerized patient record and other
    automated record keeping that meets the information needs of those
    involved with individual care and military public health.
        The Composite Health Care System II (CHCS-II), the Military Health
    System's medical and dental clinical information system, is the major
    information technology enabler for FHP. This system will provide the
    computer-based patient record for every military member. Release 1,
    currently in on-site testing, includes capabilities for clinical and
    dental outpatient care, population health, preventive health care,
    ambulatory computer-based patient record, and regional clinical data
    repositories, and interfaces with existing health information systems
    and the Defense Enrollment Eligibility Reporting System. Release 2 will
    support general dentistry, worldwide availability of records,
    optometric services, automated clinical practice guidelines, and
    occupational health/industrial hygiene.
        The clinical functionality represented by CHCS II will be deployed
    to theater operational forces in fiscal year 2002 as ``CHCS II
    Theater'' through the Theater Medical Information Program (TMIP). The
    Theater Medical Information Program, which is being developed to
    function in the operational environment, will gather individual medical
    information throughout a deployment. Because this program is integrated
    with CHCS II, military medical personnel will be able to move readily
    from health care in a clinic or hospital to the field and medical
    information from deployments will be more accessible for future
    clinical and health surveillance uses. TMIP is a component of the
    Department's Global Combat Support System and is fully integrated with
    war-fighter theater infrastructure programs. TMIP will support the
    collection and monitoring of immunizations, ambulatory care, diagnosis,
    treatment, radiation/occupational health, blood management, medical
    surveillance, and medical command and control at the deployed medical
    facility level. Furthermore, TMIP will electronically transmit and
    aggregate these data to the interim theater database at the Joint Task
    Force Commander level for use in detecting disease and illness
    clustering where overt exposure histories do not exist. At the
    conclusion of the deployment the patient medical encounter information
    will be electronically transferred to the Continental United States
    (CONUS) based clinical data repository for incorporation into the
    individual's computerized patient record. TMIP is currently fully
    funded through the fiscal year 2007.
        Recognizing that the promised capabilities of TMIP may not be fully
    realized until as late as fiscal year 2007, the Air Force Medical
    Service (AFMS) has acted to improve Force Health Protection through
    computerized medical records more immediately. In fact, there is a
    currently deployed electronic medical surveillance system in Southwest
    Asia today. This system, the Global Expeditionary Medical System (GEMS)
    incorporates use of an electronic medical record to accurately track
    untoward events in our deployed force and improve documentation of
    care.
        GEMS is a paperless data-linked tool for the front line medic to
    record individual patient assessments. From the lessons learned from
    prior systems called Desert Care 1 and Desert Care 2, this system can
    work from a hand-held palm unit in mass casualty or combat
    environments. Medical information is aggregated at progressively higher
    levels allowing for accurate theater assessment, epidemiological
    monitoring and decision-making. GEMS is designed do this now.
    Experience from use of this system may help instruct later development
    of TMIP.
        GEMS includes two other modules, the Theater Epidemiology Module
    (TEM), and the Theater Occupational Module (TOM). The TEM offers
    automated surveillance and reporting of deployed force health and
    readiness. TEM takes patient encounter data entered from the GEMS and
    provides graphic display and analysis of patient data. Geographic areas
    of responsibility are mapped and surveillance queries defined by the
    user are automatically run on all medical data from each location in
    the database. The Theater Occupational Module (TOM) is a far forward
    extension of the USAF Command Core System (CCS) functionality within
    GEMS. The TOM is able to record, track and monitor occupational and
    environmental concerns in the expeditionary setting while maintaining a
    bi-directional interface with the home base CCS.
        The Air Force is the first Service to have implemented force-wide
    automated tracking of all its active duty immunizations, not just those
    for anthrax. Through the Military Immunizations Tracking System, and
    its follow-on, the Air Force Complete Immunizations Tracking
    Application, clinical personnel, administrators, and others have
    instant access to the vaccination status of their people. This
    facilitates reminder-recall, readiness, and vaccine safety.
        The previously mentioned DMSS has important relational database
    capabilities that combine data from many current sources of clinical,
    personnel and surveillance data, enabling them to be analyzed by other
    factors, including deployment status. For example, the DMSS is able to
    link data from Service immunization tracking programs to health
    outcomes data from inpatient and outpatient databases. This capability
    is similar to that of the Vaccine Safety Data Link at the Centers for
    Disease Control, and is a powerful tool for monitoring safety of
    immunizations such as the anthrax vaccine.
        The Government-Computerized Patient Record (G-CPR) initiative, a
    collaborative effort among the DOD, Department of Veterans Affairs and
    Indian Health Service is developing the mechanism to allow the transfer
    of data between DOD and VA. Actual transfer between DOD and VA was
    accomplished in fiscal year 2000 within a laboratory environment. Plans
    are under development to test this capability in an operational
    prototype environment.
        Conclusion: We appreciate this opportunity to elaborate on the
    questions posed. We are continuing to work routinely with the other
    Services, Health Affairs and the Veterans Administration on deployment,
    post-deployment and longitudinal health issues for our military men and
    women. While we have made significant strides in improving our Force
    Health Protection strategies since the Gulf War, much is yet to be
    done. We are committed to fulfilling our full obligation and
    responsibility in this regard.
                                     ______

                 Questions Submitted to Gen. William T. Bester

                Questions Submitted by Senator Daniel K. Inouye

                    ADVANCED PRACTICE NURSES IN THE MILITARY

        Question. There have been several initiatives mentioned today
    regarding improvements to the Military Health System enabling better
    care for our patient population, what specific role do Advanced
    Practice Nurses have in this effort to improve access to care and
    provide quality care? What is the optimum career path for proper
    utilization of nurse practitioners in the military?
        Answer. Advanced Practice Nurses are an integral component of the
    total health care delivery system. Nurse practitioners are primary care
    managers for an entire panel of patients and are responsible for every
    aspect of health care need by providing direct care, education and
    management of acute and chronic conditions. Nurse midwives are
    fulfilling the growing demand for alternative prenatal and delivery
    care. As such, both nurse practitioners and nurse midwives definitely
    increase access opportunities for our beneficiaries. The certified
    nurse anesthetists' ability to provide independent comprehensive
    anesthetic care in far forward situations in addition to the hospital
    setting also contributes to improving access opportunities for care.
        The optimum career path of nurse practitioners in the military
    would be similar to that of any other Army nurse corps officer. Their
    post graduate utilization would focus on providing direct patient care
    in the clinical setting. Subsequent assignments would include an
    increase of administrative scope and responsibility to include
    management of a clinic(s), section or department. Nurse practitioners
    are afforded opportunities for military and professional development
    and enjoy very successful careers to retirement.

                     CIVILIAN HEALTH PERSONNEL RECRUITMENT

        Question. In your testimony's today you have noted problems
    maintaining enough physicians in the military, are there specific
    issues or obstacles you face in reference to hiring civilian
    physicians? Are there similar problems hiring enough support staff for
    physicians?
        Answer. The answer is yes to both parts of the question. Let me
    start with some statistics on our civilian Medical Officers to show the
    extent of our problem. At least since 1999, we have been unable to
    staff to requirements--reaching 43 percent of requirements in 1999; 57
    percent, in 2000; and currently, we have on board only 45 percent of
    our civilian Medical Officer requirements--in numbers, that is 352
    Medical Officers of the 776 required to perform mission. Although we
    experience a voluntary separation rate among our Medical Officers of
    only 8 percent a year, 21 percent of our current population (75 Medical
    Officers) is eligible to retire this fiscal year. During fiscal year
    2000, we filled 52 Medical Officer vacancies; it took us an average of
    160 days for each action. When we look at outside hires, bringing new
    doctors into the Federal system, the time jumped to an average of 180
    days each.
        To further define the problem in terms of ``support staff'' for
    physicians, I will discuss only a few of our civilian medical
    occupations to make the point. We are staffed at 85 percent of
    requirements for Physician Assistants, 75 percent for Registered and
    Licensed Practical Nurses, 40 percent for Occupational and Physical
    Therapists, 70 percent for Medical Technicians, 35 percent of
    Therapeutic Radiological Technicians, 85 percent for Pharmacists, 50
    percent for Optometrists; and 30 percent for Dentists. Only 7 percent
    of our RNs are eligible for optional retirement this year; but we
    experience a voluntary turnover rate (i.e. resignations and
    retirements) among our civilian RN corps of approximately 15 percent a
    year. Twelve percent of our Pharmacists are eligible to retire this
    year; but our pharmacists leave us at a rate of around 12 percent a
    year. So, as you can see, we face a growing recruitment and retention
    challenge.
        Historically, we've met many of our unfulfilled civilian
    requirements with military personnel, but Army Transformation, MEDCOM
    Optimization, and other strategic efforts are making this more and more
    difficult. We make extensive use of a supplemental contractor force,
    which serves some needs well--but overall, the contractor force is more
    expensive and does not build a continuity of mission capability for us.
        Here's what we're doing to help ourselves. We have dedicated an
    Army civilian personnel cell to external recruitment for many of our
    hard-to-fill medical occupations. We have increased our efforts to
    bring separating active duty medical personnel into the civilian corps.
    For example, we make full use of Veteran's Readjustment Appointments
    and waivers of the 180-day waiting period after separation from active
    duty before entry into the Federal civil service. We seek and apply
    special pay rates and physician's comparability pay and special bonuses
    for recruitment, relocation, and retention. We are working within
    Department of Army and with Department of Defense to get permission to
    use the Defense Priority Placement Program as a recruitment source for
    our hard-to-fill medical occupations rather than a reactive mandatory
    placement program. We are currently analyzing the Secretary's of
    Defense Title 38 United States Code civilian personnel program
    authorities that the Office of Personnel Management has delegated to
    improve our ability to attract and retain a high performing civilian
    Army medical corps.

                              OPTIMIZATION OF CARE

        Question. Over the last year or so, there has been much discussion
    about optimization of care as critical to providing an efficient and
    effective medical benefit. What results have you achieved to date?
        Answer. By optimizing the military health system, we can--
        Increase physician satisfaction, retention, and readiness by
    reducing the frustration our providers feel due to the shortages of
    staff support and examination space provided at many of our aging
    military treatment facilities. The optimization effort is directed in
    part towards addressing these shortfalls and identifying the resources
    needed to fix this unanticipated effect of personnel drawdowns and
    funding cutbacks. The system works as well as it does today only
    because of the dedication and selfless service of our military members,
    civilian employees, and our many hospital volunteers.
        Avoid cost shifting to MCSC by reducing the costs associated with
    increased reliance on the private sector care. Increasing the direct
    care system capabilities will minimize the risk exposure for both the
    DHP and our managed care support contract partners. Because of our
    current contractual commitments, cost shifting to our managed care
    support contractors is a losing proposition for both parties since we
    jointly share the financial risk of providing health care.
        Deliver on our commitment to care for DOD beneficiaries by
    increasing enrollment opportunities, improving access to our direct
    care system, enhancing the spectrum of direct care services at our
    MTFs, and improving patient satisfaction.
        What have we accomplished so far?
        We are incorporating state of the art advances in medical practice
    into our facilities. Business case analyses are used to prioritize
    funding for such advances as computerized liquid cytology systems to
    reduce necessary visits for effective screening of cervical cancers and
    for the deployment of the latest high resolution positron emission
    technology scanners for localizing disease and planning precision
    surgical operations.
        We have completed a primary care model that allows a detailed look
    at the staffing, facilities, and workload at our treatment facilities.
    This model can be used to explore changes in staffing patterns as well
    as to track productivity. Enhancements will tie changes in staff and
    providers to changes in purchased care requirements and costs. This
    will, in turn, facilitate business decisions about capital investments
    and personnel assignments.
        Optimization goals are built in to our strategic plan and our
    balanced scorecard so all members of the Army Medical Department know
    where our priorities lie. The optimization process directly supports
    our overall goals and those of the MHS.
        Question. General Bester and Admiral Martin have the Army or the
    Navy had problems maintaining the credentialing of their staff's go to
    war skills?
        Answer. Go to war skills are required by the entire Army Medical
    Department on a continuous basis. It is our mission to be ready to
    support the country at a moment's notice if there is a need to exercise
    the military element of national power. Our staff needs to be ready to
    care for troops in the field and to be ready and fit itself. At the
    same time, we must meet the highest expectations for quality, safe,
    efficient and effective peacetime medical care at home and abroad.
    Meeting both requirements requires balance.
        The American people expect their sons and daughters in military
    service to be cared for by fully trained and capable trauma teams in
    the event of hostilities--in fact, in deployments for other
    contingencies as well. The historically larger numbers of non-battle
    casualties from disease also have been reduced to very small numbers by
    the military medical system over the last few decades. This reduction
    in morbidity and mortality depends in great part on the readiness
    skills of our entire medical staff. Those skills include necessary
    individual and collective military skills our medical soldiers need to
    survive on the battlefield and to effectively take part in the overall
    military campaign.
        Inpatient census figures are down in the military just as in the
    civilian sector. Fewer serious surgical cases are being done at medium
    sized hospitals, and the staffs there are doing more outpatient, minor
    surgical cases. The spectrum of injury and illness does not match that
    seen in the combat zone. No medical professional society or
    certification board has yet published a list of the minimum number and
    type of cases that result in trauma care proficiency, although the
    American College of Surgeons has some total volume guidelines for
    hospital trauma centers. Using the expertise and experience of our
    specialty consultants, we are now engaged in developing such
    recommendations within the Army on this topic. Even before this process
    is finished, we have begun establishing relationships with outstanding
    civilian trauma centers so our trauma teams can train alongside their
    staffs. For example, at Ben Taub General Hospital in Houston, surgical
    teams from all services rotate regularly for refresher training in all
    aspects of complex trauma resuscitation and immediate care. As another
    example, we have expanded the training and curriculum of our medics so
    they will be fully Emergency Medical Technician Basic certified as they
    leave their advanced individual training and join their first unit in
    the field.
        Efforts to maintain the skills we need to reduce death and
    disability and to keep ourselves effective on the battlefield are
    Herculean. They take time away from delivery of peacetime health care,
    and they take funding. With the smaller medical force today, our tempo
    of operations is high and resulting stresses on families often lead to
    voluntary separation from service of members who would have stayed for
    a full and productive career previously. We will stay both competent
    and ready, but the personal cost is high for our personnel and for
    their families.
                                     ______

              Questions Submitted to Rear Adm. Kathleen L. Martin

                Questions Submitted by Senator Daniel K. Inouye

                      TRI-SERVICE NURSING RESEARCH PROGRAM

        Question. Last year because of congressional fiscal restraints the
    Tri-Service Nursing Research Program had its budget for fiscal year
    2001 decreased by one-third from the fiscal year 2000 level. What
    impact has this had on its ability to conduct and support research?
    What efforts have been made within DOD to obtain permanent funding?
        Answer. The immediate effect was less money available to fund
    incoming grant proposals for nursing research whose focus is in areas
    not addressed by other military research programs. For the last two
    years that the TSNRP has been submitted through the USUHS budget
    request; it has gone through their budget process as an unfunded item.

                    ADVANCED PRACTICE NURSES IN THE MILITARY

        Question. There have been several initiatives mentioned today
    regarding improvements to the Military Health System enabling better
    care for our patient population, what specific role do Advanced
    Practice Nurses have in this effort to improve access to care and
    provide quality care?
        Answer. Nurse practitioners and certified nurse midwives have the
    most immediate impact on improving access. Frequently serving as
    Primary Care Managers of a specified patient population, they assume
    ongoing responsibility for the patient's health care needs. Key
    components of their practice include health promotion, health
    maintenance, patient education and counseling, and management of acute
    and chronic illnesses.
        Certified nurse anesthetists provide comprehensive anesthetic care
    to their patients. They manage a wide variety of patients in routine
    and complex situations on shipboard, and at stateside and overseas
    military treatment facilities. Their superior specialized education and
    clinical training, enables them to be the sole anesthesia provider at
    many military sites.
        Utilization of advanced practice nurses is crucial to a
    comprehensive and integrated health services delivery system. By
    increasing prevention and delivering the right care by the right person
    at the right time, we increase health, decrease utilization, and expand
    direct care system access to our active duty and other beneficiaries.
        Question. What is the optimum career path for proper utilization of
    nurse practitioners in the military?
        Answer. While there is no one single, specific career path,
    clinical management of patients is an expectation. Because each nurse
    practitioner is also a military officer, nurse practitioners may assume
    administrative positions including department head or director roles,
    in addition to clinical duties when deemed to be best qualified. Some
    nurse practitioners have also achieved a blended role as a clinician as
    well as a leader in executive medicine including Commanding Officer.

                              OPTIMIZATION OF CARE

        Question. Over the last year or so, there has been much discussion
    about optimization of care as critical to providing an efficient and
    effective medical benefit. What results have you achieved to date?
        Answer. The Military Health System (MHS) Optimization Plan
    integration was a Navy Medicine calendar year 2000 priority. Those
    involved in integration efforts describe the time and energy committed
    to concept education, management tool presentation, networking and
    other related activities as well invested. Particularly noteworthy
    during this period have been the heightened collaboration, cooperation
    and teamwork within and across the Bureau of Medicine and Surgery
    (BUMED) codes, field activities and operational forces. The following
    are three of the highlighted tenets of Navy Optimization:

    Population Health and Force Health Protection
        The Navy Primary Care Optimization Model (PCOM) developed to assist
    corporate and local level staff in calculating actual and potential
    enrollment capacity provides baseline health system information.
    Following the Spring 2000 data call, many commands report moderate
    capacity increases through implementation of general capacity
    improvements. The impact of the enrollment increase on private sector
    care costs is yet to be determined.
        Over 86 percent of enrollees have a Primary Care Manager by Name
    (PCMBN), excluding Regions 1, 2 and 5 where contract modifications
    delayed PCMBN implementation. Four scenarios are associated with PCMBN
    assignment difficulties: (1) large tertiary facilities, (2) large
    operational population, (3) gaps in provider coverage and (4)
    credentialing delays.

    Access and Patient Satisfaction
        People, time, space and equipment are the primary means used to
    increase provider availability, ensure appropriate utilization and
    increase provider/clinic productivity.
        Clinical support has been increased through resource sharing,
    direct contracting, and internal staff reallocation. Staff additions
    include appointment personnel, secretarial support and coders. The
    recent transfer of operational control of the Naval Reserve medical
    community to BUMED is expected to improve the ability to identify and
    coordinate reserve support for both provider and clinical support
    staff.
        Time management techniques to increase provider availability
    include reviewing collateral duties and committee structure to minimize
    provider involvement; designating specific days and hours for command
    wide administrative, training and meeting times; and establishing rules
    to coordinate care team schedules (provider, nurse, corpsman).
        To improve bookable hours, many commands have altered clinic hours
    or changed appointing procedures. Navy Medical Clinic Patuxent River
    favorably reports on open access appointing and several sites
    implemented web-based appointing and other e-health initiatives to
    improve patient access.
        Many sites increased the number of provider exam rooms by
    consolidating administrative spaces. Equipment investments to improve
    efficiency include auto reminder systems for appointments, advanced
    phone systems, mobile dictation, voice recognition technologies and
    pagers for triage nurses.
        Fleet/Marine Liaison programs continue to be further developed and
    most commands report full time liaisons with direct access to senior
    leadership. Proactive measures to identify and meet the health care
    needs of operational forces include advance consult reviews, pier side
    visits, senior leadership visits and appointing privileges for liaison
    staff.

    Business practice
        A clinic management course has been developed that will incorporate
    business rules, roles and responsibilities, data systems, population
    health and template and schedule management. Its development has
    prompted discussions regarding the definition/composition of clinical
    teams and the level of detail needed in clinical and business
    management processes. The course is now being presented to various
    MTFs.
        Navy Medicine Report Cards published in November 2000 include trend
    measures for enrollment, capacity, utilization, private sector care,
    productivity and satisfaction. Although formal procedures to monitor
    and analyze the report cards are being developed, commands may now use
    them to appraise their efforts.

    Conclusion
        Navy Medicine vigorously adopted the MHS Optimization Plan during
    2000 and continues to acknowledge the alignment between the MHS
    Optimization plan and the organization's Strategic and Annual Plan in
    2001. In the coming months, the focus will be to: Sustain the momentum
    and enthusiasm for optimization efforts, establish optimization as a
    way of being and doing business, ensure continued advancement of those
    initiatives and issues previously identified, and advance performance
    measurement aligned with organizational goals and objectives.
        Ongoing education and communication, both locally and corporately,
    is a primary goal.
        Clinical practice guideline development and implementation is a
    near term imperative, as is the development of case management
    programs. In the future, critical assessment of clinical practice and
    policy is needed, as are efforts to begin specialty care
    ``optimization.'' Continued operational force integration and fleet
    liaison support is also needed.
        The first clinic management course is scheduled for March 2001.
    Other business practice issues requiring ongoing attention,
    particularly at the BUMED and HSO levels, include data quality and
    standardized business rules, coding and billing procedures and reserve
    integration.
        Although optimization encourages change, it is not change for
    change sake. Those leading change efforts must ensure efforts advance
    the objectives of improved population health, increased enrollment,
    increased capacity, decreased utilization, decreased private sector
    care costs, increased productivity, and increased patient and provider
    satisfaction. Performance targets and regular monitoring and assessment
    will help ensure proper alignment between optimization efforts.
        Question. General Bester and Admiral Martin have the Army or the
    Navy had problems maintaining the credentialing of their staff's go to
    war skills?
        Answer. The wartime skill requirements are met through a variety of
    training processes. Deployment skills are practiced on a routine basis
    with the assigned deployable unit. Each unit has a training plan and
    specific skills to accomplish for readiness. Trauma training is
    available in a tri-service effort at the Joint Trauma Training Center
    in Houston. Teams of specialists receive intensive trauma training to
    develop and refine wartime skills. Some Navy facilities have agreements
    with civilian medical centers to rotate staff through for critical
    care, trauma training, or skill sustainment.
                                     ______

                 Questions Submitted to Gen. Barbara C. Brannon

                Questions Submitted by Senator Daniel K. Inouye

                      TRI-SERVICE NURSING RESEARCH PROGRAM

        Question. Last year because of congressional fiscal restraints the
    Tri-Service Nursing Research Program had its budget for fiscal year
    2001 decreased by one-third from the fiscal year 2000 level. What
    impact has this had on its ability to conduct and support research?
    What efforts have been made within DOD to obtain permanent funding?
        Answer. In fiscal year 2000, Tri-Service Nursing Research Program
    (TSNRP) funded 19 studies. Though awards have not yet been finalized
    for fiscal year 2001, the decrease in funds will adversely affect the
    number and complexity of research studies that can be funded. For
    example, in fiscal year 2000, TSNRP was able to fund two sophisticated
    and cutting edge telehealth studies. The 33 percent decrease in fiscal
    year 2001 funding makes it highly unlikely that studies of similar
    magnitude will receive funding.
        TSNRP has been able to provide comprehensive administrative support
    at much lower costs compared to other similar programs. A decrease in
    the fiscal year 2001 budget may affect the programmatic oversight and
    administrative support TSNRP will be able to provide its investigators.
    There are approximately 80 active studies at the present time. Each
    research study requires support ranging from monitoring progress to
    ensuring regulatory compliance. Within the last two years, an
    additional level of regulatory compliance has been mandated, adding to
    this already burdensome process.
        Earlier this year, nurse researchers, policy makers, and clinicians
    (from the three services and representing both active duty and reserve
    components) identified a variety of services that TSNRP could provide
    to support research: (1) planning, conducting, and disseminating
    research, (2) cultivating the pool of nurse researchers, (3) providing
    vital outreach to junior nurses at small facilities, (4) and providing
    resources to meet the Services' corporate needs. The decrease in the
    TSNRP fiscal year 2001 budget means TSNRP will only be able to provide
    very limited support for these essential services identified by the
    Nurse Corps of all three Services.
        Permanent funding for Tri-Service Nursing Research Program (TSNRP)
    has been discussed at Uniform Services University of the Health
    Services (USUHS) level. During the last two years, USUHS positioned
    TSNRP as an unfunded program. Without continued support from Congress,
    TSNRP is at risk for closure.

                    ADVANCED PRACTICE NURSES IN THE MILITARY

        Question. There have been several initiatives mentioned today
    regarding improvements to the Military Health System enabling better
    care for our patient population, what specific role do Advanced
    Practice Nurses have in this effort to improve access to care and
    provide quality care? What is the optimum career path for proper
    utilization of nurse practitioners in the military?
        Answer. Advanced practice nurses are dedicated professionals who
    provide high quality care to their patients as privileged providers.
    Air Force Family Nurse Practitioners and Pediatric Nurse Practitioners
    are Primary Care Managers, with an enrolled population that is often
    larger than their physician counterparts.
        Nurse Practitioners (NPs), used in their full scope of practice,
    complement the physicians' practice by enabling the physician to focus
    on those patients with more complex medical conditions. They perform
    health histories and physical exams, diagnose and treat common acute
    illnesses or injuries, and manage many chronic diseases. Patients
    report high satisfaction with care by nurse practitioners, because of
    their individualized attention and focus on health education, health
    promotion, and illness/injury prevention.
        Air Force Nurse Practitioners (NPs) are board certified in their
    specialty and maintain strong clinical skills. Nurse practitioners
    demonstrate their versatility in a variety of settings, from small
    clinics to large medical treatment facilities. Once the NP becomes a
    field grade officer, there is the opportunity to stay in the clinical
    career path or to explore progression through an administrative/
    management track. Our senior NPs can have a robust Air Force career in
    clinical practice. Those who seek advanced leadership opportunities in
    positions such as flight commander, squadron commander, and group
    commander compete very favorably with senior clinicians from other
    corps.

                     CIVILIAN HEALTH PERSONNEL RECRUITMENT

        Question. In your testimonies today you have noted problems
    maintaining enough physicians in the military, are there specific
    issues or obstacles you face in reference to hiring civilian
    physicians? Are there similar problems hiring enough support staff for
    physicians?
        Answer. According to the Directorate of Civilian Personnel's
    Recruitment Branch at the Air Force Personnel Center (AFPC), Randolph
    Air Force Base (AFB), Texas (TX), the biggest obstacle in hiring
    civilian physicians and other support staff is the pay differential
    from the civilian sector. For those civilian physicians who do consider
    civil service, they express interest in not having to worry about the
    business overhead costs and malpractice insurance necessary for private
    practice.
        The Recruitment Branch at AFPC stated another obstacle in
    recruitment in a ``hot'' job market is that some individuals are
    discouraged by the paperwork necessary for government hiring and opt
    for opportunities with streamlined hiring procedures where recruiters
    may fill out the paperwork for them. Some advances have been made
    allowing individuals to submit a resume as opposed to standard forms,
    but if mandatory data fields are not listed on the resume, AFPC must
    contact the individual for the information. By the time this occurs,
    the applicant may have accepted another job offer.
        The Recruitment Branch has started to utilize e-recruitment avenues
    to advertise and search for applicants. This may provide some relief to
    identify job openings and search for applicants, but it is critical to
    respond quickly and obtain necessary information from applicants. The
    recruiters also mentioned it would be helpful if the job advertisement
    was ``interesting'' and ``would grab someone's attention,'' rather than
    read like a dull laundry list of job duties.

                              OPTIMIZATION OF CARE

        Question. Over the last year or so, there has been much discussion
    about optimization of care as critical to providing an efficient and
    effective medical benefit. What results have you achieved to date?
        Answer. The men and women of the Air Force Medical Service (AFMS)
    have made significant progress towards shifting our health care system
    from one of largely reactive sickness-based medical services into one
    of proactive prevention-oriented health care where the needs and health
    status of each individual within our population are assessed and
    services are provided by the right person, at the right level and the
    right time. Primary Care Optimization has changed the structure with
    dedicated staff to support our Primary Care Managers (PCMs), and has
    changed the process by assigning all enrollees to their own provider,
    empanelling 1,500 patients to each PCM, implementing medical in-
    processing, assessing the demand for services, enhancing the skill sets
    of our support staff, and addressing prevention at every visit.
        We have several milestones in place to track the process of our
    clinical and business practice desired end states and these are tracked
    and reviewed on a recurring basis. Enrollment notification process is
    in place at more than 90 percent of our medical treatment facilities
    (MTFs). Our ability to measure our outpatient workload is improving
    with our BioData Quality Assurance System (BDQAS), and more than 90
    percent of our 9 million visits are now being coded. We are well
    underway to being able to compute our workload by provider based on
    Health Care Financing Administration (HCFA) national tables. This will
    allow us to track our reasonableness to the taxpayer in a much more
    reliable manner.
        We know the demographics of our enrolled population (some 1.3
    million beneficiaries) and are able to assess the needs and modifiable
    risk factors in our population. We know the chronic disease burden and
    the number of visits our patients make so we can predict the demand for
    our services and better manage our capacity. Our Preventive Health
    Assessment and Individual Medical Readiness (PIMR) process helps us
    deliver a fit, healthy, and ready force (our primary reason for being).
    We are measuring health status improvement and health care
    effectiveness and efficiency through common metrics in both clinical
    and business areas. We have improved our screening of cervical cancer,
    increased childhood immunizations, and improved our delivery of
    prenatal care given in the first trimester, as a few examples. Our
    providers use the DOD Clinical Practice Guidelines with associated
    toolkits and metrics to track progress of standardized care.
        Training is central to our success. In the last year, we've started
    a population health epidemiology course to train our MTF personnel on
    how to use centrally produced information sets. We will start our
    primary care optimization (PCO) orientation course this spring and have
    developed a course specifically for our group practice managers and
    health care integrators. Our efforts to energize a total community
    approach are also well underway with our Integrated Delivery System
    (IDS) and the recent establishment of an AF level Community Action
    Information Board (CAIB).
        There are additional opportunities to improve as we look at more
    accurate coding to realize better return on Third Party Collections,
    decreasing preventable admissions, and decreasing lost duty time of our
    active duty members through programs that help increase physical
    fitness, decrease tobacco and alcohol use, and prevent injuries. Our
    Air Staff and MAJCOM representatives have worked hard to formulate
    sound executable policy and we've invested in a corporate population
    health support division to ensure we support our MTF personnel as they
    reengineer our health care delivery system. We are serious about this
    matter and we've visited every MTF in the past year to evaluate their
    progress and help them overcome barriers. The first round of Staff
    Assistance Visits (SAV) is nearly complete with the identification of
    many best practices. These will be incorporated into the next round of
    SAVs that will focus on educational needs of the transitioning teams
    and supporting the MTFs as they put reengineered processes into place.

                              SUBCOMMITTEE RECESS

        Senator Stevens. Our next hearing will be on March 4th.
    That is the intelligence briefing for the committee and it will
    be closed for that purpose--March 14th.
        [Whereupon, at 12:11 p.m., Wednesday, February 28, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                           WEDNESDAY, MARCH 21, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:05 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Shelby, Inouye, Byrd,
    Leahy, Dorgan, Feinstein.

                             DEPARTMENT OF DEFENSE

                   North Atlantic Treaty Organization Issues

    STATEMENT OF GENERAL JOSEPH W. RALSTON, COMMANDER-IN-
                CHIEF, UNITED STATES EUROPEAN COMMAND

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. Good morning.
        Senator Feinstein, we welcome you as a new member of our
    subcommittee. We are pleased to have you join us.
        I begin by welcoming General Ralston to the subcommittee.
    We thank you for the courtesy you extended to our delegation
    when we were in Europe last month, and we have always
    appreciated your candor and openness in responding to questions
    and issues that are raised by our committee.
        We are focusing today on the North Atlantic Treaty
    Organization (NATO), where General Ralston serves as a Supreme
    Allied Commander, as well as the Commander-in-Chief of the U.S.
    European Command. A decade ago in a hearing, besides being
    chaired by my good friend at that time, we have had speculation
    about how much the former Soviet Union and the Warsaw Pact had
    really changed. The notion of expanding NATO was a distant and
    speculative issue, and our military was fresh from its
    overwhelming victory in the Persian Gulf.
        Today we face circumstances where the world around NATO has
    changed dramatically, but our own military posture in the
    Alliance has been stagnant and buffeted by repeated rotations
    of personnel support mission in Bosnia and Kosovo. Secretary
    Rumsfeld's strategic review, along with the mandated
    quadrennial defense review affords us a unique opportunity to
    examine and assess our presence and contributions to NATO. We
    look forward to the Secretary's report.
        General Ralston, we also look forward to your views today
    and to working with you this year to ensure us that our
    committee can respond to your needs and the requirements of
    your command, which we do wish to do.
        Senator Inouye.

                     STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. I thank you very much, Mr. Chairman. I wish
    to join you in welcoming General Ralston.
        About 52 years ago, NATO was formed. And there is no
    question it has been a great success. However, today the
    Alliance faces a very different situation. The Soviet Union no
    longer exists, and many of our colleagues question the utility
    and cost effectiveness of this organization and the requirement
    to keep about 100,000 troops in Europe.
        Others question why our forces are serving in Kosovo and
    Bosnia and how these areas have come to be defined as vital to
    the United States of America. Many of your supporters worry
    about such diverse problems as how the European Union's
    decision to create its own military will affect NATO, how you
    can allow emerging democracies to join NATO without unduly
    alarming the Soviets, how can you ensure that the acquired
    immune deficiency syndrome (AIDS) epedemic in Africa does not
    spread to NATO peacekeepers, how you can continue to maintain
    Operation Northern Watch in the desert safely with increased
    air traffic in Iraq.
        Now, General, these are just a few of the issues I know you
    face and it obvious that this list is a most challenging one.
    Over the years we have all worked with you in a number of
    capacities, and we know you are certainly up to the task. We
    are fortunate to have you there. We look forward to hearing
    your views on these many contentious issues. And once again,
    welcome back to Washington.
        General Ralston. Thank you.
        Senator Stevens. Senator Shelby.
        Senator Shelby. Mr. Chairman, I am going to have some
    questions, but I will ask that my entire statement be made part
    of the record.
        I do welcome General Ralston and appreciate the job you are
    doing, General. And it was also great to see you in Belgium,
    always is.
        General Ralston. Thank you, sir.
        Senator Stevens. Senator Byrd?
        Senator Byrd. I will reserve my time for questions. Don't
    put too much emphasis on the word ``reserve.'' I will just pass
    until we ask questions.
        Senator Stevens. All right, sir.
        Senator Feinstein.
        Senator Feinstein. I, as well, Mr. Chairman, will reserve
    my time for questions. I do want to say I am delighted to be on
    this subcommittee. And I am delighted to see General Ralston
    again.
        Senator Stevens. Thank you.
        General, we would be glad to hear you.
        General Ralston. Thank you, Mr. Chairman. First of all, I
    would like to submit my statement for the record.
        Senator Stevens. It will be put in the record in full.

                       OPENING REMARKS OF GENERAL RALSTON

        General Ralston. And then spend a few moments here talking
    about some of our operations. But before I do that, I would
    like to thank you, Mr. Chairman, and members of the committee
    for your continued interest and for your trips to the area of
    responsibility (AOR), where you come to visit the soldiers,
    sailors, airmen and marines that are there trying to do their
    job.

                                   [Chart 1]

                         EUCOM'S AREA OF RESPONSIBILITY

        I would like to start off with my first chart here.
    Sometimes people get a little confused about the European
    Command (EUCOM) AOR. It is really more than Europe. Notice in
    the area in green is all of the EUCOM AOR. The yellow are the
    NATO nations that are there.
        But there are 91 countries in the EUCOM AOR. It goes from
    the northern part of Norway through South Africa. It actually
    goes further east than is noted there, because in the purple
    area is Russia and the former states that were part of the
    Soviet Union.
        In our Partnership for Peace Program, Kazakstan,
    Uzbekistan, Kyrgyzstan, and Turkmenistan are also members of
    the Partnership for Peace. So we are engaged throughout a big
    portion of the world. We have a little over 100,000 uniform
    personnel in the AOR. And that is obviously one of the things
    that will be reviewed under the review that is ongoing namely
    what the appropriate number of forces that you should have
    forward based in the EUCOM area and in the Pacific Command
    (PACOM) area.
        I would point out for the committee that we have about 8
    percent of the uniform personnel in our military stationed in
    EUCOM. And I would at least make the argument that 91 countries
    and all of the activities that we are doing with those 91
    countries, 8 percent of the uniform military is not too much to
    pay for that.
        I would also point out that from a geographic point of view
    those 100,000 troops that are forward based in Europe are also
    very close to the Middle East. And if my colleague, General
    Franks, needs help in the U.S. Central Command (CENTCOM) AOR,
    then I have forces that are much closer there than if they were
    stationed here in the United States.
        I would like to talk to you about some operations that we
    have ongoing, where there are either hostilities currently
    happening or the potential for hostilities, where American
    servicemen and women's lives are at stake.

                                   [Chart 2]

                            OPERATION NORTHERN WATCH

        First I would like to talk about Operation Northern Watch.
    Operation Northern Watch is the activity that we have ongoing
    out of Turkey over Iraq. And here is a map. You can see
    Incirlik Airbase is where our forces fly from. It is about an
    hour flight to the east until they get to the area where the
    little orbits, the little circles, are.
        It is quite an operation. If you will notice over here, a
    typical mission may have 40-some airplanes involved. That is
    fighters, tankers, Airborne Warning and Central System (AWACS),
    all of the various things it takes to make that happen.
        They will be in those orbits that you see. And then the
    fighter aircraft that enforced the no-fly zone come down to the
    36th parallel. Now you will notice a black line through there.
    One of the difficulties that we have is, many of the nations
    are not abiding by sanctions that the United Nations (U.N.) has
    imposed. Airliners will go down through that area while we have
    an operation ongoing. That is something that obviously is a
    fact that we have to take account of.
        I might outline the magnitude of the activity. Last year,
    the year 2000, we flew 7,500 sorties in Operation Northern
    Watch. Now this is just the northern part of Iraq operation and
    does not include the south. We were fired upon during those
    missions over 250 times. We responded to protect our forces
    over 60 times. That is more than once a week.
        Now the reason I point this out is that in every one of
    these missions there is a risk to American forces. I am not
    arguing that we should change the policy. That is not my
    message at all. We should carry out our policy as articulated
    by our leaders. But I do not want anyone to think that this is
    a risk-free policy. We have been flying single engine airplanes
    over Iraq for 10 years now.
        And under the law of averages, we should have had engine
    failures by this time and have lost people over Iraq due to
    engine failures. I just do not want anyone to be surprised if
    that happens at times. It is a risk we take. We willingly take
    that. But it is something that I would like to point out.

                                   [Chart 3]

                                     BOSNIA

        Next, I would like to talk about Bosnia for a moment. There
    is a lot of discussion about Bosnia. And I think sometimes we
    forget that a lot of progress has been made. If you look at
    this chart here, the blue bars are the number of troops that we
    deploy to Bosnia with. If you go back to 1996, we had 60,000
    troops that went into Bosnia. The area in red are U.S. forces.
    U.S. forces, we had 20,000 or 33 percent of the effort.
        Now over the years, as the situation has improved there, we
    have drawn down the forces that we have in Bosnia. And if you
    will notice where we are today, in early 2001 I have gotten
    approval from the administration and from NATO that we can do
    some further draw-downs. And here by next month we will be
    slightly less than 20,000 overall. The U.S. contribution to
    that, about 4,300 today, will be going down to 3,500 and 18
    percent of the effort.
        So there is a misperception sometimes in people that I talk
    to that think that the United States is carrying the bulk of
    the effort in Bosnia. I would just like to point out for the
    committee here we are 18 percent of the effort, and we have
    had, I think, a good track record of bringing the forces down
    as they are no longer needed. I would like to continue that
    effort as we go on.

                                   [Chart 4]

        Next, Kosovo. A similar effort in Kosovo. The blue line
    that you see there is, in 1999 we had 47,000 troops assigned to
    that effort. The United States was about 7,000 or 15 percent of
    the effort. Today in all the effort, in the 42,000 number that
    you see there, is Kosovo and Macedonia, by the way, the U.S. is
    about 5,500 people inside Kosovo. And we are about 13 to 14
    percent of the effort.
        So once again, the other allies, I would contend, are
    carrying the bulk of the load. But it is important for the
    United States to share the leadership and show the leadership
    of this operation.
        I know there is a lot of interest in Kosovo and Macedonia.
    And I thought I would spend a couple minutes on that, if I
    could.
        If you could give me the chart with the map. No, the one
    behind you with the blue on it.

                                   [Chart 5]

                              ETHNIC DEMOGRAPHICS

        Mr. Chairman, if you can see the map that I have there,
    notice the area of Kosovo. And to the east and south of Kosovo,
    I have colored in the map with a dark blue/purple color there.
    That is Former Yugoslavia Republic of Macedonia (FYROM).
        Senator Byrd. Mr. Chairman, we cannot see this blue
    section.
        Senator Stevens. We will move that around.
        Senator Byrd. Thank you.
        General Ralston. Mr. Chairman, if I could stand here for a
    moment, this is Kosovo right here. Montenegro, Albania,
    Macedonia down here, and Serbia up here. The area in blue is an
    area where the Albanian population exceeds 50 percent. And you
    have Albanians obviously in Albania. Ninety-five percent of the
    people in Kosovo are Albanian.
        And even in Serbia, in the area in blue, the eastern part
    here, over 50 percent of the population is Albanian. And in
    Macedonia all down here is greater than 50 percent Albanian.
    The capital of Macedonia, by the way, is right in the middle of
    that area. The ethnic overall mix of Macedonia is about 35
    percent Albanian and about 65 percent Slavic.
        Now the area in Kosovo right now, I think, is in basically
    pretty good shape. We are making good progress in Kosovo. We
    are very pleased with that. Not all the problems have gone
    away. There is still many centuries of hatred that have to be
    overcome. But for 95 percent of the people inside Kosovo today,
    they are far better off today than they were 2 years ago or 5
    years ago or 10 years ago. If you happen to be part of the 5-
    percent minority, life is not good today. And that is something
    we have to continue to work on.

                               GROUND SAFETY ZONE

        We are in the process of returning this red area, called
    the Ground Safety Zone. This was a zone that was set up when we
    went into Kosovo to keep the Yugoslav army from threatening the
    NATO troops, the Kosovo Force (KFOR) that was there. We put a
    5-kilometer-wide zone that we did not allow their troops tanks
    and artillery in there as a force protection method.
        As we have had continued democratic change in Belgrade, the
    chances today of the Yugoslav army attacking the KFOR forces, I
    think, is very slight. And because of that, we are relaxing the
    conditions and allowing the Yugoslav forces to come back into
    that Ground Safety Zone, so that they can take care of the
    extremist activities that have been going on in there.

                        CONFLICT ON KOSOVO/FYROM BORDER

        The activities itself--and I have a map, if we could pass
    those maps out to the members, please. You will see on this
    terrain map that you are about to get, this is looking from
    south to north, down here, back up into Kosovo. You will see on
    there the City of Skopje that is the capital of the former
    Yugoslav Republic of Macedonia.

                                   [Chart 6]

        Senator Stevens. Orient that to this map, will you, please,
    General?
        General Ralston. Right down here. The capital of the
    country, Skopje, is about where my finger is inside the blue
    here. And you will see there is a route, a valley, if you will,
    from Skopje up into Kosovo. Now today we have about 3,000 of
    the KFOR forces that are stationed in the Skopje area. These
    are logistics troops, supply troops, because all of our
    supplies come up from Greece through Macedonia on up into
    Kosovo.
        You will notice in the high mountains to the east and to
    the west of that supply route are two areas circled in brown.
    And that is where the Kosovo, or--I am sorry--the Macedonia/
    Albanian extremists are operating. The numbers are relatively
    small, but it is something that is a problem and that the
    former Yugoslav Republic of Macedonia is working on.
        I would be happy to answer any questions that you have
    about that map, if you would like to ask, as we go on into the
    hearing.
        Senator Stevens. Do you have forces near those two brown
    circles, General?
        General Ralston. No, sir, we do not. We have logistics
    forces in Skopje. One of the issues that we have is that as our
    supply convoys go up that route to go between those two
    mountainous areas, we obviously have to reinforce them with
    troops.
        Senator Stevens. And the orange spiked area is where the
    Albanian insurgents attacked in February and March of this
    year.
        General Ralston. Yes, sir, that is correct.
        Senator Stevens. Have those been intensive?
        General Ralston. If you happen to be at the receiving end
    of it, yes, sir.
        Senator Stevens. Any numbers of people?
        General Ralston. Our estimate of the extremist is something
    on the order of 200-300 people. Now, it may be slightly more
    than that. That is something that is very difficult to do. One
    of the issues you have is you have that heavy Albanian
    population that is there in Northern Macedonia. There is
    support for some of the extremists' efforts.
        We are trying to get the word to all of the moderate and
    responsible Albanian parties that this does their cause no good
    whatsoever to be carrying out attacks against the government of
    Macedonia, which is a democratically elected government that
    does have Albanian participation in the coalition of the
    government.
        Senator Stevens. I interrupted you. Are you finished,
    General?
        General Ralston. I have two quick comments, Mr. Chairman.

          FUNDING FOR REAL PROPERTY MAINTENANCE MILITARY CONSTRUCTION

        As we go through this upcoming budget process, I would like
    to inform the committee that I have two problems in the EUCOM
    AOR, only two that I brought forward, that I talked to the
    Secretary of Defense about, the Defense Resources Board, all
    the Joint Chiefs. For many years, our real property maintenance
    and our military construction in the European theater has not
    gotten the attention that I think that it deserves. Now there
    are a lot of reasons for that.
        As we withdrew our forces from Europe back in the early
    nineties, we went from 360,000 troops to a little over 100,000.
    It was a responsible thing to do at the time to say, let us
    take a timeout here, let us not spend a lot of money on
    facilities until we figure out exactly where we are going to
    stay. But, Mr. Chairman, we did that for the better part of the
    decade. And I would like to show you some pictures here of what
    that has resulted in.

                                   [Chart 7]

                      BARRACKS AND MILITARY FAMILY HOUSING

        We have our barracks and our military family housing that
    is just not in the standard that we should be providing for our
    American servicemen and women that are serving their country in
    Europe.
        Next slide, please.

                                   [Chart 8]

        Our military family housing. The standards we have set for
    our military family housing, I would submit to you, are not
    excessive. And let me briefly outline those. We have said if
    you are a family with the number of children that would qualify
    you for a three-bedroom house, we have said that we believe you
    should have two bathrooms in that three-bedroom house. We
    believe in the kitchen that you should have a stove and a
    refrigerator, and we believe you should have a washer and a
    dryer in that house.
        Now I do not believe that the American people would think
    that what I have just outlined to you is excessive. But I must
    tell you that 69 percent of the Army families that are living
    in EUCOM today are living in housing that does not meet those
    standards that I just outlined. And I do believe that we need
    to do better than that.
        These two issues I took to, as I say, the Secretary of
    Defense. And I do not know what is in the budget right now. I
    know that we got a sympathetic hearing at the time. And I would
    just request the support of the committee when that budget
    comes over to you.

                               PREPARED STATEMENT

        Mr. Chairman, that is all I have. I will certainly
    entertain any questions that you may have.
        [The statement follows:]

                Prepared Statement of General Joseph W. Ralston

                                  INTRODUCTION

        Mr. Chairman, distinguished members of the Committee, it is my
    privilege to appear before you as Commander in Chief, United States
    European Command (USEUCOM), to discuss the posture of U.S. Forces.
    First, however, I want to make a few comments about the area in
    question.
        The U.S. European Command encompasses American military activities
    in over 13 million square miles of the globe and includes 91 sovereign
    nations. It stretches from the northern tip of Norway to South Africa,
    and from the Atlantic seaboard of Europe and Africa, to parts of the
    Middle East and out beyond the Black Sea.
        I began my tenure in the U.S. European Command last May. Since my
    arrival, our men and women have continued to carry out a multitude of
    operational commitments throughout Europe, Africa, the Levant, the
    waters of the Mediterranean, the skies over Iraq, and throughout the
    Balkans in support of the North Atlantic Treaty Organization (NATO),
    commitments to our regional friends and allies, and our national
    interests. Additionally, there are new opportunities in this Theater--
    opportunities that properly approached will further strengthen the
    international position of the United States. These opportunities
    include working with African allies to improve their peacekeeping
    capabilities, engagement with Russia and the countries of the Caucasus
    region, U.S. influence on the evolving European defense posture and the
    future of NATO, and the enhancement of important and vital interests to
    the economic and national security of the United States. Our forward
    presence in Europe, engagement programs in Africa and Eastern Europe,
    and the ability to deploy and respond quickly and effectively
    throughout the region contributes to the preservation of stability
    throughout much of the Area of Responsibility (AOR).
        While success should be acknowledged, we must exercise continued
    vigilance by pursuing modernization to meet ongoing requirements, as
    well as develop future forces to take advantage of key strategic
    opportunities as they arise. Inadequate funding for, and attention to,
    critical readiness and modernization issues will jeopardize the careful
    balance between USEUCOM's missions and available resources. Like
    Operations and Maintenance (O&M) dollars, modernization funding must
    also be balanced to ensure resources remain proportionate to mission
    requirements. American military personnel positioned overseas and going
    about the business of the nation everyday have proven time and again
    that they are our greatest national resource. Like every national
    asset, they require care and cultivation to ensure they maintain the
    capability edge over any potential adversary. Addressing critical
    quality of life, military construction (MILCON), real property
    maintenance (RPM), and modernization needs is central toward
    maintaining this edge.
        During my comments today, I will discuss the status of many
    programs. I should note, however, that the programs I will discuss, and
    their associated funding levels may change as a result of the
    Secretary's strategy review that will guide future decisions on
    military spending. The Administration will determine final 2002 and
    out-year funding levels only when the review is complete. I ask that
    you consider my comments in that light.

                A CHANGING AND CHALLENGING STRATEGIC ENVIRONMENT

    Readiness
        Readiness of USEUCOM assigned forces is my top priority. It is the
    cornerstone of our ability to respond to crises and it enhances our
    strategy of engagement. Most of our activities relate to readiness
    because they demonstrate and enhance our capability to deter potential
    adversaries, while reassuring our friends. Such activities require
    ready forces and exercise our ability to meet commitments and promote
    joint and multinational interoperability. Taken together these
    activities can serve to help shape the international environment by
    incorporating other nations and improving our multinational expertise
    in the region; they improve our ability to respond unilaterally or in
    concert with other nations; and they prepare us now for the uncertain
    regional requirements of the future.
        Thanks to the support of Congress, forces assigned to this Theater
    are ready and well supported in their current operations. The command's
    forces are fully engaged and continue to rely upon augmentation and
    reserve forces to carry out our many diverse missions. Dedicated young
    men and women valiantly executing a wide variety of operations to
    support our national strategy make up the heart of our theater
    readiness. Over the last year, we demonstrated our readiness by
    supporting air operations over Northern Iraq, NATO-led peacekeeping
    operations in Bosnia and Kosovo, humanitarian relief operations in
    Mozambique, and training of Sub-Sahara African troops to support United
    Nations (U.N.) operations in Sierra Leone.

    Joint Training
        Training is a primary pillar of readiness and an inherent
    responsibility of being in command. For USEUCOM, readiness training has
    increasingly become part of our Theater Engagement Plan. However, over
    the past two years efforts to cope with rapidly shrinking training and
    training-dependent budgets, such as strategic lift, have resulted in
    several cancelled and restructured exercises. These cancellations have
    frustrated our efforts to provide high-quality readiness training to
    meet Theater engagement needs.
        Our challenge is to support a proper mix of readiness and theater
    engagement training within resource constraints. The U.S. European
    Command has met its Congressional mandates for Chairman of the Joint
    Chiefs of Staff (CJCS) exercise-related operations and personnel tempo
    (OPTEMPO-PERSTEMPO) reductions. Additionally, strategic lift funding
    cuts during this fiscal year may force cancellation of continental U.S.
    (CONUS)-based participation by Active, Reserve, and National Guard
    forces in various training and engagement exercises. In a worst case
    scenario, these cuts may also reduce training and engagement in Israel
    and Nigeria, and result in cancellation of half of the Joint Combined
    Exchange Training (JCET) activities in Africa.
        After taking a hard look at our training program for potential
    improvements in quality, effectiveness, and efficiency, we began
    implementation of a three-year transition plan to take USEUCOM from a
    training program focused on events, to one focused on readiness and
    Theater engagement objectives. This revised program will exploit
    opportunities within the total program, resulting in fewer, but higher
    quality CJCS-sponsored exercises. I do not anticipate that this
    transformation of USEUCOM's part of the CJCS exercises in fiscal year
    2002 and beyond will result in a significantly less costly program. A
    requirements-based objectives-driven exercise program will however,
    provide higher quality training and engagement at a size and cost that
    is appropriate to, and justified by, our National Security Strategy.

                                   ENGAGEMENT

        Side-by-side with readiness activities are the other exercises,
    operations, and training which focus primarily on assisting and
    supporting other nations in the region to develop effective democratic
    political and military systems.
        To help guide Congress in its decision-making, many of you have
    traveled to the European Theater and have witnessed efforts to extend
    contacts beyond Western Europe through engagement. Over the past
    several years this process has helped to positively shape our security
    environment. I believe this approach is key to continued long-term
    peace, security, and prosperity as USEUCOM works along side, and in
    active cooperation with, a number of governmental and non-governmental
    organizations.

    Forward Presence
        America's permanently stationed forces in Europe number just over
    100,000 troops--down from well over 300,000 during the Cold War. The
    current force level represents a 65 percent reduction from 1990. In my
    opinion, this must be considered the minimum level needed to execute
    our current National Security Strategy, meet NATO requirements, and
    provide support and staging for U.S. based forces that in time of need
    would flow into or through the Theater.
        Key to our engagement efforts are our forward-deployed and forward-
    based forces, which continue to make significant contributions in
    protecting U.S. national interests. In peacetime, forward presence of
    naval, land, and air assets provides unparalleled access to countries
    in transition. In crises, the forward presence of our forces enables a
    rapid transition from engagement to response. Forward presence is a
    critical enabler for USEUCOM activities.
        Continued forward presence is vital to implementing our current
    strategy, as our forces are able to respond more quickly--demonstrated
    through a number of deployments last year to the Balkans, Southwest
    Asia, and Africa. Surrendering this forward position would seriously
    degrade our ability to engage in peacetime or deploy in the event of
    armed conflict. The General Accounting Office (GAO) traveled through
    the AOR recently to discuss issues related to forward basing. Their
    report is due for release this spring and I believe we presented solid
    evidence of the benefits of forward basing.

    Defense Cooperation and Security Assistance
        Defense Cooperation and Security Assistance programs are vital
    components of Departments of State and Defense initiatives supporting
    the development of interoperable defensive capabilities, the transfer
    of defense articles and services, and the international military
    training of foreign military and civilian personnel. Through the medium
    of 38, and soon to be 40, Offices of Defense Cooperation, we are in
    partnership with U.S. Embassies throughout the Theater conducting
    primary military engagement in support of American foreign policy
    goals.
        Defense Cooperation in Armaments (DCA) promotes vital security
    interests through enhanced cooperation among key defense industries,
    and between DOD and West European Ministries of Defense. DCA encourages
    the development of interoperability on the ``drawing board'' and
    inherently strengthens U.S.-European military and political
    relationships.
        Likewise, Foreign Military Sales (FMS) of $4.7 billion in fiscal
    year 2000 to Europe demonstrates the continued primacy for U.S.
    security interests of Trans-Atlantic defense relationships. FMS
    encourages interoperability between U.S. and European forces, maintains
    a strong U.S. presence in the development and implementation of the
    Defense Capabilities Initiative (DCI), and helps modernize the
    militaries of new friends and partners in ways critical to our security
    interests. We in Europe work closely with the Defense Security
    Cooperation Agency and the Services to ensure that U.S. European
    Command priorities are reflected.
        Foreign Military Financing (FMF) provides irreplaceable resources
    for our friends and allies, without which U.S. influence over the
    dynamic transformation of Central and Eastern Europe and key African
    partners would be affected. The program provides access to U.S.
    expertise in defense restructuring and management, and enables
    participants to acquire U.S. military goods, services and training. The
    new NATO members and the stronger aspirants for membership provide
    excellent examples of the value of this program.

    International Military Education and Training
        I cannot overemphasize the importance of International Military
    Education and Training (IMET) as an integral component of long-term
    beneficial change in foreign militaries, as foreign military and
    civilian leaders encounter firsthand the American civil-military
    culture. The priorities of the program are professional development,
    the role of the military in a democratic society (under the Expanded
    IMET initiative, or E-MET), and English language development. In fiscal
    year 2000 the program trained almost 1,500 military and civilian
    international students in U.S. military schools, with nearly 550
    officers attending professional schools--including senior and
    intermediate service schools. Under E-IMET, Mobile Education Teams
    (MET) traveled to 30 countries in the region last year providing
    instruction to over 2,000 civilian and military personnel in military
    justice and human rights, civil-military relations, health resources
    management and integration, defense resources management and budget
    planning, equal opportunity, and maritime counter-drug law enforcement.
    Student projections for this year match last year's numbers.

    Partnership for Peace
        The Partnership for Peace (PfP) Program continues to meet its goal
    of deepening interaction, extending stability in the East, providing
    consultation mechanisms for participants who feel threatened, assisting
    in the pursuit of democratic reforms, and preparing for possible NATO
    membership. The program has returned huge dividends for operations in
    Bosnia, with over 30 nations providing support and nearly one-third of
    the forces coming from non-NATO nations. The growth of the PfP program
    over the past six years has been dramatic and, in addition to real
    world operations, Partnership exercises provide superb training and
    equally important exchange opportunities.

    Joint Contact Team Program
        The Joint Contact Team Program (JCTP) has been one of USEUCOM's
    most successful engagement programs over the past nine years. Through
    modest investments of money, personnel, and expertise, it has helped
    host nation militaries become familiar with the culture of the U.S.
    military, and through this process exposed to the best in American
    values and democratic ideals. By leveraging the expertise of America's
    active and reserve forces, especially the unique capabilities of the
    Reserve Component's (RC) State Partnership Program (SPP), JCTP has
    modeled and demonstrated the best practices of America's military
    force. It has thus helped host nation militaries move toward providing
    constructive roles to their developing democracies.
        The program's success is most evident in the three new NATO member
    countries. Poland, Hungary, and the Czech Republic's needs have matured
    beyond familiarization and exposure--they are ready to ``graduate''
    from JCTP. Their needs must now be met with additional services and
    technical training properly administered under U.S. Security Assistance
    programs and plans are now being formulated to move beyond JCTP. Where
    possible, links to their SPP states will be maintained to facilitate
    this transition.
        This natural transition in the new NATO countries is the
    realization of USEUCOM's Theater Engagement Plan and is the eventual
    goal for all of the JCTP countries. This transition also allows the
    program to move, by close coordination with the U.S. Department of
    State, to new host nations requesting the unique engagement
    capabilities available through JCTP.

    State Partnership Program
        A key program in this important engagement effort is the Reserve
    Component's State Partnership Program. SPP grew out of JCTP and uses
    reserve personnel from various National Guard and reserve organizations
    to partner with defense ministries of Central and Eastern European
    countries. Last year was extremely successful as National Guard
    soldiers and airmen conducted dozens of events including 51 Minuteman
    Fellowships (MMFs), nine ``Guardex'' events, six PfP as well as several
    ``In the Spirit of Partnership for Peace'' exercises, executed more
    than 25 percent of all events for USEUCOM JCTP, facilitated civic
    leader visits, and conducted a number of engagement activities with the
    Russian Federation. The MMF program bridges gaps in other engagement
    programs and touches levels of society that other programs cannot
    reach. Through this program we were able to share with our partners our
    experience and expertise in education, economic development, disaster
    response, environmental topics, and numerous other subject areas.
        When delegations from Tennessee, Minnesota, Indiana, Alabama,
    Vermont, Illinois, Kansas, and California conducted civic leader visits
    to SPP counterpart countries, the long-term vision for SPP had been
    realized--moving beyond military-to-military contacts into other
    important elements of society. Through these activities, state civilian
    officials in the realms of education, commerce, agriculture, medical
    emergency services, and disaster response exchange their considerable
    knowledge and expertise with their partner-nation counterparts.

    Marshall Center
        One of the most important and effective regional engagement
    activities within the U.S. European Command is the George C. Marshall
    European Center for Security Studies. The Marshall Center strengthens
    security and cooperative relationships among key nations within the
    Theater. It serves as an essential institution for bilateral and
    multilateral communication and military and civilian exchanges
    throughout the region.
        This organization builds bridges between militaries that once
    stared at one another through the crosshairs of weapons of war. Under
    the auspices of the Marshall Center, the once-warring parties of Bosnia
    came together last year and agreed to slash military spending. Marshall
    Center graduates have served as peacekeepers in Bosnia and as far away
    as East Timor. Graduates from Hungary, Poland and the Czech Republic
    are now helping to integrate their militaries into NATO. Marshall
    Center programs have led a number of nations to the democratic
    restructuring of their defense planning and crisis management
    processes. Graduates from the Republic of Georgia wrote Tbilisi's
    recently announced national security strategy. Many Marshall Center
    graduates now serve as ambassadors, defense attaches, chiefs of
    defense, members of parliament, and advisors to presidents around the
    world. These graduates possess a deeper appreciation and respect the
    concepts of democracy as we understand them, and for human rights and
    the rule of law.
        The Marshall Center is at the forefront in reaching out actively
    and comprehensively to militaries and defense establishments to lower
    regional tensions, strengthen civil-military relations in developing
    nations, and addressing critical regional challenges. Open to leaders
    from over 47 countries, the Marshall Center is a pillar of America's
    efforts to shape the world in ways that reinforce and reflect our
    values and national security interests. It is therefore important that
    the Marshall Center remains fully resourced in order to continue its
    excellent work in support of American foreign policy objectives.

    The Africa Center for Strategic Studies
        Drawing on the success of the Marshall Center, the Africa Center
    for Strategic Studies (ACSS) was established in December 1999 and
    conducted its second seminar last July in Botswana. While it does not
    yet have a permanent location to call home, its rotating seminars
    provide a unique engagement vehicle in Sub-Saharan Africa. Both
    civilian and military senior defense officials of almost every African
    nation gather with U.S. and other friendly nation counterparts to
    examine and compare experiences on national security strategy, defense
    economics, and civil-military relations. They then validate their
    impressions in an end of session capstone exercise. Its forum of open,
    two-way discussion has enjoyed great success on the continent and
    builds and strengthens bilateral and multilateral relationships.

    Near East-South Asia Center for Strategic Studies
        In January a year ago the Secretary of Defense approved the
    establishment of the Near East-South Asia (NESA) Center under the
    management of the National Defense University (NDU), Washington D.C.
    The purpose of the Center is to enhance regional stability by providing
    an inclusive, neutral institution where regional military, diplomatic,
    and national security professionals can broaden their understanding of
    the national strategy formulation process, examine regional security
    issues, improve their defense-related decision-making skills, and
    develop cooperative relationships with one another. Participation is
    open to military and official civilian representatives of all countries
    within the NESA region with which the U.S. Government maintains formal
    diplomatic relations. It is also open to non-NESA countries that have
    strategic interests in the NESA region. The inaugural two-day
    conference was held at NDU in November, and the first executive seminar
    will be held in Washington during May.

    African Crisis Response Initiative
        The African Crisis Response Initiative (ACRI) is a Department of
    State training program designed to improve the capabilities of several
    African nations to conduct humanitarian crisis response and
    peacekeeping operations. ACRI trained forces could be offered by their
    governments for peacekeeping and humanitarian operations conducted by
    the Organization of African Unity, the U.N., sub-regional African
    organizations, or any other multinational coalition. ACRI also works to
    shape the African environment by promoting professional and apolitical
    militaries, reinforcing respect for human rights, and providing a
    strong example of democratic civil-military relations. This U.N.-
    approved program of instruction combines U.S. and U.N. peacekeeping and
    humanitarian relief operations doctrine. Program instruction develops
    common standards for peacekeeping and humanitarian relief operations
    among the participating ACRI countries. Recently, the program was
    expanded to include brigade-level training focusing on the command,
    control, and logistical aspects of supporting a multinational brigade
    in the field.

    Operation Focus Relief
        Last year USEUCOM was tasked to help train five Nigerian
    battalions, one Ghanaian battalion, and one Senegalese battalion in
    order to participate in U.N. operations in Sierra Leone, and more
    strategically, to support the professional development of the Nigerian
    military--an important force for regional stability. This Operation is
    being conducted in fiscal year 2001 using State Department peacekeeping
    operations (PKO) funding as well as DOD resources made available under
    Presidential Drawdown authority.
        To accomplish this mission, Special Operations Command, Europe
    (SOCEUR) was tasked to execute the mission with Army and Air Force
    units in support. Based on information provided by the SOCEUR-led
    Military Survey Team, a ten-week training program using U.S.
    instructors and an equipment support package was developed. Execution
    of the train-and-equip program was designed for three-phase completion,
    commencing last October, with mission accomplishment likely later this
    year. Upon completion of the training program, each battalion should be
    capable of operating and maintaining newly acquired equipment,
    conducting daylight company level attacks and conducting day and night
    defensive operations as a maneuver company under command and control of
    a battalion headquarters.
        We have now completed phase one of the three-phase program and our
    personnel have performed magnificently. However, interagency policy-
    level decisions must be made early enough in the process so funding and
    resources can be programmed to meet timelines and support requirements.
    Additionally, human rights vetting must be complete for all personnel
    to be trained, to include attached units, prior to the initiation of
    training. There must also be host nation agreement on the training
    program at every political and military level in order to assure
    mission success. Operation Focus Relief is not an operation without
    risk. However, with only 200 plus U.S. personnel assigned in non-
    combatant roles, the dollar investment is minimal and the payoff great
    in that it is successfully training local forces to deal with regional
    problems. In this way, Operation Focus Relief is pioneering a new
    method of engagement.

                      KEY THEATER MISSIONS AND CHALLENGES

        Challenges in the USEUCOM AOR will continue as the U.S. works to
    strengthen and maintain the NATO structure, prepares forces to better
    respond to future conflict, shapes the international environment
    through engagement, executes contingency operations, and monitors
    potential future conflict areas. I have highlighted key challenges and
    continuing missions below to give an idea of the diversity of Theater
    challenges and missions.

    Multinational Interoperability
        ``The overall effectiveness of multinational operations is * * *
    dependent upon interoperability between organizations, processes, and
    technologies.'' Joint Vision 2020

        The U.S. European Command and America's allies and friends
    recognize that most military operations in the future, from
    peacekeeping and humanitarian relief to a major theater war, will
    typically be multinational in character. Success in multinational
    operations will depend on two factors: the capabilities of the national
    forces involved in the operation; and the degree to which these forces
    can be melded to create an effective force. These factors will demand a
    high level of interoperability and enhanced capabilities between the
    participating national forces.
        In this vein NATO has met and excelled at every challenge since the
    end of the Cold War precisely because of its ability to commit
    multinational forces structured to meet military threats to its
    members. NATO's greatest challenges today originate not externally, but
    from within. The growing asymmetry in technology between European and
    U.S. military forces is producing a serious imbalance in our military
    capabilities. Furthermore, Europe's shrinking defense industrial base
    and limitations in production of advanced military capabilities could
    lead to a future where only the U.S. has the ability to engage
    globally.
        The Defense Capabilities Initiative, launched in April 1999, is an
    effort by the European members of NATO to resolve glaring capabilities
    shortfalls between them and the U.S. as evidenced by past NATO
    exercises and Operation Allied Force in and over Kosovo. The
    Capabilities Initiative's two primary thrusts, improving national
    capabilities and exploring ways to pool capabilities, allow our allies
    and partners to enhance interoperability, take advantage of economies
    of scale, and afford participation by those countries that do not
    possess the resources to go it alone. The initiative specifically
    targets five capabilities: effective engagement; deployability and
    mobility; survivability of forces and infrastructure; sustainability
    and logistics; and communications/information systems. As Europeans
    work to improve their national and collective security, we have
    encouraged defense cooperation and procurement using the DCI roadmap
    and believe it mutually reinforces the needs of NATO and the European
    Union (EU).
        The DCI's success depends upon whether Europeans are willing to
    spend more, and more wisely, in narrowing the gap between their
    military technology and warfighting capability, and our own. Should
    Europe prove unable to engage in military operations at or near the
    level of U.S. capabilities, it may leave them vulnerable and limit the
    U.S. in some cases to unilateral action. Such a future undermines
    America's strategic vision and assumptions--diplomatically,
    economically, and militarily. Finite resources and domestic political
    realities dictate that unilateral action cannot be the future norm.
    Unilateral action endangers the historical link between the American
    and European peoples. While the issue of DCI is being worked at the
    highest levels in NATO, it is critically important that the Congress
    work to engage their European counterparts on this issue. The U.S. must
    continue to engage with its European allies to help foster the
    necessary changes to enable Europe to remain a contributing strategic
    partner across the spectrum of potential operations. DCI is a crucial
    area on which the future of a strong Trans-Atlantic link may very well
    depend.

    European Union and NATO Security Structures
        The establishment of a common foreign policy, supported by a
    military capability, within the EU is one of the most important
    political-military issues facing Europe and the United States today.
    The European Security and Defense Policy (ESDP) is worked hard,
    continuously, and at presidential and prime ministerial levels in every
    capital in Europe. If the military and political links that eventually
    define the relationship between NATO and the EU do not result in
    transparency, coordination, and a cooperative effort, it places at
    serious risk the future of the Alliance. Indeed it is the form these
    permanent arrangements between the two will take, and assured EU access
    to NATO's planning capabilities, that are the most contentious and
    potentially destructive questions currently under debate.
        The recently completed Foreign Minister's meeting in Brussels was
    not able to reach agreement on these issues and will require much
    effort by the new Administration. We believe that SHAPE headquarters
    can play a constructive and indispensable role by accomplishing the
    future military planning for both organizations, thereby negating the
    need for a duplicative headquarters solely to support the EU.
        The European Security and Defense Identity (ESDI) within NATO
    continues to evolve within U.S. redlines as the EU develops, through
    the ESDP, both capabilities and institutions for its security and
    defense aspirations. Even though the progress to date has generally met
    U.S. expectations, I would suggest that officials in Washington remain
    vigilant to ensure that ESDP remains relevant from a U.S. perspective.
    They should emphasize the requirement for Europeans to develop their
    capabilities, maintain NATO-EU linkages, and underscore the necessity
    for the inclusion of non-EU NATO members in emerging security and
    defense arrangements.
        Successful implementation of the European Security and Defense
    Policy within the European Union will require a concerted effort
    between the European members of NATO, EU members who are not in NATO,
    and Canada and the United States. This cooperation is essential to
    build the military and political links between NATO and the Union
    necessary to achieve a common strategic vision and make the needed
    improvements in technological capabilities.
        Last November witnessed positive developments in the Capabilities
    Commitment Conference. This effort has been a primary focus of the
    French during their six months as President of the EU last year. The
    planning scenarios used to determine capabilities and forces required
    for the ESDP Headline Goal Force have remained realistic. In this
    regard, the EU has commitments for a Rapid Reaction Force (RRF) of up
    to 60,000 personnel, which is the minimum goal. The EU member countries
    placed a total of 100,000 troops, 400 combat aircraft and 100 warships
    at the EU's immediate disposal to support this RRF. If this force
    becomes reality it is sufficient to establish the EU as a significant
    military power.
        The military staff at SHAPE played a very constructive role in
    assisting the EU's interim military staff in the development of these
    goals. The Catalogue of Forces turned out to be impressive, with high-
    end capabilities that are fully in line with Europe's DCI efforts. My
    main apprehension regarding capabilities is that they remain compatible
    with NATO Force Goals once the EU force is established and that the
    Europeans follow through with the necessary financial commitments to
    correct identified capability shortfalls.
        In my role as the military commander of NATO's forces (SACEUR), I
    am fully engaged in providing advice and perspective as this issue
    evolves. In my estimation, if handled successfully by NATO HQ in
    Brussels and the European Union, the ESDP process will strengthen the
    security posture of the European continent. However, there are many
    complicated factors remaining before this capability is realized. The
    central issue, in my view, is the method by which a plan is developed
    and presented. When a potential conflict or crisis emerges the planning
    should be conducted by the SHAPE staff, with EU military augmentation.
    The Deputy SACEUR would then take the completed plan to the EU and I
    would send it to the NATO political authorities. If NATO elects not to
    involve itself, the EU could pick up the mission and deploy forces as
    required. If the process does not follow this model the EU will be
    unnecessarily creating large and redundant staffs and a real
    possibility of double counting and tasking existing NATO forces.
    Realization of ESDP largely hinges on the Europeans' willingness to
    make the necessary fiscal and political commitments. Any newly financed
    capabilities, however, must be in line with DCI--not duplicating but
    rather reinforcing Alliance capabilities.

    NATO Enlargement and Integration
        There are currently nine European nations that aspire to NATO
    membership. While the decision to expand the Alliance is a political
    one and will ultimately be made in Capitals across Europe and North
    America, an aspirant's military readiness will be scrutinized and is
    certainly part of the equation. Thus far, the nine aspirants have
    benefited from U.S.-funded defense assessments as well as from the NATO
    Membership Action Plan with its associated Partnership Goals. These
    mechanisms have provided a valuable roadmap towards reform and
    interoperability in the event that additional nations are offered NATO
    membership.
        As for the three newest members of the Alliance--Poland, Hungary,
    and the Czech Republic--the Interagency Group estimated that a 10-year
    process would elapse before these nations fully transition from past
    Warsaw Pact doctrine, equipment, and organization to NATO
    interoperability. One should avoid any unrealistic expectations of full
    integration this early--only three years since the Madrid invitations.
    Nevertheless, they have made great progress. Each has performed well in
    both exercises and deployments, including the very demanding
    environments of Bosnia and Kosovo where they share the burden through a
    contribution of nearly 2,500 troops to the international effort.

    European Reaction to Missile Defense Deployment
        A number of potentially hostile nations are working to develop
    long-range missiles to coerce and threaten countries in North America
    and Europe. President Bush has stated that we will deploy missile
    defenses as soon as possible. These defenses, he has made clear, must
    protect not only the United States and our deployed forces, but also
    our friends and allies.
        NATO's Strategic Concept also recognizes that ``the Alliance's
    defense posture against the risks and potential threats of the
    proliferation of (nuclear, biological, and chemical) weapons and their
    means of delivery must continue to be improved, including through work
    on missiles defenses.'' As the U.S. pursues this capability, I suggest
    it continues to consult our friends around the world. Open and frank
    discussions on this initiative between the U.S., NATO, and our other
    European allies, will further understanding and help avoid alienating
    our valued friends.
        The defenses envisaged will reinforce the credibility of U.S.
    security commitments and the credibility of NATO as a whole. No one can
    reasonably argue that Europe would be more secure if the U.S. were less
    secure from a missile attack. An America able to defend itself from
    missile attacks is an America better able to defend Europe and common
    Western security interests. As consultations proceed with Allies on
    missile defense, we realize they will continue to consider the
    appropriate role of missile defenses in their respective national
    security strategies for dealing with the changing international threat
    environment. In keeping with the fundamental principle of the Alliance
    that the security of its members is indivisible, the United States is
    open to discussing possible cooperation with Allies on longer-range
    ballistic missile defense, just as we have with our discussions and
    cooperation in the area of Theater Missile Defense.

    Force Protection
        Force Protection (FP) remains a top USEUCOM priority. We are
    exercising an aggressive Antiterrorism/Force Protection (AT/FP) program
    providing clear AT/FP policy, measures, and tools to mitigate risk and
    maximize security for our personnel and their families. We have
    implemented a number of innovative AT/FP programs, examining the
    application of state of the art technology to enhance access control
    and explosive detection, and are continuing our efforts to field mass
    notification systems throughout the Theater. We are making progress,
    but resourcing continues to challenge our AT/FP Service priorities.
        U.S. European Command is in the staffing process of publishing a
    significantly updated AT/FP Operations Order (OPORD) 01-01 prescribing
    AT/FP standards and requirements. These new mandatory requirements
    encompass FP engineering design standards for new construction, major
    renovations, and existing facilities. USEUCOM has also instituted a
    comprehensive Installation AT/FP Program Manager course to train the
    unit FP officers in our AT construction and design standards. To date,
    we have established AT/FP responsibilities for DOD elements and
    personnel at 67 Chief of Mission locations throughout the USEUCOM AOR.
        Coupled with this, 137 AT/FP vulnerability assessments, including
    74 Joint Staff Integrated Vulnerability Assessments, have been
    undertaken over the past year. These assessments have identified AT/FP
    vulnerabilities and assisted commanders in addressing those
    deficiencies through the use of countermeasures, procedural changes,
    and resourcing--endeavoring to eliminate or mitigate their potential
    exploitation by terrorists.
        We have developed and fielded a web-based Vulnerability Assessment
    Management Program (VAMP). The VAMP captures results of vulnerability
    assessments, prioritizes AOR vulnerabilities, identifies deficiencies,
    and lists corrective actions needed or completed. VAMP is a management
    tool available to every commander and AT/FP officer from the theater
    down to the installation level and allows commanders and decision
    makers the ability to track and identify the actions taken or required
    to correct and/or mitigate vulnerabilities at specific installations
    throughout the AOR.
        We employ risk management and mission analysis processes in all
    deliberate, crisis, and contingency operational planning and exercises.
    Threat working groups and assessment tools, such as the VAMP, play a
    critical role in these processes. In light of recent events these
    processes are receiving additional scrutiny. Although we cannot
    eliminate all vulnerabilities, we continue to use risk management when
    deciding missions in this theater in order to reduce risk to our
    personnel--identifying vulnerabilities and resources required to reduce
    exploitable FP vulnerabilities.
        Our intelligence operations continually analyze and assess
    potential terrorist threats to U.S. installations, facilities and
    personnel. We use a variety of systems to disseminate intelligence
    within the command and provide routine and time-sensitive threat
    warning notifications. Our systems and procedures provide the ability
    to rapidly disseminate information regarding specific terrorist threats
    to units, installations and individuals throughout the AOR. In
    conjunction with our national intelligence agencies, we are exploring
    better methods of sharing and disseminating more accurate AT/FP
    prediction and tracking threat information. Recently, we initiated
    closer cooperation with the U.S. Central Command to share and maximize
    our efforts, including assets, analytical and database capabilities.
        While intelligence operations support for AT/FP in Theater is good,
    we concur with the recent USS Cole Commission recommendation to
    reprioritize resources for collection and analysis, including human
    intelligence and signals intelligence, against terrorist threats, and
    to increase our national intelligence agencies counterintelligence
    resources dedicated to combating terrorism.

    Balkans
        One of the greatest challenges to peace, stability, and democracy
    in Europe is the integration of the Balkans into the rest of Europe, a
    strategic objective the U.S. shares with NATO and the EU. Last year saw
    a watershed opportunity to overcoming that challenge--the toppling of
    Slobodan Milosevic and the election of Vojislav Kostunica as President
    of the Federal Republic of Yugoslavia (FRY). It has been clear for a
    decade that only a change from dictatorship to democracy in Belgrade
    would set the conditions for a regional approach to the problems in the
    Balkans. This transition from authoritarian to democratic rule in the
    FRY should have a beneficial impact on the integration of the entire
    region into the West. President Kostunica still has much work to do in
    consolidating democratic gains. While the FRY has begun its re-
    integration into the Western world, rapidly joining the U.N., the
    Organization for Security and Cooperation in Europe (OSCE), and the
    Stability Pact for Southeastern Europe, and establishing diplomatic
    relations with the U.S. and other key NATO allies, much remains to be
    done in the Balkans.
        Greater ethnic reconciliation in Bosnia and Kosovo is elusive and
    while recent voting in Serbia and Bosnia marked another milestone in
    the rule of law and movement towards democracy, it also reinforced some
    hard-line nationalist parties and their platforms. Additionally,
    despite the first democratic elections in Kosovo, where municipal
    voting saw moderates win, the province is still volatile.
        Security conditions permitting the withdrawal of U.S. troops from
    the region have not yet been fully realized. The status of Montenegro
    within the federation, a final settlement for Kosovo, and Serbia's
    future links with the Republika Srpska remain open issues whose
    resolution are required in order to bring stability and democracy to
    the Balkans. There is no short-term solution to the problems in the
    Balkans without developing a comprehensive, region wide, and long-term
    approach. The economics in the region are driving the turmoil and
    fractious nature of the ``peace.'' International involvement in the
    Balkans must include substantive initiatives that address the economic
    problems of the region. Without such initiatives, we cannot hope to
    forecast peace.
        Military forces, too, must continue to foster an environment in
    which peaceful actions are rewarded, but do it with fewer resources.
    This can be accomplished by leveraging existing national and allied
    exercises that occur across this Theater and by executing them as much
    as possible in the Balkans. By conducting exercises in the Balkans, we
    show resolve in the regional policies, deter the outbreak of
    hostilities, and improve regional infrastructure leading to increased
    interaction among Balkan peoples.
        In Bosnia, force numbers have been reduced from 60,000 when the
    mission began, to just over 20,000 personnel. Of 34 nations
    contributing forces to this effort, 28 are European and their forces
    make up 80 percent of SFOR. The U.S. has successfully reduced its
    proportion of committed troops from 33 percent in 1996 to 20 percent
    today. The way ahead in Bosnia, including future force reductions,
    remains contingent upon the implementation of Dayton's various military
    and civil tasks. We are working within the Administration to address
    possible ways to implement the civil tasks and set the conditions for
    additional NATO force reductions.
        The KFOR military effort is considerable and has not changed to any
    degree since last year. KFOR's strength remains at 37,000 deployed in
    Kosovo proper and an additional 4,400 supporting in the Former Yugoslav
    Republic of Macedonia (FYROM), Greece, and Albania. This force is drawn
    from 39 nations, with 33 European countries deploying over 80 percent
    of the total. The U.S., with 5,500 troops in Kosovo, continues to
    provide 14 percent of the force. Europe as a whole has endeavored to
    live up to its personnel and financial commitments of support to Bosnia
    and Kosovo. The following charts indicate their specific levels of
    military troop support:

        The U.N. Mission in Kosovo (UNMIK) police force enjoys continued
    success. Current numbers indicate that 53 nations contribute 4,485
    officers. This number represents 95 percent of the U.N. goal of 4,718
    police officers. Additionally, the domestic police academy graduated
    its twelfth class on 3 February and has placed 3,128 multi-ethnic
    officers on the beat as a result. I can report the U.N.'s policing plan
    is on target and the effort continues to put 300 plus officer graduates
    on the street every month to work--and learn--alongside UNMIK's veteran
    contract officers.
        U.S. contributions to NATO are based on The North Atlantic Treaty
    signed on 4 April 1949. The annual U.S. funding commitment is an
    obligation to cover approximately one-quarter of the NATO funding
    requirements as set by consensus of the Military Budget Committee
    composed of representatives from each of the participating nations.
    Once funding is committed, the prestige and credibility of the United
    States is irrefutable and must be met. Consequently, a failure to
    provide adequate funding to meet this commitment forces the DOD to
    reprogram funds from other established mission essential programs.
    Shortfalls in NATO funding have been chronic in the past and have only
    served to erode national programs. I encourage Congress to realize that
    full funding of our NATO commitment will ensure the full execution and
    realization of national programs, as well as the continued security and
    stability of Europe as afforded by NATO.
        In closing on the topic of the Balkans I do want to make one
    further comment and that is in regards to the pursuit and eventual
    apprehension of Persons Indicted for War Crimes (PIFWCs). There are few
    higher priorities in the international community's efforts in the
    Balkans than bringing PIFWCs to justice regardless of what you might
    hear or read, but it is slow and dangerous work. American forces,
    working alongside their NATO counterparts, are fully committed and one
    day I am confident these indicted criminals will be delivered to the
    International Criminal Tribunal for the Former Yugoslavia (ICTY) at The
    Hague. To date approximately one hundred have been indicted and 71
    delivered to the ICTY, killed during apprehension efforts, or have
    otherwise died. This process will continue until such time as justice
    is satisfied.

    Operation Northern Watch
        The Combined Joint Task Force (CJTF) Operation Northern Watch,
    consisting of forces from the U.S., Turkey, and the United Kingdom,
    continue to fly dangerous and complex missions in the enforcement of
    the No-Fly Zone (NFZ) over Northern Iraq, and monitoring Iraqi
    compliance with applicable U.N. Security Council Resolutions.
        In the last few months, however, the situation in the zone has been
    further complicated by a dramatic increase in the number of
    international ``humanitarian flights'' into Iraq, as well as the
    introduction of domestic Iraqi flights into the NFZ. Coalition forces
    have taken appropriate measures to ensure that civilian aircraft will
    not be endangered by ONW activities. There is no guarantee of what
    actions Saddam Hussein might initiate; however, he has altered his
    primary strategy from open defiance of ONW presence, to eroding
    international support for applicable U.N. Resolutions.

    Russia
        U.S. and Russian soldiers execute common missions side by side
    against common threats in the Balkans. Our deployed forces have
    performed ably together and have developed positive and extremely
    important combined training and operational activities. In spite of
    five years of operational cooperation and success however, our overall
    attempts to engage more broadly with Russia are mixed. Ideally, Russia
    will harmonize its security concerns with NATO, further strengthening
    stability in the region. A remilitarized or a failed Russia would lead
    to increased instability and danger not only to its neighbors, but to
    vital U.S. security interests as well. The U.S. supports favorable
    developments in Russia with its bilateral engagement efforts, as well
    as through its support for the stability, sovereignty, and economic
    development of the Ukraine, Moldova, and the Caucasus' states.

    Caucasus
        The Caucasus region is vitally important to the United States for
    at least two major reasons: the impact on the emerging Russian national
    self-definition, and its capacity to fulfill European hydrocarbon
    energy deficits. Despite its remoteness from the U.S., the region will
    have a decisive impact on international political developments in the
    early 21st Century.
        The importance of Caucasus oil and gas reserves, and the necessity
    of their supply to meet growing European energy needs, comes precisely
    at a time when Russia is still immersed in its yet to be completed
    social, political, and economic revolution. It also comes at a time
    when China is emerging as a major regional economic and political
    power, with vastly increased energy requirements. Despite this critical
    time, America has imposed on itself considerable constraints towards
    our policy and influence in this region.
        A key constraint to full American peaceful engagement in this
    region is Section 907 of the 1992 Freedom Support Act. The Act
    prohibits government-to-government assistance to Azerbaijan until such
    time as ``steps are taken'' to lift the economic embargo sponsored by
    Azerbaijan against Armenia, with the exception of counter-proliferation
    programs. The DOD applies an ``equal treatment'' policy toward Armenia
    to avoid compromising the U.S. position as mediator in the Nagorno-
    Karabakh conflict. Other subsequent legislation has opened up several
    narrow ``carve out'' areas to Section 907 for military and other
    engagement activities: democratization; counter-proliferation;
    humanitarian demining operations; and humanitarian assistance. While
    these niches have allowed us to initiate preliminary military contacts
    with Armenia and Azerbaijan, they are extremely narrow and do not allow
    USEUCOM to respond to both nations' enthusiastic desire for substantive
    engagement activities.
        Were it not for Section 907, Azerbaijan, based largely upon its
    geo-strategic position, pro-western economic, political, and military
    orientation, and its abundant energy resources, would be a very high
    priority for USEUCOM engagement efforts. A stable Azerbaijan is
    necessary not only for its vast energy deposits, but also to help
    forestall terrorism and the proliferation of weapons of mass
    destruction. U.S. policy has had the effect of frustrating Azerbaijan's
    pro-NATO policy and desires to expand its relationship with Europe and
    the U.S. I would ask you to take a hard look with the intent of
    modifying this legislation to afford the opportunity for our military
    to properly engage with our counterparts in this vitally important
    region of the world. Such an initiative would strengthen our ability to
    influence this region for the next generation and beyond.
        Armenia has also persistently and vocally pursued at the highest
    levels closer ties to the U.S. Armenia's motivation lies in its
    eagerness to balance its historic dependence and partnership with
    Russia, enlist the U.S. to mitigate historically hostile relations with
    Turkey, and attract potential economic development assistance and
    investment that Russia has not been able to provide. In particular,
    Armenia has asked for our advice on establishing a program of
    instruction for a national military senior service college and for help
    in establishing peacekeeping units that could participate in
    international efforts such as the Balkans. Due to Section 907, however,
    these are opportunities USEUCOM cannot exploit and we are limited in
    our efforts to assist these nations in sorting out mutual problems and
    their futures.
        Very briefly, our activity in the case of Georgia has continued to
    increase since being assigned to USEUCOM's area of responsibility three
    years ago. Georgia will host its first large multinational NATO
    Partnership for Peace exercise with USEUCOM support in 2001, providing
    a good example of the kind of engagement opportunities we are missing
    in Azerbaijan and Armenia.

    Africa
        Africa is a complex, diverse, and often dangerous region of the
    world. Its countries are evolving into clusters of stability and
    instability, leading in some areas to promising economic growth and
    democratic government, and in others to stagnation and autocratic rule.
    A few are simply chaotic due to coups, civil wars, widespread
    corruption, or lack of an effective government. While this dynamic mix
    of political trends and institutions will continue for the foreseeable
    future, the Administration seeks to bolster stability and democratic
    transformation through a policy of engaging with key partner states and
    regional ``success stories.'' We who watch Africa closely anticipate
    fewer African ``wars'' but an ever-increasing scope of conflict as
    failed states and the emerging transnational threats and humanitarian
    crises provide the conditions for instability. Unstable political
    environments, austere conditions, and asymmetrical threats where the
    enemy is not clearly defined, either by uniform or position on the
    battlefield, will characterize the operating environments.
        Small programs, such as our Humanitarian Assistance Program (HAP),
    are key engagement initiatives in Africa that satisfy both DOD and
    State Department objectives. Small dollar amounts have yielded big
    dividends in terms of the U.S. military impact in Africa. With
    approximately $17 million for fiscal year 2001, USEUCOM will be able to
    complete more than 120 projects in roughly 50 African and Eurasian
    countries. Engagement through the African Center for Strategic Studies
    (ACSS), Near-East South Asian Center, African Crisis Response
    Initiative (ACRI), and the West African Training Cruise (WATC) are also
    helpful for promoting African stability. Joint Combined Engagement
    Training with African partners, in addition to giving our Soldiers the
    chance to improve their capabilities to work in multiple environments,
    expose African soldiers to the U.S. military, challenging them to
    improve their professional skills. By leveraging the resources of
    programs such as these we seek to help shape the African environment in
    a positive way.

    Sub-Saharan Africa
        The portion of Sub-Saharan Africa in USEUCOM's area is an immense
    geographic area comprised of 37 countries and four primary sub-regions,
    each with significant environmental, cultural, political and economic
    differences. USEUCOM has identified its three principle objectives for
    military engagement in Sub-Saharan Africa: promote stability, democracy
    and a professional military; provide prompt response to humanitarian
    crisis; and ensure freedom of air and sea lines of communication. By
    applying resources against established objectives, the intent is to
    reinforce success and work to prevent crises before they occur. There
    are three critical issues preventing peace, stability, and economic
    development in the Sub-Saharan Africa region: the war in the Congo
    (DROC); the conflict in Sierra Leone; and the HIV/AIDS pandemic; all of
    which are unrestrained by boundaries or borders. Each is a contagion
    that threatens current and future stability throughout the continent.
        With the assassination of President Laurent Kabila on 16 January
    2001, the future situation in DROC is uncertain. Joseph Kabila, the
    late President's son, was sworn in as President on 26 January 2001.
    Within DROC there are military forces from six different nations
    participating in the conflict. The countries previously supporting the
    late President--Zimbabwe, Angola, and Namibia--have pledged continued
    support to the new government in its civil war. Additionally, the nine
    countries bordering DROC are significantly impacted socially and
    economically by the war to varying degrees. The sheer size, geographic
    location, vast mineral wealth, and economic potential in DROC guarantee
    that peace in the Congo is inextricably linked to stability throughout
    the region. The existing Lusaka Peace Accord is the best opportunity to
    resolve this conflict. President Joseph Kabila recently held a historic
    meeting with Rwandan President Paul Kagame in Washington in February
    where both sides pledged to renew efforts to implement the Lusaka Peace
    Accords. President Kabila also met with Secretary of State Colin Powell
    the same day. Within the limits of U.S. law and policy, U.S. European
    Command continues its limited engagement with all parties in an effort
    to demonstrate neutrality and urge support for the Accord and the U.N.

    Mission to the Congo.
        The situation in Coastal West Africa continues to smolder and
    destabilize the sub-region. While centered in Sierra Leone, this
    conflict also involves Liberia, Guinea, and Burkina Faso, as well as
    the sixteen other members, directly or indirectly, that comprise the
    Economic Community of West African States (ECOWAS). Through support of
    the U.N.'s mission to Sierra Leone, support to British efforts, and
    training and equipping countries contributing to the ECOWAS Military
    Observers Group, USEUCOM works to contain the spread of this conflict,
    as well as create the conditions for future peace and stability in the
    region.
        Sub-Saharan Africa is the region most heavily infected with HIV in
    the world. The region accounts for two out of every three of the
    world's HIV infections, and represents over 80 percent of global HIV/
    AIDS deaths. The prevalence of HIV in sub-Saharan militaries varies
    greatly, but it generally exceeds that of the civilian populace. Many
    militaries have infection rates as high as 20 to 50 percent of the
    force. As African militaries participate not only in conflicts but also
    in peacekeeping and humanitarian relief operations outside their
    borders, HIV follows. We are committed to working with African
    militaries to contain the spread of HIV/AIDS through education,
    awareness, and behavior modification.

    North Africa
        The strategy in North Africa is anchored by bilateral relationships
    with what USEUCOM sees as two cornerstone countries--Morocco and
    Tunisia. Recent developments in Algeria have also prompted measured
    engagement activities with that country. Complementing these bilateral
    relationships is a developing regional approach to engagement in North
    Africa and the Mediterranean.
        There are three prime sources of tension in North Africa. The first
    is the Islamist insurgency in Algeria where the government's amnesty
    offers have persuaded moderate rebels to surrender, while security
    forces remain engaged in fighting hardliners. The behavior of both the
    military leadership and insurgents will be critical to the progress of
    political reform efforts and the environment for badly needed foreign
    investment. Complete restoration of civil order in the countryside will
    likely take years, and social tensions will exist long after the
    conflict. There is optimism, however, as it appears there is a general
    trend towards greater internal stability.
        The second key source of tension is Libya--long a source for
    concern as its leader, Muammar Qadhafi, continues to pursue the
    development of weapons of mass destruction and associated delivery
    systems. Islamist opposition to Qadhafi has found limited popular
    support and has met with a strong effective response from Qadhafi's
    security forces.
        The third source of tension is the unresolved dispute in the
    Western Sahara. The King of Morocco, Mohamed VI, has initiated a series
    of measures to make the administration of the territory more positive,
    but the U.N.-sponsored process to hold a referendum on the final status
    of the territory remains bogged down over disagreements about the voter
    list. At times, this confrontation contributes to dangerous tensions
    between Morocco and Algeria.
        Africa will remain a challenging environment for the foreseeable
    future. USEUCOM will continue to pursue a program of active peacetime
    military engagement to shape the region and pursue our objectives with
    the aim of maintaining stability and preventing crises before they
    occur. Solutions to many of Africa's challenges are elusive, but
    USEUCOM is managing threats and capitalizing on opportunities where we
    can.

                       MODERNIZATION AND PERSONNEL ISSUES

        Several modernization and personnel issues are being addressed at
    USEUCOM and I want to highlight some of those that Congress might
    positively influence and support.

    Organizational Transformation Benefits to USEUCOM
        There is high probability that there will be repeated demands at
    the center of the spectrum of conflict, as well as the possibility of
    high intensity small-scale contingencies. Responding to this reality
    the Army has articulated a new vision for a strategically responsive
    and dominant force to effectively meet the full spectrum of future
    military operations. The Army's ``Transformation'' will occur in three
    phases, eventually resulting in the ``Objective Force.'' The Objective
    Force aims to be able to send a brigade anywhere in the world in 96
    hours, a division in 120 hours and five divisions in 30 days. The two
    divisions in Europe must also meet this standard by resourcing the
    training, exercises and infrastructure that support strategic mobility.
    Only through proper resourcing of our two divisions will this Objective
    Force be able to provide the deployability, maneuverability, and
    lethality necessary to conduct operations throughout the full spectrum
    of conflict.
        Another key benefit for USEUCOM is the ability to rapidly move
    lighter vehicles between training areas and countries within this
    Theater. As a potential force provider to other unified commands, most
    notably U.S. Central Command, future commanders will find that enhanced
    mobility of the Transformed Army also enhances deployability. The
    capability to deploy within a matter of hours to trouble spots in
    Africa and less developed countries of Eastern Europe offers a range of
    options that are simply unavailable today.
        As the Army transforms it will reduce the logistics tail
    considerably. By operating from a single family of vehicles,
    significant efficiencies will follow. Much of the larger and more
    demanding logistics support activities will occur outside the
    operational area, reducing the logistics footprint.
        Permanently stationed forces will be able to train effectively in
    the AOR, where many of the training activities of heavier forces will
    become increasingly problematic. Less noise and disruption of the local
    populations during movement to and from major training areas (MTAs)
    make it more likely that permission will be granted for maneuver
    training off MTAs. This will allow the widely dispersed units of the V
    Corps to greatly expand maneuver training, at a much-reduced cost.
        Similarly, the Air Force transition to the Expeditionary Air Force
    (EAF) concept has resulted in improved responsiveness in meeting the
    diverse needs of USEUCOM. Organized into multiple AEFs to support
    ongoing operations, Air Force personnel are now afforded predictable
    rotations. This new stability has improved morale, stabilized training,
    and assured necessary reconstitution time, thereby improving the combat
    readiness of all involved forces. USAFE forces are integral to the EAF.
    They provide, in addition to resident combat capability, the backbone
    that supports ongoing AEF operations over the Balkans and northern
    Iraq.

    Special Operations Forces
        An invaluable tool for the effective implementation of our
    engagement programs is Special Operations Forces (SOF). These forces
    focus largely on their unique capability to organize and train
    indigenous forces in internal defense. By interacting with foreign
    military counterparts throughout the Theater, SOF instills in host
    nation forces a sense of loyalty and professionalism that support
    democratic government and ideals. In the process, SOF gains valuable
    training and cultural experiences from these regional engagements. In
    fiscal year 2001, Special Operations Command, Europe (SOCEUR) has
    scheduled 101 JCET initiatives in 52 countries. Special Operations
    Forces become USEUCOM's force of choice for engaging on the fringes of
    the Theater in uncertain environments to open new doors and to shape
    the battlespace in preparation for possible contingency operations.

    Reserve Components
        Total Force integration means conducting military operations that
    fully utilize the unique capabilities of the Reserve Components (RC) of
    all Services. Reserve utilization requires a balanced and proportional
    approach that considers Service competencies and capabilities and
    matches those competencies to best support Theater missions. The U.S.
    European Command's ability to undertake missions is growing
    increasingly dependent upon capabilities offered by the reserves and
    the National Guard.
        In an effort to ease active component operational tempo the
    Services are increasing their use of reserves in contingency operations
    in the Balkans. The 49th Armored Division (Texas Army National Guard)
    successfully completed a rotation as the command element of Multi-
    National Division (North) in Bosnia last October. Their performance was
    superb and I want to take this opportunity to publicly applaud the
    great job they did last year. The Navy Reserve contributory support to
    this AOR for Operations Joint Guardian, Joint/Deliberate Forge and
    Northern Watch has included filling 89 percent (237,600 workdays) of
    all Navy billet requirements as of July 2000. The Air Reserve Component
    provides 60 percent of the total KC-135 tanker aircraft needed for
    Operation Deliberate Forge providing air-refueling support to NATO
    aircraft flying missions over the Balkans. At the end of last fiscal
    year there were 1,244 Guard and 2,775 reserve members on active duty in
    support of the two operations in the Balkans. The reality is SFOR and
    KFOR stability operations will continue to require augmentation from
    the reserve community for the foreseeable future, especially in the
    area of civil-military operations and peace support operations.
        Reserve Components are an increasingly important asset for
    USEUCOM's operational activities, combined exercises, training,
    combined education, humanitarian assistance, and security assistance
    efforts. Reserve support to the Theater, however, is not limitless.
    There are constraints that require a deliberate and well-thought-out
    balance of reserve force functions in the total equation of
    requirements. The requirements of employers and families demand advance
    notice of deployment and training. Reserve Service members require
    predictability in order to manage business and personal affairs.
    Accessibility and volunteerism are factors that require reasonable
    lead-time to match and mobilize assets to the mission.
        The PERSTEMPO management legislation enacted in the Fiscal Year
    2000 National Defense Authorization Act will help provide standards and
    limits for all Service member deployments. While PERSTEMPO management
    provides stability and predictability for the Service member, it may
    increase personnel turbulence and cost due to an increased frequency of
    personnel rotations. Anecdotal evidence has suggested that increasing
    use of the RC has a negative impact on Service members' personal lives
    and may affect recruiting and retention goals.

    Combat Aircraft Modernization
        To a large degree tactical aviation has shouldered much of the
    nation's foreign policy when that policy called for the use of force. A
    decade ago Operation Desert Storm commenced with an unprecedented air
    assault against Iraq's military forces involving hundreds of U.S.
    aircraft flying tens-of-thousands of sorties around the clock. Since
    that time American aviators and aircraft have maintained the NFZ over
    Iraq, and since Operation Northern Watch was established have flown
    nearly 13,000 fighter sorties alone. More recently we have seen the use
    of our strike assets over the Balkans to stop the killing in Bosnia and
    to compel Milosevic to withdraw Yugoslav forces from Kosovo during
    Allied Force. The demands of modern warfare for precision strike to
    maximize combat effectiveness while minimizing collateral damage
    clearly demonstrate the increased need for all-weather/all-target
    capability. The fact of the matter is, however, many of our tactical
    aircraft--F-18s, F-15s, F-16s, AV-8s, and A-10s--are aging and nearing
    service life. Even the F-117 ``Stealth Fighter,'' thought by most to be
    a new system, has an average age of 9.7 years and relies on dated
    technology. Currently, possible replacements--the F-22, ``Joint Strike
    Fighter,'' and F-18E/F--continue in development and are likely part of
    the Administration's defense review.

    Airlift Modernization
        Systems modifications are required to keep our airlift aircraft
    viable particularly for USEUCOM's fleet of C-130s. These airplanes, now
    approaching 30-years of age, are essential to the success of several
    USEUCOM mission areas. From support of USEUCOM army units, including
    combat airdrop and resupply, to execution of humanitarian relief
    operations, these aircraft are a critical ingredient in maintaining a
    force projection capability in both combat and during peacetime. It is
    almost a certainty that the missions and roles this aircraft fulfills
    will only be more crucial in the future.

    Air Traffic Control
        The tremendous growth in air traffic and communication industries
    in Europe presents increasing challenges for air traffic control
    agencies, civil air carriers, and military aviation. Just as in the
    United States, the European air traffic system requires significant
    improvements to increase capacity and reduce delays. At the same time,
    expansion of communication technologies is pressuring a limited radio
    frequency spectrum. To address these challenges, European countries are
    mandating more efficient air traffic communications systems and
    avionics. The U.S. has many similar plans; however, Europe is leading
    worldwide implementation due to its current frequency and air traffic
    congestion. We have no choice but to equip our aircraft for flight in
    the airspaces of Europe as well as the rest of the world to allow
    access to perform our mission.

                 INTELLIGENCE AND COMMUNICATIONS INFRASTRUCTURE

        For the past several years, we have been living in a new
    operational environment for both conventional and support operations as
    technological advances change the way our potential adversaries and the
    U.S. military operate. At the same time, military forces have become
    the spearhead for several nation-building efforts. To meet these
    challenges, our intelligence collection and analytical efforts must
    constantly adapt to keep pace with the evolving intelligence demands
    associated with these new mission areas. Potential asymmetric attacks,
    including WMD, terrorism and Information Operations, may be directed
    not only at our deployed forces, but also at our critical
    infrastructures.

    Intelligence Support to USEUCOM
        National agency support, including overhead collection, analysis
    and reporting, is critical to supporting our operational forces and
    engagement strategies. While we continue to revalidate our commanders'
    intelligence requirements and economize our requirements on these
    national resources, there is no theater capability to complement
    national collection support.
        Defense Intelligence Agency (DIA) capabilities are critical to
    meeting USEUCOM intelligence needs. In particular, the contributions of
    the Defense Attache System provide first-hand insights into the
    military-to-military relations in each country and timely reporting on
    crisis situations. The initiative to expand Defense Attache Office
    presence in Africa is important to our engagement programs. In
    addition, DIA is leading a defense intelligence community effort to
    meet future challenges. This effort includes improvements to the
    database to enhance future targeting capabilities, increased
    interoperability between national levels and tactical commanders, and
    an emphasis on new threats such as WMD and terrorism. The most
    significant of these is the emphasis on the workforce to ensure the
    intelligence workforce is capable of meeting these and other threats
    now and in the future. I am confident these initiatives will shape and
    improve defense intelligence support for the warfighter.
        USEUCOM relies heavily on National Security Agency (NSA) products
    and services. The actions undertaken by the Director of the NSA to
    transform the agency into an organization that will successfully
    respond to future threats of the Information Age are critical to
    ensuring the safety of our forces. Funding support for NSA's efforts
    will help mitigate trade-offs during NSA's transformation process,
    while ensuring the timely deployment of capabilities needed to exploit
    and defeat modern adversaries. Such funding will have the added benefit
    of meeting USEUCOM's needs now, and into the rapidly evolving future.
        The National Imagery and Mapping Agency (NIMA) provide critical
    imagery intelligence (IMINT) and geospatial information support and
    have repeatedly demonstrated its responsiveness to USEUCOM crisis
    operations. The need to precisely engage targets while minimizing
    collateral damage requires accurate and timely spatial and temporal
    intelligence. NIMA initiatives to develop a global geospatial
    foundation are critical in achieving our operational and engagement
    objectives. Additionally, NIMA's efforts to provide a critical IMINT
    tasking, processing, exploitation, and dissemination (TPED) system are
    crucial in fully realizing the benefits of our next generation imaging
    satellites. The recent Congressionally-directed NIMA Commission,
    however, concluded TPED is under resourced overall, and the U.S. cannot
    expect to fully realize the promise of the next generation of IMINT
    satellites unless NIMA TPED is adequately funded.

    Information Dominance
        In conducting our missions and executing our responsibilities,
    USEUCOM commanders have an indispensable edge: We enjoy ``information
    dominance'' that comes from the interaction of superior intelligence
    and information infrastructures. However, that edge is perishable and
    is constantly threatened. The section addresses our health in both.
    Command, Control, Communications, and Computer Systems Infrastructure
        Europe's Command, Control, Communications, and Computer Systems
    (C\4\) infrastructure needs improvement to be able to handle a major
    crisis. Many USEUCOM networks were built in the 1940s and 1950s to
    support low-bandwidth voice service, and are simply inadequate for
    evolving high bandwidth demands, such as worldwide command and control
    video-conferences, live Unmanned Aerial Vehicle (UAV) video feeds,
    electronic tasking orders for our air and land forces, theater-wide
    situational awareness, and full implementation of DOD's Global Combat
    Command and Control and Global Combat Support Systems. These systems
    are the foundation of USEUCOM's command and control capabilities.
        The Theater's World War II-era infrastructures suffer weather-
    related degradation in copper cables still insulated with wrapped
    paper. Increased network loads and failure of critical components cause
    unacceptable system delays and outages. Many Naval sites in particular
    are unable to meet the minimum requirements for the Navy/Marine Corps
    Intranet--their primary information service network. Furthermore,
    current infrastructure does not support Information Assurance (IA)
    measures, potentially allowing our collection, analysis, dissemination,
    and command and control functions, to be jeopardized by hostile or
    inadvertent interference.
        We depend upon information services and network-centric command and
    control to enable smaller forward deployments, rapidly deployable joint
    task forces and task force component commands, shorter decision times,
    and improved force protection capabilities. This reliance makes
    targeting our networks an attractive option for adversaries unable to
    field conventional forces against us, and makes IA an absolute must if
    we are to maintain information superiority, and the integrity of our
    command and control.
        USEUCOM's satellite communications lack flexibility, and capacity
    is extremely limited. In the event of a major crisis in Southwest Asia,
    nearly all of our mission-essential communications could be pre-empted
    by the surge in bandwidth requirements from U.S. Central Command.
    Realistically, this infrastructure needs to be replaced with modern
    high-bandwidth capability preferably within the next 5 to 7 years--a
    significant investment, but one that we can't afford not to make.
    Other Areas for Investment and Improvement
        Recent process improvements have enhanced coordination and
    prioritization of scarce intelligence, surveillance, and reconnaissance
    (ISR) resources across numerous worldwide requirements. However,
    airborne collectors remain a ``low density--high demand'' asset. Our
    ability to penetrate denied and high-risk airspace is critical to
    deliver the real-time threat awareness to deployed forces in places
    like the Balkans, Northern Iraq, and the Levant. We need to ensure the
    development of these capabilities, including long dwell UAVs with both
    imagery and signals collection capabilities, stays on track in order to
    deliver necessary warning and force protection in threatening and
    uncertain environments.

                                   RESOURCES

        America's most precious military resource, Service members and
    their families, are our number one combat multiplier. The well being of
    the family is one of our top Theater priorities, and is inextricably
    linked to readiness, retention, and reinforcement of core values,
    healthy family life, high morale, and mission accomplishment.

    Quality of Life
        The quality of our housing, medical care, schools, religious
    services, public facilities, community services, and recreation
    activities in Europe should reflect the American standard of living--a
    value we have all pledged to defend. Our most important fiscal year
    2000 Quality of Life (QOL) objective was to analyze and quantify the
    impact QOL has on readiness and retention. We took ``expert testimony''
    from senior enlisted advisors and family members across the Theater.
    Their conclusions paralleled previous year evaluations with family
    housing and barracks, spouse employment, childcare and health care,
    dependent education, and now the work environment consistently
    identified as lagging the farthest behind.

    Military Infrastructure
        We have seen many positive results from increased Congressional
    funding last year and we all applaud and are thankful for Congressional
    efforts to ensure the readiness of our forward deployed forces and
    families. Of particular note, the recently added $25 million provided
    to the Army in Europe to plan and design their ``Efficient Basing
    Initiative'' is greatly appreciated, and will prove important as we
    work to revitalize our existing infrastructure. However, there is still
    a substantial amount of work to do to adequately provide for our
    Service members, civilians, and family members who deserve quality
    housing, workplace, and community facilities.
        Housing, both unaccompanied and family, has improved continuously
    for the last three years and the outlook is promising. The elimination
    of gang latrines and the renovation of the barracks and dormitories to
    DOD's 1+1 standard has been a major morale booster for our troops and
    our Components are on track to meet the Defense Planning Guidance (DPG)
    requirement for fiscal year 2008. Military Family Housing throughout
    Europe as a whole remains old, however, and is well below contemporary
    standards, and in need of extensive repairs and modernization. Although
    our housing programs in Europe are generally on track to meet DPG
    requirements for fiscal year 2010, for the Air Force alone, military
    housing construction allocations of over $100 million per year for the
    next decade will be required to achieve minimum housing requirements.
    Quality housing for military members and their families continues to be
    a critical element in attracting and retaining the high caliber
    personnel who make our military forces the best in the world.
        With trends in housing and barracks positive, it is now essential
    to focus our attention on the quality of the infrastructure of our
    communities and work facilities in Europe. Sustaining, restoring, and
    modernizing facilities are critical to properly supporting the military
    mission within the Theater. From runways for our aircraft to the work
    place for our troops, the infrastructure support for our operations and
    people has weakened over time. This failing infrastructure is due to
    almost a decade of placing MILCON and Real Property Maintenance funding
    at a lower priority than other needs. Significant investments need to
    be made over the next decade to enhance our warfighter's support
    infrastructure and demonstrate to our people that they are indeed our
    most valuable resource.
        USEUCOM is aggressively using all available funding sources,
    including the NATO Security Investment Program, Residual Value,
    Payment-in-Kind, and any additional funds provided by Congress, such as
    last year's Kosovo MILCON Supplemental Appropriation, to help reduce
    costs and meet escalating requirements. Additionally, some European
    base closures and consolidations will reduce future costs, enhance
    readiness, and increase effectiveness. Current ongoing efforts include
    the Army's proposed relocation of an entire brigade combat team
    currently spread across more than 13 sites, to the Grafenwoehr/Vilseck,
    Germany area. This consolidation will significantly improve command and
    control, enhance training opportunities and vastly improve quality of
    life for the troops and family members--while saving approximately $40
    million per year in infrastructure costs.
        With our continuing resolve to reduce the footprint while
    maintaining presence in our AOR, recapitalization has also become a
    critical issue. Progress is ongoing with the Naples Improvement
    Initiative nearly completed and construction efforts at Naval Air
    Station (NAS) Sigonella about to commence. These efforts will provide a
    significant improvement in both quality of life and service for sailors
    stationed in the European Southern Region.
        These and other initiatives are essential for posturing our forces
    to better perform their missions, both now and in the future. In the
    meantime, we will continue to endeavor to help ourselves first and work
    every opportunity for internal efficiencies through consolidation,
    privatization, and ensuring maximum benefit from available funding.

    Dependent Education
        With over half of USEUCOM Service members supporting families with
    children in school, the quality of DOD's dependent education programs
    ranks very high in determining QOL for our civilian personnel and
    Service members. As with many of our other QOL programs, lack of
    adequate infrastructure funding is the top concern. Since many of our
    schools are remote, program based staffing is critical to provide a
    full range of educational opportunity for all students in music, art,
    and associated after school activities. We must take aggressive action
    to expand vocational, technical and school-to-work opportunities for
    our students. Finally, we must work toward establishing an 18:1
    student-teacher ratio for kindergarten and to provide a Talented and
    Gifted program for middle schools similar to what is currently
    available at our high schools.

                                   CONCLUSION

        The U.S. European Command, which I am proud and honored to command,
    is executing new and exciting missions everyday, while successfully
    maintaining its warfighting edge. USEUCOM has also been active and has
    indeed expanded its engagement efforts, working to influence the
    military evolution of NATO, PfP, and emerging European defense
    structures. Finally, USEUCOM has seized new opportunities involving
    Russia, the Caucasus, and Africa, and will continue to seek new
    openings to expand our relationships.
        Although our current posture is favorable and capable of meeting
    our national security interests, our infrastructure in particular is in
    need of upgrade and replenishment. Generally, significant increases in
    funding are necessary to maintain our readiness, continue current
    engagement efforts, and make the necessary investments to sustain our
    quality of life.
        Without bipartisan Congressional support, USEUCOM would not have
    been able to realize the achievements accomplished over the past year.
    On behalf of all personnel in the USEUCOM Theater, I want to thank the
    Committee for its support.

        Senator Stevens. General, we welcome you, as a great
    friend, and I want to tell you a little history of when I was a
    young Senator, a new Senator.

                ORIGINS OF HOST NATION SUPPORT FOR U.S. MILITARY

        The chairman of this subcommittee sent Senator Hollings and
    me over to Europe to look into some complaints that we were
    finding there, receiving there. At that time, those were
    unaccompanied tours. We found that the wives and children of
    the young members, they were all male at that time, of our
    service were following their serviceperson over to Germany, and
    they were living in all sorts of conditions.
        One I distinctly remember is when Senator Hollings and I
    walked up three flights of stairs and found what we called a
    cold water walk-up flight with a young woman with two babies in
    it. She was living off the economy with no allowances at all,
    because she was not supposed to be there.
        We came back, and we developed a policy with the great help
    of my two colleagues here who are my senior. That was a host
    country support policy. Unfortunately--we had very great
    success in Asia--in Germany what you see is what we got. It was
    better than nothing.
        But to a great extent the host country support concept
    never caught on in Europe. I think now we are paying the price
    in terms of the facilities that were provided at that time for
    our families were better than they had then, but they are
    totally inadequate now.
        You make a great point. Unfortunately, I have to tell you
    they mitigate in favor of our taking some of the troops as much
    as they mitigate in favor of our putting up more money to
    augment the housing that our host countries provide, which is
    inadequate.
        I really think that the message that you ought to take back
    to our NATO allies is that they have been woefully, woefully
    absent at the table when it comes to meeting some of the costs
    that we have had there in maintaining those forces for so long.
    If you compare what Japan and Korea has done, our European
    allies are just not at the table. And it is a sad thing.

                     SUPPLY ROUTE REQUIREMENTS IN MACEDONIA

        Can you tell me about that map you gave us? The indications
    are that you probably need a new supply route. Are you working
    that out?
        General Ralston. Mr. Chairman, you are right. I do not want
    us to be in a situation where, if things get beyond our control
    in the former Yugoslav Republic of Macedonia, that in fact we
    are without alternatives.
        So I have recommended to the NATO, the North Atlantic
    Council, that we explore alternative routes. For example, a
    route through Albania to Kosovo, a route through Montenegro to
    Kosovo. I would not rule out a route through Serbia into
    Kosovo.
        So I think that we do need to look at alternatives. I have
    made that recommendation to the political authorities at the
    Alliance. And we will continue to work on that very hard.

                           FORCE STRUCTURE IN EUROPE

        Senator Stevens. I am sort of reluctant to ask you this
    question, but I am reminded that President Eisenhower, when he
    had your position as SACEUR, determined that we should increase
    our forces in Europe and did so extensively. He did not have
    available the air expeditionary force concept that the Air
    Force now has, the mobility of our forces.
        And now with the transition of our Army into high mobilized
    combat brigades, do you really think we need to maintain the
    force levels we have had there in the past in terms of our
    military presence in Europe?
        General Ralston. Mr. Chairman, that is a fair question. And
    this is one of the issues, as I say, that will be looked at by
    Secretary Rumsfeld in his review. I can only tell you that we
    have, as you know, taken a significant number of forces out
    over the past decade. Today we are down roughly to two fighter
    wings that we have there, two-plus. And we have reduced our
    Army forces considerably.

                                   ENGAGEMENT

        Now one of the things we have to do, if you went and talked
    to those forces today, they would tell you that they are very
    busy. They are engaged with our allies, those 91 countries.
        I mean, we are working with countries in Africa, throughout
    Europe, throughout Eastern Europe, working with Russia, working
    with the former member states of the Soviet Union, because I do
    not want any of us in the future to look back and say if we had
    only tried a little harder working military-to-military
    relationships with Russia or with the former Soviet Union
    countries, that things may have gone better. As we have talked
    about before, I think that is a very important aspect of our
    engagement strategy in the EUCOM theater.
        I do not believe that I can ask the troops that are there
    to continue to do that level of engagement, if I had fewer
    forces. We would have to cut back on that level of engagement.
    And again, I would only point out that these forces are much,
    much closer to the Middle East, if we would need them there.
    And they do comprise eight percent of our active duty uniform
    military.

                          NATO ALLIES FORCE STRUCTURE

        Senator Stevens. Are our allies maintaining their active
    duty components of your forces as the Supreme Allied Commander?
        General Ralston. Some of them are, some of them are not.
    This is constantly a subject that I talk to the leadership of
    each of the nations, as I go around and I visit them. But this
    is something that will take continued emphasis. It will take
    continued encouragement and emphasis, I believe, from the
    political leadership of the United States, as well as the
    military leadership.

                          SECRETARY'S STRATEGIC REVIEW

        Senator Stevens. I want to get on to NATO expansion in my
    next go-around. My last question at this time, General, is, you
    are our Supreme Commander for the NATO forces and our commander
    of all our forces in your area, that 91 countries. Are you
    involved in the current review that the Secretary and his staff
    are making as far as plans for your part of the command force?
        General Ralston. I have certainly had the opportunity to
    talk to our new Secretary, to our President, to the Deputy
    Secretary. I have certainly talked to them about all of the
    operations that we have ongoing and what we are trying to do.
    And so I feel that I have the opportunity to make input in that
    regard.
        With regard to the specifics of the ongoing review, I have
    not been involved with the specifics. This is something that
    the Chairman of the Joint Chiefs, the Vice Chairman, and the
    civilian leadership in the Pentagon are working.
        Senator Stevens. Senator Inouye.

                      STATIONING OF U.S. FORCES IN EUROPE

        Senator Inouye. General Ralston, in following my chairman's
    questioning, we have been in Europe since 1943. That is about
    58 years. There are about 100,000 troops. And many of my
    colleagues want to be supportive, but they want to know why we
    should maintain forces in Western Europe, for example.
        If we have to have troops in NATO, why not deploy them
    where the costs may be less, and training facilities greater?
    Why not go to Kosovo and places like that? There are 69,000
    personnel, I believe, in Germany right now.
        General Ralston. We are looking into that. And I will tell
    you some initiatives that we are looking at. I do believe that
    we can do a better job of our stationing of our forces in
    Europe. For example, we have an airborne battalion that is in
    Italy. They are extremely useful in terms of Southeast Europe,
    where we have more unstable areas. We are working them very
    hard.
        I believe that it makes sense to give another battalion of
    airborne forces that would come from elsewhere in Europe, not
    additional forces to Europe, but to move them more to the
    southern region.

                        NON-COMBAT EDUCATION OPERATIONS

        We use them a lot for African contingencies, whenever we
    have to close an Embassy and do an evacuation of American
    citizens. One of the things that I found out when I was Vice
    Chairman of the Joint Chiefs, in every one of those countries
    in Africa that you look at there, there are about 1,500
    Americans. There are about 500 official Americans, and there
    are about 1,000 others. And every time the government is about
    to go down, we get the call, ``what can you do to evacuate
    Americans out of country x?''
        I remember right after I had become Vice Chairman, of the
    Joint Chiefs, we evacuated 2,500 Americans out of the Embassy
    in Liberia to safety. And that is something that we stand
    prepared to do, we have to do. And this is one of the reasons
    that I believe that we could do a better job of moving our
    forces around. I made this recommendation back to the United
    States Army.
        We have made this recommendation to the government of
    Italy. The government of Italy has responded favorably. And
    that is one of the things that we will be working through in
    the future.

                    CREATION OF EUROPEAN UNION DEFENSE FORCE

        Senator Inouye. There are some in Congress who would argue
    that we should let the European Union develop its own military
    and get out of NATO. What are your arguments on this?
        General Ralston. Sir, first of all, this is a very serious
    issue, and a serious subject. For years, we have encouraged the
    Europeans to do a better job of providing for their defense.
    And so I have encouraged anything that they will do that will
    be a positive step in terms of their own defense. But I must
    also tell you that I think it would be a grave mistake, if they
    did this at the expense of NATO. And I do not believe it has to
    be done at the expense of NATO. What I am concerned about is
    that we keep clear lines of command and control and clear
    procedures for making decisions.
        Let me give you a couple of examples. Today we have the 19
    nations in NATO. There are 15 nations in the European Union.
    And 11 of them are the same. There are 4 nations in the
    European Union that are not members of NATO: Finland, Sweden,
    Austria and Ireland.
        If you ask me my recommendation, and what I have made back
    to the Alliance, the right way to do this command and control
    is to invite those 4 nations that I have just mentioned, send
    their military planners to the Supreme Headquarters, Allied
    Power Europe (SHAPE), let them join the other 19 NATO nations
    that are there.
        And when we have a crisis, we will put together military
    options for the political authorities. We will have option A,
    which will have a certain set of forces and a certain risk
    factor. And we will have option B with a different set of
    forces and different risk factors, and option C.
        And then we would provide those three options to the
    political authorities at the European Union and to the
    political authorities at NATO. And then both political bodies
    have the same set of facts to deal with. If we do not do it
    that way, here is the problem. If the European Union sets up
    their own military planning operation, they will have options
    one, two and three, and NATO will have options A, B and C. And
    when they go to their two respective political bodies, there
    will be even more confusion than normal in times of crisis.
        Secondly, this would be a waste of resources. We do not
    need to be spending money, and the European countries do not
    need to be spending money, creating more jobs for generals in
    more headquarters somewhere. Those are resources that should be
    put into the battalions and into the squadrons and into the
    ships that really make a difference.
        And thirdly, if the European Union does that, they will
    pick battalion x to go on an operation. Well, how do they know
    that that battalion is not committed to a NATO operation
    somewhere?
        So for those three reasons, I think we have to be very
    careful of the way that we set up the planning structure
    between the European Union and between NATO. I can only tell
    you that from my experience. Every day I am confronted with
    issues where various nations have difficulties. And many of
    these are historic.
        But if the United States of America says this is the way it
    is going to be, then they accept that. But if we were not there
    to sort those out, I can tell you that there would be a
    constant problem among the nations. And this is something that
    I believe the current setup that we have in NATO is the best
    way to keep those historic tensions under control.

                 NATO/EU COOPERATION ON DEFENSE FORCE CREATION

        Senator Inouye. Your proposal is logical and makes good
    sense. How is our administration, and how are the Europeans
    responding to your proposal?
        General Ralston. I have had certainly great support within
    the administration at all levels. This is something that is
    being actively worked at NATO, as we speak, between NATO and
    the European Union. I think it is fair to say that most all of
    the nations, not all, but most all, of the nations, have agreed
    with the concept that I have outlined. I think we need to
    continue to work on it.
        And this is something that I have told Secretary Rumsfeld I
    believe is a very, very important aspect. And he agrees with
    me. And I think he will continue to give it proper emphasis.
        Senator Inouye. Do I have time?
        Senator Stevens. Yes.

                              AOR RESPONSIBILITIES

        Senator Inouye. I am just amazed at the map there. I have
    not often seen that map. Your area of responsibility is
    unbelievably large. You have 91 countries.
        General Ralston. Yes, sir, 91 countries.
        Senator Inouye. I know that you have great ability to lead,
    but do you think this area of responsibility is too big for one
    command?
        General Ralston. I certainly would not ask for any more. I
    think we have--let me explain the set up a little bit.
        I have been blessed with a wonderful deputy. I have a
    Marine four star general, General Carl Fulford, who is at
    Stuttgart, Germany, which is the U.S. European Command
    Headquarters. And while I am doing NATO business in many of the
    countries, General Fulford concentrates to a great extent on
    the countries of Africa, in addition to the European countries.
        Between the two of us, we start every morning talking to
    each other. We end every night talking to each other. And I
    think we are doing fine. But it is a large area of
    responsibility. There is no question about that.
        Senator Stevens. We will come back to you.
        Senator Feinstein.
        We do follow the early bird rule, General, so Senator
    Feinstein is next.
        Senator Feinstein. Thank you very much.

                     NATO ACTIVITIES ON FYROM/KOSOVO BORDER

        General, in an op ed in yesterday's Washington Post,
    General Wesley Clark suggested that NATO needed to take a
    higher profile in helping to end the current violence in
    Macedonia, including an active role in ending gun smuggling
    along the border. Do you agree with General Clark's approach on
    how NATO should deal with Macedonia? If NATO does take a higher
    profile, what missions do you think are appropriate? What would
    be your recommendations regarding rules of engagement and exit
    strategy?
        General Ralston. Well, first of all, let me separate what
    we can do inside Kosovo and what we could or should do inside
    Macedonia. NATO, KFOR, are patrolling the border inside of
    Kosovo. Now I must tell you, though, I do not want to mislead
    you with that.
        I have personally surveyed that border. I have gone in a
    helicopter that entire border from Serbia across FYROM, across
    Albania, and stopped at many of the potential checkpoints.
        This is an enormously difficult area of terrain. And there
    are trails that go through those countries that have been in
    use for centuries, a very, very heavily wooded, heavily
    mountainous area. And the idea that anyone can seal that border
    is fantasy. That cannot be. But we are actively patrolling the
    border. We are capturing every day arms and smugglers that go
    cross that border. But I am not going to tell you that it is
    100 percent.
        What are some of the things that we could do that I think
    would be wise? We are working very closely with the government
    of Macedonia to provide them intelligence information. We are
    providing them with pictures that we get from our various
    systems.
        I have requested back to the Joint Staff the deployment of
    unmanned air vehicles that we could fly along that border and
    provide that down-linked information into the FYROM government,
    as well as to the United States and to the KFOR forces.

                            USE OF UNMANNED VEHICLES

        We certainly do not have a mandate from NATO for NATO
    forces, and there has been no request by the FYROM government
    for NATO forces to act in a combat role inside of Macedonia. I
    do not believe, in my own personal judgment, that that would be
    wise certainly at this time. And I would not recommend it.
        But I would recommend that we provide the FYROM government
    with advice, with equipment, and with intelligence information
    for them to solve this problem.
        This, by the way, is a political problem, not a military
    problem. This has to do with access to the political process
    and to the economic process for all the citizens of the former
    Yugoslav Republic of Macedonia.
        Senator Feinstein. So if I understand your answer to the
    question, it is that we should have a constrained, restricted
    role in this crisis. I mean, many, many people believed that
    once the Balkans became inflamed, it would spread to Macedonia
    and then perhaps even to Greece. It is very surprising that it
    is happening with the vigor that it is in Macedonia right now.
    And I would hate to see those predictions come true.
        If I understand you then, our role should be logistical,
    intelligence providing, sort of behind the scenes, unless that
    would be reevaluated should there be a formal request from
    Macedonia to get involved.
        General Ralston. Basically, that is correct, with the
    exception of inside Kosovo when the KFOR troops are, in fact,
    actively patrolling the border, and we should do the best job
    we can to make sure that smuggling and arms and extremists do
    not enter Macedonia from Kosovo.

             NUMBER OF DEPLOYED NATO TROOPS IN KOSOVO/FYROM BORDER

        Senator Feinstein. How many troops are on that particular
    border now?
        General Ralston. We have thousands. We have 37,000 in
    Kosovo, which is a very small area, by the way. It is one-
    fourth the size of Bosnia. And by comparison, the most troops
    we ever put into Bosnia was 60,000. This was back in 1996. By a
    comparison, if you had 40,000 in Kosovo, you are talking
    160,000 equivalent. So it is a very densely populated area of
    KFOR troops.
        On the particular border, the United States has 5,500
    troops in Kosovo. Now we have the eastern border all down along
    that line. And in the German sector, the Germans also have
    4,000 troops or so that are there. And they are on that border.
    So we have thousands of troops that are available for that
    border control.
        Now, once again, I do not want to over-sell this border
    control area, because this is a very mountainous, difficult
    area to seal off.

                   NATO'S ROLE IN THE ARREST OF WAR CRIMINALS

        Senator Feinstein. Thank you. One of the unresolved issues
    of the Bosnian and Kosovo conflict is the question of war
    criminals. As you know, the 2001 Foreign Operations Assistance
    Act laid out strict guidelines prohibiting assistance to
    Belgrade unless Yugoslavia cooperates with the International
    Tribunal.
        If Yugoslav authorities continue to delay in arresting
    indicted war criminals, such as Milosevic, Mladic, and
    Karadzic, do you think that NATO has a role in arresting these
    individuals and transferring them to The Hague?
        General Ralston. First of all, the legislation that you
    refer to I believe gives them until the 31st of this month to
    demonstrate compliance. And if they have not done so and the
    President had not certified that they are complying, then that
    financial aid would cease. And I certainly support that law and
    that policy.
        What the government in Belgrade decides to do is up to
    them. I cannot predict them. If you are asking me should NATO
    go into Serbia to arrest Milosevic or Mladic or Karadzic, that
    is beyond the mission that NATO has been given. I mean, that is
    a police mission. This is the responsibility of the individual
    nation to turn the people that have been indicted for war
    crimes over to the International Tribunal.
        Inside Bosnia that is a different issue. If we know and can
    find and can capture war criminals inside of Bosnia, we will
    continue to do so. I might add, sometimes there is a
    misunderstanding of exactly what we have done there.
        There are approximately 100 war criminals that have been
    indicted with regard to the Bosnian situation. Seventy-two of
    those are either in The Hague or have been killed during
    apprehension or have otherwise died en route to The Hague. That
    leaves approximately 30 that are still at large. I wish that
    number were zero. And we are continuing to do everything that
    we can.
        But I believe here is a case where diplomatic and economic
    pressure on the Belgrade regime is the proper course for this.
        Senator Feinstein. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Stevens. Senator Shelby.
        Senator Shelby. Thank you.

                  ESCALATION OF FIGHTING IN MACEDONIA (FYROM)

        General Ralston, just to follow up on Macedonia here. This
    past week we have seen a rapid escalation of fighting in
    Northern Macedonia. You talked about it a minute ago. NATO
    Secretary General Robertson has stated that KFOR must stop
    these border incursions by utilizing a greater number of
    troops.
        It appears to me, General, that our troops are on the front
    line of yet another ethnic war, and we are about one or two
    incidents away from being dragged into something as a full-
    fledged participant. If NATO becomes a combatant, fighting for
    the stability of the Macedonian government against the rebels,
    are you concerned that the Albanians in Kosovo could rise up
    against NATO peacekeepers? It has to be a concern.
        General Ralston. There is always a concern. And this is one
    of the things that we have tried from day one to make sure that
    our forces of KFOR operate in an impartial and evenhanded
    manner. We are against extremism on either side, whether it
    happens to be Albanian extremists or whether it happens to be
    Macedonia extremists or whether it happens to be Serbian
    extremists. I think that the only way for us to operate is to
    be impartial.
        I am concerned that we stay within our mandate and that we
    operate to provide a safe and secure environment inside Kosovo.
    The government of FYROM has to deal with the situation that is
    there, albeit it is a democratically elected government that
    has been very supportive of NATO and very supportive of KFOR.
    Therefore, I would recommend that we support them with
    logistics and materiel and intelligence information. But they
    have not asked for NATO combat forces in Macedonia. And I
    certainly would not recommend that at this time, and only in
    extremis.
        Senator Shelby. But it is potentially a real explosive
    area, is it not?
        General Ralston. Yes, sir, it is.

                               NATO INOPERABILITY

        Senator Shelby. To move into another area, General, during
    and after the Kosovo operation, there were reports of
    inoperability problems within NATO. Some examples of which I
    was made aware include one multi-level security access of
    intelligence data, the ability of different units to establish
    secure communications, and three, the disparity of investment
    in precision-guided weapons between the United States and our
    allies.
        Given that the Kosovo experience was NATO's first combat
    operation, has NATO made improvements in these and other areas
    which involve interoperability? I think interoperability is
    something you have talked about before.
        General Ralston. Senator Shelby, yes. And let me say, first
    of all, they have made some improvement and some progress. But
    I would also tell you that it is inadequate, and it is not
    where it needs to be. With----
        Senator Shelby. Where does it need to be?
        General Ralston. It needs to be a lot better. Let me give
    you an example.
        Senator Shelby. Okay.
        General Ralston. Let me give you a good example and a bad
    example. The good example is on precision-guided munitions.
    This is something that, as a result of what was demonstrated in
    1999 during the Kosovo campaign, several of the European
    nations have banded together to buy precision-guided munitions
    like the joint direct attack munition, the JDAM, for example,
    and laser-guided bombs.
        Many of the smaller nations have done that in a cooperative
    way, if you will, because they can get a better deal, if they
    do that. And that is moving forward, and I applaud them for
    that.
        Let me give you a bad example. In the case of Kosovo, our
    Airborne Warning and Control System (AWACS) airplane had secure
    radios. The other allied nations do not have secure radios in
    their fighters. Therefore, everyone had to operate in the
    unsecure mode. And this unnecessarily endangered the lives of
    all of the NATO participants. Now--because in this particular
    case the Serbs are very good at intercepting the radio calls,
    and they could take action to change the situation and improve
    their defenses.
        This is not a technical problem. We know how to make secure
    radios. This is not a money problem. If a country can spend $25
    million for an airplane, they ought to be able to spend $5,000
    for a radio.
        Senator Shelby. What is the problem:
        General Ralston. The problem is the lack of will to do so.
    And in spite of this being pointed out as a problem in Kosovo,
    not a single nation has added a secure radio to their fighters
    since that time. So this is something that I continue to harp
    on. I continue to tell the nations they have to do better on
    it.
        So I must tell you that in some cases they have made
    improvements, but in others, it is still lacking.
        Senator Shelby. What are some of the other inoperability
    problems besides the radio?
        General Ralston. I think that is certainly the bigger area.
    Our doctrine, we have made a lot of progress on that. I feel
    good about that aspect of it.
        With regard to intel, yes, there are problems there. Some
    of them are procedural. Some of them are policy. Some of them
    are technical.
        Senator Shelby. What are you doing there? Are you trying to
    work that out? That is hard, is it not?
        General Ralston. It is hard, but first of all, we have to
    make sure the nations understand that it is a problem, and then
    we try to move forward.
        Senator Shelby. You have to also make sure that they keep
    the intelligence within a close group, too, do you not?
        General Ralston. Yes, sir, that is exactly right. And that
    is some of the policy issues.

                              ARMY TRANSFORMATION

        Senator Shelby. General, can you tell us your assessment of
    the Army's ongoing transformation to a lighter force? For
    example, how will this transformation affect future NATO
    doctrine in operations? And what future do you see for an army
    in Europe and elsewhere?
        General Ralston. Well, let me talk from the Commander in
    Chief (CINC) perspective, if you will.
        Senator Shelby. Okay.
        General Ralston. This is something that is very much needed
    in terms of the United States Army being able to be in a place
    that I need them to be quickly.
        Senator Shelby. Be able to project force?
        General Ralston. Be able to project force quickly and to be
    able to do something about it when they get there. Now I have
    clearly stated this to General Shinseki and to General Keene
    that I will do everything I can to help them attain that.
        I do not believe it is my role to get in and tell them how
    many wheels ought to be on a vehicle or what kind of wheels
    ought to be on that vehicle. That is something the United
    States Army is qualified to do.
        But I certainly have encouraged them and continue to
    encourage them, that they have to get more responsive and be
    able to project force quicker and to be able to be effective
    once they hit the ground.
        Senator Shelby. But that is easier said than done, is it
    not?

                             NATO FORCE PROTECTION

        General Ralston. It is easier said than done. But it is
    something we have to start right now.
        Senator Shelby. Although we have been able to do it, a lot
    of our allies in NATO, the ability to project force is a real
    problem for them, is it not? Airlift, sealift, everything that
    goes with it.
        General Ralston. That is exactly right. Now, once again, we
    have the Defense Capabilities Initiative, the DCI. We have 58
    initiatives that we have given to the nations that they should
    move out on.
        Airlift, for example, is one. The nations have said they
    are going to develop the Airbus A400M aircraft. That is good
    rhetoric. I appreciate that. But when you look in their
    budgets, many of them do not have the resources there to do it.
    So this is something that I think we have to continue pressure
    on.
        Senator Shelby. And obviously, they are not committed to
    putting the resources at the moment into what they need to
    project force, have they?
        General Ralston. This is always a problem.
        Senator Shelby. Thank you.
        Thank you, Mr. Chairman.
        Senator Stevens. Senator Byrd.

                            AIRCRAFT RADIO SECURITY

        Senator Byrd. General Ralston, you spoke about the need for
    security in regard to radios on aircraft. Is that what we are
    talking about?
        General Ralston. Yes, sir. We were talking about for the
    NATO allies. We have those radios on U.S. airplanes.
        Senator Byrd. Yes. It might be well if our NATO allies
    would review one of the great battles of the world that took
    place, I would say, in a goodly distance to the southeast of
    Trusca, pretty far to the southeast, the battles of Philippi.
    The battles of Philippi took place 2,043 years ago this year in
    42 B.C., 2 years after the assassination of Julius Caesar.
        And those battles that took place--this is a matter of just
    perhaps historic interest. It may not have much bearing on this
    particular hearing.
        In those battles Brutus and Cassius faced off Octavian and
    Marc Antony. That was the first battle of Philippi. And Brutus
    defeated Octavian. Cassius's wing, I believe it was the left
    wing, Cassius was defeated by Marc Antony.
        Brutus did not know about Cassius's straits, s-t-r-a-i-t-s.
    They did not have those little cell phones that we have today.
    So you see where I am going. If Brutus had had the little
    logistic instrument that we call the cell phone, he would have
    known that Cassius was in deep trouble, and he would have
    redirected, to use the word of the administration right now in
    its budget talks, he would have redirected some of his forces
    to the aid of Cassius.
        But that did not happen. And after this, Cassius had
    withdrawn to a hill. Cassius was nearsighted and he saw this
    group of people approaching. From the descriptions of the group
    that were given to him by some of his aides, he determined that
    this must be the enemy approaching to get him. He had already
    lost part of the battle, you see.
        So he detached Titanius, one of his best friends, to do a
    reconnoitering over here, go see that crowd and see what they
    are up to. And when Titanius approached, Brutus's people jumped
    off their horses and embraced Titanius, because they were glad
    to see him. But Cassius decided that this indeed was the enemy.
    And to his great chagrin, he had dispatched his best friend
    Titanius to go out there, and now he assumed Titanius was being
    taken by the enemy. It was not so at all.
        But in any event, Cassius retired to his tent, where his
    freedman helped him to dispatch his own life with a dagger, the
    very dagger that he had plunged into the veins of Caesar. So
    the second battle then took place. This time Brutus against
    Octavian and Marc Antony.
        Now this is all high school history to me. I did not learn
    it in any college or anything. I just like history, like
    Cicero. He said, ``To be ignorant of what occurred before you
    were born is to remain always a child.''
        In any event, Brutus lost; whereupon he retreated to a
    hill. And his freedman Stratos, I believe it was, helped him to
    fall on his sword.
        Now all that is to say this, again, that if they had had
    this little cell phone, this great battle, who knows what the
    future of some parts of the world might have been had they been
    equipped with this bit of logistics. That is to say, I hope a
    third battle of Philippi does not take place, and it will be
    one of the great battles of the world, if it does. And it will
    be between Greece and Turkey. And we have been concerned about
    this for a long time.

                         NEED FOR SUPPLEMENTAL FUNDING

        Now let me go to one of the questions. My time may have
    expired already. But I want to ask you this: I am on the budget
    committee, just a new member. I am just kind of learning my way
    around. The U.S. effort to support the NATO operations in the
    Balkans has been largely funded through supplemental
    appropriation bills. Do you anticipate needing supplemental
    2001 funding to carry out your mission in the Balkans?
        General Ralston. No, sir.
        Senator Byrd. You do not.

                            NATIONAL MISSILE DEFENSE

        General Ralston. Not to carry out the mission in the
    Balkans, if I heard the question correctly.
        Senator Byrd. Yes. So you do not anticipate needing
    supplemental 2001 funding for that purpose, even with what is
    happening in Macedonia?
        General Ralston. I certainly do not--we are 6 months
    through the fiscal year. And I cannot predict what the next 6
    months will be. But at this point right now, we were funded in
    the 2001 appropriation for all of our anticipated needs for
    2001.
        Senator Byrd. Would you say that again, please?
        General Ralston. Yes, sir. In the case of 2001, the
    appropriation that we received for the Balkans covers all
    anticipated needs that we know about for this year. Now again,
    I will reserve. I do not know what is going to happen in the
    next 6 months. And I cannot rule it out completely. But at this
    point, I do not see a need for a supplemental for the Balkans
    for 2001.
        Senator Stevens. General, can you pull that mike up closer
    to you, please? Thank you.
        Senator Byrd. The key word in your answer, as far as I am
    concerned, is anticipated. What you have and what you are
    saying is, as far as all the anticipated needs are concerned,
    you do not need a 2001 supplemental.
        General Ralston. For the Balkans.
        Senator Byrd. Yes. Did we anticipate what is happening now
    in Macedonia when that budget request was made? The answer is
    no, I guess. It would have to be, I suppose. You did not
    anticipate that, or did we?
        General Ralston. I think we anticipated instability in
    FYROM. We did not anticipate that we would need to introduce
    United States combat forces into Macedonia, nor do I anticipate
    that at this point.
        Senator Byrd. Well, you do not, of course, at this point.
    But a conflagration there that could spread to Greece and
    Turkey would be a far different matter than what you are being
    confronted with here. Now I do not know whether a supplemental
    would have anything to do with that or not. It might be that a
    stitch in time saves nine. And we might begin to anticipate
    this fighting could spread.
        This is what I have been concerned about for years and have
    mentioned from time to time. Of course, I was assured by
    General Shalikashvili, I was assured by him a few years back
    that it would only take about a year to put this problem to
    sleep. It would only be about a year, a couple billion dollars.
    Now we are 5 years later and many billions of dollars.
        And so I have to say that I am concerned that we are not
    going to have 2001 supplemental. But that is neither here nor
    there, perhaps, any further than what I have been asking you.
        My final question is this: We hear all this business about
    a national missile defense. How are our European friends and
    our allies in NATO taking this, the National Missile Defense?
    What do you think of it, if you care to say?
        General Ralston. Senator, let me give two answers to that
    question, if I may. One, it is what I tell my American
    colleagues that I perceive from the Europeans' perception of
    this. And then I will come back and tell you what I tell the
    Europeans from an American perspective.
        But the first issue is, how do the NATO allies react to the
    idea of a national missile defense? My own judgment is that the
    NATO allies are not so concerned with the idea of a missile
    defense. Indeed, they are starting to understand the need for
    missile defense against cruise missiles and against theater
    ballistic missiles and against strategic ballistic missiles.
        But what they are concerned about is a U.S. unilateral
    withdrawal from the Anti-Ballistic Missile (ABM) Treaty. And if
    we could come up with a way that the United States did not
    unilaterally withdraw from the ABM Treaty, either through
    discussions with the Russians or whatever, then I believe that
    the concerns on the part of the NATO allies would disappear.
        Now the other aspect of this, there are some that would say
    that if the United States has a missile defense, that that
    would somehow decouple America from the NATO allies. And I
    answer them with a story that goes along this way.
        Not long ago, there was a Chinese general that said: Don't
    worry about the United States coming to the defense of Taiwan,
    because we have a missile aimed at Los Angeles, and they don't
    want to trade Los Angeles for Taipei.
        Now whether you believe that or not, that is a different
    issue. But I think you would at least have to say that that
    statement would inject some uncertainty into any President
    before he made a decision of what to do. Well, let us flip that
    to the other side of the world. What if an unstable leader in
    some country said, we are going to launch a missile against
    Berlin unless they do something we want them to do? And do not
    worry about the United States coming to the aid of Berlin,
    because we have one aimed at New York. And they do not want to
    exchange New York for Berlin.
        Well, if the United States has a defense so that you are
    not subject to blackmail and the President is not subject to
    blackmail during that kind of event, then we will be a stronger
    alliance, not a weaker one.
        Senator Byrd. Well, the key word in your answer, of course,
    is if. Well, I guess my time has expired. I would simply say I
    do not know how a missile defense is going to ever defend this
    country from submarine launched missiles or from terrorist
    acts. It is going to be a huge expense.
        That will do me for this time around. I congratulate you. I
    think you are doing a good job.
        But I am not sure that we ought not have that supplemental
    appropriation bill, Mr. Chairman.
        Senator Stevens. I hear you, Senator.
        Senator Dorgan.
        Senator Dorgan. Mr. Chairman, thank you.

             AFFECT OF BALKAN OPERATIONS ON TRAINING AND READINESS

        General Ralston, nice to see you. General Ralston, I have
    been, from time to time, uncomfortable about our commitment in
    the Balkans. I recognize that what we have done there has
    created stability and worked out quite well. But we hear
    criticism by some that our peacekeeping role in Kosovo
    diminishes the effectiveness and the training of the U.S.
    military. We have heard that again and again and again.
        You and I talked about that in Macedonia some weeks ago.
    And I was frankly surprised by what you said. Let me inquire
    again: What does this role mean with respect to training and
    readiness in our military? Does it diminish it?
        General Ralston. Senator, as we talked about at the time,
    let me give you my opinion. And I might say that this opinion
    that I am about to give you is shared by the U.S. Army Europe
    (USAREUR) your Commander, General Meigs, by his subordinate
    commanders.
        The training that our soldiers are getting in Kosovo today,
    the training that the young non-commissioned officer and the
    young officer is getting is superior to what they would be
    getting if they were in garrison in Germany, because they are
    out doing real world problems, dealing with real world
    leadership issues, and dealing with real world small unit
    combat operations. They are far better off at the platoon
    level, the company level and the battalion level.
        Now what they do not get when they are in Kosovo is their
    division-level training and their brigade-level training. But
    this is something that they would not get if they were back in
    Germany except on about an 18-month cycle. So the idea that
    they go to Kosovo for six months, where their individual
    leadership is improved and their small unit training is
    improved, and then they rotate back to Germany, where they pick
    up in the cycle their brigade level and their division level, I
    personally believe that they are better trained, not less
    trained.
        Senator Dorgan. Well, thank you. That is the answer you
    gave a month or so again, and I think it is important. And I
    might say that the troops I have met describe the same set of
    circumstances to me.

                     FUTURE STABILITY IN THE BALKAN REGION

        Let me--I indicated that I have some misgivings about all
    this, and still do from time to time. Although I certainly
    support what we are doing there. But the upside is that we
    create stability and prevent hopefully the spread of
    hostilities in Macedonia and Greece and so on.
        What is the worst case scenario there? You know, all of us
    want to be positive, but we also should understand that there
    are worst case scenarios. What are those worst case scenarios
    that you model in that region? And what are the consequences of
    it for us?
        General Ralston. Well, there are a whole series of things
    that could happen. Let me talk about worst case from a military
    perspective. I think continued instability in Macedonia that we
    talked about this morning that somehow threatens our supply
    routes into Kosovo is certainly one you cannot rule it out. And
    that would be a very severe issue, if in fact we did not have
    alternate ways to get supplies there. That is why we are
    working on those alternate routes that I mentioned.
        One of the issues that you have is that in fact the
    Albanian population in Kosovo somehow decides that KFOR is the
    enemy and not the liberator that they were when they went in.
    That would certainly increase the risk to our people. Once
    again, that does not mean that we play favorites on this at
    all. We have to be impartial. We have to be neutral. We have to
    be against extremism on any side.

                            NATIONAL MISSILE DEFENSE

        Senator Dorgan. Let me ask a question, General, about
    national missile defense, following on Senator Byrd's question.
    You finished your answer by talking about the strengthening of
    the Alliance. But I assume that you would agree that no
    alliance is strengthened in this world if the building of a
    national missile defense system creates a spate of new
    offensive weapon construction activities in a number of
    countries, including Russia, China, and others.
        It seems to me that if the building of a national missile
    defense system creates a rush to build new offensive systems in
    other countries, that nobody is strengthened. Would you agree
    with that proposition?
        General Ralston. I would agree with that proposition. I do
    not think I proposed that.
        Senator Dorgan. I understand.
        General Ralston. But certainly I am not in favor of people
    building offensive systems that would threaten the Alliance.
        Senator Dorgan. But as a military analyst, would you agree
    that one of the potential outcomes of our building a robust or
    not-so-robust national missile defense system is to stimulate
    an increase in offensive weapons production in other areas?
        General Ralston. I think it is a complex issue. And I
    cannot tell you that I completely agree with that. Because let
    me use as an example, the system that has been talked about is
    a rather modest one. And I firmly believe that what has been
    talked about in no way, shape or form threatens the Russian
    strategic deterrent, for example.
        So if you somehow--if you ask me the question, do I believe
    that a missile defense that has been talked about would be
    cause for the Russians to build more offensive systems, I would
    not agree with that, because the numbers just would not make
    sense for them to do it.
        Senator Dorgan. Well, the risk of that happening is
    something neither of us want to see. But let me also ask you
    this: You described the rumored comment by a Chinese general
    about trading Los Angeles for Taiwan. It is also the case, is
    it not, that if we build the national missile defense system
    that is now being talked about, it would not defend this
    country against a missile attack by China? Would that not be
    the case?
        General Ralston. It would certainly defend this country
    against an accidental launch from China. It would defend
    against an unauthorized launch from China.
        Senator Dorgan. I understand the distinction. I was asking
    about a decision by China to launch nuclear missiles against
    this country. Our national missile defense system, as it is
    currently being constructed, is not designed to protect against
    that, is that not the case?
        General Ralston. That is correct. It is not designed
    against a Chinese threat. It is not designed against a Russian
    threat.
        Senator Dorgan. Right. Let me ask you----
        General Ralston. Other than the accidental and unauthorized
    that I talked about.
        Senator Dorgan. I understand. Because I just do not want
    people to leave with the impression, especially those that are
    not very familiar with this issue, that somehow a national
    missile defense system really is going to provide some
    impenetrable protection. It will not. It is designed against a
    very limited threat.

                            TERRORIST MISSILE THREAT

        Let me ask one additional question, if I might, if my time
    has not expired. Would you not agree that the more likely
    threat by a terrorist would be to say not that we have a
    missile aimed at Berlin or Los Angeles, but that we have a
    suitcase nuclear bomb planted in the trunk of a rusty Yugo
    sitting at a dock in one of those cities?
        Is it not more likely that the delivery of a nuclear device
    to threaten a city would not be, by an ICBM especially, if you
    are talking about terrorists or renegade countries, but much
    more likely a suitcase or other device?
        General Ralston. I honestly have no way of quantifying the
    probabilities of each of those two events. I would hope that
    both are low, but I cannot tell you one is greater than the
    other. I would only tell you this, that I think we need to be
    working against both of those, not against just one.

                               HIV/AIDS IN AFRICA

        Senator Dorgan. And some of us wonder whether we are quite
    as aggressive in some areas, as opposed to others. But you have
    been very forthcoming, and I appreciate that. Let me just
    finally ask you, your area of responsibility is Africa. The
    AIDS problem in Africa. What is it doing to the military in
    those areas where you are working with the military?
        General Ralston. It is a staggering problem. The militaries
    of some of the nations that we are dealing with have HIV-
    positive rates ranging from 20 to 50 percent. What this means
    in the long term on the life expectancy of a nation, I think,
    is dramatic. I have not been able to think through all the
    ramifications of what that means. But it is a very, very
    serious issue.
        Senator Dorgan. I ask the question, not because I am less
    concerned about the general population than the military, but
    this has profound consequences to the entire continent. And it
    is a crisis that is more significant than the bubonic plague in
    the 1300s. It is something we have to deal with. And I was
    curious as to its impact on the Alliance.
        General Ralston, thank you. And let me thank you for your
    service to our country. I have long been an admirer of your
    service.
        General Ralston. Thank you, sir.
        Senator Stevens. Senator Cochran.
        Senator Cochran. Mr. Chairman, thank you.

                          NATIONAL GUARD AND RESERVES

        General Ralston, some of your comments in the latter part
    of your statement deal with the important new role that Reserve
    components and National Guard units are playing in the Balkans,
    specifically in Bosnia where you point out that the Texas Army
    National Guard provided a substantial force in that area. And I
    notice that from Mississippi National Guard units, there are
    going to be over 500 soldiers who will be going over in August
    to Bosnia for a 6-month deployment.
        My question is whether you think the troops who will be
    entering in this area have been sufficiently trained and
    prepared so that they are not subject to any unusual dangers
    because they are not active duty force troops, and whether or
    not you expect that this is going to have an adverse effect on
    National Guard and Reserve units in terms of recruiting and
    retention for those forces.
        General Ralston. Well, first of all let me say that the
    Reserve component forces that I have personally met and talked
    to in Bosnia and in Kosovo, whether they be National Guard or
    Reserve or whether they be Army or Air Force, whatever, they
    have been absolutely superb soldiers, sailors, airmen and
    marines. I am very confident in their training. If I had any
    qualms whatsoever that they were not up to the task, then I
    would not accept that. I do not believe that is a problem. They
    have been most professional.
        And I, and I think you know this, am a big supporter of the
    Guard and the Reserve. I have written to General Shelton and
    asked that Army National Guard divisions be assigned to the
    European Command area of responsibility (EUCOMAOR), because I
    think that is the proper thing to do. I think it is the right
    thing to do. I have tried to take some actions that will
    relieve some of the stress on the National Guard and Reserve.
        For example, we sometimes ask them to sign up for a 270-day
    commitment before we do that. Why not 90 days? Why not 60 days?
    Now I am not proposing that every National Guard soldier that
    comes could come for a short period of time, but there are
    certainly some that could. And if by doing that we are able to
    enhance the volunteer rate of the units, then I think that is
    something that is a positive step and something that we should
    do.
        Senator Cochran. I think our Air National Guard experience
    from units in our State of Mississippi has been very positive
    in terms of the volunteerism that is a part of the deployment
    decisions.
        You know, all of you who want to go on a mission, raise
    your hand. And invariably, there are enough volunteers in
    recent experiences that have permitted them to deploy to the
    region and provide a valuable contribution to the effort there.

                          UNREST IN FYROM (MACEDONIA)

        With respect to Macedonia, we are continuing to hear
    suggestions of the dangers that are growing in that region. And
    we are all concerned about that. Is NATO going to respond
    positively to the request for more troops to be introduced into
    that area to try to reduce the likelihood of an outbreak of new
    fighting in that area?
        General Ralston. Senator, let me try to clarify some of the
    things that have been reported in the press. NATO did not ask
    for additional forces for Macedonia. One of the things the
    Secretary General said is that we were going to move additional
    forces down on the border inside of Kosovo. And we have done
    that.
        Now, the issue is, do you need to backfill those forces
    that were doing other things as those came down to the border.
    That is something the nations will have to look at. I do know
    that before I left Belgium yesterday at least one nation had
    come forward that they were prepared to send additional forces
    to backfill some of those. So this is not an issue of calling
    for forces to go into Macedonia. It was an issue of how many
    forces do you put down on the border to try to control the
    border from inside Kosovo.
        We can do that either by stopping lower priority missions
    that we would do inside Kosovo or, if the nations come through
    with troops to backfill, we can continue to do those missions.

                               RELEVANCY OF NATO

        Senator Cochran. The threat that NATO is organized to
    confront was from the Soviet Union in the aftermath of World
    War II to protect the security interests of Europe, Western
    Europe, and also the United States. That has changed so
    dramatically since NATO was first organized and its doctrine
    and its decisions about where troops would be sent and how they
    would be trained.
        Has NATO become irrelevant to the real world threats that
    exist in Europe now? I am questioning this because we continue
    to hear about the declaring integrity and capability of
    Russia's military.
        There are no Eastern European countries that I know of that
    are building up military forces or threatening Western Europe
    in any way or the United States. To what extent could we reduce
    the size of our NATO forces and still provide the level of
    protection that would be adequate to protect the security
    interests of the United States and Western Europe?
        General Ralston. Yes, sir. As we had said earlier, I
    believe, this is an issue that will be looked at in the ongoing
    review that Secretary Rumsfeld is conducting. So I will not try
    to predict what the answer will be coming out of that. I can
    tell you the arguments that I would make in favor.
        First of all, I think the NATO Alliance has done a very
    good job in responding to the instabilities in Europe. And
    instabilities can come from within, as well as from without. I
    think one of the things that we sometimes forget is that when
    the United States withdrew from Europe twice in the past
    century, we had to go back at great expense in terms of
    national treasure and in terms of the lives of our servicemen.
        We cannot rule that out. One of the things that NATO has
    done has been a tremendously calming influence and factor. And
    as Senator Byrd mentioned, we have looked at Greece and Turkey
    for a number of years and for centuries. But I am absolutely
    convinced that one of the great strengths of NATO is the fact
    that both Greece and Turkey are members of the Alliance. They
    are good members of the Alliance. And they put the interest of
    the Alliance ahead of their individual interests.
        And I do not think we can underestimate the good that then
    happens. I happen to pick out Greece and Turkey. I could pick
    out any number of other pairs of nations on the continent.
        The fact that we have about 100,000 American forces forward
    deployed, they are not only there for NATO. They are there for
    the 91 countries of the European AOR, including places we
    normally do not think about. Israel, Syria, Lebanon are all
    part of the European AOR. These forces are available for the
    Middle East, if they need to redeploy. They are much closer to
    the Middle East being where they are in Europe than they would
    be in the United States.
        Those are the arguments that I would make for a substantial
    portion of our forces. By the way, it is eight percent of our
    uniformed forces stationed in the EUCOM AOR. I do not believe
    that is too high a percentage for the 91 countries that we are
    engaged with.
        Senator Cochran. Thank you very much.
        Mr. Chairman.
        Senator Stevens. Thank you very much, General.
        I am constrained to remind us all about the divisions that
    Hitler had in the region that you are involved in now during
    World War II. And my memory is that he never quite conquered
    the people of the Yugoslavia area. I hope we do not get drawn
    into battle with these people in small groups of 100 or 200 and
    lead to further expansion of actual warfare in that region.

                              HOST NATION SUPPORT

        General, would you be kind enough to give a summary, or ask
    your staff to give us a summary, of the host nation support of
    our NATO allies for our forces in Europe for the record?
        General Ralston. Yes, sir, Mr. Chairman. We will provide
    that for the committee.
        [The information follows:]

        This data summarizes the host nation support (HNS) provided by NATO
    allies for our forces in Europe. The data encompasses the past three
    fiscal years. It is broken-out by the NATO Security Investment Program
    (NSIP), Residual Value (RV)/Payment-in-Kind (PIK), Prepositioning
    Contributions of European Nations, Assistance in Kind (AIK), and
    contributions supporting the George C. Marshall European Center for
    Security Studies. This data has been reviewed by U.S. European Command
    component services that concur with the data below.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                              Fiscal Year--
                               Program                           ---------------------------------------    Total
                                                                      1998         1999         2000
    ----------------------------------------------------------------------------------------------------------------
    NSIP \1\....................................................         -3.0        120.0        -49.0         68.0
    RV/PIK \2\..................................................          0            0            0            0
    Prepositioning Contributions................................          8.5          8.5          8.6         25.6
    AIK.........................................................         17.0         43.7        123.0        183.7
    Marshall Center Host Nation Support.........................          2.2          2.3          2.4          6.9
                                                                 ---------------------------------------------------
          Total HNS.............................................         24.7        174.5         85.0        284.2
    ----------------------------------------------------------------------------------------------------------------
    \1\ Amounts represent the difference between U.S. contributions and the funds received for infrastructure
      projects at U.S. bases in the U.S. EUCOM AOR. This does not include U.S. infrastructure benefits in the United
      States, Canada, and Iceland. It also does not include U.S. benefits from NSIP-purchased communications systems
      and satellite rental.
    \2\ RV/PIK funds are reimbursement for U.S. capital investment.

                      NATO MILITARY CONSTRUCTION (MILCON)

        Senator Stevens. I would like to ask you to explore an
    initiative, that is, I understand you are going to be asking
    for substantial military construction monies for the European
    area in particular under your command. I would like to see what
    the response would be to amassing a fund requirement from our
    NATO allies. They built that housing originally. Now, as I
    understand it, our command is asking us to replace that
    housing.
        I should think that those nations would at least be willing
    to meet us halfway in terms of providing the kind of facilities
    that our men and women in the armed services demand now there.
        I am not sure that Congress is going to react too favorably
    to a total assumption of responsibility for the activities and
    efforts that the nations have provided in the past. That was
    host nation support housing in the first instance, according to
    my memory. Is that correct?
        General Ralston. Mr. Chairman, I will have to go back and
    provide for the record what the historical track on that is. I
    understand the substance of your question, and I will certainly
    take that for action and work that.
        What we are talking about in many cases here is real
    property maintenance just to work on the houses that are there.
    It is not necessarily a replacement of the housing, but let us
    try to bring them up to the modern standards.
        [The information follows:]

        The majority of the Family Housing and Unaccompanied
    Housing that troops and their families occupy in Europe were
    initially provided to the United States following the end of
    World War II. The United States moved in to these facilities
    while serving as the Occupational Force after the war. The host
    nation, by and large Germany, allowed U.S. forces to remain in
    these facilities ever since. Unless the land was purchased or
    new facilities built on these installations by the United
    States, the host nation owns the facilities and the land. The
    United States pays no lease costs for these facilities, but
    rather is charged with the maintenance and improvement costs
    for the facilities that they occupy.
        Host nations throughout NATO where U.S. forces are
    stationed provide significant support to the United States in
    terms of the NATO Security Investment Program (NSIP) and the
    opportunity to reside in their facilities essentially rent
    free. Additionally, if any improvements are made to existing
    facilities and then these facilities are returned to the host
    nation, negotiations between the United States and the host
    nation occur to determine an acceptable settlement for the
    returned facilities.
        While support for facilities housing U.S. forces in Europe
    is minimal, every NATO country provides significant military
    forces as well as critical infrastructure that strengthens NATO
    capabilities. Expenditures within their defense budgets to
    ensure their forces meet NATO requirements are essential to the
    success of NATO. These investments have generally hindered
    additional funds from being spent supporting other forces
    within their country. Additionally, the investment of more than
    $500 million annually by the NATO countries (less the United
    States) into the NSIP budget has resulted in significant
    benefits to the U.S. installations and a dedication to the role
    of NATO.

        Senator Stevens. I think that is absolutely necessary, if
    we are going to continue to have our people there, particularly
    on accompanied tours. Under the circumstances, many of them
    have children. And those barracks were not built for children,
    so I think you are absolutely right, we are going to have to do
    something about it.
        But I think it is going to be a reluctant Congress, as far
    as military construction of any great extent in that area,
    until we see some greater response from our allies to the
    responsibilities that our other host nations have recognized,
    as far as Korea and Japan and other areas of the world.
        Anyone else have a last question? There will be a vote here
    in just a minute or two.

                                CLOSING REMARKS

        Senator Byrd.
        Senator Byrd. Just to compliment you and Senator Inouye on
    the constant good work you do in the funding and needs of our
    national defense. And you are on the firing line every day,
    just like General Ralston and his troops. I have been on this
    subcommittee a long time. But I have not attended the meetings
    of the subcommittee probably ten percent of what you and
    Senator Inouye do. We kind of lean on you. I do. I lean on you.
        God knows, and he does, that our time is terribly
    fragmented as Senators. So we cannot all give time to the same
    subcommittee. But you do a remarkably good job. You know the
    facts that are in these bills. And we have good reason to
    depend on you. And that takes a lot of your time and a lot of
    your strength. But you are highly dedicated.
        And I just want to say that for the record as one member
    who has observed your constant attention, your patriotic
    devotion and dedication to this important work.
        Senator Stevens. You are very kind, Senator. Senator Inouye
    and I wish we could get frequent flyer miles for our military
    miles, but we do not get them.
        And the same to you, General Ralston. I know your schedule.
        The general was with us in Athens at the Special Olympics
    ceremony, then he was with us when we went to Kosovo, and then
    he was back here again to meet us.
        I think you demonstrate the need for adequate airlift for
    our supreme commander. We are glad to see the way you use it,
    and I do appreciate your hosting us in Belgium, as well as your
    interest in the Special Olympics, and, above all, the trip you
    took us on into Kosovo. I think that was a day very worth
    while.
        We are delighted to have you back and look forward to
    seeing you again, General.

                         ADDITIONAL COMMITTEE QUESTIONS

        For those of you who do not know, he is a constituent of
    mine. So I will see you at home, too, Joe. Thank you very much.
        General Ralston. Yes, sir. Thank you, Mr. Chairman.
        Senator Stevens. Thank you.
        [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 Daniel K. Inouye

                             CONFLICT IN MACEDONIA

        Question. General Ralston, according to press reports, Russian
    President Vladimir Putin says the situation in Kosovo and the region is
    spiraling out of control and the Prime Minister of Macedonia says NATO
    is permitting the creation of a new Taliban in Europe. We are told that
    NATO countries will be sending more troops to the border between
    Macedonia and Kosovo. What response do you have to the Russian and
    Macedonian comments and what will be the mission of the U.S. troops on
    the border and in Macedonia, peacekeeping, peace enforcement, or combat
    operations?
        Answer. I do not agree with President Putin when he describes
    ``Kosovo and the region'' as out of control. KFOR has conducted a
    peaceful transition in the Ground Safety Zone where Yugoslav forces are
    now patrolling in the southern section of the Presevo Valley. KFOR has
    increased the number of patrols along the FYROM border and has
    interdicted several ``Ethnic Albanian Armed Groups'' (EAAG) attempting
    to either enter FYROM from Kosovo or vice versa. KFOR has been very
    successful in recovering arms caches in the region as well. In concert
    with KFOR, the FYROM army has been successful in defeating the EAAG in
    the northern portions of FYROM. Though difficult to eliminate, FYROM
    has slowly ensured that the EAAG activity, under the reported guidance
    of the ``National Liberation Army'' (NLA), is not provided easy access
    to the area.
        When PM Georgievski addressed FYROM on March 18, he did accuse
    ``foreign democracies from Europe of creating new Talibans.'' However,
    this was an emotionally charged timeframe. Through State Dept channels,
    the PM was assured of Western, and specifically United States, support
    for his government. Subsequently both Secretary of State Powell and
    President Bush have sent personal notes to the government of FYROM
    reassuring them of U.S. support for their democratic efforts and fight
    against the insurgents. More recent events have provided indications
    that the PM sincerely appreciates NATO/U.S. support.
        NATO has requested additional troop contributions for Kosovo.
    Several countries have volunteered additional troops but this does not
    change the KFOR peacekeeping mission. The United States has not
    volunteered additional troops, though Secretary of State Powell has
    acknowledged military equipment to support the FYROM army may be
    offered.

                     EUROPEAN SECURITY AND DEFENSE IDENTITY

        Question. General Ralston, does the current debate on pulling our
    forces out of the Balkans hamper your efforts to influence the EU's
    EDSI?
        Answer. As you know we have assured our NATO Allies that we will
    not unilaterally withdraw our forces from the Balkans--we will consult
    fully with our friends and allies. If we did unilaterally withdraw our
    forces this would play into the hands of those who wish the United
    States to play a lesser role in NATO and in European security, and
    consequently it would adversely impact our efforts to build a
    constructive relationship between NATO and the EU.
        Question. General, if the Europeans start down this path, are you
    concerned they will be forced to spend their limited defense dollars to
    duplicate capability that NATO already has such as strategic lift?
        Answer. I continue to stress with our European Allies the
    requirement for increased capabilities while not wasting scarce defense
    resources on capabilities we have in NATO and that we cannot afford to
    duplicate, such as military command structures and our planning staff
    at SHAPE. However, this does not mean that we don't want the Europeans
    to procure more defense capability. The NATO Defense Capabilities
    Initiative provides a wide range of capabilities that our allies should
    strive to attain.

                              SUBCOMMITTEE RECESS

        Senator Stevens. If there is nothing further, the
    subcommittee will stand in recess.
        [Whereupon, at 11:35 a.m., Wednesday, March 21, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                           WEDNESDAY, MARCH 28, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:23 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Bond, Shelby, and Inouye.

                             DEPARTMENT OF DEFENSE

                              U.S. Pacific Command

    STATEMENT OF ADMIRAL DENNIS C. BLAIR, U.S. NAVY,
                COMMANDER IN CHIEF

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. Admiral Blair, it is nice to have you with
    us again. I apologize for my tardiness due to a vote on the
    floor and some conferences that took place immediately
    afterwards. Delighted to have you as the Commander in Chief of
    our Pacific forces with us today.
        Many of us here have recognized for a long time the
    strategic importance of the Pacific and the area that is under
    your command. I think I speak for all of us here that it is our
    belief that the theater of U.S. military operations for the
    future must accent the Pacific region. We have not had this
    vision shared totally throughout the defense establishment, but
    I am encouraged, I hope my colleagues are, by the reports that
    there is an increasing awareness of the importance of the
    Pacific and that the strategic review now under way may give
    greater emphasis to the area of our great concern and your
    current responsibility.
        As a matter of fact, this coming year may really be a year
    of transition as far as the position of our national government
    with regard to the Pacific region. You know more than we do
    about the specifics of the reasons for these fundamental
    changes in force structure, engagement, basing, presence of our
    forces throughout the area. They will have serious impacts on
    some of our long-range commitments and security relationships
    in the Pacific, and we will be hopeful that you can provide us
    with an update on those arrangements and the security situation
    in the Asian Pacific region as a result of your own review.
        I assume that we all have to wait for the final review on
    the direction that is going on in the Department by Secretary
    Rumsfeld. But clearly we would like to hear today from you
    about the basic positions that you are prepared to argue for in
    your command.
        We are going to have some statements that we would like to
    ask you, and there will be other statements that we would like
    to file and ask that you and your staff complete them for the
    record. Your full statement is in the record under our
    procedure, printed in full, and we would appreciate your
    comments on how much of that you wish to proceed with orally
    here.
        Let me again personally thank you for your hospitality to
    us and to the members of this committee when we visited your
    headquarters in Hawaii, and have been really in touch with you
    and your subordinates throughout your region. You have the
    largest regional responsibility of anyone below the Chairman of
    the Joint Chiefs, and you are in fact Commander in Chief (CINC)
    of that region.
        The CINC concept is one concept that we fully support and
    we are delighted that you have that position, because of your
    awareness of the problems and the comments and presentations
    that you have made to us in the past.
        I would yield now to my distinguished colleague. I have
    called him vice chairman for years, but he is a co-chairman
    now. Senator Inouye.

                     STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. Thank you very much, Mr. Chairman.
        I do not think I can add much more to what you said because
    you have spoken for the majority of us here. I would just like
    to add a few things. There are certain statistics that not all
    of our colleagues may be aware of, such as there are more jumbo
    jets flying across the Pacific than the Atlantic, we do more
    trade with Asia than we do with Europe, and from the military
    standpoint, eight out of the ten largest armies in the world
    are in your area of responsibility.
        There are many places of contention in your region:
    Indonesia, the Korean peninsula, India, Pakistan, just to name
    a few. For that reason, I am pleased that we are beginning to
    hear that the new administration is beginning to think about
    the Pacific. That is the report we are receiving from the
    Pentagon. We hope that the strategic review will bear this out
    and recommend whatever is necessary.
        We are eagerly waiting, as the chairman has indicated, the
    conclusion of this review. But we are well aware, as we are
    constantly reminded, that unfortunate accidents, disciplinary
    problems, cultural differences, have occasionally caused us
    problems with our friends in the region. We are also faced with
    nations that possess profoundly different forms of government
    than our own, who seek to challenge our principles of freedom
    and democracy.
        We see areas of significant regional tensions, where
    territorial disputes threaten the peace of that region.
    Therefore, I cannot say this often enough, your leadership is
    so important. You have helped us work through many
    difficulties, and we have been able to overcome many
    challenges.
        Today, I believe as a result of your leadership, we are
    respected by our friends and potential adversaries alike. But I
    am certain you know that improvements are always needed. You
    can be certain that we stand here ready to serve you and to
    assist you in your endeavors out there, because we value your
    leadership.
        So, like my chairman, I look forward to your testimony.
    Welcome, sir.
        Senator Stevens. Senator Shelby.

                     STATEMENT OF Senator RICHARD C. SHELBY

        Senator Shelby. Thank you.
        Admiral, we welcome you here and look forward to seeing you
    in a week or so. I hope you will touch on this in your
    testimony, but there have been a number of accidents and
    embarrassments for the U.S. armed forces in the preceding 6
    months. Four of these incidents have occurred in your area of
    operations. These include, among other things: October 2000,
    overflight of the carrier Kitty Hawk by Russian fighters in the
    Sea of Japan. The carrier launched no aircraft despite ample
    warning.
        Two, November 2000, crash of two Air Force F-16's in the
    Sea of Japan.
        Three, March 2001, the collision that we know about between
    the U.S.S. Greenville and a Japanese fishing vessel.
        Four, March 2001, the crash of two Army Blackhawk
    helicopters in Hawaii.
        I guess what I hope you will touch on is--are the troops
    adequately trained and equipped at this time? Are they ready,
    so to speak? Do you have adequate airlift and sealift assets to
    expeditiously transport your combat forces to a conflict and
    engage with them in a decisive manner?
        There are other questions I will ask, but I thought I might
    tell you at the beginning, and I hope you will touch on these.
    Thank you.
        Thank you, Senator.
        Senator Stevens. Thank you very much, Senator Shelby. I did
    not detail those because we presume the Admiral is going to
    deal with those, and some of the questions we will submit will
    deal with those issues, too.
        Senator Shelby. Absolutely.

                   PREPARED STATEMENT OF SENATOR THAD COCHRAN

        Senator Stevens. Senator Cochran has submitted a statement
    and asked that it be placed in the record.
        [The statement follows:]

                   PREPARED STATEMENT OF SENATOR THAD COCHRAN

        Mr. Chairman, I am pleased to extend my thanks to Admiral Blair for
    his many years of dedicated service to our country and for the
    outstanding job he and his command are doing in support of our national
    security interests.
        The Pacific Command encompasses over 52 percent of the earth's
    surface and plays a vital role in maintaining peace and prosperity in
    the region. However, I understand that many challenges and threats
    exist to maintaining an environment supportive of our national
    interests and goals.
        The proliferation of missiles and other weapons of mass
    destruction, increased nationalism, and dynamics of asymmetric warfare
    are three significant threats that will have to be dealt with as we
    contribute to the stability of this region.
        I am concerned that the current rate of ship production will leave
    your command short of the forces required to carry out future missions.
    Other concerns that I hope you will discuss today include whether the
    Pacific Command has adequate flight hours, ship steaming days, spare
    parts, and ordnance to meet its mission requirements.

        Senator Stevens. Admiral Blair.

                               OPENING STATEMENT

        Admiral Blair. Thank you, Mr. Chairman. Let me just make a
    couple of remarks as we head into the questioning period.
    First, it would be wrong if I did not recognize this committee
    for the strong support they have made to the men and women of
    the Pacific Command this year and in past years. As I look up
    at both the members in front and the staff members who back you
    up, I cannot think of a better group who is more knowledgeable
    about the Pacific. You come out to see us a lot. You know what
    is going on, and then you reflect it in the bills that you
    pass.
        The priorities that we have in the Pacific Command remain
    readiness, regional engagement, transformation, and resources.
    Readiness over the past year has been a mixed picture, frankly.
    We have made some gains, but there are other areas that we have
    not made gains in. I am concerned that in the future we will be
    losing overall readiness unless we can come to grips with some
    of the structural issues having to do with the operation and
    maintenance of equipment and of the replacement and maintenance
    of real property.
        On regional engagement, I just returned last week from a
    trip to China, Korea, and Japan. With our forward-based forces,
    our forward-deployed forces, we can reassure our friends. We
    can give pause to those who wish us ill. We are making progress
    on enhanced regional cooperation, which is tieing together
    countries to work together on the missions of the future which
    we all share in common, not simply looking to the missions of
    the past.
        Third is transformation. We are working with Joint Forces
    Command and we are experimenting our way into the future in the
    Pacific using our existing exercise program plus some
    activities like advance concept technology demonstrations. We
    are working on a concept for the future called the Joint
    Mission Force, which will be applicable to Pacific missions.
        Finally, resources. Our strategy in the Asia Pacific
    region, no matter how we finally determine it with this
    administration, is based on balanced, forward, ready forces, a
    command and control infrastructure which can enable us to work
    across this vast region that we have, and a mobility network--
    and you mentioned this, Senator Shelby--to be able to reinforce
    in crisis or conflict immediately.
        To do that, we need sustained funding, for both of our
    joint headquarters and the four service components who make up
    the forces in the theater. It is important that we do that for
    all the reasons we talked about, in this theater that is not
    only important to U.S. interests, but it is the most dynamic
    region in the world. It is going to be different in 10 or 15
    years from the way it looks now.

                           USPACOM MILITARY INCIDENTS

        Let me stop there with summary statements. But Senator
    Shelby, I will just address the incidents that you raised. I
    have looked at the preliminary reports for all of those
    incidents and I have also looked at our overall statistics, and
    I do not connect those dots into a trend yet, Senator. For
    example, one of the pilots involved in the F-16 accident was a
    group commander, one of the most experienced pilots we have.
    One of the pilots of one of the helicopters was our most
    experienced warrant officer helicopter pilot. So it was not
    that we were putting rookies behind the stick without enough
    training.
        In all of those four cases, there were a series of things
    that were not done as we know how to do them and so they
    occurred. But I do not string them together into an overall
    lack of readiness in those areas. I do remain concerned for the
    future, as I mentioned, sir.

                          AIR AND SEALIFT IMPROVEMENTS

        Air and sealift, we need improvements in the region because
    of its distance, because of the number of things we have to
    cover. I think that the improvements that are still being made
    in terms of more C-17's coming on line, the more flexible use
    of the sealift, are in the right direction, and we need those.
        [The statement follows:]

                 Prepared Statement of Admiral Dennis C. Blair

                                  INTRODUCTION

        Mr. Chairman and members of the Committee: On behalf of the men and
    women of the United States Pacific Command, thank you for this
    opportunity to present my perspective on security in the Asia-Pacific
    region.
        Having served as Commander in Chief, United States Pacific Command
    (USCINCPAC) for over two years, I continue to believe, as we enter into
    this century, that a secure, peaceful and prosperous Asia-Pacific
    region is very much in the interests of America, and the world.
    Alternatively, an uncertain Asia may present only crises and dangers.
    We base our power and influence on our values, our economic vibrancy,
    our desire to be a partner in this critical region, and the forward-
    stationed and forward-deployed forces of the U.S. Pacific Command
    (USPACOM).

                    DEVELOPMENTS IN THE ASIA-PACIFIC REGION

        Since I last testified before you, developments in the region have
    offered promise and continuing challenges.

    Japan
        Japan remains our most important ally in the Asia-Pacific. Although
    the economy is virtually stagnant, Japan remains the second largest
    economy in the world and continues to have a strong economic impact on
    the Asia-Pacific region. Japan hosts nearly 41,000 U.S. armed forces
    personnel and serves as a forward-deployed site for about 14,000
    additional U.S. naval personnel. Japan also contributes $4.86 billion
    in host-nation support, the most of any U.S. ally. These forward-
    stationed and forward-deployed forces are key for the United States to
    meet commitments and defend American interests throughout the Asia-
    Pacific region. The U.S.-Japan alliance is the cornerstone of U.S.
    security interests in Asia, and it is fundamental to regional security
    and peaceful development.
        Over the past year, we made steady progress in strengthening our
    alliance with Japan. The two countries signed a new 5-year Special
    Measures Agreement (SMA) that will take effect on April 1, 2001. While
    the utilities cost-sharing levels are down slightly from the previous
    SMA, the new agreement provides for the same levels of labor cost-
    sharing and training relocation costs as those of the previous SMA.
        Over the past year, working groups took the first steps to
    implement the Defense Guidelines. In addition, Japan's Diet passed the
    final piece of Defense Guidelines related legislation: a law
    authorizing the Japanese Self-Defense Forces (JSDF) to conduct ship
    inspections to enforce U.N. sanctions. Now that a site for the
    replacement facility for Marine Corps Air Station Futenma has been
    selected in northern Okinawa, detailed discussions have begun over the
    type and scale of the facility. U.S. and Japan ballistic missile
    defense cooperation continued on Navy Theater Wide research.
        On February 9, 2001, USS GREENVILLE collided with the fishing
    vessel Ehime Maru, resulting in the loss of the ship and nine lives,
    including students. The U.S. Government and Navy have apologized to the
    Government of Japan and the families of the victims, are evaluating the
    feasibility of raising the vessel, and will provide compensation to the
    victims. The Navy has convened a Court of Inquiry to examine the events
    contributing to the incident and accountability. The U.S. and Japan
    have a strong bilateral relationship whose enduring strength has
    benefited both sides for close to half a century. We believe we will be
    able to move forward from this tragedy in the interests of both nations
    and our peoples.
        The roles and capabilities of the JSDF are slowly evolving to meet
    future challenges. The Japanese Ground Self-Defense Force provided a
    45-man transportation unit as part of the Golan Heights U.N.
    Disengagement Observer Force. The JSDF has also worked closely with
    USPACOM components to restructure bilateral exercises to develop skills
    for humanitarian assistance, search-and-rescue, non-combatant
    evacuation, consequence management for chemical, biological and nuclear
    incidents, and complex contingency operations that are likely to occur
    in the future. JSDF is sending observers to TEAM CHALLENGE, a linked
    series of exercises addressing these missions and involving several
    Asia-Pacific nations. I am also encouraged by the increased attention
    that the JSDF is giving to cooperating with regional armed forces--the
    Republic of Korea in particular.
        I remain deeply concerned about the Shinkampo private industrial
    waste incinerator abutting Naval Air Facility Atsugi. While dioxin
    levels have fallen significantly since Shinkampo completed the
    installation of bag house filters last May, construction has not
    started on a 100-meter smokestack that the Prime Minister of Japan
    committed to building by March 2001. This situation continues to be a
    serious health risk to our service members and their families.
        We must solve individual local issues arising from our forces based
    in Japan. As important, however, is that the U.S. Pacific Command and
    the JSDF maintain the capability to defend Japan and build the
    capability to operate together in order to face the common regional
    challenges of the future--peace operations, noncombatant evacuation
    operations, humanitarian relief and dealing with transnational
    concerns. The Defense Guidelines show the way to the future for the
    U.S.-Japanese alliance and we must proceed in that direction.

    South and North Korea
        Last year, the U.S. and Republic of Korea (ROK) began the
    commemoration of the 50th anniversary of the Korean War. About 37,000
    U.S. troops remain stationed in the ROK to deter North Korean
    aggression.
        Political developments in Korea have been breathtaking, highlighted
    by the June 2000 summit between President Kim Dae-jung and his North
    Korean counterpart Kim Jong-il. Other North-South reconciliation
    activities included reunions between selected families separated by the
    war, increased aid, and agreements to increase economic links including
    a road and railway passing through the demilitarized zone.
        At the same time, North Korea's military training cycle in the
    winter and summer of 2000 was the most extensive ever, and the ongoing
    winter training cycle remains robust. North Korea continues to maintain
    60 percent of its forces within 100km of the DMZ.
        Given North Korea's continuing significant military capabilities,
    the Republic of Korea and the United States must maintain the deterrent
    power of the Combined Forces Command (CFC). Any changes to the CFC
    posture must come through mutual and verifiable confidence-building
    measures that increase warning times for aggression.
        I remain concerned about the lack of frequency clearances granted
    by the ROK government to U.S. forces for planning and training. For
    example, there are no frequencies cleared to support UAV training on
    the peninsula. Likewise, we are currently limited to only 126 VHF/FM
    frequencies for planning purposes, far short of the over 1,000
    frequencies we would expect in an operational scenario. We will
    continue to work to resolve this deficiency.
        Whatever the future holds, it remains in the interests of both the
    Republic of Korea and the United States to have a continued U.S.
    forward presence on the Korean Peninsula. Recent developments have been
    encouraging. The recent renewal of our Status of Forces Agreement
    (SOFA), the conclusion of the No Gun Ri investigation, and the
    agreement on missile guidelines reflect the mature relationship between
    the United States and South Korea and provide a strong foundation for
    future cooperation on the Korean Peninsula. The Commander in Chief of
    U.S. Forces Korea has also proposed a Land Partnership Plan that, once
    enacted by Korea, will make U.S. force presence less burdensome while
    enhancing training and combined warfighting capability. We also will
    begin negotiations for a new Special Measures Agreement that we hope
    would increase South Korea's financial support for the stationing of
    U.S. troops in the country.
        The Republic of Korea increasingly contributes to meeting regional
    security challenges by contributing 419 troops to peacekeeping in East
    Timor, consulting and cooperating with the JSDF, participating in
    exercises such as RIMPAC (a major, multilateral naval exercise) and
    PACIFIC REACH (a submarine rescue exercise also involving naval forces
    from Japan, Singapore and the United States), and participating as
    observers in TEAM CHALLENGE.

    China
        During the past year, military developments in China have been
    mixed. A White Paper issued in February 2000 emphasized China's
    commitment to peacefully resolving its differences with Taiwan, but
    also specified conditions that could trigger the use of force against
    Taiwan. Chinese military spending increased, and Beijing continued to
    acquire advanced weapon systems from Russia.
        The People's Liberation Army (PLA) is modernizing and making
    organizational changes in all branches of service to strengthen
    homeland defense, expand regional influence and support sovereignty
    claims to Taiwan and the South China Sea. China continues to increase
    its modern combat aircraft inventory and improve air defenses,
    particularly across the Taiwan Strait. The PLA navy conducted sea
    trials for eventually fielding additional surface ships and submarines,
    continued testing of anti-ship missiles, and received its second modern
    Russian guided missile destroyer. PLA ground forces continued
    downsizing to reduce force structure and increase mobility. The PLA
    missile force continued testing and fielding of newer inter-continental
    and short-range ballistic missiles (SRBM) and is building additional
    SRBM launch sites within range of Taiwan. China's exercise program,
    while extensive, was not explicitly threatening to Taiwan.
        Over the past year, we have reinitiated military relations with
    China on a realistic foundation. We have fashioned policies that offer
    China areas for productive relations, while ensuring that we can deal
    with a more confrontational posture, should it be necessary. We
    emphasize areas of mutual interest and encourage Chinese participation
    in regional security cooperation while maintaining that diplomacy, not
    armed force, should settle disputes.
        We have exchanged visits between senior PLA delegations and U.S.
    counterparts, and ships have conducted reciprocal port visits. PLA
    forces participated in a search-and-rescue exercise in the Special
    Administrative Region of Hong Kong, and four Chinese officials (two
    from the PLA and two from the Ministry of Foreign Affairs) attended the
    Asia-Pacific Center for Security Studies in Honolulu. We have invited
    the PLA to participate in more multinational conferences on topics
    involving regional security cooperation than it has chosen to attend.
    We carefully vet our engagement in accordance with the National Defense
    Authorization Act.
        The Taiwan armed forces also continue their restructuring and force
    modernization. A civilian Defense Minister now oversees the armed
    forces. The Taiwan military relies heavily on the United States to
    modernize its forces. Through last year's arms sales, Taiwan's armed
    forces increased surveillance capabilities and modernized air-to-air,
    air-to-ground and air-to-surface weapons. Taiwan is looking forward in
    its modernization plans by improving a number of bases and
    infrastructure to support acquisition of future weapons.
        As Taiwan modernizes its armed forces to ensure a sufficient
    defense, training, inter-service interoperability and logistics support
    become even more important. The Taiwan armed forces will have to put
    resources and attention into these areas to retain the qualitative
    edge.
        Based upon our assessments, I conclude that the changes in PLA and
    Taiwan military forces have not significantly altered the balance of
    power across the Taiwan Strait. Taiwan's military maintains a
    qualitative edge over the PLA, and the PLA still lacks the capability
    to invade and hold Taiwan. China maintains a quantitative edge in all
    branches of service, but does not have adequate power projection to
    quickly overcome Taiwan's more modern air force and inherent
    geographical advantages, which favor defense. Beijing's military
    forces, however, have the ability to inflict significant damage to
    Taiwan.
        We expect China to accelerate military modernization, but pressing
    economic and social issues will temper this effort. Military
    modernization will not decisively alter the military situation across
    the Strait in the next several years. The continuing buildup of Chinese
    Ballistic missiles, combined with increases in accuracy, will
    increasingly pressure the sufficiency of Taiwan's defenses. The U.S.-
    China-Taiwan relationship will continue to be a critical factor in our
    regional engagement strategy.

    India
        U.S. military relations with India have been restricted since
    India's nuclear weapons tests in 1998. Areas for military cooperation
    exist, however. Peacekeeping is the most promising. We have also agreed
    to discuss search-and-rescue, humanitarian assistance, and
    environmental security. The U.S. and India have also set up a working
    group to address counter-terrorism cooperation. The response to India's
    recent earthquake demonstrated the value of cooperation, both civilian
    and military. We are pursuing opportunities to build a foundation for
    closer relations. I believe a gradual strengthening of military
    interaction is in the interests of both countries. The more we work
    with India and Pakistan, the better we can defuse tensions by
    supporting productive relations between those two nuclear-armed
    countries.

    Insurgents and Communal Violence
        Beyond Kashmir, which remains a flash point of tension between
    India and Pakistan, insurgents and communal violence affect many states
    in the Asia-Pacific Region.
        Indonesia faces violent separatist movements in Aceh and Irian Jaya
    (West Papua) and sectarian violence in the Maluku Islands and
    Kalimantan. Intense fighting on the Jaffna Peninsula between the Tamil
    Tigers and Sri Lankan armed forces continues without significant gains
    by either side. Nepal faces an increasingly troublesome Maoist
    insurgency. For much of the year, the Philippine armed forces have
    battled the Moro Islamic Liberation Front (MILF) and operated against
    hostage takers, including the Abu Sayyaf, which took American Jeffrey
    Schilling hostage. Indonesia, Sri Lanka, Nepal, and the Philippines are
    still searching for the right combination of political, economic
    development, and military/police measures to effectively address these
    insurgencies and sectarian strife.
        In Fiji, a coup overthrew the democratically elected government,
    and the Solomon Islands have experienced separatist violence that
    caused a change in government and the evacuation of foreign nationals.
    Also, fighting among various ethnic groups on Burma's borders, much of
    it connected to illegal drug trafficking, has spilled into Thailand.
        Communal violence not only causes suffering and slows the
    political, social and economic development of countries in the region;
    violence also fosters terrorism, causes refugees to migrate, and
    creates humanitarian disasters that spill across national borders.

    Indonesia
        Indonesia is still undergoing major political, social and economic
    changes after 40 years of authoritarian rule.
         The Armed Forces of Indonesia, or TNI, began reforms in 1999 that
    they have yet to complete. The reforms call for the TNI to become a
    professional, modern armed force, focused on external defense and
    divorced from political practices. The number of TNI seats in
    parliament has been reduced and the police force separated from the
    TNI. However, elements of the TNI have been reluctant to continue
    reforms. The TNI remains a major political force, particularly on the
    local level, and retains the major role in internal security. It has
    not brought under control the militias in West Timor, resulting in the
    deaths of three U.N. workers and a continuing security threat to East
    Timor, nor has it yet brought to justice any of those who orchestrated
    or engaged on atrocities in East or West Timor. TNI reform is an
    important aspect of restoring order in Indonesia in a manner that
    promotes democratic development and regional security.
        Most interactions between U.S. and Indonesian armed forces have
    been suspended until there is credible progress toward accountability
    for East Timor human rights abuses and the return or resettlement of
    refugees. During the past year, limited interaction with the TNI
    involved a Navy humanitarian exercise and Indonesian Air Force
    observers at Exercise COBRA GOLD. The objectives of interaction with
    the TNI are to favor reform and build capability for coalition
    operations.
        Under the protection of International peacekeepers, East Timor
    today is generally secure from the militias, but the work has just
    begun to establish a fully functioning society. Our Australian allies
    did a great job in leading this U.N.--mandated peace operation and
    remain the backbone of the security forces. The Philippines and
    Thailand have stepped forward to assume leadership of the peacekeeping
    forces since it became a U.N. operation. The U.S. armed forces continue
    to conduct operations in East Timor by providing liaison officers,
    engineers and humanitarian assistance during ship visits.

    Philippines
        The Philippines experienced a peaceful transition of power from
    former President Estrada to former Vice President Gloria Macapagal-
    Arroyo (GMA). Throughout the period of the impeachment hearings and
    transfer of authority, the Armed Forces of the Philippines (AFP) acted
    with restraint and used constitutional precepts as guiding principles.
        Following the ratification of the Visiting Forces Agreement (VFA)
    in May 1999, the frequency and quality of interactions between U.S. and
    Philippine armed forces has also improved. The AFP has actively
    participated in initiatives to enhance regional cooperation and promote
    regional security. It deserves credit for taking a leading and
    responsible role in East Timor, contributing ground forces to the
    International Force in East Timor (INTERFET) coalition, providing the
    first force commander for the peacekeeping force of the U.N. Transition
    Authority for East Timor (UNTAET).
        The United States maintains its Mutual Defense Treaty with the
    Philippines, and our defense relations have steadily improved over the
    past year. The Defense Experts Exchange, a consultative group
    established between OSD and the Philippines Department of National
    Defense in 1999, has made progress in identifying the Philippines'
    national security and force structure needs. The talks address ways to
    help the Philippines increase readiness and become a more active
    contributor to regional security. Operations with, and assistance from,
    the United States cannot substitute for adequately funded armed forces,
    and the Philippines has not yet made the necessary investments.
        The Philippines continues to face significant internal security
    challenges from organizations such as the MILF, the Communist New
    People's Army (NPA) and the Abu Sayyaf Group. This past year, the
    United States initiated a $2 million program using Nonproliferation,
    Antiterrorism, Demining and Related (NADR) Program funds to train and
    equip a counter-terrorist unit that will improve the AFP's capability
    to deal with hostage taking and other terrorist incidents.

    Thailand
        A strategic ally, strongly oriented to U.S. military training and
    equipment, Thailand aspires to adopt force modernization and
    ``jointness'' along U.S. models. Thailand consistently responds
    positively to U.S. requests for access, training, and transit. Thailand
    is one of the nations in Asia most committed to building regional
    approaches to future challenges--peacekeeping, humanitarian assistance,
    and transnational concerns. Exercise COBRA GOLD in Thailand is
    developing into a multilateral training event to improve participating
    countries' capabilities to cooperate in peacekeeping and humanitarian
    missions.
        Thailand has taken a leading Southeast Asian regional role in
    support of peacekeeping by maintaining battalion strength forces in
    East Timor. The current military commander in East Timor is Thai LTG
    Boonsrang Niumpradit. We support humanitarian demining in Thailand and
    will transfer that program over to Thailand by fiscal year 2002. Joint
    Task Force Full Accounting Detachment-1 in Bangkok logistically anchors
    our POW/MIA recovery efforts throughout Vietnam, Laos and Cambodia.
        Within the last year, Thailand has requested U.S. assistance to the
    Royal Thai Army in combating drug traffic across the Burma-Thai border.
    U.S. Pacific Command is in the early stages of establishing a modest
    program of assistance against this common threat. Joint Interagency
    Task Force West (JIATF-WEST) is the standing task force for all
    counterdrug (CD) issues in the theater and has the lead to work
    training, equipment, and organizational coordination initiatives to
    assist the Thais with their CD mission.

    Australia
        This year marks the 50th anniversary of the ANZUS treaty, and
    Australia remains America's closest ally in the Asia-Pacific region.
    Australian armed forces not only took the lead in East Timor
    operations, but they remain the largest part of the U.N. security force
    there. They also evacuated civilians and provided peace monitors in
    Bougainville and the Solomon Islands. The Australian government has
    been active in promoting the return of democracy in Fiji and in
    promoting security and peaceful development throughout the archipelagic
    states of Southeast Asia and the South Pacific. Australia has also
    constructively engaged in dialogue with China and North Korea to
    promote peace in Northeast Asia.
        In recognition of our special relationship, we have pursued an
    agreement to exempt qualified Australian firms from U.S. International
    Traffic in Arms Regulations controlling unclassified military
    technology.
        Australia recently completed an extensive Australia Defence 2000
    White Paper that clearly lays out its future defense requirements. The
    White Paper achieved broad national support and general bipartisan
    consensus through a unique consultation process that involved the
    public and all government agencies. The product is a plan to acquire
    the skills and equipment Australia will need to succeed across the full
    range of defense tasks, along with required funding.

    Singapore
        Completion of the deep draft pier at Changi Naval Base signifies
    Singapore's contribution and desire for continued U.S. presence in the
    region. Though not an ally, Singapore is a solid security partner in
    the Asia-Pacific region, a vocal proponent for U.S. access, and
    supports and hosts multilateral activities. Singapore hosted PACIFIC
    REACH, a multi-lateral submarine rescue exercise; participated in COBRA
    GOLD and in numerous anti-piracy regional conferences; and is planning
    a regional Mine Counter-Mine exercise in May 2001.
        Singapore seeks greater interoperability with the U.S. Armed
    Forces. It views high technology and advanced hardware as a deterrent
    and is increasing its cooperation with the U.S. in Joint
    Experimentation. Singapore participates with the Extension of the
    Littoral Battlespace Advanced Concept Technology Demonstration (ACTD)
    and is active in other experiments such as the Joint Mission Force and
    Asia Pacific Area Network.

    POW/MIA Efforts in Southeast Asia
        Joint Task Force Full Accounting (JTF-FA) continues to make
    progress on achieving the fullest possible accounting of Americans
    unaccounted for as a result of the conflict in Southeast Asia. JTF-FA
    conducted ten joint field activities (JFAs) in fiscal year 2000--four
    in Vietnam, five in Laos, and one in Cambodia. During these JFAs, the
    JTF-FA field teams investigated 219 cases and excavated 44 sites. JTF-
    FA will continue to maintain its robust pace of operations in fiscal
    year 2001, with ten JFAs scheduled--four in Vietnam, five in Laos, and
    one in Cambodia. Each JFA is about 30 days in duration.
        In calendar year 2000, 40 sets of remains previously recovered in
    JTF-FA operations were successfully identified and returned to their
    loved ones. As of January 31, 2001, Americans unaccounted for total
    1,900. In the same period, JTF-FA recovered and repatriated 24 remains
    we believe to be those of unaccounted-for Americans from Southeast Asia
    (17 from Vietnam and 7 from Laos).
        Achieving the fullest possible accounting of Americans is a U.S.
    Pacific Command priority, and we will continue to devote the necessary
    personnel and resources to obtain the answers the POW/MIA families so
    richly deserve.

                        U.S. PACIFIC COMMAND PRIORITIES

        The challenges to security and peaceful development in the Asia-
    Pacific region require regional cooperation to address effectively.
    They include:
      --Unresolved wars in Korea, across the Taiwan Strait, and in Kashmir
            that have flared, on occasion, but have been restrained for
            over 50 years.
      --Conflicting territorial claims such as the Spratly Islands, the
            Kuril Islands, and the Senkaku Islands.
      --Major powers--China, India, and Russia--that seek greater roles in
            regional security.
      --Communal violence driven by separatist movements and historic
            grievances.
      --And transnational concerns--including terrorism, illegal drug
            trafficking, piracy, and weapons proliferation.
        Our objective is an economically prosperous and interdependent
    region that shares dependable expectations of peaceful change. To
    achieve this objective, the strategy of the U.S. Pacific Command
    involves:
      --Deterring aggression in Korea;
      --Determining the future of Taiwan by peaceful means;
      --Encouraging responsible development of growing powers;
      --Developing multilateral capabilities to handle complex
            contingencies and transnational challenges;
      --Planning for transition as security challenges evolve;
      --And transforming our armed forces to increase their warfighting
            edge.
        The priorities for the U.S. Pacific Command in executing this
    strategy continue to be readiness, regional engagement, transformation,
    and resources.

    (1) Readiness
        During my comments today, I will discuss the status of many
    programs. I should note, however, that the programs I will discuss, and
    the associated funding levels may change as a result of the Secretary's
    strategy review which will guide future decisions on military spending.
    The Administration will determine final 2002 and outyear funding levels
    only when the review is complete. I ask that you consider my comments
    in that light.
        U.S. Pacific Command forces must be fully ready to execute any
    assigned mission. Readiness revolves around people. If we are to
    recruit and retain the quality personnel that we need, service must be
    professionally rewarding to the members of our armed forces and must
    meet their personal and family needs. If we do not meet their basic
    professional and personal needs, they have many, often more lucrative,
    alternatives to a life of service to their Nation.
        Professionally and personally rewarding service involves confidence
    that financial compensation is fair, that educational opportunities are
    available to prepare for a world that values knowledge, and that
    healthcare is adequate. It also involves the provision and maintenance
    of suitable housing and facilities in which to live and work. It
    involves confidence that we fill personnel billets to match the tasking
    and that we are properly trained to conduct the full spectrum of
    operations expected of us. It involves having the resources to maintain
    equipment in a high state of readiness both during and between
    deployments, and adequate munitions to train and fight. It involves
    adequately protecting our forces on and off duty.
        Pay, Education, and Healthcare.--First, let me thank you for all
    the positive quality of life initiatives in the Fiscal Year 2001
    National Defense Authorization Act (NDAA). The pay raise of 3.7
    percent, targeted Pay Table reform for mid-grade non-commissioned
    officers, Basic Allowance for Housing amendments, partial reimbursement
    for mandatory pet quarantine fees, impact aid to help civilian schools
    educate military dependents, and Tuition Assistance up to 100 percent
    for off-duty education are all outstanding efforts that servicemen and
    women appreciate. Also, thanks to your support, the performance of DOD
    schools is second to none, though we need help in funding operating
    expenses and maintaining infrastructure.
        We greatly appreciate the initiatives of the 106th Congress to
    enhance the TRICARE benefit and its coverage to include our retirees
    over the age of 65. This is the right thing to do--such Quality of Life
    enhancements favorably impact recruitment and retention and ultimately
    force readiness. And yet, challenges remain in establishing consistent,
    adequate funding of the healthcare benefit in a way that does not
    compromise other essential programs. We must ensure health services
    support functions organic to our operating forces, which are not in the
    Defense Health Program, receive adequate funding and attention within
    the Service POMs.
        Real Property Maintenance.--Real property maintenance (RPM)
    continues to reveal the combined effects of aging facilities and under
    funding. The current and accumulating RPM backlog for U.S. Pacific
    Command components will amount to $7.1 billion over the next five
    years, assuming no fundamental changes emerge from the Secretary of
    Defense's ongoing strategy review. Funding intended for facilities
    repair and maintenance often goes to more immediate operational needs,
    and the backlog grows. The result is that our camps, posts and stations
    across the U.S. Pacific Command are shabby and deteriorating. This
    shortfall in real property maintenance affects readiness, quality of
    life, retention, and force protection that we can no longer ignore. Our
    people deserve to live and work in a quality environment.
        Housing.--Good top rate housing that meets family housing goals of
    2010 remains one of my top quality of life concerns. Projects are
    underway, ranging from whole barracks renewals at Fort Richardson,
    Alaska, and Schofield Barracks, Hawaii, to new family housing at Pearl
    Harbor and Kaneohe Bay, Hawaii. Commander in Chief Pacific Fleet
    (CINCPACFLT), Pacific Air Forces (PACAF), and Marine Forces Pacific
    (MARFORPAC) expect to meet the 2010 housing goal if funding continues
    at current levels for their programs. U.S. Army Pacific (USARPAC)
    anticipates adequate housing for Hawaii by 2010 if their Residential
    Community Initiative is successful. However, housing in Alaska and
    Japan will remain inadequate until substantial MILCON funding is
    allocated to their revitalization programs. U.S. Forces Korea (USFK)
    and U.S. Forces Japan (USFJ) also face shortages, forcing service
    members to live off base in Korea and Japan, often in inadequate
    housing. Lack of available real estate acquisition for new housing is
    the biggest obstacle in Japan and Korea. When additional real estate is
    procured, we will need additional MILCON Housing funding to meet
    requirements above what Host Nation Funded Construction can provide in
    Japan and Korea.
        Munitions.--Although we are beginning to procure additional
    munitions, because they have just recently entered full-rate
    production, or have yet to do so, a number of preferred munitions are
    available only in limited quantities and do not support training and
    operational requirements. Such already limited quantities have been
    drawn down as a result of expenditures in Kosovo and ongoing
    consumption in Operation SOUTHERN WATCH and NORTHERN WATCH. Alternative
    munitions will get the job done, but with greater combat risk and
    losses. Funding to further increase stock levels of preferred and
    precision munitions is a top priority.
        Force Protection.--Before the terrorist bombing of the USS COLE,
    U.S. Pacific Command's Force Protection Program had expanded over the
    last year to include rear-area protection program during increased
    hostilities and critical infrastructure protection. The COLE bombing
    resulted in a command-wide, top-to-bottom review of our antiterrorism
    policies and procedures.
        Funding obtained through the Combating Terrorism Readiness
    Initiative Fund (CBT RIF) has helped with critical emergent
    requirements, but the U.S. Pacific Command still has $110 million in
    unfunded requirements. Joint Staff Integrated Vulnerability Assessments
    (JSIVA) play a significant role in assessing our program and
    identifying requirements.
        Following the COLE bombing, the Command began a full reassessment
    of vulnerabilities at ports and airfields not under U.S. control.
    Negotiating force protection memoranda of understanding with foreign
    countries is an ongoing process to ensure clearly delineated
    responsibilities.
        A major challenge is to prevent increased effort from becoming a
    bureaucratic drill rather than a routine way of operating. Instructions
    and checklists help, but they are not enough. Our commanders must think
    tactically about force protection. On every deployment, every exercise
    and even at home stations, we must ingrain force protection in the very
    fabric of our forces. Having said that, terrorists can choose their
    time and place of attack. That gives them an advantage. As long as we
    are engaged around the world, there will be further attacks. Our goal
    is to minimize the impact to our forces.
        Staffing, Training, and Operations.--As we exploit information
    technology and revise our organizations, the character of combatant
    command headquarters is changing. Increasingly, headquarters staffs
    perform operational functions that forward forces used to do. As
    examples, my staff in Hawaii provided many logistics, communications
    and intelligence support functions for our operations in East Timor
    that allowed us to keep the number of U.S. personnel in country to a
    minimum. This further reduced requirements for force protection and
    living support. Also, PACAF is establishing a Joint Air Operations
    Center at Hickam Air Force Base. This center will similarly perform
    many functions of the Joint Forces Air Component Coordinator, reducing
    the number of personnel that must forward deploy to conduct operations.
        As our headquarters staffs become more involved in supporting
    operations 24 hours a day, 7 days a week, in addition to their
    administrative functions, we are finding our staffs working harder than
    before, even as they downsize. We have turned to the Reserve Components
    for help, and they have done a splendid job. But our shortfalls are
    growing, and we are just beginning to exploit the capability that
    information technology gives us to allow forward forces to reach back
    to staffs.
        Increasingly, the measure of staffs to deployed forces is shifting
    from ``tooth to tail'' toward ``brain to brawn.'' While the fiscal year
    2001 NDAA provides some relief from the fiscal year 1998 and fiscal
    year 2000 NDAAs, there is still a requirement for OSD designated
    activities to reduce personnel by 7.5 percent. These additional
    headquarters cuts will hinder our ability to provide effective
    management and oversight of command readiness and operations. It will
    be difficult to execute these reductions in a way that does not impact
    our operational readiness. In the U.S. Pacific Command our staffs are
    fully engaged in operations forward.
        We are experiencing shortfalls not only in available billets, but
    also in the funds needed to train, exercise and operate our forces.
    Particular areas affecting readiness are funding for flight hours, ship
    depot maintenance, joint exercises, and reserve support.
        The funds allocated to component flying hour programs (FHP) are
    increasing, but not fast enough to cover escalating costs. The rising
    costs of fuel and spare parts for aging aircraft appear to be driving
    the escalation. These costs may increase even faster in the years ahead
    as DOD aircraft and avionics fall further behind commercial standards.
    The Navy FHP is growing 15 percent annually. PACFLT is facing a $317
    million shortfall this fiscal year (fiscal year 2001). This figure
    includes a MARFORPAC shortfall of $94 million. Both PACFLT and
    MARFORPAC would exhaust their fiscal year 2001 FHP funding by August
    without reprogramming funds. USARPAC's and PACAF's programs also have
    shortfalls. The Services increasingly rely upon supplemental
    appropriations to avert the consequences of unprogrammed escalation in
    operations and maintenance program costs.
        PACFLT's Ship Depot Maintenance Program continues to be underfunded
    relative to the full requirement. Growing deferred maintenance backlogs
    have been kept in check largely through execution year supplemental
    funding from Congress. This affects battle group inter-deployment
    training readiness, which continues to decline as training resources
    are continually sacrificed to maintain deployed readiness. Forces enter
    training cycles at low state of readiness, fall to lower levels and
    then ``recover'' rapidly right before deployment. The resultant
    ``spikes'' in our readiness curves could become vulnerabilities if
    asked to respond to unforeseen contingencies.
        The ability of U.S. joint forces to fight in a seamless battle
    space and to conduct combined operations with our coalition partners
    will provide the greatest gains in U.S. warfighting capability over the
    coming decade. Joint training represents 5 percent of the operations
    tempo (OPTEMPO) of forces assigned to U.S. Pacific Command. Currently,
    we are well within the congressionally mandated joint exercise man-days
    reduction directives. Our USPACOM-wide man-day reduction through fiscal
    year 2000 was 32 percent, 7 percent below the objective of 25 percent.
    Simultaneously, we have shaped a solid Joint Training Program. This
    program provides us confidence that our Joint Task Forces (JTFs) are
    ready to fight. Further fiscal reductions to the Joint Exercise Program
    put our JTF and joint warfighting readiness at risk. We need full
    funding of the currently planned minimum exercise program. This
    includes Service Incremental Funding and the Strategic Lift (STRATLIFT)
    provided through the Chairman's Exercise Program. Inflation of flying
    hour costs has increased exponentially over recent years, significantly
    eroding our STRATLIFT buying power. This impacts us greatly in USPACOM
    where STRATLIFT is our lifeblood due to our vast area of responsibility
    (AOR). We need full funding to ensure we get the right forces, to the
    right place, to exercise with the right joint and coalition partners,
    so we can indeed remain ready.
        Shortfalls also exist in funding designed to employ reserve and
    National Guard personnel. U.S. Pacific Command's reserve billets are
    based upon a single major theater war. Reservists' two week training
    period is sufficient for them to support one major exercise per year,
    which leaves the command short of personnel to support several other
    major exercises in the joint training plan. Defense plans include
    provisions for Reserve personnel to volunteer to support exercises, but
    funds are inadequate to accommodate the volunteers.
        Summary.--Overall, the majority of readiness concerns of a year ago
    remain today. While making progress in some areas, we are declining in
    others. I continue to have no reservations about the U.S. Pacific
    Command's ability to do its job today. However, I do have doubts about
    its ability to do so in the future unless we make more progress in
    addressing structural readiness issues.

    (2) Regional Engagement
        While readiness prepares us to respond, through regional engagement
    we shape the region to promote security and peaceful development.
    Current circumstances provide the opportunity and the necessity to
    develop more mature security arrangements among the nations of the
    region. Opportunities derive from dynamic regional security
    developments and a new generation of leaders willing to reexamine what
    policies are genuinely in their national interest. Necessity derives
    from strong nationalism, ethnic and religious rivalry, and historic
    grievances that drive desires to settle old scores prevalent throughout
    the region. Steady and focused efforts ensure the region develops in
    ways favorable to American interests.
        Engagement is a process to achieve national objectives, not an end
    in itself. Our efforts improves the ability of regional partners to
    defend themselves, deters potential aggressors, strengthens security
    alliances and partnerships, increases regional readiness for combined
    operations, promotes access for American forces to facilities in the
    region, and promotes security arrangements better suited to the
    challenges of the 21st century.
        Enhanced Regional Cooperation.--Over the past year, the U.S.
    Pacific Command has worked closely with the Joint Staff, Office of the
    Secretary of Defense and the interagency community to develop enhanced
    regional cooperation. The objectives of enhancing regional cooperation
    have been to improve regional readiness for combined operations and to
    expand the set of states in the region that share dependable
    expectations of peaceful change.
        Transnational concerns affect all states in the region in varying
    degrees. Many of the states in the region contribute armed forces and
    police to U.N. peacekeeping operations. Terrorism, weapons
    proliferation, illegal drug trafficking, illegal migration, piracy, and
    other transnational criminal activities represent problems that require
    regional cooperation. Some of this is police work, and some of it is
    military work. Different countries organize differently. Since
    adversaries operate freely without regard for borders, seeking support,
    bases of operation, and weak points to attack throughout our region,
    the only way to win against them is international cooperation.
        By developing capabilities to work effectively as coalitions in
    complex contingencies (such as East Timor); as partners in countering
    terrorism, illegal drug trafficking, and piracy; in managing the
    consequences of chemical, biological or nuclear attacks, natural
    disasters and accidents; in evacuating citizens caught in the path of
    violence; in search-and-rescue of mariners in distress; and in
    providing humanitarian assistance, the armed forces of the region
    improve their readiness to contribute to combined operations. Working
    side-by-side on these missions builds confidence and trust among the
    participants as it improves operational capabilities. It provides a way
    for states that want to exert more influence in the region to do so in
    constructive ways that contribute to regional security. And, it
    provides the United States with competent coalition partners so that
    our armed forces need not shoulder the entire load.
        The U.S. Pacific Command's efforts to enhance regional security
    include expanding dialogue among the armed forces of the region,
    developing standard procedures and training staffs to use them, and
    exercising to hone our capabilities and learn where to improve.
        In addition to my visits around the region and those of my
    component commanders, U.S. Pacific Command sponsors a wide range of
    activities to promote regional security dialogue. The Asia-Pacific
    Center for Security Studies (APCSS--see Appendix A) brings together
    military officers from around the region at the colonel/brigadier level
    and government officials of equivalent grades for a 12-week course.
    APCSS also conducts a one-week course for more senior officers and
    officials, and hosts about five conferences each year. The U.S. Pacific
    Command also hosts annual conferences on military operational law and
    logistics, and for the past three years has held a conference for
    Chiefs of Defense from around the region. These conferences have been
    very effective in promoting military cooperation against common
    threats.
        At the Chiefs' conference, we also demonstrated our new Asia-
    Pacific Area Network (APAN). APAN is a non-secure web portal, which
    provides an internet-based communications and collaboration ability for
    the armed forces of the region and civilian organizations that
    participate in complex contingencies to share sensitive, but
    unclassified, information. On it, we have begun web-based collaboration
    by posting standard procedures for combined operations. These web pages
    have mechanisms so that anyone can suggest improvements. Like many
    things on the web, no government signs up to use these procedures, but
    they are available for those who need them. Web-based planning and
    distributed simulations are also possible to add new, affordable means
    to build regional capacity. Additionally, the APAN concept provides a
    simple and economical means to provide a networking of institutions and
    training centers with this new form of collaboration and information
    exchange. These networks will be the building blocks for Asia-Pacific
    Security Communities that were previously unaffordable.
        We also have held Multinational Planning Augmentation Team (MPAT)
    conferences to refine procedures, and conducted workshops to train
    staff officers from around the region as a cadre of Asia-Pacific
    military planners ready to reinforce a multinational force
    headquarters. We rely on lessons learned in East Timor and other
    peacekeeping operations to improve the region's capability to conduct
    combined operations. In November, the Philippines hosted an MPAT Staff
    Planning workshop attended by eighteen nations, non-governmental
    organizations and U.N. representatives. Many armed forces in the region
    want to improve their abilities to work together, and use APAN to
    continue their MPAT dialogue between workshops.
        TEAM CHALLENGE links bilateral exercises COBRA GOLD with Thailand,
    BALIKITAN with the Philippines, and TANDEM THRUST with Australia to
    address bilateral training objectives and to improve the readiness of
    regional armed forces to contribute to multilateral operations. This
    year Singapore will participate and other nations, such as Japan and
    Korea, will observe with an eye toward participating in future years.
    In TEAM CHALLENGE we will exercise elements from the full spectrum of
    missions that our combined forces may be called upon to do together,
    from complex contingencies to humanitarian assistance.
         These are examples of efforts to enhance regional security
    cooperation. As we progress, we find many requirements to coordinate
    better on logistics, intelligence and other aspects of our operations,
    and take steps such as developing a coalition-wide area network
    (successfully employed in RIMPAC, our multinational naval exercise).
    With cooperation from the nations of the region, and the initiative
    that my staff and my components have demonstrated, enhanced regional
    cooperation and security communities have grown from a concept to a
    substantial approach for promoting security and peaceful development
    over the past year.
        The reactions to the U.S. Pacific Command's efforts have been
    largely positive, with some reservations. Some allies have expressed
    concern that multinational efforts will dilute the quality of our
    bilateral relations. For enhanced regional cooperation to succeed, we
    must strengthen our traditional bilateral relations, focusing our
    efforts on capabilities to pursue common interests, and then reach out
    to other nations in the region. The TEAM CHALLENGE planning efforts
    have demonstrated our commitment to meeting bilateral training
    objectives and enhancing them with skills required for coalition
    operations.
        Other nations have expressed concerns that this is a precursor to
    the United States reducing its involvement in the region. Quite the
    contrary! By improving our capabilities to work together, the nations
    of this critical region can more effectively address the broad range of
    security challenges that none can solve alone.
        Also, some nations fear that it is a scheme for containing China.
    Instead, it is a way to encourage China to contribute to regional
    security in constructive ways. We welcome the fact that China has sent
    15 police officers as part of the CIVPOL contingent to East Timor. We
    would welcome greater Chinese involvement in peacekeeping such as they
    provided in Cambodia in 1994. The last class at APCSS included two
    Peoples Liberation Army (PLA) officers and two officials from the
    Ministry of Foreign Affairs. They learned that many nations in the
    region share American security concerns and that cooperation in many
    areas is in China's interest. The way ahead in U.S. Pacific Command's
    relations with the PLA is, with the support of other armed forces, to
    encourage cooperation in areas where our nations genuinely share mutual
    interests, while maintaining that disputes must be resolved peacefully.
    As with many nations in the region, we must work to transform PLA
    leadership mindsets from measuring differences in military power to
    measuring progress in regional security.
        The $10 million in Asia-Pacific Regional Initiative (APRI) funds
    provided by Congress in fiscal year 2000 and $24.6 million provided in
    fiscal year 2001 have been essential to the initiatives to enhance
    regional cooperation. The dollars we invest in these regional
    activities pay huge dividends in U.S. security.
        Currently, U.S. Pacific Command interactions with armed forces of
    14 of the 43 nations in the region are restricted in some form. Some of
    these restrictions are in the U.S. interest. Others, I question. I
    encourage the close review of restrictions to ensure we have drawn the
    lines at the right places. The objective is to build relationships and
    influence for the long term as we exact penalties in the short term.
        Foreign Military Officer Education (FMOE).--One area where I would
    recommend eliminating restrictions is in foreign military officer
    education. The experience of American officers who have attended
    foreign military colleges provides an unparalleled understanding of how
    foreign armed forces see their role and approach operations. Similarly,
    foreign officers who attend American military colleges develop an
    understanding of the value of professional armed forces, removed from
    politics and subordinate to civilian government authority. They come to
    appreciate that reliance on force to resolve internal disputes, rather
    than political accommodation and economic development, stokes the fires
    of rebellion and drives away investments needed for national growth.
    They also acquire a deeper appreciation of America's interest in
    maintaining international security so all may prosper. The contacts
    they develop with Americans and officers from their region establish a
    network for dialogue and become particularly valuable as they assume
    leadership roles within their armed forces.
        International Military Education and Training (IMET).--We should
    also examine restrictions on many aspects of our IMET program.
    Education is a long-term investment and the IMET program, a main source
    of funding for FMOE, is our primary tool in this effort. I believe
    unrestricted IMET programs are fundamentally in the national interest.
    Some say military education is a reward for countries that behave
    according to international standards. On the contrary, military
    education is a valuable tool we use to gain influence with foreign
    militaries. Military training--teaching tactical skills and equipment
    maintenance--should be carefully tailored and controlled. However,
    military education--study at Command and Staff Colleges--introduces the
    ideals of democracy, civilian control of the military, and respect for
    human rights, and should be available to all. Many reform-minded, pro-
    U.S. military leaders in the Asia-Pacific region today are IMET
    graduates who strongly advocate a continued U.S. presence and
    engagement in Asia.
        IMET is a modest, long-term investment to help build a secure,
    peacefully developing Asia-Pacific region. Following a declining trend,
    with your help U.S. Pacific Command's funding for IMET is now on the
    right path. In fiscal year 2000 we received $6.659 million for 17
    countries, and in fiscal year 2001 our budget is about $7.2 million for
    19 countries. Further increases would yield real benefits to U.S.
    security.
        U.N. Convention on the Law of the Sea.--U.S. ratification of the
    U.N. Convention on the Law of the Sea (UNCLOS) is another action that
    would enhance regional security cooperation. Many Asia-Pacific
    countries assert excessive maritime claims that challenge navigation
    rights. Over the past few years, parties disputing territory in the
    South China Sea have shifted their approach from occupying reefs to
    negotiating over a Code of Conduct. In this and other disputes, the
    U.S. position is that agreements should be in accordance with UNCLOS.
    Ratification will strengthen our hand in demanding compliance with
    UNCLOS requirements and in countering excessive maritime claims.
        Summary.--We have continued to make significant progress this year
    in better structuring our engagement programs in the Asia-Pacific
    region to advance U.S. interests. Through continued emphasis on
    education, dialogue, standard procedures, staff training, improved
    communications, exercises and coordination on matters of common
    interest, we will continue to expand the set of nations in the Asia-
    Pacific region that share dependable expectations of peaceful change.
    We will enhance regional cooperation and access of U.S. forces to
    facilities in the region, strengthen alliances and security
    partnerships, and deter aggression.
    (3) Transformation
        Transformation involves changes in operational concepts and
    organizational schemes that take advantage of technology to provide
    decisive advantages in warfare. The Armed Forces of the United States
    are committed to leading that change in the 21st century. At U.S.
    Pacific Command, our Transformation strategy is based on two parallel
    initiatives--technology insertion efforts such as the Advanced Concept
    Technology Demonstration (ACTD) program run out of OSD and the Joint
    Experimentation program that is led by U.S. Joint Forces Command.
        Since I last spoke with you, U.S. Pacific Command has been rewarded
    for its aggressive pursuit of ACTDs with three fiscal year 2001 new
    start ACTDs and a fourth ACTD-like project, bringing the total number
    of ACTDs we are involved in today to thirteen.
        The Tactical Missile Systems-Penetrator ACTD will provide a
    penetrator weapon designed to deal with specific high threat targets in
    Korea within three years. The Coalition Theater Logistics ACTD will
    provide vital logistics command and control capabilities for coalition
    forces operating in campaigns similar to that in East Timor. The Hunter
    Standoff Killer Team ACTD will provide vital joint C4I
    capabilities to engage time critical targets and massed armor. The
    Coalition Rear Area Security Operations Command and Control
    (CRASOC2) is an ACTD-like project in that it will have
    streamlined management and early operator involvement.
    CRASOC2 will develop force protection C4I
    capabilities to improve coordination between U.S. security forces and
    host nation police and military agencies for improved protection of our
    forces stationed overseas.
        The Advanced Concept Technology Demonstration program is serving
    U.S. Pacific Command well. We need such programs designed to get
    advanced technology rapidly into the field for evaluation and
    experimentation.
        The pace of joint experimentation in the U.S. Pacific Command has
    increased since I last testified before you. Over the past year, U.S.
    Pacific Command has supported U.S. Joint Forces Command in the Unified
    Vision and Millennium Challenge series of experiments and planning
    conferences. We participated in Joint Warrior Interoperability
    Demonstration (JWID) 2000 as a primary demonstration site and the
    Combined Task Force Commander's headquarters in the Pacific Scenario.
    We have agreed to team, as host CINC, with the Joint Staff and U.S.
    Marine Corps in the execution of JWID 2002-2003 and have already
    stepped forward to influence the C4ISR interoperability
    challenges that will be addressed. We continue efforts to develop joint
    interoperability at the tactical level through the Expanding the
    Littoral Battlespace (ELB) ACTD. With the support of U.S. Joint Forces
    Command and the Services, we have made significant progress in
    developing the Joint Mission Force (JMF) concept into a capability.
        A Joint Mission Force is a seamless Joint/Combined Pacific Theater
    response force capable of accomplishing the full spectrum of missions
    from a complex contingency through humanitarian assistance and of
    serving as the leading edge of a major war. This force will execute
    operations more effectively, rapidly and efficiently than we can today.
    This transformation effort has moved from its infancy into wargames and
    exercises that enhance our ability to rapidly form and deploy a Joint
    Task Force. We have identified the top 10 challenges to more effective
    Joint Task Force operations and have made significant progress in
    developing procedures to address them. We also have incorporated JMF
    and other mature experimentation into our exercise program.
        We have concentrated our efforts over the past year on the
    improvements we need to establish a relevant, common operational
    picture and communicate tasking and information among the headquarters
    of components of a Joint Task Force. Our JMF Command and Control
    exercise program, or C2X, is identifying clear requirements
    to enable a JTF and assess where specific deficiencies exist, with the
    intent of fixing deficiencies by 2003. We are receiving strong support
    from the Services in rectifying these deficiencies that are basic to
    our joint warfighting capability. The greatest gains in warfighting
    capability that we will see over the coming decade will come from our
    ability to eliminate seams in the battlespace and let all units
    assigned to a Joint Task Force exploit their full potential. We have
    received significant financial and staff support from U.S. Joint Forces
    Command in taking the JMF concept from its infancy to a near-term
    capability. By including our allies and close security partners in our
    wargames, we ensure that our JMF efforts are in harmony with our other
    efforts to improve regional readiness for combined operations.
        Australia, Japan, Korea, and Singapore all have the technological
    resources to work with the United States in developing advanced warfare
    capabilities. We share information on our efforts with these countries,
    and work together to improve coalition interoperability at the high end
    of military technology.
        Some have expressed concerns that by strengthening coalition
    capabilities and working with potential adversaries on skills required
    for peacekeeping operations and complex contingencies, we are
    jeopardizing our warfighting edge. The reverse is true. We are
    continuing to widen the gap in warfighting capabilities between the
    United States, its allies and partners, and potential adversaries. As
    we experiment, we improve our readiness, enhance regional cooperation,
    and transform our forces to meet the challenges of the 21st century.
        Indeed, U.S. Pacific Command's priorities of readiness, regional
    engagement, and Transformation are not wholly distinct activities. Let
    me try to bring this idea alive by describing a visionary Western
    Pacific deployment of a carrier battle group (CVBG) on its way to the
    Arabian Gulf.
        During workups, the battle group acts as the Navy component of a
    joint task force under a realistic exercise scenario. The battle group
    maintains a common operating picture with a JTF commander's
    headquarters and subordinate Service components. During that time, it
    experiments with a new C4 system being developed by the
    Army--for example a new version of the Coalition Wide Area Network--
    holding Common Operational Picture checks with brigade headquarters in
    Australia, Singapore and the Philippines.
      --As the battle group approaches Japan, it forms a two-carrier task
            force, and conducts an area access exercise involving Japanese
            and ROK forces in both coalition and opposition force roles.
            The battle group joins the Japanese Global Command and Control
            System (GCCS).
      --It then integrates into the Korean area air defense and conducts
            experiments integrating joint and combined fires, including
            live ordnance fire on ranges.
      --The task force then transits from Korea down to the South China
            Sea.
      --It exercises operational deception, employing information from
            national technical means to evaluate effectiveness;
      --It conducts Antisubmarine Warfare (ASW) exercises, working the
            seams between CVBG and area ASW in littoral regions, developing
            new concepts and establishing C4SIR requirements.
      --It exercises area air and missile defense with an Air Force
            component out of Okinawa and Guam, working Air Tasking Order
            improvements and experiments with information operations, and
            routinely operating with Global Hawk to hone new joint
            concepts.
      --The transit culminates with a dissimilar air engagement exercise
            with Singapore and port calls in South East Asia. During the
            port calls, battle group officers hold seminars with
            counterparts in host countries to improve coalition
            interoperability at the tactical level.
        All of this could be done in 10-14 days. And what would we have
    accomplished?
      --Increased readiness of all forces involved, to respond to
            contingencies;
      --Conducted regional engagement that both reassured allies, and
            deterred those who would use aggression to impose their will;
      --Made progress in transforming the way we operate, both to take
            advantage of emerging technology and to address emerging
            challenges.
        This vignette illustrates that readiness, regional engagement, and
    the transformation of our armed forces are not distinct efforts,
    accomplished by separate organizations at separate times. We do them
    together, with operational units. If we experiment and adapt, we are
    increasing our readiness, while we make the evolutionary changes in
    technology and concepts which will lead to the transformation of
    warfighting. If we do them with our allies and security partners, we
    have the most effective kind of military engagement.
        Transforming our armed forces to maintain their leading edge and
    interoperability with coalition partners is essential to protecting
    American security interests in the 21st century. Several members of
    Congress have been active in pushing us to pursue this program, and we
    need your continued support and leadership.

    (4) Resources
        The U.S. Pacific Command's ability to execute its strategy rests on
    its ability to command ready, forward-deployed and forward-stationed
    forces, to move them where they need to be in the theater, and to
    reinforce them in the event of a major war. Ultimately this depends on
    the resources Congress and the American taxpayers provide us. In this
    section, I will discuss resources in several key areas that are
    important to the Pacific Command's strategy.

    Command, Control, Communications, and Computer Systems (C4)
            Capabilities
        Information technology is changing every aspect of warfare in an
    evolutionary way and warfare as a whole in a revolutionary way. From my
    perspective, C4 support fits into three main categories: (1)
    an end-to-end infrastructure; (2) the capability to integrate and
    process data into usable information and make it available when needed;
    and (3) the protection of information.
        First, the end-to-end enterprise enhances the ability to command
    and control forces and consists of a space segment, a downlink
    capability and the ground segment.
        The U.S. Pacific Command's vast area of operations, covering 52
    percent of the earth's surface, requires forces to rely heavily on
    strategic satellite communications (SATCOM). Since my testimony to you
    last year, we've made great strides in many of the SATCOM programs. For
    example, we accelerated the Advanced Extremely High Frequency program
    to compensate for a Milstar launch failure; agreed to launch a third
    Wideband Gapfiller System satellite to complete global coverage as the
    Defense Satellite Communications System constellation replacement; and
    scheduled the launches of the three Milstar satellites. The challenge
    is to keep these critical satellite programs on track.
        As I also stated last year, my Joint Task Force commanders and
    deployed units must have access to the strategic defense information
    infrastructure, the Global Information Grid, or GIG. This capability is
    critical to providing them with vital command, control, and
    intelligence information. I strongly supported the DOD Teleport
    program, as did many of my fellow CINCs, and I am now satisfied that
    this program is on course.
        Advances in the space segment and downlink capability provide
    little value if we cannot push the information out to the user. The
    base, post, camp, and station infrastructures must keep pace. Since we
    still have antiquated cable plants, network wiring, and end-user
    equipment, we must attack this ground infrastructure as aggressively as
    we have the space segment. The recent decision that injected
    significant funding into the U.S. Army's European and Pacific theaters
    is a tremendous boost in our fight to keep pace with technology, and I
    applaud your and OSD's efforts in directing that funding to us.
    However, requirements go beyond the U.S. Army. The U.S. Air Force,
    Navy, and Marine Corps are also encountering the same problems and
    require much-needed funding support if we are to modernize entire
    theaters. While single-Service efforts significantly help in the
    modernization battle, we realize maximum payoffs when we collectively
    raise all Services to the same capability level.
        Not to be overlooked in the end-to-end infrastructure is the
    frequency spectrum. We must proceed cautiously with the sell-off of DOD
    frequencies since that loss directly translates into potential
    operational risks. Once we sell them, they are forever unavailable for
    military use.
        The second C4 category involves converting data into
    useful information that will optimize synchronous planning and
    execution, and improve decision support. At the heart of this
    requirement is interoperability and accessibility. Interoperability
    allows all parties to share the same capabilities and information,
    while accessibility allows them to get the information they require
    when and where they need it.
        The Global Command and Control System (GCCS) is the backbone of the
    joint and combined command and control capability. Yet, Service
    variants of GCCS are not fully interoperable with the Joint version.
    For example, the GCCS Integrated Imagery and Intelligence application
    being developed for the Joint version of GCCS is falling behind, while
    the Services continue to modernize their individual intelligence
    applications. To fix this, we must mandate new C4 systems be
    Joint `from cradle to grave.'
        There are also GCCS incompatibilities in combined operations; for
    example, GCCS Joint and GCCS-Korea. These two systems share some common
    operational picture data, but do not share information via files, e-
    mail, and other web service tools. Obstacles to combined
    interoperability lie in information release restrictions. Our allies
    understandably restrict release of their classified information.
    Likewise, we want to control release of U.S. classified information. To
    achieve effective combined interoperability, we must develop much more
    capable security procedures and sophisticated tools to allow
    information exchange while protecting our national and allied data.
        Technology is changing the way the warfighter prepares, trains, and
    executes the mission. We must develop a mindset promoting innovation
    and technology insertion. It is through continued support of Advanced
    Concept Technology Demonstrations, experimentation programs, and
    exercises with our coalition partners, that we find ways to improve
    interoperability and enhance capabilities. We must put more emphasis on
    acquisition by adaptation, put proven prototypes into a joint field
    environment, and mature them through a tight spiral development cycle.
    Information is power, and a fully interoperable infosphere allows us to
    collaborate with coalition partners, share operational pictures,
    increase the speed of command, and ultimately, win the day.
         Obviously, sharing information among Services, sub-unified
    commands, and coalition partners is a complex security challenge. That
    leads me to the third category, Information Assurance (IA). How do we
    provide access to, and share information with, Asia-Pacific countries
    while protecting U.S. and coalition-sensitive data from potential
    adversaries?
        To improve IA in the U.S. Pacific Command, we are taking several
    measures. We are evaluating the Automated Intrusion Detection
    Environment. Our Theater C4ISR Coordination Center is
    building a theater IA common operational picture (COP) (similar to the
    COP we use in the command and control arena) and tracking intrusion
    attempts and methods. We also are working closely with the Defense
    Information Systems Agency on an improved configuration that will
    provide full coverage of external connections to our Pacific networks.
        Yes, we can improve IA in the theater; however, to do so requires a
    heavy investment in people and additional hardware. The payback is not
    always as easily recognizable as with the production of new airplanes,
    ships, or tanks. You cannot touch and feel information protection, but
    a loss of critical or time-sensitive information or a denial of service
    can be far more detrimental to national security than a single weapon
    system. I request your continued support as we implement IA into our
    daily operations.
        As you can see, C4 is a major concern in the Pacific and
    my top resource priority. While we have made great strides recently in
    addressing satellite communications shortfalls, we still have a long
    way to go. We must now focus on modernizing the ground infrastructures
    and ensuring the protection of our networks and the information that
    traverses them.

    Intelligence
        Intelligence is essential to monitor potential adversary
    developments and preparations so that we can train our forces for the
    threats that they face and move them into position in a timely fashion.
    Shortages of airborne intelligence, surveillance and reconnaissance
    (ISR) assets--U-2s, RC-135s, EP-3s significantly impact USPACOM's
    readiness ratings. These shortfalls diminish our situational awareness,
    early indications and warning (I&W), and deep knowledge of the
    capabilities, plans and intentions of key theaters in our area of
    responsibility. Although Joint Staff planned allocation of airborne
    reconnaissance assets is adequate for routine operations in the Pacific
    Theater, we do not have the surge capability to monitor crises or
    cyclical increases of potential adversary activities. Other chronic
    shortfalls in high priority intelligence include linguists, tactical
    signals intelligence (SIGINT) systems, intelligence specialists, and
    intelligence interoperability.
        The core of intelligence analysis and dissemination in the theater
    is the Joint Intelligence Center Pacific (JICPAC), located near Pearl
    Harbor. JICPAC's operational efficiency and impact suffers because
    almost 100 JICPAC personnel must work in a revamped hangar at Hickam
    AFB, due to space limitations in the main JICPAC facility. These split-
    based operations cost almost $300,000 per year for the separate
    facility, as well as lost time and efficiency. In addition, JICPAC's
    building, in a vulnerable location near a major highway, presents a
    serious force protection issue. At the same time, the Kunia Regional
    SIGINT Operations Center (RSOC) occupies an aging facility, built in
    1945, renovated for cryptologic operations in 1979, and then updated
    throughout the last twenty years. Collocating the RSOC with the new
    JICPAC facility on an intelligence ``campus'' would improve
    intelligence exchange, analytical dialogue, and efficiencies in
    infrastructure.
        Advances in global telecommunications technology continue to place
    enormous pressure on the need to modernize both national and tactical
    cryptologic capabilities. USPACOM supports the National Security
    Agency/Central Security Service's (NSA/CSS's) strategic transformation
    actions and changes undertaken in the last year. NSA must transform to
    address the global net, but warfighters' knowledge of adversary
    battlefield communications will also continue to be a high USPACOM
    priority. NSA must be funded to continue modernizing tactical SIGINT
    collection capabilities, operations of the RSOC and accompanying land-
    based collection architecture, addressing ELINT collection shortfalls,
    and operations of the Information Operations Technology Center (IOTC).
        Specifically, NSA needs more capable, joint tactical cryptologic
    systems. Rapid advances in widely available communication technology
    have rendered obsolete much of the current inventory of tactical
    cryptologic systems. At the same time, the Services' R&D funding has
    declined. NSA and the Services must continue to aggressively pursue
    standards and common architectures, such as the Joint Tactical SIGINT
    Architecture.
        Increased HUMINT capabilities are critical to support collection
    against strategic and operational requirements in the Pacific.
    Improvements are needed to enhance collection against key USPACOM
    indications and warning requirements and hard-target organizations and
    countries. Continuing investment in theater-based HUMINT resources,
    specifically computers and communications capabilities, is essential to
    improve collection against hard targets. Any further Defense HUMINT
    Service (DHS) reductions will adversely impact USPACOM-based U.S.
    Defense Attache Offices (USDAOs), Field Operating Bases, and DHS
    support to key USPACOM collection requirements and contingency
    operations. The USDAO system, in particular, already is experiencing
    serious resource constraints in the USPACOM AOR.
        The Nation's future imagery and geo-spatial architecture will
    deliver unmatched capability, including enhanced imagery collection
    provided by unmanned aerial vehicles and the Future Imagery
    Architecture. However, USPACOM warfighters will not reap the full
    benefits of this capability without full tasking, processing,
    exploitation, and dissemination (TPED) investment. A robust TPED
    architecture is essential to ensure that dynamically tasked national,
    airborne, and commercial imagery and geo-spatial products connect the
    sensors to the analysts and, ultimately, to the tactical consumers.
    Services and agencies must institutionalize the need to properly
    program resources that incorporate TPED capabilities. Progress is
    occurring and CINC interests are being addressed. However, we will work
    to identify outyear funds to meet substantial portions of Senior
    Warfighting Forum priority requirements. Specifically, the Services
    must work with National Imagery and Mapping Agency to fund the
    capabilities needed to make Joint Vision 2010/2020 a reality. These
    include required technical enhancements to theater digital
    infrastructure, advanced analytical exploitation tools, and improved
    imagery analyst training (especially for advanced sensor products).
        Asian linguist deficiencies are acute and a documented USPACOM
    readiness concern. Despite additional student slots at the Defense
    Language Institute, there are recurring and persistent shortages of
    Asian linguists to meet Operation Plan (OPLAN) and Contingency Plan
    (CONPLAN) requirements. Also, resources for low-density linguists in
    support of probable Noncombatant Evacuation Operations (NEO) continue
    to be problematic. Service recruiting and retention shortfalls, coupled
    with the inherent difficulty of Asian languages and the longer training
    periods required, aggravate these deficiencies.

    Mobility Infrastructure and Strategic Lift
        With congressional and Service support, we have made solid progress
    in correcting deficiencies in our mobility infrastructure. A total of
    15 MILCON projects are either in work or programmed through fiscal year
    2004. We will apply supplemental MILCON funding for fiscal year 2001 to
    critical en route and currently unfunded infrastructure projects, such
    as those at Wake Island.
        We support the fiscal year 2001 MILCON language that would restore
    MILCON contingency funding. While we are making headway with some near-
    term MILCON projects, sustained funding is still required. The
    continued appropriation of resources is absolutely essential to
    maintain an upward trend and complete the necessary repairs of our
    aging mobility infrastructure.
        In addition to a well-maintained mobility infrastructure,
    contingency throughput in our theater largely depends on strategic
    lift. As identified in the recently released Mobility Requirements
    Study 2005 (MRS-05), there are ``areas where improvements are needed in
    mobility programs  * * *  An airlift fleet of 49.7 million-ton-miles
    per day, (the previous established level), is not adequate to meet the
    full range of requirements.'' I fully support the MRS-05 recommendation
    that ``DOD should develop a program to provide [additional] airlift
    capacity.''

    Army Prepositioned Stocks (APS-4)
        A key logistics and sustainment shortfall remains in Army
    Prepositioned Stocks (APS-4) in Korea. Sustainment shortfalls limit
    ability to reconstitute the force and sustain missions, resulting in
    increased risk. Major end item shortages include M1A1/A2 tanks, MLRS,
    HEMTT fuelers, and some chemical defense equipment. Equipment shortages
    currently total about $450 million. Lack of repair parts and major
    assemblies within the APS-4 sustainment stockpile will directly impact
    the ability to return battle-damaged equipment to the fight. The Army's
    current plans are to cascade additional equipment into the APS-4
    sustainment stocks over the next couple of years, thus reducing this
    shortfall.

    Infrastructure in Japan and Korea
        The Host Nation Funded Construction (HNFC) programs in Japan and
    Korea provide almost $1 billion annually in new construction to support
    U.S. Forces. However, the United States must fund the initial project
    planning and design (P&D) effort. For fiscal year 2001, the U.S. Army
    Corps of Engineers allocated $20.5 million for the HNFC program. This
    is a return on investment of 46:1. Continued congressional support for
    the planning and design funding is critical.
         One provision of the latest Special Measures Agreement is that
    Japanese Facilities Improvement Program (JFIP) funds can no longer be
    used for ``revenue producing'' projects. Examples of projects
    disallowed in the fiscal year 2001 program were Army and Air Force
    Exchange Service warehouses, exchanges, commissaries, and gymnasiums.
    The effect of this provision is that additional MILCON funding will be
    required for the Services, Defense Logistics Agency, Army and Air Force
    Exchange Service, Navy Exchange, Defense Commissary Agency, and DOD
    Schools to support Quality of Life initiatives for our service members
    in Japan. We will need strong congressional support for these MILCON
    projects when programmed. There has not been a MILCON project completed
    in Japan since 1989.

    New Headquarters Building
        I would like to offer my thanks again for your support for the new
    U.S. Pacific Command Headquarters building. We held the groundbreaking
    ceremony in February and are on track to provide a facility designed to
    support the 21st century.

    Security Assistance
        Security Assistance Funding in the Pacific Theater is an important
    component of my Theater Engagement Strategy.
        Foreign Military Financing (FMF).--For fiscal year 2001, two U.S.
    Pacific Command countries will each receive about $2 million in FMF;
    Mongolia, to increase its border security capabilities; and the
    Philippines, for critical aircraft and patrol boat spare parts. State
    Department has allocated FMF for East Timor, as those funds meet
    legislative requirements.
        Enhanced International Peacekeeping Capabilities (EIPC).--The Asia-
    Pacific region needs better capabilities to respond collectively when
    the United Nations or the nations of the region determine that an
    international response is required. Approximately $2.2 million in
    fiscal year 2001 EIPC funds have been requested for five Pacific
    Command countries, to either enhance existing or establish new
    peacekeeping operation (PKO) training centers. These well-spent dollars
    are helping our neighbors share the PKO burden around the world.
        Nonproliferation, Antiterrorism, Demining and Related Program
    (NADR), and Overseas Humanitarian Disaster and Civic Aid (OHDACA).--
    NADR funding has helped the Philippines improve its ability to deal
    with terrorists, and, in combination with DOD OHDACA money, has done
    much to reduce the threat of unexploded ordnance in Thailand, Cambodia,
    Laos, and Vietnam. Anticipated fiscal year 2001 funding will expand
    demining operations in those countries.
        These Security Assistance programs, along with IMET, are crucial to
    our continued engagement in the Asia-Pacific region, and I request your
    continued support in their funding.

    Center of Excellence in Disaster Management and Humanitarian Assistance
            (COE)
        Since its beginning in 1994, the Center of Excellence in Disaster
    Management and Humanitarian Assistance has bridged the gap between
    civil and military activities related to humanitarian emergencies.
    Historically an annual increase to DOD appropriations has funded the
    COE. Collaborating the resources and strengths of governmental and non-
    governmental organizations, the Center of Excellence has participated
    in relief efforts following floods in Vietnam and Venezuela,
    earthquakes in Turkey and Taiwan, and population displacement in Kosovo
    and East Timor. The Center's approach to response, education and
    training, research, and consulting for disaster relief has become the
    model for successful interaction between the military and private
    humanitarian organizations.

                                   CONCLUSION

        In summary, Asia-Pacific issues are growing in importance on the
    American security agenda. Our people are the foundation for everything
    that we do, and providing professionally rewarding service must be our
    first concern. Next must be our strategy, and ensuring that we have the
    capability to sustain our forward basing, support increasingly
    information-rich operations, and the mobility to move our forces across
    this vast theater and across the globe. The coming year will continue
    to present challenges for the United States in the Asia-Pacific region.
    We neglect developments in the region at our peril, but with sustained
    attention we can help build a region which will support American
    interests over the long term.

                                   Appendix A

                    ASIA-PACIFIC CENTER FOR SECURITY STUDIES

        The Asia-Pacific Center for Security Studies (APCSS) is a regional
    studies, conference, and research center in Honolulu. Established in
    September 1995 as a preventive defense and confidence-building measure,
    its mission is to enhance cooperation and build relationships through
    mutual understanding and study of comprehensive security issues among
    military and civilian representatives of the United States and other
    Asia-Pacific nations. The cornerstone of the Center's program is the
    College of Security Studies, which provides a forum where future
    military and government civilian leaders from the region can explore
    pressing security issues at the national policy level within a
    multilateral setting of mutual respect and transparency to build trust
    and encourage openness. Central to the College's effectiveness is the
    relationships forged between participants that bridge cultures and
    nationalities. Full and unobstructed participation by all nations in
    the region, to include such countries as Indonesia and Cambodia, is
    essential to achieving this. Complementing the College is a robust
    conference and seminar program that brings together current leaders
    from the region to examine topical regional security concerns,
    including peacekeeping, arms proliferation and the role of nuclear
    weapons in the region, and energy and water security.
        The Center directly serves to further our regional engagement goals
    in several ways. First, it serves as a resource for identifying and
    communicating emerging regional security issues, within the constraints
    of non-attribution. Secondly, the Center functions as an extremely
    effective ``unofficial'' engagement tool to continue critical dialog in
    cases where official mil-to-mil relations are curtailed. Recent
    conferences and regional travel involving contact with, or
    participation by, prominent representatives from China highlight this
    role. Additionally, the Center frequently coordinates or hosts
    conferences addressing topical issues of interest to the U.S. Pacific
    Command or the region. Finally, the Center serves as a forum for
    articulating U.S. defense policy to representatives from the region.
    Authorization to waive certain expenses as an incentive for
    participation, and expanded authority to accept domestic and foreign
    donations to help defray costs are crucial to the continued success of
    the Center.

        Senator Stevens. Thank you very much, Admiral.
        I came in late, so I am going to turn to Senator Inouye
    first.
        Senator Inouye. I thank you very much.
        Admiral Blair, last year you were quoted as advocating
    enhanced regional cooperation, multilateral exercises, and
    dialogue as ways to create consensus among Asian countries on
    specific security needs. I am certain you are aware that there
    are those who question the utility of military to military
    contacts with some countries in your region. Do you have any
    response to this criticism? More broadly, what is your opinion
    of engagement as a strategy in dealing with Asia?

                         MILITARY-TO-MILITARY CONTACTS

        Admiral Blair. Senator, I am a strong believer in
    engagement in the Asia Pacific region. It has to be engagement
    with a purpose, not just activity. In the Asia Pacific region
    we direct our engagement toward building U.S. influence with
    the countries in the region, we direct it towards increasing
    U.S. access, so that when we have to go someplace we have
    available facilities within countries. Finally, we direct it
    towards building more competent regional coalition partners so
    that when an operation like East Timor occurs there are other
    countries which can share the load with us.
        So our program is focused. The human side of it is very
    important. Let me give you two anecdotes, Senator. It has
    appeared in the paper that a senior colonel from the People's
    Liberation Army (PLA) has decided to pursue his career in the
    United States rather than remaining in China. He is a person
    who knows more about the United States than most any other
    senior colonel in the PLA. I think knowledge of our country
    breeds people who can work with us. In fact, in this particular
    case, he preferred the United States.
        I was visiting another country. I had had a particularly
    unpleasant meeting with a general in that country, Cold War
    attitudes would have been an improvement over what he was
    giving me. As I came back out to my car, my escort officer, who
    was a graduate of the Asia Pacific Center for Security Studies
    (APCSS), just leaned over to me briefly. He could not do this
    publicly----
        Senator Stevens. Admiral, may I interrupt you? Pardon me.
        Will those in the back row move forward a little bit, so
    those people can get behind you and over into these chairs on
    the other side. Those in the back row, move your chairs forward
    a little bit so these young people can get behind you.
        Thank you, Admiral. Sorry. Go ahead, sir.

                          ENHANCED MILITARY ENGAGEMENT

        Admiral Blair. As I was getting in the car, this graduate
    of APCSS leaned over to me and said: ``Admiral, I am sorry
    about that meeting; there are those of us in this country who
    know what we need to do.'' I believe that the reason he knew
    what he needed to do was because he had spent those 12 weeks at
    the Asia Pacific Center.
        So I believe that engagement, done smart, done right, is
    very much in the U.S. interest. On that score, I particularly
    appreciate the Asia Pacific Regional Initiative (APRI) funding,
    which frankly is an initiative of this committee. Those dollars
    that you have made available to us we have spent on exactly
    these kinds of activities, and I believe the results are
    beginning to show.
        Senator Inouye. Would International Military Education and
    Training (IMET) also fit into this scheme?

                 INTERNATIONAL MILITARY EDUCATION AND TRAINING

        Admiral Blair. Yes, sir. IMET is a big part of that, and I
    am a big believer that the more IMET the better. I distinguish,
    Senator, between education and training. There are certainly
    military officers and noncommissioned officers that we do not
    want to train to set better ambushes and to be able to lay
    artillery and to be able to plan attacks. That is the training
    piece and we should make that available strictly to people that
    we know are going to use it for the right purposes.
        But when it comes to education, sitting at Carlyle,
    Pennsylvania, in the Army War College, Montgomery, Alabama,
    Fort Leavenworth, reading books about what armed forces are all
    about, I think that we should make that available to virtually
    every armed force in the region. If I had my way, North Korean
    officers would be taking that education, because I believe it
    teaches them. It does not make them into American officers, but
    when they go back into their countries, number one, they know
    about this country; number two, they know how a responsible
    armed force under political control, concentrating on external
    defense, having in mind concepts like posse comitatus and the
    things that we are raised with in the armed forces, these kind
    of officers are the ones who are going to change these
    countries and the ones who are going to deal with us over the
    long term.
        So the more education in IMET, the better for the United
    States.
        Senator Inouye. What would you suggest we do to enhance the
    contribution made by the Asia Pacific Center?
        Admiral Blair. I think you have got it just about right,
    Senator. I know you were there when we opened the new building
    last year. That is making a tremendous difference because the
    campus-like atmosphere is contributing to even more interchange
    among the fellows during the course, which is good.
        We are gradually increasing the number of graduates, but we
    need to maintain the quality. Right now we have 500 graduates
    of that course who are out there. They are talking with each
    other by Internet email, they have a regional focus. I think
    the pace that we are doing that is just about right.
        We would like the authority in two areas which are not the
    province of this committee, but are of the authorization
    committee. That is the ability to receive donations directly
    from charitable organizations, including foreign charitable
    organizations, and the second one is permanent legislation
    authorizing APCSS to waive reimbursement of the costs of
    attendance at their conferences and courses for attendees from
    other nations.
        They have been placed in appropriations language repeatedly
    in past years and we would like the permanent authority to do
    that for this committee. That would be the one single thing
    that I would ask for, Senator.
        Senator Inouye. I have a rather parochial question. I have
    been receiving calls and letters suggesting that the 911
    systems in certain military bases in Hawaii are not working as
    intended. Can you comment on this?

                                   ALL CALLS

        Admiral Blair. I have received those same reports, Senator.
    I am told we are working on them, and let me get back to you
    with a more detailed answer on how that is being improved.
        [The information follows:]

        We currently do not have a seamless 911 system on Oahu. All
    911 calls originating from military locations, including family
    housing, are delayed due to the required manual re-routing of
    the calls from the civilian/military dispatcher back to the
    appropriate military emergency response unit (i.e., fire
    department, ambulance, military police). The Joint Interservice
    Regional Support Group (JIRSG) is working on a solution to
    automate the military interface between the City and County and
    Department of Defense Emergency Dispatches which will require
    new equipment, updating the street mapping databases for the
    on-island military installations (a major effort), and thorough
    testing. All four Services are engaged in this unfunded Quality
    of Life issue.

        Senator Inouye. Transformation is a key word in the
    administration at this time, primarily in the Army, but I
    presume that all services are going through this exercise. Do
    you have any thoughts on transformation?

                              ARMY TRANSFORMATION

        Admiral Blair. Yes, sir, I do. I believe that the key to
    transformation is not sitting back in a room making up ideas of
    what the armed forces will look like in 30 years and then
    putting it into the current acquisition system. I believe that
    the key to transformation is getting out there and
    experimenting and then improving based on what we find in the
    field.
        I visited Fort Lewis about 2 weeks ago and saw the Interim
    Brigade Combat Team and it is doing just that. Interesting
    things, like instead of the Army Training and Doctrine Command,
    a bunch of colonels sitting around writing the manuals, the
    Army Training and Doctrine Command is writing drafts, sending
    them to Fort Lewis, and sergeants who are actually driving
    these vehicles around look at the new documents and say: Nah,
    this does not work, this does, you forgot about this.
        So we are building it through the experience. But we only
    gain experience from operations or from exercises and creating
    artificial conditions. I believe that is the way to change.
        We are doing the same thing in the Pacific Command with our
    exercise program by taking part of our exercise and trying to
    do it differently, and then drawing the lessons from that and
    plowing it back in. So I am very much a believer in shortening
    time lines of acquisition, adapting rather than trying to work
    for a program 50 years in the future, and pushing the
    responsibility down within the system rather than having it
    come out of labs and warfare development centers.
        I believe that the more that we institutionalize that kind
    of approach, the faster we will get better.
        Senator Inouye. Admiral, I would like to take this
    opportunity to commend you and your command in the way you have
    handled the recent tragic accident involving the Ehime Maru and
    the U.S.S. Greenville. I think you have handled this matter
    sensitively. You have gone out of your way. You have taken the
    extra step. You do not often hear of a hearing panel consisting
    of not only our admirals, but the admiral of another country.
        I am certain that the Japanese government looks upon this
    favorably. So if I may, I wish to commend you and your command,
    sir.

                              EHIME MARU INCIDENT

        Admiral Blair. Thank you very much, Senator. If I could
    point to one--I would like to point to two names who have, I
    think, handled this just right. One is Admiral Fargo, who is
    our Pacific fleet commander; and also I would like to commend
    Admiral Fallon, our Vice Chief of Naval Operations, who made
    the trip to Japan to offer formal apologies on behalf of the
    President and of the Navy.
        I have been playing background music, but it is those two
    admirals who have really done the heavy lifting, and I will
    pass that on to you, sir--to them, sir.
        Senator Stevens. Senator Shelby.
        Senator Shelby. Thank you.

                             INTELLIGENCE GATHERING

        Admiral Blair, what steps has the Pacific Command under you
    taken to provide counterterrorism and emerging threat
    intelligence data in support of forward protection efforts? Are
    more resources necessary to properly mature these intelligence
    support efforts? Are you concerned that we may soon face a
    serious and potentially life-threatening intelligence failure?
        In other words, what do you need? There have got to be
    risks everywhere. Would you comment on that?
        Admiral Blair. Yes, sir. I cannot do much about the
    collection side of intelligence. As you know better than I and
    better than most, to penetrate these terrorist organizations,
    with their cell-like structure and the pretty tough initiation
    practices that they have, is difficult. So to count on tactical
    intelligence for an event, I do not think we can base our plans
    on that.
        So we have primarily taken intelligence action in two
    areas. One is to consolidate our analytical areas, so that we
    are not simply passing raw intel to all of our forces and
    saying, you sift through it. But we have established a tighter
    analytical cell at our headquarters. There is a new cell at the
    Defense Intelligence Agency. We are forcing the analytical
    community to make calls, to tell us what is different, to try
    to do a systems approach to at least telling what they know and
    what they do not know.
        But I think, more than that, we are not counting on having
    tactical intelligence every time. We have had pretty strong
    force protection plans for our fixed installations, but we are
    now applying that same methodology to our forces that go
    through and make port visits, airplanes that stop, small units
    that go for deployments, and we are looking at it from that
    point of view.
        Finally, we are trying to instill a tactical way of
    thinking about it among our commanders. In the past, I will
    tell you frankly, we thought of force protection as sort of
    like getting your shots. If you receive your inoculation, you
    are going to be okay. If you go through a checklist of items,
    you are going to be okay. Now we are emphasizing to our
    commanders that they have to think of terrorists as the enemy.
    These are individuals who are going to come at you down a
    certain street, across a certain piece of water, and you have
    to treat them just the way you would in combat. You have to
    think of your approaches, you have to have your people armed
    and ready. You have to make risk management decisions on a
    tactical basis.
        I think this mind change will help us better. You do not
    have the complete intelligence in combat. As you know, you have
    to make plans based on not having that. So I think we are
    increasingly a tougher target, which is important, and we are
    better able to handle attacks should they come. I cannot sit
    here and promise to you or to the parents of our service people
    and their brothers and sisters and spouses 100 percent
    protection, but I can promise you that it is getting better
    every day and we do not have easy targets in the armed forces
    of the United States. But to do our job we have to be out
    there, and we are not going to have 100 percent protection
    against determined terrorists who are willing to sacrifice
    their own lives.
        Senator Shelby. Admiral, could you comment on our ability
    to disseminate intelligence data in the Pacific theater? Are we
    properly supporting our forces in Korea? How can we help?
        In other words, you have, as we all know, a broad scope of
    command there. There is a lot of territory.

                           INTELLIGENCE DISSEMINATION

        Admiral Blair. That is the one area, Senator, that I feel
    okay about. We have a system that when a piece of intelligence
    with time sensitivity and geographic specificity comes in we
    get it to the troops who it affects. We get it to them at the
    highest level of classification we can. But if all they have is
    a telephone, we will call them on the telephone and tell them.
        We test that periodically under a test system, and we can
    get that data out to anybody in minutes. So that is the one
    piece I feel good about. I just wish we had more to get out to
    them.
        Senator Shelby. Could you comment briefly on the ballistic
    missile threats in the Pacific theater, in your operation area?

                            THEATER MISSILE DEFENSE

        Admiral Blair. Yes, sir. The greatest threat is over 500
    Scud-class missiles that are held by North Korea, and they can
    target both South Korea, our troops there and our allies there,
    and they can also target part of Japan. That is the single
    largest threat we have.
        The other missiles that we worry about, because we are
    pledged to a sufficient defense of Taiwan, is the [deleted]
    weapons which range Taiwan that are on the Chinese side, and
    more are being installed all the time. So I am a very strong
    supporter of theater missile defense, both sea-based and the
    land-based. We need both in our theater in order to provide
    force protection for ourselves and to be able to provide it to
    our allies when we choose to.
        As you know, Japan is cooperating with us on some of this
    missile defense. Korea is not cooperating on the defense, but
    they are purchasing Patriot missiles, which are point defense,
    for some of their own platforms. As you know, the Taiwan arms
    sales are under consideration right now by the administration.
    So that is pretty much the set.
        I would say, Senator, that these weapons, as we learned
    tragically in the Gulf War when 30 Pennsylvania guardsmen were
    killed by a Scud that in fact had been hit by a Patriot system,
    that these are weapons of widescale destruction and terror.
    These are not war-winning weapons. They are weapons that we can
    deal with, but we should have better defenses against them.
        Senator Shelby. Thank you, Mr. Chairman.
        Senator Bond. Thank you very much, Mr. Chairman.
        Admiral, my apologies for arriving late. I have been
    enjoying the benefits of the finest naval medicine around and I
    am just getting back. But I have a couple of areas where I
    think that we have a number of areas of interest.
        I wanted to follow up first with your comments on Taiwan.
    With the threats of missiles targeted at Taiwan, is there not
    a--is there an appropriate response in terms of our assistance
    through Aegis-based anti-ballistic missile defense systems?

                                 TAIWAN DEFENSE

        Admiral Blair. Senator, as I told the Chinese themselves
    last week, right now we do not have theater missile, theater
    missile defense, that can engage the sorts of missiles that
    threaten Taiwan. We are developing four systems, two land-based
    systems, two sea-based systems. The two sea-based systems are
    based on the Aegis technology.
        As I mentioned, right now the [deleted] missiles that
    Taiwan faces are not a war-winning capability on the part of
    the Chinese. We dropped more than 15,000 precision weapons on
    Kosovo and Serbia, by way of comparison, and you are familiar
    with what the results of that were. These missiles face a
    country of 22 million right now. So it is not an immediate
    defense problem.
        What it is is a trend which, should the Chinese continue to
    increase the number and the accuracy of those missiles--and we
    are pledged to sufficient defense of Taiwan--we will be
    required to respond. So the best solution for China and for
    Taiwan is restraint on the Taiwan side--on the Chinese side, so
    that the United States would not support an arms race, but if
    we have to maintain sufficient defense, we will. It is just
    going to be at what level, what level of arms. The lower the
    level of arms we can keep it, the more we concentrate on trade,
    on travel, on financial instruments, on information technology,
    things that will bring Taiwan and China together so that trust
    will be built and eventually they can reach a political
    settlement between them, the better.
        Senator Bond. It would be very helpful if our friends in
    the People's Republic of China understood that, and I
    appreciate your clear statement on it.
        You mentioned in your written testimony some of the
    problems in Indonesia, and you have stated that you favor
    eliminating restrictions on foreign military officer education,
    particularly on IMET, which you have said is fundamentally in
    the national interest. I had the opportunity to visit the
    region in January and I found that among our friends and
    partners there there was a very great fear of what is happening
    in Indonesia.
        One of the recommendations by knowledgeable leaders in
    those governments, I think who share our views and values was
    that Indonesia faces the possibility that internal conflict
    could lead to chaos, and that chaos in Indonesia, the fourth
    largest nation in the world, the largest Islamic nation in the
    world, would be a disaster for that region and truly a disaster
    for international security and our interests.
        I asked them, I said, okay, what can be done about it?
    Their conclusions--and it is almost like they talked together--
    they all said the Indonesian military has to be brought back
    into a position where they are disciplined and they have
    appropriate training and they are able to restore security in
    that nation of I guess 13,000 islands at high water.
        They suggested that we pursue very aggressively exchange of
    education, bringing foreign military officers to the United
    States, participating in IMET. They also said that there ought
    to be incremental but reciprocal and verifiable steps to
    provide the equipment they need for their legitimate defensive
    needs, perhaps coast guard and other spare parts and so forth,
    equipment that they need to exercise the appropriate role, but
    that we should do that in a phased basis, demanding reciprocal
    steps from them which would show that they truly are abiding by
    the appropriate standards of the military with due regard for
    human rights.
        Their suggestion, the suggestion of these observers and
    neighbors of Indonesia, was that the police forces are so
    inadequate that we cannot expect the police forces to maintain
    security and that it is incumbent on us, through our military
    presence, to exercise an aggressive, progressive, and positive
    role in the area.
        I note that Indonesia, back on one of these pages, when you
    were talking about the priorities, U.S. Pacific Command
    priorities, it did not exactly measure up as a priority. But I
    get the sense that that may in fact be one of the significant
    dangers our interests and international security face in
    Southeast Asia. I would appreciate your comments and guidance
    on that.

                                   INDONESIA

        Admiral Blair. Yes, sir. I support the basic outlines of
    what you describe. I have heard the same advice from other
    countries in the region and from Indonesians, in fact
    Indonesians who are not members of the Indonesian armed forces.
        I would add that I believe that the police also require a
    lot of assistance and training. The United States does provide
    that through the Department of Justice and I support that, and
    I think that should be increased. As you know, the police were
    separated about a year and a half ago from the armed forces and
    they now are transitioning to report to the minister of the
    interior instead of to the minister of defense. They are on the
    front lines of internal order and I think that is good.
        There is a justice system that has to be developed in
    addition, with very few crimes, especially those that are of
    concern to the international community, such as the killing of
    the three international aid workers in West Timor last year,
    are brought to justice in a timely or in a comprehensive way.
    So I think we need to help strengthen the justice system.
        Then I think we need to support those in the Indonesian
    armed forces, the TNI, who are part of the reformist group.
    This group within TNI seeks to pull out of internal security
    over time and mainly concentrate on external threats. That
    becomes more of a navy and more of an air force emphasis
    because of the nature of the country that you mentioned.
        The army needs to be paid properly. Right now a private who
    is put out on the streets to patrol is terribly underpaid and
    the temptations to him in terms of getting paid for doing other
    things are pretty high. He is often not as well trained as he
    needs to be. He is given maybe 3 weeks of training and then
    sent out to very delicate, in the street peacekeeping missions.
        So there are a bunch of across the board improvements that
    do need to be made in the TNI. The way that I think that we
    reinforce that is exactly as you said, with resuming officer
    education so that we get Indonesian officers out, the good
    Indonesian officers who are going to be leaders there, and then
    that we carefully modulate our engagement with them so that we
    support those things that are positive in TNI's development and
    we do not support those elements of TNI and those activities
    which can be used to oppress the people.
        It's a series of tough individual decisions you have to
    make along there. I think the right people to make them are at
    the consultation between the ambassador and his people on the
    scene, those of us who deal with them on a day to day basis,
    and we sort of work our way forward as you described.
        Just to finish off, Senator Bond, I am not one who believes
    that Indonesia is going to fall apart in the near term. I think
    Indonesia is going to continue as a unitary state with a lot of
    turbulence. So I am not one who is telling you the sky is
    falling. But we need to help Indonesia work in that direction.
        Senator Bond. I certainly share your hope, but, I guess
    just to finish up, you indicated steps that you need to take.
    Just to bring it down simply, what do we need to do here to
    remove the constraints, to provide the resources so that you
    can take this phased steps of assistance towards stabilizing
    Indonesia?

                    UNITED STATES ACTIVITIES WITH INDONESIA

        Admiral Blair. Senator, there are two pieces of legislation
    which restrict our activity in Indonesia. One was sponsored by
    Senator Leahy, which keeps back any sort of training,
    education, foreign military sales, until accountability is
    taken for the August 1999 activities in East Timor, which were
    bad, and the refugees are resettled.
        Second, there has been a longstanding prohibition on
    international military education and training coming from the
    House of Representatives. Those two are the legislative
    restrictions on them. I absolutely agree with the goals of that
    legislation, which is to make the Indonesian armed forces
    responsible and correctly acting. I disagree with the means. I
    think military education is a way to reach those goals, rather
    than a reward once you get there. Restrictions on arms sales
    and restrictions on exercising, on military activity, I think
    are entirely appropriate and we should not do that for a long
    time with the Indonesians. But the things that help the
    reformers reach the positive goals I think we should do, and
    those two legislative restrictions prevent us, at least in the
    officer education area.
        Senator Bond. Thank you. Thank you, Admiral. I hope to work
    with the leaders of this committee to see if we cannot move in
    that direction.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you.
        Admiral, I second what Senator Inouye had said about the
    way you have handled these terrible disasters in your area, and
    commend you and your forces for the way you have reacted in
    such a humanitarian way.
        I am a little disturbed about the comments you made, about
    shortfalls in flying hours, ship depot maintenance, real
    property maintenance, and joint training for this fiscal year.
    Those comments did pertain to this fiscal year, did they not?
        Admiral Blair. Yes, sir, they did.
        Senator Stevens. Do you have any way to tell us how that
    happened, what accounts for that shortfall? We thought we had
    appropriated a sufficient increase in funds last year. Why are
    we behind this year, for 2001?

                      FISCAL YEAR 2001 FUNDING SHORTFALLS

        Admiral Blair. Senator, I do not have a third decimal point
    answer. But the----
        Senator Stevens. Did you get the allocation you asked for,
    Admiral?
        Admiral Blair. No, sir. We did not have a full year's
    allocation at the beginning of the year for flying out the
    flying hour program or for completing the depot maintenance or
    for completing the service incremental funding of the joint
    exercise program. The budgeting strategy had been, as it had
    been the year before, to take supplemental funding and fill up
    the third and fourth quarter funding to the required limit. As
    that has not happened yet with the current strategy review
    going on, the shortages would make themselves felt starting in
    about August of this year in those three areas.
        Senator Stevens. Well, we do have a dilemma and that is how
    to sort of return to the normal process. In the last about 6
    years, the administration took money from particularly the
    Operations and Maintenance (O&M) accounts for overseas
    activities, maintaining peacekeeping, other activities that the
    President had the right to do under the law, and then came in
    to us for a supplemental each year.
        This is the first time I have heard that the strategy for
    the budget itself for 2001 involved not contemplating a proper
    allocation to regions such as yours for O&M. We are not going
    to have supplementals like that again, I hope. We did not like
    them and I do not think many people liked them. This year it
    was my understanding that President Clinton did not take money
    from O&M last year for these overseas accounts because we did
    in fact budget for it. We gave money for Bosnia, we gave money
    for Kosovo, we gave money for Kuwait, we gave money for the
    operations for the cap over the Persian Gulf.
        We fully funded, we thought, all those things. Now we find
    this sort of embarrassing gap, because the two of us thought we
    had funded properly the region we represent, and I am sure that
    the other members of the Senate understood that.
        How much money are you short?
        Admiral Blair. I think one of the best examples, Mr.
    Chairman, is in the Navy-Marine flight hour program. The
    traditional amount of O&M that you spend per flight hour was in
    fact requested and budgeted. However, the reality is as the age
    of the airplanes is going up those costs are not realistic in
    terms of being able to fly old airplanes like the P-3's, like
    the EA-6's. In fact, the O&M costs are going up on the order of
    15 percent per year, and that leaves a gap.
        When you drive down into the analysis of it, it is not just
    that fuel is costing more, which it is. It is primarily in the
    depot-level repairables, where these airplanes are getting so
    old that parts are breaking that were not budgeted for and in
    many cases the companies that actually make that assembly are
    no longer in business, so these things have to be hand-tooled
    in depots.
        Senator Stevens. I know you do not like to say, but how
    much have you asked for? What do we look forward to for your
    region to make up for this shortfall in this fiscal year?
        Admiral Blair. In the flight hour program it will be on the
    order of about $250 million to finish flying the flight plan
    that the Pacific Fleet and Marine Forces Pacific need to fly
    the budgeted hours.
        Senator Stevens. Depot maintenance, how much?
        Admiral Blair. I will have to get you that figure, sir. I
    do not have that one.
        Senator Stevens. Will you give us those figures for the
    record. I know that the Department does not like to have us ask
    such questions, but I think we ought to get prepared for what
    is coming for this fiscal year. I would like to know for flying
    hours, ship depot maintenance, real property maintenance, joint
    training, and other funds that will be exhausted before the
    completion of the fiscal year, how much do you need to carry
    out your responsibilities.
        [The information follows:]

        Senator, our Fiscal Year 2001 Component Command Readiness
    Supplemental Funding Requirements for the United States Pacific
    Command theater total $974.9 million. The figures match those
    recently provided by each of our components to their respective
    Service headquarters and should match individual Service
    numbers concerning our theater shortfalls. We are working with
    the Office of Secretary of Defense, the Joint Staff, and the
    Services to ensure that all of our critical requirements are
    met.
        A detailed breakout of our requirements follows:

    Fiscal year 2001 Commander in Chief, United States Pacific Command
    component command readiness supplemental funding requirements

    Pacific Fleet (PACFLT):
        Flying Hour Program (FHP) (Includes $76 million for Marine
          Corps Forces Pacific (MARFORPAC))...........................$252.0
        Ship Maintenance Program...................................... 244.8
        Base Operations Support Program & Sustainment, Restoration and
          Modernization (SRM)......................................... 130.0
        Force Protection ($44.4 million in Operations & Maintenance,
          Navy (OM,N) and $19.4 million in Other Procurement, Navy
          (OPN))......................................................  63.8
        Ship Operations...............................................  20.0
        Contingency Operations Support................................   1.3
                                                                      ______
          Total....................................................... 711.9
                            =================================================================
                            ________________________________________________
    Pacific Air Forces (PACAF):
        Sustainment, Restoration and Modernization (SRM)..............  20.2
        Base Operations Support (BOS).................................  20.1
        Readiness.....................................................  20.1
        Real Property Services (RPS)/Utilities........................  18.9
        Contractor Logistics Support (CLS)............................  15.4
        Communications (C\3\I)........................................  13.1
        Quality of Life (QOL).........................................   9.7
        Anti-Terrorism/Force Protection (AT/FP).......................   7.6
        Training......................................................   2.7
        War Reserve Material (WRM)....................................   2.4
                                                                      ______
          Total....................................................... 130.2
                            =================================================================
                            ________________________________________________
    Marine Forces Pacific (MARFORPAC):
        Support of Operations in East Timor...........................   2.7
        Strategic Lift................................................   4.6
        JCS Exercises.................................................   1.0
        Utilities ($28 million for Base Operations & $13 million for
          Family Housing).............................................  42.0
        Base Operations Support.......................................  10.0
        Maintenance of Real Property (MRP)............................  11.0
                                                                      ______
          Total.......................................................  71.3
                            =================================================================
                            ________________________________________________
    U.S. Army Pacific (USARPAC):
        Command, Control, Communications, Computers, Intelligence,
          Surveillance and Reconnaissance (C\4\ISR) Joint Mission
          Force ($5.9 million Other Procurement, Army (OPA) & $2.0
          million Operations & Maintenance, Army (OMA))...............   7.9
        Support of Operations in East Timor...........................   2.4
        Joint Readiness Training Center (JRTC) Transportation.........   2.7
        Utilities Price Adjustment & Government of Japan Burden Share.   4.9
        A-76 Transition...............................................   3.8
        Force Protection, Increment One...............................   1.0
        Dunker Training...............................................    .4
        Training Ranges & ITAM (Integrated Training Area Management)..   7.3
        Well Being (Morale, Welfare and Recreation/Family Support Pro-

          grams)......................................................   2.1
        Facilities Sustainment........................................  29.0
                                                                      ______
          Total.......................................................  61.5
                            =================================================================
                            ________________________________________________
          Total for Pacific Theater................................... 974.9

    (Note: All figures are operations and maintenance (O&M) unless specified
    otherwise.)

        Admiral Blair. Yes, sir, I will get you those figures.
    Those are the same figures we are providing internally up the
    tape.
        Senator Stevens. I assume so, but they are not giving them
    to us, Admiral.
        Admiral Blair. Yes, sir.
        Senator Stevens. We would like to know what is coming. The
    immediacy of it is a problem. When will you run out of money?
        Admiral Blair. July-August, depending on the account.
        Senator Stevens. So you would need funds available by July
    1?
        Admiral Blair. Yes, sir.
        Senator Stevens. You also stated that family housing in
    Alaska--we both get a little provincial here and we are proud
    of it, so I am not disturbed about that--is inadequate because
    MILCON has not been properly assigned to our region for family
    housing. That worries me in view of the potential that we may
    face some reallocation or realignment of force deployment in
    the Pacific in the future.
        What is your idea, what is your time frame and plan for
    that, to meet that need?

                             MILCON-FAMILY HOUSING

        Admiral Blair. Senator, as you know, this is a marathon,
    not a sprint, to update the housing. In Alaska in particular--
    and also, there is more than one way to provide adequate
    housing for our families. The traditional MILCON way is one
    route, but some great imagination has been shown by General
    Gamble and the Pacific Air Force in terms of public-private
    ventures, and Alaska is one of the areas in which we are on the
    verge of success there.
        Fort Wainwright, on the other hand, has these 75-some odd
    units of what is basically postwar housing that is inadequate.
    Whether we can use the Air Force model and do it that way or
    whether it needs a MILCON project, I am not sure. But we do
    need to replace that over time.
        In Senator Inouye's area, now you can drive into Pearl
    Harbor with pride and see good new housing on either side of
    the gate there. You can go up in the back reaches of Schofield,
    though, and we could film ``From Here to Eternity'' again and
    never have to do any changes to the sets. So it is a case of
    working through it.
        The Department as a whole is committed to having all of our
    housing meet suitable criteria by 2010, and if we can sustain
    the levels of funding we have had in the recent years and we
    can bring home the public-private ventures that are
    contemplated and we can overseas continue the level of support
    by Japan and Korea that we have currently, then, with the
    exception of some units in the Army Pacific, we can meet that
    goal.
        I believe, Mr. Chairman, that it is the progress towards
    that goal that is really as important as saying that tomorrow
    every single set of quarters will be adequate, because people
    move and people are going. As long as we are heading the right
    direction, I think that we are in good shape. We need to
    support that right direction, sir.
        Senator Stevens. Your figures are that they are 75 family
    housing units short in Fort Wainwright at the present time?
        Admiral Blair. I know those particular 75. Let me amplify
    that answer. Those are the ones that I have driven around--I am
    sure you have as well--that we should not have people living in
    2001.
        Senator Stevens. Thank you.

                             NORTHERN EDGE FUNDING

        We welcome the Northern Edge exercise that is ongoing now
    in Alaska, I was a little disturbed to hear, however, that
    funding for the exercise was released by the Pentagon 10 days
    after it started. How did that happen, Admiral?
        Admiral Blair. Mr. Chairman, we are in a transition year.
    As you know, in the past that was a year by year exercise based
    on appropriations. We now have put it into our authorization
    and plan program. This was the year in between and so the money
    was not in the right place at the start of the exercise.
        Working with the components, we moved the money from other
    accounts so that we were able to start the full exercise on
    time, and then we paid ourselves back, as you said, within 10
    days of the exercise. I do not anticipate repeating that rope
    dance next year.
        Senator Stevens. That did not create any part of the
    shortfall, did it?
        Admiral Blair. No, sir. We planned and executed it as if we
    were going to have it and then it did come in, and so we paid
    ourselves back. It took a lot of hard work by people like
    General Tom Case, who, as you know, is now my deputy, was the
    former commander in Alaska, and working with General Schwartz
    they made it happen.
        Senator Stevens. Incidentally, I want to commend General
    Schwartz for his public statement concerning the paint-bombing
    incidents in our State.
        Admiral Blair. Yes, sir.
        Senator Stevens. It offended us all. I have seen the tape,
    as a matter of fact, a strange tape, strange that people would
    take a tape of themselves doing what they did.
        But I do commend him. He was forthright and came right out
    and put the position of the military right on the table. There
    was a rumor that one or more of the people involved had been
    dependents of military people. We still do not know whether
    that is so or not. But he stepped up to the plate and stood
    very straight on that issue, and we are very pleased to have a
    General like that in our command.
        Admiral, you are just back from China. We had to cancel our
    trip to China. I am very interested in your observations about
    the China situation as far as the future here is concerned. My
    colleagues sort of, if you will pardon the phrase, danced
    around the basic problem of Aegis acquisition. Have you come to
    a conclusion about that?

                                     CHINA

        Admiral Blair. Yes, sir. I have shared my recommendation
    with the administration. I would just as soon let them make the
    call, but I have told them what they need to maintain military
    sufficiency.
        Senator Stevens. We have had great interest in China. I
    want to state that I admire the answers that you gave to
    Senator Bond. But there is a lot that goes into that statement
    that assumes that the Chinese are ready to work with us. Can
    you give us your opinion about that? Is there any indication
    that the Chinese in terms of their modernization plans and
    their own deployment will desist from establishing a
    provocation that would lead to a demand for ever-increasing
    upgrading of the capabilities of the forces on Taiwan?
        Admiral Blair. So far, Mr. Chairman, they have gradually
    increased their ability to threaten Taiwan. But with Taiwan's
    own improvements, including the equipment that we have sold
    Taiwan, including what they produce themselves, and including
    what they buy from other countries, Taiwan has been able to
    maintain the qualitative edge to offset the geographic position
    and the quantitative edge that a country of 800 million people
    will have. So the sufficient defense that we are pledged to has
    been maintained.
        The PLA is continuing to modernize its armed forces.
    Talking with PLA leaders, they have been told that China does
    not give up the right to take military action against Taiwan
    and they are carrying out orders to be able to increase their
    capability to do that.
        I would say that they have not--that they could have gone
    faster than they did. The improvements that you see are not
    their absolute top priority. The PLA has many other missions--
    defense of a wide, a huge long border; internal security,
    particularly in the far west and in Tibet and areas like that.
        So Taiwan is not the only focus of the PLA and that is not
    all they are spending their money on. In addition, military
    modernization, although it has received more attention in
    recent years, it is the fourth of the four modernizations that
    China is pursuing. As you know from your previous visit to
    China, when you go to China they are mainly working on economic
    development, getting rid of those state-owned enterprises,
    increasing the wealth and the efficiency and trying to plug
    into the world.
        When President Jiang and Prime Minister Zhu wake up every
    morning, the first four or five things they think about have to
    do with economic development and social improvement. You get
    down the list before they are worrying about improving their
    ability to take on Taiwan militarily. So I think that there is
    an area there where there could be further restraint on their
    side that would keep the military option off the headlines and
    out of the debate, and I think that is the right thing to do.
        I have thought through the consequences of a conflict
    across the Taiwan Strait very carefully and all I see are
    losers. There is damage to military forces on both sides. There
    is damage to civilians on both sides. There is tremendous
    economic damage in China, losing the foreign investment and a
    lot of the trade. There is tremendous commercial damage to
    Taiwan. At the end of the day, it is not successful from
    China's point of view; Taiwan is still, is not taken over.
        That is a loser for both those countries. The win for both
    countries is over the long term to emphasis the things that
    bring them together and to reach some sort of a political
    arrangement. That is what is in the long-term interests of
    China and of Taiwan. The way we get there is by de-emphasizing
    military escalation, by de-emphasizing military rhetoric, and
    by showing restraint on both sides.
        But it does take two to show restraint. In particular, the
    missile buildup on the Chinese side I think is the part that is
    the most threatening right now. I talked about that with the
    Chinese and I think that is the important area in which we
    should look to them for restraint.
        Senator Stevens. I think we agree with you. As you know, I
    served in China in World War II and have gone back as often as
    possible. Senator Inouye and I make trips there whenever we
    can. I am sad that we cannot go this year.
        But when we look at the situation there, we have been
    convinced that there is a generational problem there. As the
    new generations come along, we think that the strain between
    the mainland and Taiwan will decrease. There is every reason in
    the world for China as a republic to upgrade its military and
    to modernize in view of its position in the world, particularly
    in that it has the resources that it has and the population
    base that it has.
        But it worries me considerably that we are about ready--it
    looks like we are being pushed towards a collision course here
    as far as the Aegis is concerned with regard to a request to
    purchase that equipment because of the increased activity along
    the coastline opposite to Taiwan. We would welcome any
    suggestions you might have as to what we might do to help you
    with regard to your comments that you have made on China.
    Clearly, from my point of view China remains the potential
    partner in the world as far as this country is concerned,
    economically and even eventually politically, I think.
        But right now we are still trying to overcome some of the
    strains of the past. I would hope that we can find some way to
    deal with this issue without trying to resolve it in the
    Congress, is what I am saying. I do not know what the results
    of your recommendations will be, but we are under a new
    administration. The President said he wants to treat China as a
    strategic competitor and not as a partner yet. But I think the
    time will come when we should look at them as a partner in
    terms of goals throughout the world.
        I would welcome, we would both welcome, your suggestions as
    time goes along.
        Do you have any other questions, Senator?
        Senator Inouye. Mr. Chairman, if I may follow up.
    Obviously, one of the major areas of contention in Congress
    will be the so-called arms sale to Taiwan. It has been the
    policy of the United States to provide defensive arms, although
    there are some who would contend that any sort of arms would be
    offensive.
        Would you consider a Patriot battery as being offensive?

                               TAIWAN ARMS SALES

        Admiral Blair. No, sir, I consider that as being defensive.
        Senator Inouye. In the array of ships in the fleet, would
    you consider a destroyer to be offensive? For example, I would
    consider a submarine and an aircraft carrier, to be power
    projectors and therefore offensive.
        Admiral Blair. Senator, the way I would define defensive
    systems are those that would enable Taiwan to deal with an air,
    naval, or ground attack on them. The systems which would be
    used to intercept those sorts of operations I would consider to
    be defensive systems.
        The Aegis platform and Kidd class destroyers, have also
    been talked about as being available, are considered fleet air
    defense systems as they are currently configured. That is, they
    intercept anti-ship missiles which are fired at the fleet. They
    also have anti-submarine capability. In the context that we are
    talking about, I think those are defensive, that class of ship
    is a defensive system.
        Senator Inouye. So you would suggest that we are still
    within the present policy of not providing offensive weapons?
        Admiral Blair. With either of those two platforms, yes,
    sir.
        Senator Inouye. Thank you very much, sir.
        Senator Stevens. The last question. Admiral, about the
    situation in North Korea, it has been some time since we were
    there. How long since you were there? Have you been up there?

                                  NORTH KOREA

        Admiral Blair. I have never been to North Korea. I looked
    at it last week, but did not set foot on it.
        Senator Stevens. I think I am interested to know what the
    level of their modernization is to your knowledge, if we can
    talk about that here.
        Admiral Blair. Yes, sir, I can talk in general terms about
    it. It is just incredible. The economy is still flat on its
    back. North Korea cannot feed its people, and yet it continues
    to keep this million man army supplied. It has a program to
    modernize the equipment. [Deleted]. They are spending, at a
    time when you have to keep your coat on in North Korean
    buildings all the time, indoors or outdoors, it is allocating
    fuel to training.
        [Deleted].
        So it is quite clear that North Korea is maintaining a
    strong military capability, which is 70 percent down on the
    demilitarized zone (DMZ) threatening Seoul and others, as it
    relies on external assistance to feed its citizens. When you
    look at a picture of North Korea at night, you only see a
    couple of lights in the Pyongyang area and the rest of it is
    dark because there are no lights available.
        I mean, we have kind of gotten used to it over the years,
    but it is just a bizarre imposition of resources on the North
    Korean people in order to maintain a military capability.
    General Schwartz and I keep a very close eye on that, and if
    conflict breaks out we are going to win, but you do not see a
    lowering of military tension on the North Korean side to match
    the offers that they are making in other areas in terms of
    economic development and diplomatic consultation. There is very
    much a ``military first,'' to use North Korea's own words,
    policy there.
        Senator Stevens. Their readiness has not declined during
    this period of severe strain on their economy?
        Admiral Blair. They have maintained their readiness during
    this period, yes, sir, and in some ways increased the
    capability of weapons.
        Senator Stevens. Well, I do thank you again for coming. We
    are going to submit some of the questions we have.
    Particularly, I would like to know about the funding of your
    areas of operations down around East Timor. I have not asked
    you too much about what is going on on the strategic review
    because I assume it is not at the point where we can discuss
    it.
        But I do hope that you can. I would like to have us take
    our subcommittee out and visit with you and your command again
    this year and hopefully get a more in depth briefing on the
    status of our forces and the potential. Any thoughts you might
    have about potential redeployment of forces, so that we do not
    get behind in that and we have the capabilities if you might
    consider redeployments?
        I must say, many of us hoped that we would face the problem
    of deciding what to do with forces in South Korea. We thought
    for a while things were going to calm down and cool off. But I
    do not see that happening now, and from what you have said I
    gather you do not, either.
        Admiral Blair. Sir, I think we have a ways to go before we
    see real military capability go down to the point that we
    should change our force posture. As you know, President Kim,
    who from my mind has the clearest eye view of what is going on
    there, very much wants a U.S. military presence in his country,
    to which he is willing to contribute, even following
    reunification. It would not be the same posture that we have
    now. It would have different characteristics. But he believes
    that is in his country's interests, and I believe it is in our
    country's interests.
        Senator Stevens. As my friend from Hawaii said, the future
    expansion and capability of our economy is in your area, and I
    think that there is no question that we have to maintain a
    robust presence in the Pacific. We would like to be able to
    work with you. We will not be marking up this bill as early as
    we thought this year, so hopefully we will have a chance to
    confer with you before we get around to the markup of the
    Defense Subcommittee bill.
        Any further questions, Senator?
        Senator Inouye. No.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Stevens. Again, thank you very much for coming.
    This is a very strange period of time here right now, Admiral.
    I hope you will pardon the conversations that went on and the
    notes that had to be passed back and forth to keep going with
    our friends who are on the floor at the same time we are here
    with you.
        Thank you very much.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                   Questions Submitted by Senator Ted Stevens

                                STRATEGIC REVIEW

        Question. In your capacity as Commander-in-Chief of U.S. Pacific
    Command, what engagement and role have you played in Secretary
    Rumsfeld's strategic review?
        Answer. Secretary Rumsfeld has provided me a draft copy of his
    defense strategy review for comment, and I have provided a response.
        Question. There are reports in the press that the strategic review
    will recommend a shift in focus toward the Pacific, a strategy that
    Senator Inouye and I have long advocated. Can you comment on why the
    Pacific Ocean is the most likely theater of future major U.S. military
    operations?
        Answer. The Asia Pacific region contains about 55 percent of the
    world's population including the world's two largest countries: China
    and India. About one-third of U.S. trade is with countries in my
    theater, which produce 26 percent of the Gross World Product. The
    region has the world's six largest armed forces: China, United States,
    Russia, India, South Korea and North Korea, four of which have nuclear
    arsenals: United States, Russia, China and India. China, Russia, India
    and Indonesia all seek to extend their influence in the region over
    time. Japan is reevaluating its defense posture. Communal violence
    caused by civil wars, religious and ethnic differences flares
    throughout the region. This combination of population, military forces,
    competing developing nations and economic potential is unique this part
    of the world. Unless the United States is engaged and steady in its
    relations with the Asia-Pacific region, it risks a region of rivalry
    and conflict.

                              OPERATING CHALLENGES

        Question. What are your major operating challenges that are unique
    to the Asia-Pacific region?
        Answer. Operating in the Asia-Pacific region presents a myriad of
    unique challenges. The United States Pacific Command (USPACOM) area of
    responsibility contains 43 countries, and over 105 million square miles
    totaling 52 percent of the earth's surface. The region spans 14 time
    zones. Countries in this region field the world's six largest armed
    forces. Four of them also have nuclear arsenals. Conflict in the region
    would potentially involve large-scale combat. The rich resources
    throughout this region also present potential flash points for crisis
    and conflict. Additionally, the governments and societies of major
    countries in the region are in transition. The strategic landscape also
    includes significant transnational threats. First is proliferation.
    There are four countries in the region with nuclear weapons capability,
    and many more with chemical and biological capability. This widespread
    capability increases the threat of weapons of mass destruction use
    against United States forces and citizens. Next is terrorism. While
    significant terrorist incidents in the Asia-Pacific region trail those
    in other parts of the world, terrorist related events show an
    increasing trend. Finally, drug trafficking throughout the Asia-Pacific
    region continues to threaten the United States and other countries in
    the region. Rich in resources and full of potential flash points, the
    Asia-Pacific region poses unique challenges to our nation.
        As the military element of U.S. national power in the Asia-Pacific
    region, USPACOM has the following mission: Ready today and preparing
    for tomorrow, the USPACOM challenge is to enhance security and promote
    peaceful development in the Asia Pacific region by deterring
    aggression, responding to crisis and fighting to win. Ready Forces are
    the first component of our strategy. Our Pacific forces consist of
    forward deployed, forward based, and forces based in the continental
    United States. Our overseas deployed forces consist of forward-
    stationed forces, located primarily in the Republic of Korea and Japan,
    along with maritime forces afloat in the western Pacific. Our command
    has forces forward based and home ported in Hawaii and Alaska. The
    total overseas deployed force is about 100,000 military personnel.
    Finally, USPACOM also has forces on the West Coast of the United
    States. The total of all is about 300,000 military personnel. This is
    the largest number of U.S. military personnel dedicated to any regional
    theater.
        Preparing for tomorrow is the second component of our strategy.
    Joint Vision 2020 is the conceptual template for the development of
    future joint warfighting. Based on high quality people, equipped with
    the technology of the information revolution, the armed forces of the
    United States will be faster, more lethal, and more precise than today.
    We will achieve this vision by joint experimentation (JE). Through JE
    we seek to leverage joint and combined operational concepts and
    technologies. We seek breakthroughs in joint and coalition warfighting
    as we transform our operational schemes to the circumstances of the
    21st century. As USPACOM and our allies and partners exploit the
    opportunities of the revolution in military affairs, our challenge will
    be to ensure our objectives are met across the spectrum of major
    theater war, crisis response, and regional engagement.
        The heart of our mission is to fight and win. Nowhere in the Asia-
    Pacific region is this part of the mission more clear than on the
    Korean peninsula. For the past 50 years the Republic of Korea and the
    United States have successfully checkmated a North Korean regime openly
    committed to reunification of the peninsula by force. The U.S.
    contribution to deterrence includes a mechanized division and air
    forces maintained at peak readiness. Ready to fall in on these troops
    are powerful naval, air, and ground forces, some already in the
    Pacific, both ashore and afloat, and others in the United States.
        A critical challenge to our mission is our day-to-day engagement in
    the theater to enhance security and promote peaceful development. By
    remaining a regional military leader our intent is that no nation will
    believe it stands to gain by military aggression. A secure peace
    provides the foundation for prosperity and personal freedom to grow.
    Our goal is to help nations in the region to learn to be multilateral
    partners rather than regional adversaries. We want to expand the
    foundations for multinational security arrangements, to include all
    nations who desire to participate. Our ultimate intent is to create
    conditions where states do not perceive each other as enemies based
    upon historic animosities, but come together to deter any power that
    would threaten regional peace. Regional engagement involves encouraging
    and reassuring allies and security partners, and promoting professional
    relations among all militaries in the Asia-Pacific region.
        An integral component of our engagement activities involves our
    Joint Exercise Program. Bilateral and multilateral exercises are a
    primary means for developing and evaluating operational readiness. Over
    80 percent of USPACOM's exercise activity involves training forces and
    staffs in the tasks they need to successfully perform assigned
    missions. The remainder is for basic skills. Last year, USPACOM
    conducted over 300 exercises with 37 countries, many joint/combined
    exercises with allies throughout the theater. Our exercise program
    faces unique challenges with the tyranny of distance created by the
    vastness of this area of responsibility coupled with cost escalation
    and reduced funding.
        USPACOM is here to stay in the Asia-Pacific region with ready,
    powerful, forward-deployed forces. Operating with allies and partners
    in the region, we deter aggression, we respond to crisis, and we engage
    in a wide range of day-to-day activities throughout the region. For the
    future, we are developing new dominant warfighting capabilities through
    joint experimentation. We are working to build on our many strong
    bilateral relationships to form multilateral security structures in the
    region, building a foundation for peaceful development to the entire
    region's benefit. The aforementioned efforts address our unique major
    operating challenges in the Asia-Pacific region. Our current readiness
    deficiencies, reduced funding, large geographic coverage, major
    emerging requirements with declining resources, create additional
    burdens and strain our ability to meet these challenges.

                                FORCE STRUCTURE

        Question. We've maintained the ``base force'' in the Pacific since
    the mid-1980s. A lot has happened in the region in the intervening
    years. How should we look at changing, reducing, or repositioning those
    forces in the years ahead and is that effort underway?
        Answer. I have provided recommendations to the Chairman and to
    Secretary Rumsfeld. The Secretary is conducting his review precisely to
    answer these types of questions. I will say this however; we have seen
    substantial diplomatic movement in the last year on the Korean
    peninsula. But I do not envision any change to or reduction of our
    forces there until the North Koreans are ready to reduce their military
    posture as part of some verifiable confidence building measures; so
    far, they've been unwilling to do that. As for the rest of Asia, this
    is one area of the world where daily activities of the United States
    military are crucial to our influence. We are an Asia-Pacific nation,
    but we have no Asian territory. We must be out there actively working
    with our allies and friends to reassure the region and promote peaceful
    change. In the future, I would like to see our forces be more balanced
    throughout the Asia-Pacific, in multiple locations, away from densely
    populated areas, and near adequate training facilities. I'd also like
    to see them postured to be more expeditionary, because of the vast
    distances. Even operating from our Asian bases, we could be thousands
    of miles from where we're needed.
        Question. With the perception of the threat shifting from the
    Korean peninsula to the Taiwan Strait, do you envision that will impact
    force levels within the theater?
        Answer. The perception of the threat shifting from the Korean
    Peninsula is just that--a perception. Although we are encouraged by the
    political changes on the Korean peninsula, as General Schwartz stated
    in his testimony, we have seen no reduction in the military threat from
    North Korea. If anything, the North Korean military is receiving an
    even greater share of the Democratic People's Republic of Korea's
    limited resources. Any changes in our posture there must be measured
    and only taken if the threat is lessened. These changes would need to
    be of a scope and pace designed to maintain deterrence. Moreover,
    countries in the region want us to stay in Korea, even after any
    reconciliation, and I believe this is in our best national interest.
        Question. Have rapid advances in military technology and
    capabilities changed the way we think about force structure and how we
    project power throughout the theater?
        Answer. Advances in communications technology are revolutionizing
    our command and control concepts. Precision guided weapons have
    increased our lethality while increasing stand-off distances as threat
    environments become denser. Unmanned Airborne Vehicles (UAVs), stealth
    and supercruise will bring needed enhancements to combat capability.
    However, the physical characteristics of my theater, not technology,
    most influence what we are able to do here. Our access to the region is
    fairly good, but it's limited by the long distances and large areas
    covered by water. After 50 years of jets, transports still fly at about
    600 miles per hour, and the Strait of Malacca is still about 3 weeks
    steaming time from San Diego. Logistics, not technology, tend to drive
    the operational tempo, and dictate that we conduct most operations from
    forward bases. Together with our components, we are working on
    initiatives to leverage technology to reduce forces forward in a
    conflict. This will eliminate costly delays in deployment time (build
    up/tear down) as well as increased force protection capabilities.
    Pacific Air Force's program to upgrade its technology to create its
    main Combined Air Operations Center back in Hawaii rather than forward
    deployed is one such example. Yet there are significant startup costs
    for these investments.
        Ballistic and cruise missile inventories of regional powers are
    steadily increasing and posing challenges. To protect our access to
    bases and ports, we must develop and field effective tactical and
    theater defenses against cruise and ballistic missiles as soon as
    possible. Finally, we must remember we are confronted by a thinking and
    changing enemy who will adapt to and counter any new technology we
    field. Therefore it is imperative that we likewise train our people and
    procure systems that can more rapidly and effectively counter this
    resourceful entity.

                         MILITARY ENGAGEMENT WITH CHINA

        Question. With respect to United States-China military-to-military
    exchange program, is the Chinese government allowing the United States
    access to visit the same kind of facilities in China as we show the
    Chinese in the United states?
        Answer. In the last two years, I think the Chinese have allowed us
    access to visit roughly the same kinds of facilities as we show them in
    the United States, essentially, headquarters buildings, educational
    facilities such as the Asia-Pacific Center for Security Studies (APCSS)
    and the Center of Excellence (COE), and organizations and training
    facilities dedicated to Search and Rescue, Humanitarian Assistance and
    Disaster Relief and Peacekeeping Operations. Access could be better,
    and the People's Liberation Army (PLA) is inclined to take our
    delegations to sites that have been visited by earlier U.S.
    delegations. However, the PLA's organization and capabilities are
    overall at a lower level than ours are. It is important to note that
    our military-to-military exchanges were stopped from May until December
    1999, as a result of the accidental bombing of the Chinese embassy in
    Belgrade. Also, when the military-to-military exchange program was
    restarted in 2000, we implemented significant new restrictions that
    were stipulated in the National Defense Authorization Act. Neither we
    nor China allow the other access to visit what are considered sensitive
    military capabilities or facilities. The bottom line is, exchanges are
    limited and roughly reciprocal.
        The recent EP-3 accident and aftermath have caused the Secretary of
    Defense to undertake a comprehensive review of our military to military
    activities with China. USPACOM is an active participant in this review.

                                   EAST TIMOR

        Question. What kinds of support and personnel is PACOM currently
    providing the United Nations' operations in East Timor?
        Answer. There are no United States Pacific Command (USPACOM)
    military personnel assigned to the United Nations Peacekeeping Force
    (UNPKF) in East Timor or to the United Nations Transitional Authority
    East Timor (UNTAET).
        The United States Support Group East Timor (USGET) has twelve core
    staff members who coordinate USPACOM rotational presence operations in
    East Timor. Our activities in East Timor include monthly ship visits,
    medical and dental civic action projects and engineering support
    through December 2001 and will include a maximum of forty-five
    personnel deployed to East Timor during peak periods. In addition,
    twice a year an amphibious ready group, including its reinforced medium
    lift helicopter squadron and navy landing craft, will conduct community
    relations, and humanitarian and civic assistance projects in support of
    the people of East Timor's transition to independence.
        As Commander-in-Chief, United States Pacific Command (USCINCPAC), I
    do not provide capabilities to the peacekeeping force other than staff
    advice and technical assistance on a case by case basis within the
    capabilities of the personnel assigned to USGET. For example, the USGET
    civil military affairs officer acts as the USGET liaison with the UNPKF
    headquarters. He keeps the UNPKF informed of day-to-day USGET
    activities, and provides situational awareness to the Commander, USGET
    (COMUSGET). Additionally, the civil military affairs officer
    coordinates United States rotational presence activities with UNTAET
    and with non-government organizations and private organizations
    operating in East Timor. This coordination maintains a professional
    relationship between UNTAET and USGET, but not a supporting or command
    relationship.
        Likewise, the USGET engineer planner periodically provides subject
    matter expertise and technical assistance to UNTAET engineers and
    coordinates USGET engineering projects with the East Timor Transitional
    Authority. This deconflicts community relations and humanitarian
    activities between United Nations sponsored nation building projects
    and USGET community relations and humanitarian assistance projects in
    East Timor.
        Force protection is an area of concern for all personnel in East
    Timor. The collocation of the USGET intelligence officer with the UNPKF
    allows for the USGET intelligence officer to gain a greater
    understanding of security issues both within Dili and throughout East
    Timor. USGET does not provide any intelligence products to the United
    Nations (U.N.); however, the USGET intelligence officer integrates with
    the UNPKF staff where possible to allow for better coordination between
    the UNPKF and USGET on Force Protection matters.
        Technical advice and staff assistance is provided only within the
    current capabilities of the USGET staff, and does not require
    additional staff or other resources. This support is consistent with
    the terms set out in the President's February 2000 congressional
    notification regarding U.S. military activities in East Timor, as
    required by the U.N. Participation Act, and the recent Helms-Biden
    amendments to that Act.
        Question. I understand that PACOM is funding operations in East
    Timor as an exercise rather than as a contingency operation, making it
    ineligible for DOD contingency funding. How has your command absorbed
    these costs, and what programs have been reduced to fund these costs?
        Answer. The Office of the Secretary of Defense classifies current
    deployments to East Timor as training, and requires funding to be
    provided by the Service component commands. As such, operations in East
    Timor are not eligible for reimbursement from the Overseas Operations
    Contingency Transfer Fund (OCOTF). The four component commands in the
    United States Pacific Command are each absorbing East Timor costs with
    different programs. The programs affected include flying hour, ship
    operations, combat support forces, operating forces' equipment,
    engagement, and sustainment, restoration and modernization. The total
    costs for the fiscal year 2001 program are estimated at $7.6 million.
    While small in comparison to other operations worldwide, the
    unbudgeted, un-reimbursed costs can eat up significant operational
    funding for our components. Marine Forces Pacific bore a significant
    portion of the East Timor costs and has a relatively small budget. Any
    unprogrammed requirements directly impact other areas.
        Question. As East Timor prepares for independence in late 2001,
    what is the current and long-term threat to East Timor's security?
        Answer. Three issues threaten the current security situation in
    East Timor: rising street crime, the external pro-integrationist
    militia threat, and emerging politically motivated violence. Two issues
    potentially threaten East Timor's long-term security situation. First,
    the present militia threat, based on a refugee population in West
    Timor, could form the nucleus of a long-term insurgency to destabilize
    an independent East Timor. The second long-term threat is a potential
    deterioration of East Timor's strategic relationship with Indonesia,
    although bilateral relations are presently very good.

                                  NORTH KOREA

        Question. Describe the North Korean military situation and overall
    readiness?
        Answer. North Korea possesses the fifth largest military is the
    world, composed of approximately 1.6 million personnel [deleted]. Their
    most formidable conventional component is ground forces, composed of 15
    Corps equipped with a wide variety of weapons systems [deleted]. They
    also maintain the world's largest number of special operations forces
    [deleted]. However, the ground forces are beset with problems and
    overall military capability is declining. The functional collapse of
    North Korea's economy has resulted in increasing military shortfalls,
    to include obsolete military equipment, inadequate training, and the
    effects of widespread chronic malnutrition on its soldiers.
        To mitigate the declining ground forces capability, [deleted].
        North Korea's primary counterbalance to declining military
    capability is the threat posed by deployed SCUD and NO DONG missile
    units. [Deleted].
        Problems of obsolescence also effect the North Korean Air Force and
    Navy. However, the Air Force retains a large aircraft inventory,
    [deleted], many of which train for limited ground controlled air
    intercept and ground attack. While North Korea Naval capability is
    limited to littoral waters, every vessel in North Korea is capable of
    mine-laying, and if such mines were set adrift, it would pose a
    substantial threat to international shipping in the area. [Deleted].

                                KOREAN PENINSULA

        Question. With the ongoing dialogue between North and South Korea
    and their economic cooperation initiatives, what are the prospects for
    near-term conventional force reduction negotiations on the peninsula?
        Answer. The prospects for near-term conventional force reduction
    negotiations do not look good. Military measures are making virtually
    no progress in the ongoing North-South dialogue. The Defense Ministers
    only met once and at this meeting North Korea refused to discuss any
    matters other than the transportation corridor through the
    Demilitarized Zone (DMZ). The North Korean side rebuffed all attempts
    by the Republic of Korea (ROK) Defense Minister to raise confidence-
    building measures at the meeting. The North canceled the scheduled
    second meeting. While the ROK continues to make considerable progress
    in demining south of the DMZ along the path of the Seoul-Sinuiju
    railway, North Korea has done little on its side of the DMZ. North
    Korea has not yet signed the bilateral agreement that will govern
    security inside the DMZ transportation corridor either. In general, the
    North Korean actions to date focus on their demands for maximum
    economic benefit, especially the provision of electrical power, but
    offer little in return in the way of military confidence building
    measures or creating an environment conducive to foreign investment.

                             EXERCISE NORTHERN EDGE

        Question. It is my understanding that the exercise funding for
    NORTHERN EDGE was just released by the Pentagon--ten days after the
    exercise started. How can we avoid this from happening in the future?
        Answer. In past exercises, the funding for joint exercise NORTHERN
    EDGE (NE) was passed by the Joint Staff directly to the Commander,
    Alaska Command (COMALCOM). COMALCOM in turn passed the funding directly
    to the units participating in the exercise. For NE01 the funding flow
    changed by Congressional direction. The conference report for the
    Fiscal Year 2001 Defense Appropriations Act directed ``the Secretary of
    Defense to transfer funds from the Chairman, Joint Chiefs of Staff
    exercise fund to the service operation and maintenance accounts to
    cover the incremental cost of this exercise.'' This direction
    necessitated a reprogramming of Department of Defense appropriations
    and created several more organizational layers between the source of
    funds (the Joint Staff) and participating units in the field. Once the
    reprogramming was accomplished (in the middle of the transition between
    administrations), funds had to be passed from the Joint Staff to the
    Services, from the Services to major commands, from major commands to
    local/regional commands, and finally to the participating units. To
    mitigate the impact upon NE01 participating units, all Services
    ``fronted'' the funding for exercise participants in anticipation of
    reimbursement (received ten days after the exercise started). We do not
    anticipate any similar problems in the future. United States Pacific
    Command and the Joint Staff have worked closely with the Office of the
    Secretary of Defense to properly align the required funding for future
    exercises.
        Question. Is funding for NORTHERN EDGE included in DOD's long range
    funding plan?
        Answer. We do not yet have details of the fiscal year 2002 defense
    budget request or the associated Five-Year Defense Plan. The President
    will provide those details after Secretary of Defense Rumsfeld
    completes his ongoing strategy review.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye

                       INTELLIGENCE ASSETS IN THE PACIFIC

        Question. Admiral Blair, could you comment on the requirements
    versus available ISR assets under your command?
        Answer. The numbers of airborne reconnaissance assets assigned to
    United States Pacific Command [deleted]. We continue to advocate
    requirements for additional aircraft with the Joint Staff and Services.
    Our airborne collection requirements continue to [deleted]. At a
    minimum, as Commander-in-Chief, United States Pacific Command, I
    require an [deleted].
        Question. Admiral Blair, what is your view of Global Hawk and would
    that have a positive impact if it were deployed in your AOR?
        Answer. We are very excited about the potential Global Hawk
    presents to the United States Pacific Command (USPACOM) Area of
    Responsibility (AOR). With its long range and duration, Global Hawk can
    help us conquer the ``tyranny of distance'' in the Department of
    Defense's largest geographic AOR. Though its initial operating
    capability (IOC) is still 3 or more years off, we at USPACOM intend to
    take the lead in both deployment and employment of Global Hawk,
    enhancing our indications and warning (I&W) capabilities both on the
    Korean Peninsula and in other key areas of interest in the Pacific.
    Global Hawk's potential to surveil the broad ocean area is already
    gaining the interest of key regional allies, such as Australia, to whom
    Global Hawk is being demonstrated during Exercise TANDEM THRUST 01.
        Global Hawk will have a positive impact by helping address our
    shortage of intelligence, surveillance and reconnaissance assets, a key
    challenge for USPACOM. However, it is critical to note that Global
    Hawk's current and near-term programmed capabilities will make it a
    good complement to the U-2 aircraft we currently employ; Global Hawk
    will not be able to replace the U-2 until possibly late in the decade
    (depending on payload development decisions).

                              SUBCOMMITTEE RECESS

        Senator Stevens. If there is nothing further, the
    subcommittee will stand in recess.
        [Whereupon, at 11:35 a.m., Wednesday, March 28, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                           WEDNESDAY, APRIL 25, 2001

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

                             DEPARTMENT OF DEFENSE

                       Chemical Demilitarization Program

    STATEMENT OF HON. JOSEPH WESTPHAL, ACTING SECRETARY OF
                THE ARMY
    ACCOMPANIED BY:
            JAMES L. BACON, PROGRAM MANAGER FOR CHEMICAL DEMILITARIZATION
                PROGRAM
            MICHAEL PARKER, PROGRAM MANAGER FOR ASSEMBLED CHEMICAL WEAPONS

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. Good morning. Today's hearing concerns the
    Department of Defense's (DOD) chemical demilitarization
    program. It consists of two panels. The first panel will
    discuss the overall program and consists of Acting Secretary of
    the Army Joe Westphal and program managers Jim Bacon and Mike
    Parker. The second panel will focus on the concerns of some of
    the communities located next to chemical weapons storage
    disposal sites.
        Let me first welcome you, Mr. Secretary, and thank you for
    your role as Acting Secretary of the Army. We are delighted to
    have you with us and know of your work in the past. I can
    testify that you are a good fisherman.
        Dr. Westphal. Thank you, Mr. Chairman.
        Senator Stevens. I look forward to spending time with you
    again.
        The disposal of chemical weapons poses one of the more
    difficult challenges to our Nation and the Department of
    Defense in selecting the best technology for Kentucky and
    Colorado, controlling costs and assuring safety in terms of all
    actions of the Department.
        I want to recognize my colleagues here. Senator Shelby, do
    you have a comment?

                     STATEMENT OF Senator RICHARD C. SHELBY

        Senator Shelby. I have a brief opening statement, if you
    will permit me, Mr. Chairman.
        Senator Stevens. Please.
        Senator Shelby. Mr. Chairman, first of all let me thank you
    and also Senator Inouye for agreeing to hold this hearing so
    that we may take a closer look at the chemical demilitarization
    program and the assembled chemical weapons assessment programs.
        For those of us in the Senate who have stockpiled chemical
    weapons in our State, I believe this is a very difficult and at
    times a divisive issue. Different States have different issues
    and concerns. I compliment the chairman and the ranking member
    for their patience and understanding during the preparation of
    this hearing. I would also like to recognize Mr. Tom Hawkins of
    the subcommittee staff for his diligence and responsiveness
    during the planning of this hearing.

                             WELCOMING OF PANELISTS

        I would like to welcome all the panelists here today and
    look forward to their testimony regarding the two programs. I
    would especially like to welcome Ms. Lindell, Mr. Kenney, and
    Mr. Henderson, who are from Anniston, Alabama, my home State.
    Thank you for your concern for your community and thank you for
    being here today.
        Mr. Chairman, the destruction of stockpiled chemical
    munitions has been successfully completed on Johnston Atoll and
    operations continue in Utah. Incineration is scheduled to
    commence next year in Anniston, Alabama, and also in Oregon.
    However, the fact that the incinerator will go on line next
    spring has heightened, I believe, a sense of fear in a lot of
    people in the Anniston, Alabama, community.
        Today I would like to ask the Army and the Federal
    Emergency Management Agency (FEMA) why such a state of fear
    exists in Anniston. I am hopeful that they will have
    explanations and solutions. I would also like to give some of
    my constituents that I mentioned an opportunity to voice their
    concerns here today. We must remember that they are the
    ultimate stakeholders in this matter. They live in these
    communities and I think most of us are aware of that.
        Mr. Chairman, thank you for holding this hearing.
        Senator Stevens. Thank you.
        Senator McConnell.

                     STATEMENT OF Senator MITCH Mc CONNELL

        Senator McConnell. Thank you, Chairman Stevens.
        You know, if General Washington had run the continental
    army the way our chemical weapons destruction efforts have been
    managed, it is an absolute certainty that we would still be
    sipping tea and dining on crumpets. I am not exaggerating when
    I say that in all my years as a Senator I have never seen a
    Federal program that has been more poorly managed than this
    one.
        What exacerbates the problem is the reality that poor
    oversight can lead to much more than increased cost and
    schedule delays. It can lead to disastrous accidents that
    seriously threaten men, women and children in communities
    around the country.
        Quite frankly, with the exception of the loyal support from
    the chairman of this subcommittee, there are very few members
    of Congress who are interested in wrestling with this issue. I
    can well understand why. Destroying our Nation's chemical
    weapons consistent with our commitments under the Chemical
    Weapons Convention may be important, but it is not what I would
    call a glamorous undertaking.
        That said, the evidence is undeniable. This is a program in
    desperate need of new management. I am proud to have been
    involved in forcing--and I use that word intentionally,
    forcing--the Army to conduct an evaluation of alternatives to
    incineration as a means to destroy these weapons. Despite the
    General Accounting Office's (GAO's) 1992 recommendation that
    the Army determine whether faster and less costly technologies
    exist for destroying the stockpile, my effort was met with
    strident, strident opposition by everyone within Program
    Manager for Chemical Demilitarization (PMCD).
        Despite this fact, I am pleased that under the leadership
    of Mike Parker and his team today a total of four alternatives
    have been successfully demonstrated and it is entirely likely
    that one of these could be deployed in Kentucky in the near
    future. In addition, this effort relied on considerable input
    from the public and other non-DOD sources. I think all who
    participated would agree that this aspect was the most
    successful part of the program, as people from all sides of the
    debate became invested in a positive outcome.
        Unfortunately, the larger destruction program continues
    under a shroud of deception, producing embarrassing results. I
    submit that the time to institute reform is now. Secretary
    Rumsfeld should include in his comprehensive review an honest
    evaluation of the chemical weapons program. If this occurs,
    there is no question in my mind that the need for improved
    management and accountability will become crystal clear.

                             DEMILITARIZATION COSTS

        One need only look at the mountain of Army, DOD, and
    private reports which have been issued on the chemical weapons
    demilitarization program over the last decade to see that the
    need for reform is real. In 1985, the year I came to the
    Senate, the initial estimate for the cost of destroying
    America's stockpile was $1.7 billion. The latest publicly
    stated cost projection is $14.1 billion. That is a staggering
    increase of 829 percent.
        What have we gained with the extra cost? According to a
    1998 independent review, ``Even inside the DOD and the Army,
    the program lacks credibility.'' No one appears to want to take
    charge because it is seen as a disaster with no solution, and
    even Dr. Jacques Gansler the recently departed Under Secretary
    of Defense for Acquisition and Technology, stated that the
    program ``requires a number of management improvements and
    needs to improve stakeholder involvement and program
    transparency through the use of the Assembled Chemical Weapons
    Assessment (ACWA)-type public outreach as a model across the
    chemical weapons program.''
        To that, Mr. Chairman, I can only add, amen. The issue of
    accountability must be dealt with and I intend to pursue
    solutions with the Department. But until DOD decides to take
    ownership of this program, we will be here every year lamenting
    the ever-spiraling budget and more missed deadlines. We owe it
    to our constituents in Alabama and Kentucky and other places
    whose homes, workplaces, and schools border these destruction
    facilities to stop this embarrassing trend in its tracks.
        Thank you very much, Mr. Chairman, for holding this
    important hearing.
        Senator Stevens. Thank you.
        Mr. Secretary, the news accurately reports a comment I made
    at the White House yesterday about needing more money in this
    year's budget for this committee. One of the reasons I pointed
    that out to them was we have a series of programs that have
    escalating costs and yet we have some fixed costs for
    acquisition. We must cut one or the other. We must either
    postpone airplanes or acquisition of new ships or acquisition
    of tanks, or we must find some way to get these programs like
    this one back under control.
        I do not see how we can do it in 1 year. I really think we
    have an absolute crunch in terms of the defense appropriations
    bill this year.
        Senator Inouye, I have proceeded in your absence. I
    apologize.

                     STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. That is all right. I am late.
        Senator Stevens. Do you want an opening statement? Are you
    sure? We have got plenty of time.
        Senator Inouye. Make it part of the record.
        Senator Stevens. Well, let us hear it.
        Senator Inouye. You want to hear about it?
        Senator Stevens. Yes.
        Did you not come to hear his statement? I did.
        Senator Inouye. Well, Mr. Secretary, good morning, sir.
        Dr. Westphal. Good morning, sir.
        Senator Inouye. We appreciate that you and your colleagues
    are here to give us some wisdom. We need that here. I know that
    the committee also will hear from a second panel, including Mr.
    Salter from the FEMA, and several representatives from local
    citizens groups, and to them I also extend my greetings and
    welcome. I join my chairman in doing that.
        Today the committee will review DOD's chemical
    demilitarization program. It is certainly true that issues of
    great national and international importance too often have
    unavoidable and sometimes dire consequences for local
    communities. This of course is the case in war as well as in
    actions such as trade embargoes, for example. Disposing of our
    chemical weapons is no less an issue of great national and
    international importance, but one with clear local
    consequences.

                     CHEMICAL WEAPONS CONVENTION COMMITMENT

        The United States is bound by the Chemical Weapons
    Convention, ratified by the Senate, to eliminate these horrific
    tools of war by the year 2007. Yet, of equal consequence to
    this committee is ensuring that DOD's chemical demilitarization
    program meets its commitment to safely and quickly dispose of
    these weapons.
        As all of us in this room understand, protecting the public
    health is job number one for this program, and that is why the
    Congress has required the Department to seek the safest and the
    most effective technologies for eliminating our chemical
    weapons. I know that this is a risky and costly task, but I am
    certain you will agree that must be done.
        Mr. Secretary, your challenge today is clear, to present to
    the committee a statement about the risks and the successes of
    DOD's chemical demilitarization program and to give us a view
    of the path ahead, one that will ensure the safety of our
    communities and meet our commitments to our Nation. We welcome
    your testimony, sir. As you know, although we do not have a
    chemical facility in our back yard, there is a little island
    down the way that we are concerned about in Hawaii.
        Senator Stevens. Thank you very much, Senator.
        Mr. Secretary and for all witnesses, we will print your
    statements that you presented to the committee in the record in
    full. We would like to have your comments for the committee
    now.

                 OPENING STATEMENT BY ACTING SECRETARY WESTPHAL

        Dr. Westphal. Thank you, Mr. Chairman and ranking Senator
    Inouye, Senator Shelby, Senator McConnell. I am delighted to be
    here. I am particularly delighted to have the opportunity to
    get more immersed into this program. As you know, I am fairly
    new to this job. I do pledge to all of you that I will take the
    time to educate myself and to understand better the issues you
    have raised today. We will have people in the audience here
    that will also be checking in on the comments of the second
    panel to ensure that we were well coordinated on that.
        Mr. Chairman, I brought Jim Bacon, who is our program
    manager for the chemical demilitarization program, and Michael
    Parker, who is our program manager for the Assembled Chemical
    Weapons Assessment (ACWA) Program. They are the experts. We are
    going to be addressing some fairly technical or highly
    technical and complex issues today, so I hope you will indulge
    me. I will probably ask them to address many of the technical
    questions you may raise during the questions and answers.
        As you know, the Department of Defense in 1985 took over
    this program when you mandated the Department to carry out the
    destruction of the U.S. stockpile of chemical agents and
    munitions. Through that you also required the Department of the
    Army to be the essentially executive agent or to manage the
    disposal program.
        The program is composed essentially of four projects: the
    Chemical Stockpile Disposal Project. In 1985, we were required
    to destroy the stockpile of unitary chemical weapons at nine
    sites, including Johnston Island.
        The second project is the Chemical Stockpile Emergency
    Preparedness Project (CSEPP), which was established in 1988, to
    help communities in ten states to enhance existing emergency
    management and response capabilities.
        The Non-Stockpile Chemical Materiel Product was established
    in 1993 to identify, locate, and destroy binary chemical
    weapons warfare materiel, former production facilities, and
    recovered chemical warfare materiel.
        Then the fourth project, the Alternative Technologies and
    Approaches Project, was established in 1994 to develop and
    support testing of two technologies for neutralizing chemical
    agents at two sites that store only large containers holding
    one type of agent.
        Also, in 1997 the Assembled Chemical Weapons Assessment
    Program was established. This program was designed to test
    technologies other than incineration for destroying assembled
    chemical weapons. Established by Congress in 1997 to test these
    technologies, this program is, as I mentioned earlier, managed
    by Mike Parker here.

                             MAJOR ACCOMPLISHMENTS

        Now, if I may, I would like to just briefly address some of
    the major accomplishments and activities in those particular
    projects. The United States originally maintained about 31,496
    tons of chemical agent at these nine storage sites. To date we
    have destroyed over 22 percent of the original tonnage, while
    90 percent of the total original stockpile is under contract
    for destruction.
        By April of 2000, April 29 of this year, we were required
    to have destroyed 1 percent--excuse me, last year--1 percent of
    the chemical weapons that were declared at the time of the
    treaty's entry into force. By that time we had well exceeded
    that milestone, having destroyed over 15 percent of those
    weapons. We will pass the next significant treaty milestone
    ahead of schedule, which will require that we have 20 percent
    of category one chemical weapons destroyed by April 29th of
    2002.
        The greatest accomplishment of the program by far is the
    reduction of risk to the public, the workforce, and the
    environment by destroying chemical agents. It continues to be a
    reality that the ongoing storage of chemical weapons remains
    the greatest risk to local communities residing near
    stockpiles. Every day we operate a disposal facility, we are
    safely, effectively, and significantly reducing the risk.
        Our priorities for fiscal years 2001 and 2002 include
    maintaining the momentum we have achieved and continuing to
    make progress at each of the chemical stockpile sites under
    construction or in operation. Of critical importance are the
    selection of disposal technologies at Pueblo and Blue Grass
    locations and the acquiring of funding necessary to begin
    demilitarization activities at those sites.
        We are supporting a Defense Acquisition Executive review of
    several aspects of the Chemical Demilitarization Program,
    including our compliance with the Chemical Weapons Convention,
    life cycle costs and schedule estimates, program plans for the
    closure of chemical agent disposal facilities, and the path
    forward to implement disposal technologies at Pueblo and Blue
    Grass. The review is scheduled to be completed during the first
    quarter of fiscal year 2002.
        In addition to the Defense Acquisition Executive review, we
    are supporting the completion of the Congressionally directed
    studies of the Chemical Demilitarization Program, including an
    assessment of the feasibility and advisability of using
    stockpile facilities for disposal of non-stockpile material.
    Each of these assessments has the potential to drastically
    change the scope of the program and the funding requirements
    necessary to execute the chemical demilitarization mission.
        Now, as stated earlier, maintaining momentum in our program
    is vital to the safety of our communities and to meeting our
    international treaty obligations. We have made tremendous
    progress in the safe destruction of chemical agents and
    munitions in an environmentally sound manner while continuing
    to address the challenges that such endeavors bring.
        So, given those broad statements of what we perceive to be
    a program that has our utmost concerns for safety, health, and
    environmental protection, I am personally anxious to understand
    also what the Congress's concern and what your communities'
    concerns are regarding the management of that program and what
    we need to do to improve and to assure you and your
    constituents that safety and environmental protection are of
    utmost significance.
        Senator Inouye, you mentioned Johnston Island. As you know,
    the Johnston Atoll Chemical Agent Disposal System was
    constructed back in 1985. We have destroyed 2,031 tons of
    chemical agents and in November of 2000 we successfully and
    safely destroyed the last chemical munitions in the Johnston
    Island stockpile, a major milestone in the history of chemical
    demilitarization.
        Closure activities have begun at Johnston Atoll and are
    planned to be completed by the fourth quarter of fiscal year
    2003. Closure is a first-time activity for the program and may
    result, I think, in a lot of new requirements. But the lessons
    we have learned at Johnston Island, both through the operation
    and the closure will be invaluable to the transfer of those
    ideas and methods to the continental United States disposal
    sites.
        Mr. Chairman, I could go on with the statement. You have
    most of it. I would rather save the committee's time and not go
    through most of this information, which you have, and allow the
    members to ask the questions. I can tell you that I have spoken
    with the Secretary and with the current folks that are in the
    Under Secretary of Defense's position. The Senate will be
    looking at confirmation of a new Under Secretary of Defense for
    Acquisition, Technology and Logistics in the next few days.
    Pending that nomination, I intend to work with whoever the
    Senate confirms to that position and make sure that we address
    your questions and your issues adequately.

                               PREPARED STATEMENT

        But I will end there. I would rather not take your time
    with repeating what is in the statement.
        [The statement follows:]

                   Prepared Statement of Dr. Joseph Westphal

        Mr. Chairman and Members of the Committee: It is an honor and a
    pleasure to testify before you here today on the state of our Chemical
    Demilitarization Program. Our panel is comprised of Mr. James Bacon,
    the Program Manager for Chemical Demilitarization, and Mr. Michael
    Parker, the Program Manager for Assembled Chemical Weapons Assessment,
    and myself. We will tell you where the program is today, and where we
    will be going in the future.
        I would like to begin by highlighting some of the successes that we
    have made to date. The Chemical Demilitarization Program, as you know,
    is a top priority, not only for our nation and its military, but for
    the global community of which the United States is a part. The
    principal functions that this program was founded to perform have the
    historic end goal of not only reducing, but eliminating the United
    States' chemical weapons inventory consistent with an international
    treaty obligation--the Chemical Weapons Convention. Of course, that is
    no small task. However, we believe that this is an important,
    beneficial and absolutely necessary program which will help destroy
    weapons of mass destruction as well as helping to ensure a clean and
    safe environment for Americans and their allies.
        One of our proudest recent milestones is the completion of our
    mission at the Johnston Atoll Chemical Agent Disposal System (JACADS).
    The JACADS site has been disposing of stockpiled chemical weapons
    safely for over a decade, and on November 29, 2000, the facility
    completed its final mission, the elimination of its stockpile of VX
    nerve agent. The JACADS mission has, to date, accomplished the
    destruction of 2,031 tons of agents. That's more than six percent of
    the entire United States chemical stockpile and includes the chemical
    munitions relocated from Germany to Johnston Atoll in 1990. For the
    first time in the history of the Chemical Demilitarization Program, an
    entire U.S. chemical stockpile storage location will be free of
    chemical weapons. Since the disposal operations at Johnston Atoll are
    complete, closure activities for that facility are currently underway
    that we expect to complete in September 2003.
        The closure of our first full-scale prototype facility at Johnston
    Atoll marks a profound turning point in our program. At the same time,
    I am pleased to report to you that construction of new facilities at
    Anniston, Alabama, and Umatilla, Oregon, is nearly complete. Work on
    the facilities is continuing steadily, and we do not anticipate any
    significant delays or problems. We are on schedule to begin operations
    at these sites during fiscal year 2002. We are also making progress in
    our work on our facilities at Pine Bluff, Arkansas, Aberdeen Proving
    Ground, Maryland, and Newport, Indiana. In addition, we have begun the
    National Environmental Policy Act (NEPA) documentation process to
    support technology decisions for the Pueblo, Colorado, and Blue Grass,
    Kentucky, sites. These decisions will be made by the Defense
    Acquisition Executive in the first quarter of fiscal year 2002 for
    Pueblo and the third quarter of fiscal year of 2002 for Blue Grass. Our
    new facilities will continue the process of Chemical Demilitarization
    in the new millennium with the same concern for safety and
    environmental preservation that made our mission at Johnston Atoll so
    successful.
        Further, safe and effective destruction operations continue at our
    Tooele, Utah, facility--our largest stockpile site. Since August 1996,
    over 10 million pounds of agent have been destroyed at the Tooele
    facility, and these operations are scheduled to be completed in 2004.
        We look forward to answering any questions that you may have about
    this vital program.

              DESCRIPTION OF THE CHEMICAL DEMILITARIZATION PROGRAM

        Public Law 99-145, as amended, designated the Army as the
    Department of Defense's Executive Agent in charge of destroying our
    nation's chemical weapons. As such, the Army's Program Manager for
    Chemical Demilitarization (PMCD) is the primary entity with the
    obligation of designing and operating state-of-the-art chemical weapons
    disposal facilities that will allow our nation to meet international
    treaty obligations by April 2007. Along with reducing the risk of
    proliferation of weapons of mass destruction, the Army continually
    seeks ways to reduce the risk to military and civilian families living
    near the storage sites by ensuring these aging weapons are safely
    destroyed in an environmentally sound manner as efficiently as
    possible. This is a top priority. The Army also is spending
    approximately $120 million per year to safeguard the storage of
    chemical weapons.
        As Program Manager, Mr. Bacon is directly responsible for the
    Chemical Stockpile Disposal Project, the Alternative Technologies and
    Approaches Project, and the Non-Stockpile Chemical Materiel Product.
    The United States' stockpile of chemical agents and munitions is stored
    at eight sites within the continental United States. To date, we have
    safely destroyed a combined total of over 7,000 tons of chemical agent
    at the Johnston Island and Tooele facilities.
        The Alternative Technologies and Approaches Project is an
    aggressive research, development, test and evaluation program that
    began in 1994 to pilot test chemically neutralizing the bulk mustard
    agent, stored at Aberdeen Proving Ground and the bulk nerve agent VX
    stored at Newport Chemical Depot. This program is focused on these two
    sites because each site has only one type of chemical agent stored in
    large steel containers (hence the term ``bulk''), and because there are
    no assembled chemical weapons in these stockpiles.
        The Non-Stockpile program's mission is to safely dispose of all
    former chemical warfare production facilities and recovered and
    miscellaneous chemical warfare materiel that is not part of the
    stockpile.

                              TECHNOLOGY APPROACH

        Baseline incineration is the only tried and successfully proven
    chemical weapons disposal technology to date, and the PMCD has employed
    that technology at two operational sites and is constructing additional
    facilities at three other locations. At our Johnston Island facility,
    the incineration technology successfully and safely destroyed over
    2,000 tons of chemical agent, including over 400,000 munitions and bulk
    agent containers, while meeting stringent Resource Conservation and
    Recovery Act requirements and permitting conditions. Johnston Island is
    the first facility to complete its mission, destroying its entire
    stockpile of agent. To date, our facility in Tooele has destroyed
    approximately 5,000 tons of chemical agent, including 795,285 munitions
    and bulk agent containers.
        Alternative, non-incineration technologies are actively being
    researched and developed for pilot testing at Aberdeen Proving Ground
    and Newport to support the disposal of the bulk only stockpiles. Under
    a separate Department of Defense program, the Assembled Chemical
    Weapons Assessment (ACWA) program, additional alternative technologies
    are also being examined for potential pilot testing. Mr. Parker, the
    ACWA Program Manager, will provide you with information regarding this
    program and testify here as well.

                         ACCOMPLISHMENTS AND PRIORITIES

        The United States originally maintained 31,496 tons of chemical
    agent at nine storage sites. To date, we have destroyed over 22 percent
    of the original tonnage while 90 percent of the total original
    stockpile is under contract for destruction. The program continues to
    meet or exceed requirements of the Chemical Weapons Convention (CWC).
    By April 29, 2000, we were required to have destroyed one percent of
    our Category 1 chemical weapons that were declared at the time of the
    treaty's entry into force. By that time, we had well exceeded that
    milestone, having destroyed over 15 percent of those weapons. We will
    pass the next significant CWC milestone ahead of schedule, which
    requires that we have 20 percent of Category 1 chemical weapons
    destroyed by April 29, 2002.
        The greatest accomplishment of the program, by far, is the
    reduction of risk to the public, the workforce, and the environment by
    destroying the chemical agents. It continues to be a reality that the
    ongoing storage of chemical weapons remains the greatest risk to local
    communities residing near stockpiles. Every day we operate a disposal
    facility we are safely, effectively, and significantly reducing this
    risk.
        Our priorities for fiscal years 2001 and 2002 include maintaining
    the momentum we have achieved and continuing to make progress at each
    of the chemical stockpile sites under construction or in operation. Of
    critical importance are the selection of disposal technologies for the
    Pueblo and Blue Grass locations and the acquiring of funding necessary
    to begin demilitarization activities at those sites.
        We are supporting a Defense Acquisition Executive review of several
    aspects of the Chemical Demilitarization Program, including our
    compliance with the CWC; life cycle cost and schedule estimates;
    program plans for the closure of chemical agent disposal facilities;
    and the path forward to implement disposal technologies at Pueblo and
    Blue Grass. The review is scheduled to be completed during the first
    quarter of fiscal year 2002. In addition to the Defense Acquisition
    Executive review, we are also supporting the completion of
    Congressionally directed studies of the Chemical Demilitarization
    Program, including an assessment of the feasibility and advisability of
    using stockpile facilities for disposal of non-stockpile materiel. Each
    of these assessments has the potential to drastically change the scope
    of the program and the funding requirements necessary to execute the
    chemical demilitarization mission.

                                 PROGRAM STATUS

        As stated above, maintaining momentum in our program is vital to
    the safety of our communities and to meeting our international treaty
    obligations. We have made tremendous progress in the safe destruction
    of chemical agents and munitions in an environmentally sound manner
    while continually addressing the challenges that such an endeavor
    brings. Our results are significant, and so are our obstacles. The
    following is a brief description of the status of our programs as we
    follow the critical path necessary to make our communities safe and to
    meet our international treaty obligations:

    Status of the Chemical Stockpile Disposal Project
                Johnston Island
        Johnston Island, located 825 miles southwest of Hawaii, is the home
    of the world's first full-scale facility, operated by the Washington
    Demilitarization Company (formerly Raytheon Demilitarization Company),
    and designed specifically for the disposal of chemical agents and
    weapons. The Johnston Atoll Chemical Agent Disposal System (JACADS) was
    constructed by the Pacific Dredging Company in 1985. During its
    operational phase JACADS, destroyed 2,031 tons of chemical agents. In
    November 2000, JACADS successfully and safely destroyed the last
    chemical munition in the Johnston Island stockpile, a major milestone
    in the history of chemical demilitarization. Closure activities began
    in January 2001 and are planned to be completed by the fourth quarter
    of fiscal year 2003. Closure is a first time activity for the program
    and may result in new requirements. The lessons we learn at Johnston
    Island, both through operations and closure, have been and will
    continue to be transferred to our continental United States disposal
    sites.

                Tooele, Utah
        The Deseret Chemical Depot, located 22 miles south of Tooele, Utah,
    stores the nation's largest stockpile of chemical weapons (13,616 tons
    of chemical agent. EG&G began construction of the Tooele Chemical Agent
    Disposal Facility in September 1989 and disposal operations began in
    August 1996. To date, Tooele has safely and effectively destroyed
    approximately 5,000 tons of the chemical agent GB. To put this
    significant achievement into perspective, the amount of agent destroyed
    at Tooele is greater than the amount of agent that is stored at any one
    of the remaining stockpile sites around the country. Closure operations
    at the facility are scheduled to begin in the fourth quarter of fiscal
    year 2004. It is important to note that all GB agent munitions will be
    destroyed during this calendar year.

                Umatilla, Oregon
        The Umatilla Chemical Agent Disposal Facility, located at the
    Umatilla Chemical Depot, is approximately seven miles west of
    Hermiston, Oregon, just south of the Washington/Oregon state line. This
    facility will dispose of 3,717 tons of our nation's original stockpile
    of chemical agent. Washington Demilitarization Company (formerly
    Raytheon Demilitarization Company) began construction of the facility
    in June 1997. Construction is 92 percent complete and is expected to be
    completed during the third quarter of fiscal year 2001. Disposal
    operations are scheduled to begin in the fourth quarter of fiscal year
    2002 and be completed in the first quarter of fiscal year 2006.

                Anniston, Alabama
        The Anniston Army Depot, located 50 miles east of Birmingham,
    Alabama, and eight miles west of Anniston, stores 2,254 tons of our
    nation's original stockpile of chemical agents. Washington
    Demilitarization Company (formerly Westinghouse Company/CBS) began
    construction of the Anniston Chemical Agent Disposal Facility in June
    1997. Construction is 98 percent complete and will be completed in
    third quarter of fiscal year 2001. Disposal operations are scheduled to
    begin in the third quarter of fiscal year 2002 and be completed in the
    second quarter of fiscal year 2006.

                Pine Bluff, Arkansas
        The Pine Bluff Chemical Agent Disposal Facility, located at the
    Pine Bluff Arsenal, is 35 miles southeast of Little Rock, Arkansas. The
    facility will dispose of 3,850 tons of our nation's original stockpile
    of chemical agent. Groundbreaking at the facility was held in February
    1999, and construction by the Washington Demilitarization Company
    (formerly Raytheon Demilitarization Company) is now 45 percent
    complete. Disposal operations are scheduled to begin in the fourth
    quarter of fiscal year 2003 and end in the first quarter of fiscal year
    2007.

    Status of the Alternative Technologies and Approaches Project
                Newport, Indiana
        The Newport Chemical Depot, located two miles south of Newport and
    32 miles north of Terre Haute in western Indiana, stores 1,269 tons of
    the nerve agent VX in 1,690 steel containers, commonly called ton
    containers. Groundbreaking at the Newport Chemical Agent Disposal
    Facility was held in April 2000 and Parsons Infrastructure is scheduled
    to begin pilot testing in the third quarter of fiscal year 2004 to
    pilot test VX neutralization followed by super critical water oxidation
    as the disposal technology. Upon verification of this technology being
    successful in the pilot stage, full-scale operations should begin in
    the first quarter of fiscal year 2005 and be completed in the fourth
    quarter of fiscal year 2005.

                Aberdeen Proving Ground, Maryland
        The Edgewood Chemical Activity of the Aberdeen Proving Ground,
    located approximately 20 miles north east of Baltimore stores 1,623
    tons of mustard agent, also known as HD, in 1,817 ton containers.
    Bechtel National, Incorporated, began construction of the Aberdeen
    Chemical Agent Disposal Facility in July 2000. The pilot testing of a
    neutralization process followed by biodegradation to destroy the
    mustard agent is scheduled to begin in the third quarter of fiscal year
    2004. Upon successful completion of the pilot testing to verify that
    the neutralization process is capable of full-scale disposal of the
    chemical agent, full-scale operations should begin in the second
    quarter of fiscal year 2005, and end in the second quarter of fiscal
    year 2006.

    Status of the Pueblo, Colorado, and Blue Grass, Kentucky, Sites
                Pueblo, Colorado
        The Pueblo Chemical Depot has 780,078 munitions with about 2,611
    tons of chemical agent. Significant demilitarization activities at the
    depot had been on-hold pending the results of the congressionally
    mandated ACWA program. This assessment required the evaluation of at
    least two alternate technologies to incineration for the disposal of
    assembled chemical munitions. This assessment is now complete.
        Both PMCD and ACWA are supporting the environmental evaluation and
    review process. In November 1999, an environmental Working Integrated
    Product Team (WIPT) was formed for the Pueblo project to work with the
    state of Colorado to expedite planning, development and implementation
    of all aspects of the environmental permitting process for a chemical
    agent disposal facility in Pueblo. The WIPT continues to meet regularly
    with the state. The PMCD and ACWA have also begun the NEPA process to
    support a technology decision. Completion of the NEPA process and the
    technology decision are scheduled to be made in the first quarter of
    fiscal year 2002 with a systems contract award expected in the second
    quarter of fiscal year 2002. Infrastructure projects for upgrade of
    roads, utilities and communications systems are scheduled for award
    this summer.

                Blue Grass, Kentucky
        The Blue Grass Army Depot, located in central Kentucky, stores 523
    tons of our nation's original stockpile of chemical agents. As with
    Pueblo, significant demilitarization activities have been on hold
    pending the results of the ACWA program.
        An Environmental WIPT was formed in January 2001 for the Blue Grass
    project. The purpose of the WIPT is to facilitate and expedite the
    permitting process for the safe elimination of chemical weapons stored
    at Blue Grass Army Depot. As required by NEPA, preparation of an
    environmental impact statement (EIS) has begun. Two technologies will
    be addressed in the EIS. These technologies are baseline incineration,
    and the ACWA technology of neutralization followed by super critical
    water oxidation. Additional ACWA technologies will be considered in the
    EIS if they are ultimately deemed reasonable alternatives. Completion
    of the NEPA process and the technology decision are scheduled to be
    made in the third quarter of fiscal year 2002.

    Status of the Non-Stockpile Chemical Materiel Destruction
        Destruction of the non-stockpile chemical materiel covered by the
    CWC must also adhere to the terms of the Convention. The Product
    Manager is responsible for the safe disposal of binary chemical
    weapons, former chemical weapons production facilities, buried and
    recovered chemical warfare materiel, and miscellaneous hardware and
    chemical warfare components. The Army continues to research, develop
    and deploy several neutralization-based technology mobile treatment
    systems for the disposal of non-stockpile materiel, including the
    Mobile Munitions Assessment System, the Rapid Response System, and the
    Explosive Destruction System.
        In December 2000, the program's Explosive Destruction System
    arrived at Rocky Mountain Arsenal, Colorado, and safely destroyed
    recovered bomblets containing GB. Due to the success of the Explosive
    Destruction System, the Program Manager decided to end the development
    of the Munitions Management Device-1. Termination of the Munitions
    Management Device-1 test will result in fiscal year 2001 cost savings
    to the program of approximately $5 million. Funds in this amount are
    being transferred to the Alternative Technologies and Approaches
    Project to cover emerging program requirements.

                                     SAFETY

        Disposing of lethal chemical agent and munitions is one of the most
    complex missions undertaken in either the public or private sector.
    Multiple configurations of munitions and energetics, along with varying
    types of chemical agent demand that we take the utmost safety
    precautions in the storage and destruction of these weapons. Throughout
    this process, we are totally committed to worker safety, protecting the
    health of the citizens in the communities in which we operate, and an
    overall respect for the environment. The PMCD actively works with the
    EPA, relevant state environmental and health regulatory agencies, as
    well as the Centers for Disease Control and Prevention to ensure worker
    and community health and safety and full protection of the environment.
    As the program continues its mission, a priority is maintaining a
    culture of safety and sharing lessons learned from operating facilities
    to those facilities about to enter into operation.

        MEETING AND EXCEEDING ENVIRONMENTAL AND REGULATORY REQUIREMENTS

        Planning, constructing, operating, and ultimately closing disposal
    facilities at nine different sites requires that the PMCD meet or
    exceed local, state, and national regulatory requirements for
    protecting human health and the environment. This requirement is both
    costly and time consuming; however, meeting or exceeding standards is
    critical for building partnerships in the communities where our
    facilities are located. As science and public policy concerns evolve,
    we are faced with increasing oversight requirements, which we fully
    accept for the protection of the public, our workers, and the
    environment. Because we have strong working relationships with state
    and local regulatory agencies, we cooperatively ensure that all
    obligations are met. For example, Oregon recently reclassified all
    munitions in storage as hazardous waste, and such a change will require
    the Army to change the way we work with state agencies. This
    reclassification will result in increased regulatory compliance costs
    for the Army.
        On the federal and state levels, the program continues to meet
    environmental regulatory and permitting requirements. Also, since the
    1960's, the Army has worked with the National Research Council, whose
    members are some of our nation's most distinguished scientists and
    engineers, to review and ensure our practices and procedures are sound.

     MANAGING UNIDENTIFIED FACILITY CLOSURE ISSUES AND ENVIRONMENTAL COSTS

        The legacy of chemical weapons production, testing, storage, and
    disposal will not be eliminated overnight. As the chemical weapons
    disposal process ends at our facilities like JACADS, we are entering
    uncharted territory relating to requirements and closure costs. As we
    work through the process at JACADS, we will learn a great deal about
    ultimate closure costs, schedules and processes that will be shared
    with our other facilities.

                        PARTNERING WITH OUR COMMUNITIES

        Public confidence and acceptance of the program is vital to the
    successful planning, construction, operation and closure of our
    facilities. The PMCD partners with citizens' advisory commissions in
    each stockpile state, with the Federal Emergency Management Agency
    (FEMA), and state and local emergency response agencies to ensure the
    public is adequately informed about the risks associated with the
    stockpile and our disposal operations. We take every opportunity to
    work with our state and local partners and communities to engage and
    inform local citizens by maintaining public outreach offices in all of
    the stockpile communities.
        The Chemical Stockpile Emergency Preparedness Program protects
    public health and safety in ten states from the risks of chemical
    stockpile storage and disposal operations. This program ensures that
    Army installations and state and local governments are prepared to
    respond to an accident involving the chemical stockpile. All eight Army
    installations that store chemical agents and munitions are prepared to
    respond to such an accident.
        The Army shares responsibility for managing this program with FEMA.
    FEMA is responsible for assisting state and local governments in
    developing their emergency response capabilities. The Army supports
    this effort by providing funding and technical assistance. The Chemical
    Stockpile Emergency Preparedness Program has enhanced emergency
    response capabilities in each of the ten states affected by the
    Chemical Demilitarization Program.

                MAINTAINING FUNDING NECESSARY TO FULFILL MISSION

        The PMCD has achieved a number of milestones and is clearly a world
    leader in chemical weapons disposal technology and processes. Meeting
    the CWC obligations and building upon our successes is a top priority,
    one which will require full financial support. The program has begun
    closure activities at the Johnston Island facility and will begin
    operations in the near term, at new facilities in Anniston and
    Umatilla. In addition, we expect the Department of Defense to
    determine, in the near term, the technology path forward for the Pueblo
    and Blue Grass sites.

                                   CHALLENGES

        The chemical demilitarization mission is a large and complex
    undertaking, constantly breaking new ground and meeting new
    technological, economic and political challenges. The Army's continuing
    destruction of our chemical weapons stockpile already has reduced risks
    to the public, the workforce and the environment. Risks from these
    lethal weapons will continue to decrease as new destruction operations
    (most of which are already under construction) come on line. Despite
    these achievements, the Army faces a number of significant challenges
    as we move forward with existing and planned operations to meet
    requirements of public law and the CWC. It is imperative that we
    maintain momentum and the full funding necessary to see the projects
    mature through the systemization, operations and closure phases. We
    must determine a technology path forward for Pueblo and Blue Grass,
    using sound science and frank dialogue, so we can proceed with the
    destruction of those stockpiles. Personnel retention issues, including
    the maintenance of the right skills mixture for government and
    contractor employees, must be successfully addressed for these
    relatively short duration projects. We must successfully manage the
    degradation of the stockpiles, which is an ongoing issue as the weapons
    deteriorate with age, so we can continue to minimize risk to the
    workers and the public. Finally, developing and achieving approved
    closure standards, working with the various stakeholders at all of our
    sites, to include state and local governments, continues to be a key
    program objective.

                                   CONCLUSION

        For over 20 years, the safety record of the thousands of men and
    women involved in the destruction of chemical weapons is remarkable. No
    member of the public has ever been exposed to a chemical agent during
    operations of our disposal facilities. We are meeting our CWC
    obligations while fulfilling our commitment to safety--to our workers,
    our communities and our environment. Indeed, we are truly making
    chemical weapons history.
        As we proceed toward our goal, we are constantly aware of the
    public's intense interest in this program and encourage their
    participation. We have and will continue to work closely with the
    established citizens' advisory commissions and our local communities.
    We are committed to forthright, open and responsive communications with
    all of our stakeholders. In our endeavors, we will never forget that
    safety and protection of the environment are our first priorities. Our
    obligation to our workers, our families, the communities and our nation
    is too great not to fully commit to safety as the program's paramount
    consideration. To accomplish our mutual goal, the focus must now be
    placed on staying the course and completing the mission of disposing of
    chemical warfare materiel using proven disposal technologies which are
    protective of human health and the environment and supportive of our
    international treaty obligations.
        In closing, Mr. Chairman, we ask for your support and this
    committee's support, which will demonstrate our commitment to both the
    communities surrounding our storage sites and our international
    partners. Thank you for the opportunity to present this statement to
    the Committee. We look forward to responding to your questions.

                                 PROGRAM COSTS

        Senator Stevens. Well, Dr. Westphal, we are very pleased
    that you are where you are now, because I think this program
    needs some attention. I am told that this program so far has
    cost $6.2 billion. I am getting used to big numbers this
    morning because I have just left the Commerce Committee, where
    we were talking about the Big Dig. The Big Dig was estimated to
    cost $2.4 billion. It has so far cost over $13 billion and it
    is not completed yet. You know, that is the tunnel under the
    Charles River up in Massachusetts.
        Now, this one I understand has spent $6.2 billion and the
    estimate for the total life cycle cost as I understand it is
    $14.1 billion, as Senator McConnell has said. The estimate,
    however, has been changing each year.
        How reliable is this estimate now, Joe?
        Dr. Westphal. I think it is pretty reliable. But there is
    an ongoing review of a new cost estimate for the future that is
    under way and will be ready some time in the fall. I do not
    know what that will tell us, but I think that we need to take
    into account the recommendations that you will make in this
    committee in decisions that we want to implement to maximize
    economic efficiency in order to assure that we either maintain
    the cost cycle where it is or reduce it if we can and at the
    same time apply whatever safety and useful technologies that
    are out there to make sure that we absolutely take care of
    people and their communities.

                 OPENING STATEMENTS OF MESSRS. BACON AND PARKER

        Senator Stevens. Now, Mr. Bacon and Mr. Parker, before I
    ask you questions, did you have any statement you wish to make
    this morning? Mr. Bacon?
        Mr. Bacon. Sir, my statement is incorporated with the
    Secretary's. But I do say that we are totally committed to
    giving this program its required attention. It is a top
    priority program. We take safety and environmental protection
    very seriously. We take all issues and concerns raised very
    seriously and are committed to meet our national obligation to
    the Chemical Weapons Convention.
        Senator Stevens. Thank you.
        Mr. Parker.
        Mr. Parker. Thank you, Mr. Chairman.
        I would just like to acknowledge the subcommittee's support
    to the search for alternative technologies and especially
    Senator McConnell's support in resourcing this critical
    program. We are fundamentally complete in the demonstration
    phase of alternative technologies and, as Dr. Westphal
    outlined, those decisions and how they affect especially the
    Pueblo and Blue Grass sites, will be subject to a decision this
    fall.
        [The statement follows:]

                       Prepared Statement of Mike Parker

        Thank you for this opportunity to update you on the accomplishments
    of the Assembled Chemical Weapons Assessment program in successfully
    identifying alternatives to incineration. I appreciate the committee's
    support for this program, and will give you a status of the program and
    accomplishments to date.
        The Assembled Chemical Weapons Assessment (ACWA) program was
    initiated under the Omnibus Consolidated Appropriations Act, 1997
    (Public Law 104-208). As directed within that Public Law, we the
    Department of Defense, Industry, Federal, State and local leaders as
    well as affected community members have formed an interactive
    partnership to identify and demonstrate alternative technologies to the
    baseline incineration process for the demilitarization of assembled
    chemical weapons.
        Congressional direction was based on strong constituent concerns
    over the health and safety of incineration. In order to address these
    concerns and define the criteria for an acceptable alternative, public
    involvement initiatives were set in place to build and maintain a
    transparent program. The Keystone Center, a neutral third party, was
    utilized as the facilitator to help build a program based on trust
    among the stakeholders in reaching consensus of acceptable alternate
    technologies. The stakeholders have coalesced into a working body, the
    Dialogue, where full public involvement is the operating principle. The
    Dialogue consists of a diverse group of affected stakeholders to
    include: DOD staff, EPA staff, State regulators, tribal government
    representatives, citizens from the stockpile communities (both pro and
    anti incineration proponents), and national interest groups. Technology
    providers from the commercial sector and members of the National
    Research Council panel overseeing the ACWA program for the Congress
    have also participated fully in the Dialogue process. Public
    involvement is the cornerstone of the ACWA program through the process
    established within this Dialogue group. All aspects of Technical,
    Environmental, and Contractual efforts within the program have been
    accomplished with Dialogue involvement and input.
        The ACWA team, which consists of technical, environmental,
    contractual, and legal experts, in conjunction with the Dialogue,
    developed several levels of criteria that were used to evaluate the
    proposed alternative technologies. Industry representatives observed
    this criteria and evaluations development process as well as
    participated in a two-day pre-solicitation conference in June 1997 to
    assure that industry understood the objectives of the program. A
    Request for Proposal was then published on July 28, 1997. The ACWA
    program received thirteen original proposals. Utilizing the established
    criteria, six proposals were ultimately found to warrant demonstration
    testing within the program. Due to funding constraints, only three
    technologies were demonstrated during 1999. These technologies were
    Burns and Roe (Plasma Arc), General Atomics (Neutralization/
    Supercritical Water Oxidation), and Parsons/Honeywell (Neutralization/
    Biotreatment). The evaluation of these demonstrations concluded that
    the Neutralization/Supercritical Water Oxidation and Neutralization/
    Biotreatment technologies are viable to go to pilot testing as stated
    in the ACWA Supplemental Report to Congress in September 1999.
        Upon receipt of fiscal year 2000 funding, the three remaining
    technologies were demonstrated. These final three technologies
    demonstrated were AEA Technology (Electrochemical Oxidation), Foster
    Wheeler/Eco Logic (Neutralization/Supercritical Water Oxidation/Gas
    Phase Chemical Reduction), and Teledyne Commodore (Solvated Electron
    Technology). The evaluation of these demonstrations concluded that the
    Electrochemical Oxidation and Neutralization/Supercritical Water
    Oxidation/Gas Phase Chemical Reduction technologies are viable to go to
    pilot testing. The basis of these conclusions will be presented in the
    next ACWA Supplemental Report to Congress.
        The Strom Thurmond National Defense Authorization Act for Fiscal
    Year 1999 (Public Law 105-261) directed the ACWA Program to begin
    preparations for the potential implementation of viable alternative
    technologies via pilot testing activities. Environmental, acquisition
    and budget planning requirements were set in motion to accommodate the
    implementation of an alternative technology. Also contained within
    Public Law 105-261 is the requirement for the DOD to certify to
    Congress that prior to implementing an alternative that the alternative
    technology approach is: as safe and cost effective as incineration; is
    capable of completing the destruction of such munitions on or before
    incineration; and is able to satisfy Federal and State environmental
    and safety laws applicable to the technology.
        To ensure success regarding the possible implementation of an
    alternative technology, Engineering Design Studies have been initiated
    for all successfully demonstrated technologies. The goals associated
    with the Engineering Design Studies are to complete a design package
    that would enable industry to complete and implement a pilot facility
    at a designated site and to provide cost and schedule estimates
    necessary for certification per Public Law 105-261. Also, the
    Engineering Design Packages will enable the Program Manager to develop
    a meaningful and complete Resource Conservation and Recovery Act permit
    application, which is required prior to constructing a pilot facility.
    It is important to note that throughout the entire ACWA program, the
    Dialogue has been kept involved and has had continual opportunity to
    present their views and concerns prior to major decision milestones.
        Currently, the ACWA program is participating in the Defense
    Acquisition Executive (DAE) Review. Various ACWA team members are co-
    chairing Integrated Process Teams (IPT) developed to establish, through
    advice to the senior leadership and the ultimate decision maker, the
    eventual path forward for the ultimate destruction of the Colorado and
    Kentucky chemical weapon stockpiles. The IPTs will make recommendations
    regarding the certification of an alternate technology per Public Law
    105-261. All available information developed throughout the program,
    including cost, schedule, technical data, and environmental analysis
    will be considered in the DAE review process. We expect a technology
    decision by the DAE for Pueblo, CO in the 1st Quarter of fiscal year
    2002 and for Blue Grass, KY in the 3rd Quarter of fiscal year 2002.
        As I previously stated in the 1997 ACWA Annual Report to Congress,
    ``it has been my belief, now validated by experience, that establishing
    and promoting a cooperative working relationship and understanding
    between a broad spectrum of stakeholders can and will yield positive
    results. Rather than giving up authority, I have found that involving
    the public in the decision making process is a powerful tool for
    increasing the authority and legitimacy of the ultimate decisions''.
        Thank you for your support and interest in this vital program.

                              PROGRAM COST GROWTH

        Senator Stevens. Mr. Bacon, what factors have led to this
    cost growth in the recent years?
        Mr. Bacon. Sir, the costs have changed over the years, as
    you mentioned in an earlier statement, I believe the $2 billion
    estimate was based on mid-1980's requirements. The stockpile at
    that time to be destroyed was M-55 nerve agent rockets. Scopes
    have increased over the period as the total stockpile was
    included in the program bringing new rules and regulations on
    environmental compliance, and bringing in the CSEPP program.
        All these are necessary parts for safe disposal. Also, the
    Non-Stockpile Chemical Materiel Project was added, i.e., former
    production facilities and binary weapons. These scope changes
    have led to cost increases. In addition, it is a very complex
    job, dealing with something that is as lethal as chemical
    agents, making sure that we place absolute priority on safety
    and environmental protection.
        In a nutshell, those are the issues that relate to the cost
    changes from those early days of the estimate.

                  ENVIRONMENTAL PROTECTION AGENCY REGULATIONS

        Senator Stevens. Have there been changes in the regulations
    of the Environmental Protection Agency (EPA) that apply to your
    agency?
        Mr. Bacon. Yes, sir, there have.
        Senator Stevens. When were those changes made?
        Mr. Bacon. Sir, there were major changes in the late 1980's
    with the Resource Conservation and Recovery Act passage,
    assuring the rules that apply to destruction processes, wastes,
    secondary wastes, and hazardous wastes are maintained within
    compliance. Also in the 1990's was the addition of the
    requirement to assure public health again, where health risk
    assessments, ecological risk assessments were added; new
    challenges coming with additional rules and maximum achievable
    control technology, the ``MACT'' rule as it is referred to,
    which has to do with hazardous waste combustors, a number of
    changes of that type.
        I can take those for the record and give you a detailed
    outline of the rules changes.
        Senator Stevens. We would appreciate that detail for the
    record.
        [The information follows:]

         Changes in Regulations of the Environmental Protection Agency

        The following changes in federal environmental laws and
    regulations have occurred since the beginning of the Chemical
    Demilitarization Program:
        The Hazardous and Solid Waste Amendments of 1984 were a
    significant change to the Resource Conversation and Recovery
    Act (RCRA). It increased requirements on the handling and
    tracking of hazardous waste to include waste minimization
    requirements and a national land disposal ban program.
        The Emergency Planning and Community Right to Know Act
    (EPCRA) was enacted in October 1986. The Act increased
    notification and coordination requirements of a facility with
    state and local emergency planning entities. It also added
    reporting requirements of inventories and environmental
    releases of potentially hazardous chemical substances.
        The Clean Water Act Amendment of 1990 increased
    requirements for storm water management and reporting.
        The Pollution Prevention Act of 1990 required facilities to
    implement source reduction and recycling activities. Facilities
    are then required to provide an annual report on these
    activities.
        Clean Air Act Amendments of 1990 required new programs and
    made major changes to the way that air pollution is controlled
    in the United States. It emphasizes an incremental approach to
    achieving attainment of the national ambient air quality
    standards. Facilities must obtain permits, conduct monitoring,
    and add pollution controls, or change production processes to
    further reduce emissions.
        Federal Facilities Compliance Act of 1992 ensured that
    there is a complete and unambiguous waiver of sovereign
    immunity with regards to the imposition of administrative and
    civil fines and penalties against federal facilities. This act
    allows state environmental agencies and the Environmental
    Protection Agency to impose civil penalties and administrative
    fines on federal facilities under RCRA for violations of
    federal, state, and local solid and hazardous waste laws.
        Hazardous Waste Minimization and Combustion Strategy was
    announced in May 1993. The strategy required the performance of
    extensive human health and ecological risk assessments for any
    hazardous waste combustor prior to being permitted.
        The Hazardous Waste Combustors Maximum Achievable Control
    Technology Rule was enacted in September 1999. It established
    technology based emission standards for hazardous air
    pollutants from hazardous waste combustors. Additionally, it
    added new facility testing requirements and stringent operator
    training requirements for hazardous waste combustors.
        Executive Order 13148, ``Greening the Government through
    Leadership in Environmental Management'' was signed in April
    2000. This Executive Order was issued to ensure that all
    necessary actions are taken to integrate environmental
    accountability in agency day-to-day decision-making and long-
    term planning processes, across all agency missions,
    activities, and functions. Pollution prevention is highlighted
    as a key aspect to the environmental management system process.
    In particular, the order requires agencies to implement
    compliance auditing programs and environmental management
    systems. It also establishes agency goals to reduce the use of
    particular toxic chemicals, reduce the emissions of toxic
    release inventory chemicals, and to use environmentally
    beneficial landscaping.

                        ENVIRONMENTAL IMPACT STATEMENTS

        Senator Stevens. How many environmental impact statements
    have you made in this process so far?
        Mr. Bacon. Sir, we have made a programmatic environmental
    impact statement for the total program and a subsequent record
    of decision by the Secretary of the Army in the late 1980's. We
    have also made a site-specific environmental impact statement
    for each and every destruction site, with the exception of the
    two which we still have to implement based on technology
    decisions. Those two are the Pueblo and Blue Grass sites.
        In addition to the environmental impact statements, there
    are required assessments, records of consideration that are
    made and filed. Environmental impact studies, of course,
    involve extensive public input, public hearings, and review. It
    is a statutory process for the environmental permitting part of
    that. It is also public review of the impact statements
    themselves.
        Senator Stevens. This process has been going on since about
    1985, has it not?
        Mr. Bacon. Yes, sir.

                           CHEMICAL WEAPONS DISPOSAL

        Senator Stevens. Mr. Parker, what is the projected cost now
    for disposing of the demilitarization facilities in and of
    themselves, just the facilities? Do you have a projected cost
    for the disposal of facilities you are going to use, which will
    be obsolete when you finish the job?
        Mr. Parker. I think I would refer that question to Mr.
    Bacon. The alternative programs that I have been involved with
    have been really a technology demonstration program, Senator.
        Senator Stevens. I see. I apologize.
        Mr. Parker. Mr. Bacon has the facilities.
        Mr. Bacon. Senator, I will take that question. The closure
    of the facilities is another requirement included in the
    Resource Conservation Recovery Act (RCRA) permits. This is to
    assure that we meet all appropriate requirements to close
    facilities. Those requirements are very stringent. As you know,
    originally there was legislation that required these facilities
    be dismantled and allowed no future use. Those are the types of
    clean closure, where we thoroughly decontaminate the facilities
    of any agent or any hazardous wastes involved in the facilities
    and secure it so there is limited access.
        The expected estimate at this time to completely close the
    Johnston Island facilities is over $400 million. That is a big
    ticket item. However, I have to point out that in that $400
    million, a substantial component of that, probably 40 percent,
    relates to the remote location of Johnston Island, as opposed
    to what a stateside facility might cost.
        Senator Stevens. I thank you very much. I wanted to get
    some background here before I yield to my colleagues who have a
    direct involvement.
        Senator Shelby.

           CHEMICAL STOCKPILE EMERGENCY PREPAREDNESS PROGRAM (CSEPP)

        Senator Shelby. Thank you. Thank you, Mr. Chairman.
        Mr. Bacon, some in the Anniston community in Alabama feel
    strongly that they have been both consistently and
    intentionally misled regarding risk, operational incidents, and
    public safety procedures associated with the chemical
    destruction program. A lot of us are concerned about the Army's
    policy regarding chemical exposure. Elected officials there and
    the general public, a lot of them in the Anniston community,
    have been told for years that the Army's objective was zero
    exposure. Has the Army changed its objective from zero exposure
    to zero fatalities and does the Army believe that people will
    be exposed to chemical agents?
        What medical studies or data can you share with this
    committee regarding the long-term health impacts of non-lethal
    exposure to chemical agents?
        Mr. Bacon. Senator Shelby, most of that I believe supports
    the Chemical Stockpile Emergency Preparedness Program and the
    protection of the public in the unlikely event of a storage
    accident or some other consideration that would cause an agent
    release to the environment and the public. So Mr. Salter with
    FEMA will be addressing some of those issues related to the
    protection of the public sector.
        The issues relating to misleading the public--sir, we are
    open. We share the information we have through our outreach
    centers and through the various citizens' advisory commission
    meetings. We have no secrets in the program. We take those
    issues very seriously that the public has raised. We take each
    one of those and thoroughly evaluate them and make the maximum
    effort to assure that we are safely operating, that we are
    protecting the public and our workers.
        Senator Shelby. Mr. Parker, do you have any comments on
    that?
        Mr. Parker. From an alternate technology standpoint, the
    operation of the plants that would be based on an alternate
    technology would follow the same policies and procedures that
    would be established for any of the alternatives, including
    incineration. So Senator, in that regard the technology as far
    as how it would affect policy is really not an issue in how the
    CSEPP program would respond.

                          PROGRAM MANAGEMENT STRUCTURE

        Senator Shelby. Secretary Westphal, last spring the GAO
    detailed problems in the execution of the demilitarization
    program due to a complex management structure which hinder
    accountability. I believe that accountability is important,
    very important, especially where safety is involved. This is
    what we are getting at. Central to all of this is safety of the
    people.
        What has the Army done to address these problems since the
    GAO study and what more can be done?
        Dr. Westphal. I think, given the complexity of the issue,
    obviously we have created a complex organizational system
    within the Department to address it. As we move forward with
    this program, and as the technologies get more complicated, and
    as the answers to some of the questions that you are raising
    become more complex, we need to address what the chairman said
    earlier in his statement, in which he talked about public
    involvement. You said greater stakeholder involvement, more
    transparency in terms of the program. All of these things need
    to be addressed.
        I started asking questions about what are the lines of
    accountability and chain of command. We do have an existing
    chain of command that works. However, we need to make it
    clearer to the communities and the stakeholders what that chain
    of command really is.
        Ultimately, the Secretary of the Army is the person
    responsible. The Assistant Secretary of the Army for
    Acquisition, Logistics and Technology is the acquisition
    executive, but reports to the Secretary of the Army. The
    Secretary of the Army, together with the Under Secretary of
    Defense for Acquisition, Technology and Logistics, should be
    able to work together with Defense acting as an oversight
    agency in looking at the program and assuring that it meets not
    only the Secretary of Defense's priorities in terms of funding
    and future outlays and all of that, but as well as
    coordination.

                                 PUBLIC SAFETY

        Senator Shelby. This is an appropriations panel. We are
    very interested in funding, but we are very interested in the
    central issue and I think that is safety, safety of the people
    in the area, wherever it is, in my State of Alabama or
    elsewhere, who could be the victims of an accident or a
    technological failure of some kind.
        So that is what we are getting at. We want the weapons
    destroyed because they are deteriorating. We all know that. But
    we have got to do it in a safe, the most technologically
    advanced way, and I think that is one of the central questions
    of a lot of the people in the Anniston area. They are not
    satisfied with the safety response and the information that you
    are giving them.
        Dr. Westphal. I think our absolute priority is, and would
    be in the future, safety. Cost is a major factor, as it always
    will be.
        Senator Shelby. Cost is a factor, but cost of losing lives,
    fatalities, is a heck of a consideration here, too; is it not?
        Dr. Westphal. Absolutely. For example, to address a point
    Senator McConnell made earlier, I said earlier to one of my
    colleagues in the Office of the Secretary that as we identify,
    as the environmental impacts are done on these two new plants,
    Blue Grass and the other--and I do not know if you have a time
    constraint.
        Senator Shelby. Go ahead.
        Dr. Westphal. But as they are identified, we want to use
    the best technology. We should use the best technology, the
    most advanced technology that provides the greatest protection
    for the communities involved.

                            ALTERNATIVE TECHNOLOGIES

        Senator Shelby. Well, that comes to my next question, then.
    Given the state of the program in Anniston, Alabama, does a
    faster, cheaper, and safer alternative exist to eliminate these
    weapons other than what you are proceeding with now?
        Dr. Westphal. We do not know as of today, as of this
    hearing, what that technology may be. We are in the process of
    trying to identify alternative technologies that may be faster,
    cheaper, more effective, and offer more protection. As we
    identify them, I intend to work with the Under Secretary of
    Defense to come to you, to the Congress, to the chairman of the
    Appropriations Committee and others on the authorizing side, to
    look at how we implement those technologies at a place like
    Anniston, where we already have built a specific disposal
    technology for use.
        So if we think we have a better way to do it, we are not
    going to shy away from coming back to Anniston and looking at
    that. At least I do not believe that we should do that.
        Senator Shelby. Do you want to say something, Mr. Bacon?

                               SAFETY ASSESSMENT

        Mr. Bacon. Yes, sir. Senator Shelby, I would like to just
    back up just a minute in talking about safety, making sure that
    the public is protected and what those oversights are. Of
    course, we use the Centers for Disease Control as an
    independent assessor of public health. We use the National
    Research Council as an independent assessor of the operations,
    and of course the regulatory agencies, the states, as well as
    the EPA.
        So we have independent bodies from time to time that we use
    to review safety assessments of the program, particularly
    operational phases, like at Tooele, Utah. So we do place the
    top priority on safety. Those independent bodies do in fact
    verify that our operations are safe and protective of public
    health and the environment.
        Senator Shelby. Well, I want to make sure as best I can as
    a member of the Senate and a member of this panel in funding
    these programs that the best technology issued, that our
    people, whether in my State of Alabama, Kentucky, Utah, or any
    other State, are not guinea pigs for the testing of some
    technology, because we cannot afford to make a mistake here
    with the use of this technology, or the software that runs it.
    Every part of this program is central, I believe, to the safety
    of the people in the Anniston area who are being asked to live
    with the impact of this program.
        Mr. Bacon. Yes, Senator, and that certainly is our
    philosophy, and that is applied continuously in the program in
    terms of every step or action that is taken. That kind of
    assessment is made.
        Senator Shelby. Well, why is the problem persisting in some
    of the communities if this would be so, what you are saying?
        Mr. Bacon. Well, sir, that is a good question, Senator
    Shelby, and we continuously work to improve the sharing of
    information. Gaining the credibility and the confidence of the
    people obviously is a major action to achieve, a necessary
    action that must be achieved, so that everyone, essentially,
    everyone is comfortable with the fact that we are protective of
    their health, that no action will be taken unless it is
    protective of their health.
        We will continue that and continue to work harder and
    harder to improve that, getting the information out and sharing
    it with the public. As I said earlier, there are no secrets to
    the program. We try to be as open as we can, sharing all the
    information that we have. Each and every incident, you may
    notice was shared with the public.
        Senator Shelby. When you say sharing all the information
    you can, would not transparency be central to alleviating any
    fears that the people would have? Assuming that you have the
    best technology, if you show them that you have the best
    technology, that you are dotting every i and crossing every t
    for safety, would that not be very important, to hold back
    nothing?
        Mr. Bacon. Certainly. We do not hold back anything. Maybe I
    misspoke when I said sharing what we can. I did not mean there
    was any limits to it.
        Senator Shelby. Sharing everything?
        Mr. Bacon. Sharing everything, certainly.
        Senator Shelby. Mr. Chairman, thank you for your
    indulgence.
        Senator Stevens. Yes, sir.
        Senator McConnell.
        Senator McConnell. Thank you, Mr. Chairman.

                     DESTRUCTION SCHEDULES AND PROJECTIONS

        Mr. Bacon, is it your testimony that all stockpile sites
    with the exception of Colorado and Kentucky will complete
    operations in compliance with the 2007 convention deadline?
        Mr. Bacon. Sir, consistent with application of safety and
    environmental protection, that is our next priority, and we are
    focused on meeting the Chemical Weapons Convention date. But
    more importantly----
        Senator McConnell. Is that a yes or a no?
        Mr. Bacon. That is a yes, we are focused on meeting that
    treaty compliance date, yes, sir.
        Senator McConnell. What is the projected schedule for
    destruction of the stockpile in Kentucky if you use the method
    of incineration?
        Mr. Bacon. Sir, the projected date would be based on when
    we are able to start facility construction, permitting actions
    based on technology decisions that the Under Secretary of
    Defense would make next year and provide those to the Congress.
    We are looking at 6 to 7 years to construct the facility and
    complete the operations. So we are talking about 2007, very
    close to the treaty deadline.
        Senator McConnell. You are saying that if you use
    incineration in Kentucky, the project would be begun or
    completed by 2007?
        Mr. Bacon. I am saying that we would be very tight, but we
    have a chance to complete it by that time. The variables in
    there, of course, are the construction--the permits, I should
    say, the environmental permits, receipt of permits, to allow
    construction of the facilities. We have 523 tons of stockpile
    there. There are over 60,000 nerve agent rockets. But we would
    tailor the facility specifically to the stockpile at that site.
        Senator McConnell. Mr. Parker, if we were to use an
    alternative to incineration, what would be the time line?
        Mr. Parker. Senator, as we reported in the ACWA annual
    update to the Senate, we used a very conservative estimating
    technique at the end of the demonstration and we had come up
    with an approximate mid-2011 date for Blue Grass. We are in the
    process of updating those estimates based on some continued
    effort under what we call engineering design studies.
        The commercial contractors who have completed the design,
    the preliminary design for a Blue Grass facility, have come in
    to us with an estimate of a 2008 to 2009 time frame. We are in
    the process of scrubbing that down and it will be subject to
    the defense acquisition review that Secretary Westphal
    mentioned as the independent assessment of that date.
        I want to stress that, because of the history of the
    program and direction from or advice from this committee's
    professional staff, first Mr. Kimmitt and now Mr. Hawkins, that
    we used very conservative estimating techniques in putting
    those dates together. So those are relatively high confidence
    dates.
        Senator McConnell. So we are looking at a delay of a few
    years at least if we use an alternate disposal approach; is
    that what I am hearing here, listening to you and Mr. Bacon?
        Mr. Parker. On the simple arithmetic, yes. The estimating
    base for the two numbers is going to be reconciled by this
    Defense Acquisition Executive review so that we have a common
    baseline of comparing, a common level of confidence and risk.
        Senator McConnell. Given the condition of the material
    there, does that involve any risk, the delay, if we ended up
    picking an alternate method of disposal?
        Mr. Parker. Senator, as to the stability of the stockpile,
    the recently completed assessment is that the stockpile in and
    of itself, while it is old, is stable. I think about 2040 was
    the estimate of the time to expect any kind of deterioration
    with the M-55 rockets, which are the most problematic item.
        That is from a storage stability standpoint. The forcing
    function that could result in an event in storage would be an
    external event, a lightning strike, a tornado, or that type of
    an event. If you look at the risk associated with storage, it
    is a very small number, but it is slightly higher than the
    risks that would be associated with proceeding with onsite
    disposal, whether that is an incineration-based technology or
    for that matter an alternate technology.

                     DESTRUCTION SCHEDULES AND PROJECTIONS

        Senator McConnell. Well, if incineration is chosen, Mr.
    Bacon, it is your testimony that the facility would be
    constructed and the incineration completed by 2007? Is that
    what I heard?
        Mr. Bacon. Sir, the key variables in there are of course
    the permitting, the time it would take for the permitting. That
    is a schedule risk. But we believe that we can complete it by
    2007, but that means that we have to make a decision this fall
    through the DAE, Defense Acquisition Executive review process,
    and then immediately go into preparing the permit applications
    and the permit so that we can start construction.
        We would be in a position to start infrastructure upgrades
    that are necessary there during this next year.
        Senator McConnell. So Mr. Parker, do you know enough,
    having looked at these alternate technologies, even though you
    have not completed the study, do you know enough about them to
    know, once that is begun, how long it would take to finish? You
    are saying we would finish up in 2010 and 2011 if we used one
    of these alternate technologies; did I hear that correctly?
        Mr. Parker. Based on the most recent input from the
    commercial contractors who have now completed a preliminary
    design, and we are looking at the 2008, 2009 time frame for
    Blue Grass, based on their estimates.
        Senator McConnell. To start or to finish?
        Mr. Parker. That is completion of the total effort. I
    should have noted earlier that the completion for the purposes
    of compliance with the Chemical Weapons Convention would be 6
    to 12 months before that date, differentiating between
    destruction of the agent as required under the treaty and then
    completion of all of the so-called secondary wastes. So that
    the 2008-2009 date would be completion of the total job.
        Senator McConnell. So the difference in the delay, then,
    between one approach versus the other is only a year or two? Is
    that what we are talking about here?

                               CONSTRUCTION COSTS

        Mr. Bacon. It is certainly in that time frame, Senator.
        Senator McConnell. Now let us look at costs. In 1986 the
    Army testified that the incineration construction, facility
    construction, would cost $38 million and the entire stockpile
    would be eliminated in 1 year. What is the current estimated
    cost of construction for incineration?
        Mr. Bacon. Senator McConnell, would you rephrase that
    question, sir?
        Senator McConnell. In 1986 the Army said construction,
    presumably of an incineration facility, would cost $38 million
    and the entire stockpile would be eliminated in 1 year. What is
    your testimony today?
        Mr. Bacon. Okay, sir. Obviously, the construction is much
    more complex than probably estimated on that basis in 1986. The
    military construction cost of these facilities, regardless of
    the technology, will probably be on the order of $200 to $250
    million. I believe that was your question as I understand on
    the construction portion.
        The total operation will vary from site to site depending
    on the size of the stockpile and the types of munition
    configurations, the numbers of different plant changeovers that
    are made to process the different agents and different
    technologies. So our estimate obviously is to complete by 2007.
        Senator McConnell. Mr. Parker, your estimate is 2008 or so
    if we should pick some alternate disposal?
        Mr. Parker. Yes, sir.
        Senator McConnell. Now, what about the cost of that? Do you
    have any sense of what it might cost to use another approach?
        Mr. Parker. The cost estimates, sir, are being massaged. We
    do have from the technology providers an estimate and it is the
    total cost to construct and operate would be in the $500 to
    $600 million range.
        Senator McConnell. So it would be more costly.
        Mr. Parker. No, I do not think--Mr. Bacon, I think
    referenced military construction only, versus total life cycle
    cost.
        Senator McConnell. Let us go back to the total cost then,
    life cycle cost.
        Mr. Bacon. For a Blue Grass facility?
        Senator McConnell. Using incineration.
        Mr. Bacon. I believe that number is about $1 billion.
        Senator McConnell. And life cycle costs? Apples and apples.
    Life cycle costs on an alternate technology are likely to be?
        Mr. Parker. Including everything, the government oversight
    cost, the depot operating cost, as well as the contract value,
    it is going to be about the same, Senator. The size of the
    plants, the complexity of the plants, the size of the work
    force and the operating duration, whether it is an incinerator
    or an alternate technology, is fundamentally the same. So the
    life cycle cost within our ability to estimate is going to be
    the same number.

                            ALTERNATIVE TECHNOLOGIES

        Senator McConnell. Mr. Parker, you have been around for a
    while. You recall there has been considerable opposition to
    exploring alternatives to incineration, which I have been
    advocating for years. I finally won that battle over a lot of
    reluctance inside the DOD. Do you feel like the effort to look
    at alternatives has been worthwhile?
        Mr. Parker. Yes, sir, it has. I believe the most
    significant value, I think, was to bring in the constituency
    who was very, very skeptical of where the Department of Defense
    was going with the chemical weapons disposal program and bring
    them in as part of the process, open the process up, and show
    them that what we do internal to the Department of Defense
    including the Department of the Army, is straightforward, above
    board, that there is honesty and integrity in the process, and
    to bring them in and show them and allow them to participate in
    the decisionmaking process.
        The decisions are made by the Department as our
    responsibilities, but the bringing the public in--and that
    includes a spectrum of the public from people who are very
    supportive of the incineration approach to those who are
    vehemently opposed to the incineration approach.
        Senator McConnell. Can you describe the level of support
    you have received from above on this whole issue of looking at
    alternative technologies during the process?
        Mr. Parker. At the Secretary of Defense level, the
    instruction from Dr. Kaminski when I was chosen to do this job
    was to go out and find alternate technologies if they exist and
    determine whether or not they are appropriate and to do that in
    such a manner as that it resolves the technology issue and
    takes it off the political table.
        The Office of the Secretary of Defense has been very
    supportive throughout this. I have had very close collaboration
    with my counterpart in the Army, Mr. Bacon, through the
    program. The Army has been very respectful of the way the
    Congress constructed Public Law 104-208, which required a
    direct reporting line from the alternate program into the
    Office of the Secretary of Defense.
        Senator McConnell. So PMCD has been enthusiastic about
    looking at these alternatives from the beginning?
        Mr. Parker. Well, I would say that they have observed the
    law and we have shared information back and forth. We do have
    to recognize, Senator, that the Program Manager for Chemical
    Demil is pursuing two alternate technologies or alternative
    technologies at two sites, Edgewood and Newport, and that much
    of the information that we started the ACWA program which came
    from a very open collaboration with the team within PMCD that
    provided that information.
        Senator McConnell. But in any event, you think that the
    community involvement that came about as a result of looking at
    alternative disposal methods has been a healthy thing for the
    Army and ought to be pursued in the future in these kinds of
    issues, right?
        Mr. Parker. I believe so, Senator. I do not know that we
    could have ever reached a consensus had we used a more
    traditional, inward-focused process. We had to bring in the
    affected community so that they would have some sense of
    confidence that we really were exploring every possible
    alternative and giving them full evaluation.
        Senator McConnell. Dr. Westphal, when do you expect a
    decision to be made with regard to Kentucky as to which
    approach to take, some alternative, assuming we finish that
    up--and the date to finish that, Mr. Parker, is when, to finish
    up the assessment of alternative techniques?
        Dr. Westphal. I think Blue Grass is in the spring of 2002.
    Am I right on that?
        Mr. Bacon. Yes.
        Senator McConnell. So some time next year we will have an
    announcement about which method of disposal you prefer, is that
    right?
        Dr. Westphal. Right.

                              COMPLETION SCHEDULES

        Senator McConnell. Now, in your testimony you state that
    the stockpiles for Arkansas, Alabama, and Utah are all on
    schedule to be completed by 2007, and we have heard that again
    today. Is that correct?
        Dr. Westphal. Yes, sir.
        Senator McConnell. All of those sites are going to be
    cleaned up and completed by 2007?
        Mr. Bacon. Sir, Senator McConnell, a point of clarification
    there. In terms of cleaned up, by 2007, actually 2006, we will
    meet the Chemical Weapons Convention destruction of all the
    chemical warfare materiel. Closure of the facility, we are not
    bound by the treaty, but we will do that in an orderly fashion,
    and it may or may not be completed by 2007, but shortly
    thereafter.
        Senator McConnell. So in terms of the concerns of the
    communities that live in proximity to it, the dangerous
    materiel will be destroyed by then?
        Mr. Bacon. The dangerous materiel will be destroyed, the
    hazardous material will be contained.
        Senator McConnell. Then I think I heard at Blue Grass,
    Kentucky, we are talking about a year or so later, no matter
    which approach is taken, whether we do it through incineration
    or some other disposal method. Is that right? You all are
    shaking your heads yes.
        Mr. Bacon. Yes, sir.
        Dr. Westphal. Yes, sir.
        Senator McConnell. This is a matter of no small concern to
    the people in my State. So you are shaking your heads yes?
        Dr. Westphal. Well, I think we have to--I have considerable
    experience dealing with environmental impact statements in my
    previous job and I can tell you that predicting on a timely
    basis conclusion of environmental impacts and getting through
    all of that is sometimes risky. I would say that we are going
    to have to take some very strong steps to ensure that we move
    along expeditiously.
        I think the leadership of the Department----
        Senator McConnell. I hear you hedging your bets.
        Dr. Westphal. No, not at all. What I am telling you is we
    want to make a commitment to you and to your constituents that
    we will really focus on this and we will make sure that we do
    this as expeditiously as possible, and make sure that these
    environmental impact statements are done in a timely way and we
    do not drag this process on.
        If we drag it on, not only do we risk greater danger to the
    communities by the stockpiles themselves, but we also risk
    alienating our chairman here by asking him for more money, an
    extension of time and so on and so forth.
        I want to tell you that I am in earnest about trying to do
    whatever I can and for the Department to do whatever it can to
    address the management issues and to expedite this program.

               PRIORITY OF THE CHEMICAL DEMILITARIZATION PROGRAM

        Senator McConnell. Let me just ask you, Dr. Westphal, in
    closing: Other than in preparation for this hearing, how often
    have you attended meetings or held conversations with senior
    Army officials on the chemical disposal program?
        Dr. Westphal. Only once prior to this, to prepare for this
    hearing. I have been in this position now for about 2 months.
    Only once before.
        Senator McConnell. Well, you know, I think part of the
    problem over the years, and I will finish up, Senator Stevens,
    is that the chemical demilitarization program has just not been
    a top priority at the Department. It is a matter of enormous
    concern to those of us who have constituents located in
    proximity to these dangerous weapons.
        I hope, keep hoping--this is one of the first issues that
    came up when I came here 16 years ago, now almost 17 years
    ago--that we are about to see the end of these weapons. I hope
    with new people coming in that this will occupy a level of
    priority so that we can not only see the light at the end of
    the tunnel, we can emerge from the tunnel and it is over, some
    time in the next 7 or 8 years.
        Can we expect that, Joe?
        Dr. Westphal. Yes, sir. I think this is very important from
    the standpoint of health and safety and also environmental
    protection. I think it would do the administration a great deal
    of good to make sure that we apply the stringent constraints
    that you are demanding of the program.
        I also would say that it is always a catch 22 situation.
    When I first began to ask questions about this program, one of
    my first questions is, can I go to the Senate, can I stand
    before the Senate Appropriations Subcommittee and say without
    any hesitation that the Army is taking every step possible at
    the existing sites, Senator Shelby's issues concerning
    Anniston, that we are taking every step under current
    technologies to make sure that we are conducting this work in a
    safe manner, that we are protecting citizens, and that we are
    working well with FEMA and local communities.
        The answer I got was yes, we are doing everything we can to
    test, to monitor, to ensure that we do not have releases, that
    we do not have problems associated with both the disposal and
    storage of the weapons. So we need to just continue to make
    sure that we do that.
        Senator McConnell. Thank you, Mr. Chairman.
        Senator Stevens. Thank you.

                 MANAGING THE CHEMICAL DEMILITARIZATION PROGRAM

        I am going to have to go to the floor for another matter. I
    just have to ask one question, though, before I go. It is my
    understanding, Mr. Parker, you answer to the Under Secretary of
    Defense for Acquisition and Technology, and, Mr. Bacon, you
    answer to the Assistant Secretary of the Army for Acquisition,
    Logistics and Technology and the Secretary of the Army. Has
    this bifurcated process delayed this?
        I ask that because as I understand it it is the Assistant
    Secretary of Defense that is going to certify the alternative
    technology. Yet those technologies are being worked on by you,
    are they not, Mr. Bacon?
        Mr. Bacon. Sir, Senator Stevens, the technologies for the
    existing nine sites that we are working are managed by the Army
    and myself. Alternative technologies for disposal of assembled
    chemical weapons are being assessed by Mr. Parker. But I would
    say that in the Defense Acquisition Executive review process
    and, in fact, in the milestone decision authority process of
    both the Army and the Department of Defense, we work
    collaboratively. We have integrated process teams and the
    actual chair of the overarching committee is a member of the
    Office of the Secretary of Defense (OSD), and Mr. Parker and I
    are co-chairs of those working committees that work up to that
    OSD level.
        So I do not believe that it has hindered or delayed any of
    the activities or our ability to work together through that
    process, even though we report to separate positions.
        Senator Stevens. We may have to go into that later to see
    if that is part of the delay here, because it does seem to me
    that we are waiting for the Under Secretary of Defense to make
    the decision, but you are working on an entirely different
    line. I would hope that that does not mean that we have got to
    go up to the top and then come back, then go up to the top and
    come back.
        You assure us that you are working together all along on
    these two different lines of attack?
        Mr. Bacon. Yes, sir. When our working committees have the
    final recommendations to the committee, at the OSD level, the
    Under Secretary of Defense for Acquisition, Technology and
    Logistics level committee, for that person to certify
    technologies and make technology decisions and recommendations,
    that will be later this year. We are not at that point yet, so
    the vacancy of that position has not impacted the decision.
        Senator Stevens. Senator Inouye, I apologize, but if we
    finish this panel call up the next panel; all right?
        Senator Inouye. Yes, sir.
        Senator Stevens. Thank you.
        Senator Inouye [presiding]. I would like to summarize what
    I have heard and ask for your opinion whether I am correct or
    not. Number one, you maintain that the risks involved in
    prolonged storage would be greater than disposal itself; is
    that correct?
        Mr. Bacon. Yes sir, Senator Inouye. That is certainly the
    case. The consequences of a storage accident in the public is
    what we are concerned about. The chemical demil facilities are
    designed to have safety features incorporated in them and
    layers of protection.

                  DESTRUCTION TIMELINES, COSTS, AND VARIABLES

        Senator Inouye. Therefore, it is incumbent upon the
    Department to dispose of these horrific weapons systems as soon
    as possible if we are to maintain public health and safety.
        Mr. Bacon. Yes sir, maintain the public health and safety
    and then, as expeditiously as we can, complete the job.
        Senator Inouye. However, it would be next to impossible at
    this stage to predict the time of disposal and the costs
    involved because of unanticipated problems, such as
    Environmental Impact Statement (EIS), environmental groups,
    legal proceedings, activities of the National Institute of
    Health (NIH), activities of EPA or FEMA; is that correct?
        Mr. Bacon. Yes, Senator, that is correct, that those are
    variables that can impact on cost and schedule, but keeping in
    mind that we must place safety and protection of the
    environment number one, as Senator Shelby has reminded us also,
    that we do that. But there are those kinds of factors that can
    impact on cost and schedule.
        Senator Inouye. What you are telling us is that the science
    of disposal and demilitarization is a new science and it is
    still evolving. For example, Johnston Atoll was the first
    facility of its kind in the world, was it not?
        Mr. Bacon. Yes, sir. The Army had earlier destroyed
    stockpiles at Denver, Colorado, Rocky Mountain Arsenal, using
    similar technologies in the 1970's, which were protective of
    our worker health. But we did not have the much broader
    applications that we are using today.
        Senator Inouye. You are still learning from that Johnston
    experience?
        Mr. Bacon. Yes, sir. We apply those lessons that we learned
    from Johnston Atoll as well as the Tooele facilities,
    incorporated those designs into the new facilities. Anniston,
    for example, has many safety features enhanced in its facility
    where we have added additional pollution abatement systems,
    automated certain systems, that we are also doing at Tooele.
        But we continue to use the lessons learned. A very
    extensive program.
        Senator Inouye. With all the knowledge that you have at
    this moment, you can estimate that Anniston can have its
    closure ceremony about 2011?
        Mr. Bacon. Sir, Senator Inouye, we plan to beat that
    substantially. We are planning to complete destruction of the
    weapons at Anniston by the year 2006 and have our final closure
    and get off the depot by 2007, 2008. But 2006 is our date to
    celebrate elimination of that risk to the Anniston community
    totally.
        Senator Inouye. Although we did not have any disposal site
    near our cities, we had one on an island not too far away. I
    can feel the concern expressed by my two colleagues, because we
    are constantly reading reports about chemicals being found at
    Spring Valley, Maryland. I think we should keep in mind that
    our first method of disposal was burial and we are now finding
    out the costs of such burials. So I can assure you, whatever we
    can do we will do.
        Mr. Bacon. Yes, sir.

                               ANNISTON TIMETABLE

        Senator Shelby. Mr. Chairman, could I ask one more
    question?
        Regarding Anniston, let us talk about the timetable. Where
    are we today in the construction, just step by step briefly?
    Where are we, Mr. Bacon?
        Mr. Bacon. Yes, sir. Senator Shelby, today we are
    substantially complete with the construction of the facility.
        Senator Shelby. What does that mean?
        Mr. Bacon. What that means is we are in the 98, 99 percent.
        Senator Shelby. Ninety-eight, ninety-nine percent of your
    initial construction?
        Mr. Bacon. No, the construction of the facility, total
    construction of the facility. What that means is that there is
    a 1 to 2 percent time that we are correcting punch list items,
    construction anomalies, making sure that all of the wiring is
    correct--the final finishing touches of construction.
        Senator Shelby. Westinghouse is involved in this, are they
    not?
        Mr. Bacon. Yes, sir, Westinghouse Anniston, who has been
    acquired by the Washington Group International, or Morrison-
    Knudsen formerly. We will have in fact a ceremony--we would
    like you to attend--on June 8th.
        Senator Shelby. Will it be safe?
        Mr. Bacon. Yes, sir, it will be safe. As a matter of fact,
    our safety record in building and operating these facilities
    from the Occupational Safety and Health Administration (OSHA)
    reviews and from the OSHA standpoint, as well as all of the
    other safety reviews, is remarkable.
        Senator Shelby. How are you going to meet the concerns of
    people in my State in the Anniston area, several hundred
    thousand people that have genuine concerns about whether this
    facility will operate safely? How do you do this? We are going
    to have another panel in a few minutes that is going to raise
    some concerns that they have with your facility.
        Mr. Bacon. Senator Shelby, I understand those concerns and
    we take those very seriously. We will be addressing each one of
    them during the period between completion of construction and
    the beginning of operations, the phase we call systemization,
    where we will actually be testing the system. We will then
    enter into surrogate trial burns. In other words, we will be
    burning some organic compounds that are much more difficult to
    destroy than the nerve agents. Those are to satisfy the
    conditions of the permit, to demonstrate that we can operate
    the facility within the constraints of the permits.

                                 PUBLIC SAFETY

        Senator Shelby. How are you going to, in the short period
    of time, alleviate the concerns of evacuation in case something
    went wrong in the community, something lethal, deadly? These
    are real concerns.
        Mr. Bacon. I understand and am concerned about those issues
    also. You will hear from Mr. Salter on the next panel, that the
    Army and FEMA work very diligently to demonstrate that the
    public will be protected and can be given the necessary
    protective actions to take to assure that in the event of a
    stockpile storage accident, which would generate the greatest
    hazard to the public, that they will be protected.
        As I was saying, during the next year, from completion of
    construction to start of operations, that is where we really
    prove that we are ready to operate. We want to expand our
    public outreach to assure we get that kind of information out
    to the citizens.
        Senator Shelby. Well, I can feel a lot of questions coming
    from the area, people in my area of Alabama. They are really
    concerned.
        Mr. Secretary, do you have a comment?
        Dr. Westphal. Just a comment, Senator. As you know, we are
    beginning this process in a way--we have some experience at
    Johnston Atoll, but the situation there is somewhat different
    than it would be at Anniston or some of the other places where
    there are larger populations around them. So what I would ask
    is to say, you know, the Army has protocols for, as you use the
    word, for transparency, for informing people, and for getting
    input from stakeholders and so on. But we may not have all the
    answers as to how to best do that. We look to you and to other
    members of the delegation perhaps to help us identify what
    those might be if you feel we are not doing everything.
        Senator Shelby. We are looking to you for the central issue
    here to be resolved. That is safety, real safety. Then there is
    the perception of safety and concern. I think you have both and
    I think you have to deal with them and you have to deal with
    them in a forthright way. You cannot cut corners. This is not
    something that you can cut corners on. There is too much at
    risk, too much risk. Too many people could be at real risk, and
    you know it.
        Dr. Westphal. Yes, sir.
        Senator Shelby. Thank you.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Inouye. Mr. Secretary and your colleagues, we thank
    you very much. The chairman has asked me to thank you for your
    testimony.
        Dr. Westphal. Thank you, Mr. Chairman.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                   Questions Submitted to Dr. Joseph Westphal

                Questions Submitted by Senator Richard C. Shelby

                              MANAGEMENT STRUCTURE

        Question. Last spring, the General Accounting Office detailed
    problems in the execution of the demilitarization program due to a
    complex management structure, which hindered accountability. What has
    the Army done to address these problems? What more can be done in the
    next year?
        Answer. The management structure of the chemical demilitarization
    efforts has been shaped largely by statute. Program management roles
    and responsibilities as well as accountability and coordination roles
    in the area of chemical demilitarization within the Army have been
    clearly defined by the Department of Defense.
        The Program Manager for Chemical Demilitarization (PMCD) manages
    and executes the U.S. Chemical Demilitarization Program. He reports
    directly to the Assistant Secretary of the Army for Acquisition,
    Logistics and Technology (ASA(ALT)), who serves as the Army Acquisition
    Executive with milestone decision authority for the Chemical
    Demilitarization Program. The Program Manager for Assembled Chemical
    Weapons Assessment (PMACWA)--a research and development program--
    manages and executes the ACWA Program. Consistent with Public Law 104-
    208 and Public Law 105-261, the PMACWA reports to the Under Secretary
    of Defense for Acquisition, Technology, and Logistics (USD(AT&L)). The
    Assistant Secretary of the Army for Installations and Environment
    (ASA(I&E)), in coordination with the Federal Emergency Management
    Agency (FEMA), provides program oversight, policy, and guidance to the
    Chemical Stockpile Emergency Preparedness Program (CSEPP). The Deputy
    Assistant Secretary of the Army for Chemical Demilitarization
    (DASA(CD)) ensures coordination among the appropriate organizational
    elements involved with chemical demilitarization in the Army and the
    Department of Defense.
        Procedures are in place to promote the flow of program-related
    information between all elements of the program. This has enhanced
    communication and coordination between the Offices of the Secretary of
    Defense, Assistant Secretary of the Army (Acquisition, Logistics and
    Technology); the ASA(I&E); the program managers for Chemical
    Demilitarization and Assembled Chemical Weapons Assessment; the Soldier
    Biological and Chemical Command; and Federal Emergency Management
    Agency.
        The Department of Defense is conducting a Defense Acquisition
    Executive Review of the Chemical Demilitarization Program in the first
    quarter of fiscal year 2002. One of the issues that will be addressed
    at this review includes the formalization of a plan that integrates
    roles and responsibilities of the PMCD and the PMACWA.

                                MAJOR CHALLENGES

        Question. Mr. Secretary, as of today, what are the major challenges
    presented by the complex task of safely destroying the chemical
    stockpile?
        Answer. The Army faces a number of significant challenges as we
    move forward with existing and planned operations to meet requirements
    of public law and the Chemical Weapons Convention. It is imperative
    that we maintain momentum and the full funding necessary to see the
    projects mature through the systemization, operations and closure
    phases. We must determine a technology path forward for Pueblo and Blue
    Grass, using sound science and frank dialogue, so we can proceed with
    the destruction of those stockpiles. Personnel retention issues,
    including the maintenance of the right skills mixture for government
    and contractor employees, must be successfully addressed for these
    relatively short duration projects. We must successfully manage the
    degradation of the stockpiles, which is an ongoing issue as the weapons
    deteriorate with age, so we can continue to minimize risk to the
    workers and the public. Finally, developing and achieving approved
    closure standards, working with the various stakeholders at all of our
    sites, to include state and local governments, continues to be a key
    program objective.

                            PUBLIC OUTREACH EFFORTS

        Question. What specific ``increased outreach efforts'' can the Army
    implement which will ensure that the public remains properly informed
    as to their safety?
        Answer. The Army and the Program Manager for Chemical
    Demilitarization (PMCD) believe that public outreach is essential to
    accomplishing its mission and will continue to build upon the already
    extensive outreach program that exists at each of the eight stockpile
    sites. We engage the public through a strategic, targeted, and measured
    approach to involvement and outreach. We have site teams and outreach
    offices at each of the eight stockpile locations that are engaging the
    public on a daily basis. Across all of the site locations, over 34,000
    individuals have been reached in the past six months alone via targeted
    outreach, presentations and public meetings with school, civic, and
    community groups.
        Anniston, Alabama, is a strong site example that highlights the
    PMCD's outreach and involvement efforts. We have actively sought
    partnerships with local elected officials and citizens' advisory
    commissions (CACs), and have focused efforts on communities that have
    expressed concern about the proposed facility. In the last six months,
    we have had 26 local events, such as speakers' bureaus, that reached
    well over 600 residents. Facility tours also help the community
    understand the disposal project. In the past six months, 23 tour
    opportunities have guided almost 600 residents through the facility
    grounds.
        As the demilitarization program progresses, we will continue these
    efforts and increase targeted outreach to local schools and colleges,
    businesses, and community civic groups. We will enhance already
    developed targeted outreach programs to minority communities
    particularly at sites with large African American, Hispanic, or Native
    American populations. We continue to conduct spot surveys in the site
    communities to gauge public sentiment and how the public wants
    information about the disposal program.
        In addition, we will continue to enhance existing partnerships with
    CACs, the Chemical Stockpile Emergency Preparedness Program, the
    Environmental Protection Agency, elected officials, and states and
    local counties, which will provide opportunities to coordinate the
    distribution of comprehensive information about chemical weapons
    disposal plans.

                             EMERGENCY PREPAREDNESS

        Question. Mr. Secretary, it is my understanding that Anniston's
    March 2001 Chemical Stockpile Emergency Preparedness Program Exercise
    was a failure. I am told that one of the primary causes was computer
    software utilized by the emergency operations center. Do you believe
    that this problem will be fixed? How can this Committee help?
        Answer. The emergency management information system used at the
    Anniston exercise meets Army requirements. However, it falls short of
    meeting off-post requirements identified by state and local officials
    at the eight stockpile sites. Some state and local emergency management
    officials advocate using another software program, the Federal
    Emergency Management Information System, to meet these requirements.
    Accordingly, the Army is conducting an independent assessment of the
    effectiveness, suitability, and reliability of both systems for meeting
    on-post and off-post requirements. Once that assessment is completed,
    the system then will be properly tested and reviewed to determine an
    appropriate path forward. The Committee can help in this effort by
    supporting the adoption of a single automation system as the most cost-
    effective approach to meet on-post and off-post emergency management
    requirements at all sites.

                            ALTERNATIVE TECHNOLOGIES

        Question. Given the state of the program in Anniston, does a
    faster, cheaper, and safer alternative exist to eliminate these
    weapons?
        Answer. No, the incineration facility being constructed at Anniston
    represents the only proven systemized technology available now to
    dispose of assembled chemical weapons. Incineration technology has been
    demonstrated to safely and effectively destroy all of the chemical
    agents and energetics, as well as completely treat contaminated metal
    munition casings. The Army continues to track emerging technologies in
    an attempt to identify alternatives to incineration that may be faster,
    cheaper, and offer more protection.
        The Anniston disposal facility is 99 percent complete and we are
    scheduled to start agent operations in the third quarter of fiscal year
    2002. It would take numerous years to develop the systems, design a
    facility, obtain the requisite environmental permits, construct the
    facility, and prove-out the alternative technology(ies). In that time
    alone, using the incineration facility being constructed at Anniston,
    we could eliminate 90 percent of the risk associated with the Anniston
    stockpile. Incineration has been proven to be a safe technology as we
    have completed the Johnston Atoll Chemical Agent Disposal System
    mission and continue operations at the Tooele Chemical Agent Disposal
    Facility.
        Lessons learned from these facilities have been incorporated into
    the facilities currently being built, continuing to add to the safety
    of the Anniston facility and operations.
        Question. What is your response to opponents of incineration who
    would like to see the facility in Anniston retrofitted for alternative
    technologies?
        Answer. The Army's paramount objective during the storage and
    destruction of chemical weapons is to provide maximum protection to the
    public, the workers, and the environment. All risk analyses prepared to
    date have shown continued storage poses the greatest threat to the
    local community. The risks are dominated by external events such as
    seismic events, lightning strikes, or tornadoes. While the possibility
    of these events occurring are extremely remote, the consequences could
    be severe. However, the Army is continuing to identify alternative
    technologies that may be faster, cheaper and offer more protection. At
    this time, pilot testing of an alternative technology would be
    necessary since no alternative technology has been used in full-scale
    operations. The construction of an alternative technology pilot-scale
    facility would take at least 18 months from the time all permits were
    received. In that time alone, by operating the incineration facility
    being constructed at Anniston, 90 percent of the risk associated with
    the Anniston stockpile would be eliminated. Retrofitting facilities
    nearing completion will only increase risk to the public by delaying
    the destruction of the stockpile. If at some point in the future, an
    alternative technology is demonstrated to be appropriate for
    consideration for retrofitting the Anniston facility, the local
    community would be encouraged to participate in that decision.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye

            CHEMICAL WEAPONS DISPOSAL: MEETING THE PROGRAM SCHEDULE

        Question. The Department of Defense (DOD) Chemical Demilitarization
    program has been the subject of many legal, environmental, and local
    community concerns. What are the greatest challenges--legal,
    environmental, financial--DOD must overcome in order to meet the
    planned disposal schedule?
        Answer. The Army faces a number of significant challenges as we
    move forward with existing and planned operations to meet requirements
    of public law and the Chemical Weapons Convention. It is imperative
    that we maintain momentum and the full funding necessary to see the
    projects mature through the systemization, operations, and closure
    phases. We must determine technological paths forward for Pueblo and
    Blue Grass, using sound science and frank dialogue, so we can proceed
    with the destruction of those stockpiles. Personnel retention issues,
    including the maintenance of the right skills mixture for government
    and contractor employees, must be successfully addressed for these
    relatively short-duration projects. We must successfully manage the
    degradation of the stockpiles, which is an ongoing issue as the weapons
    deteriorate with age, so we can continue to minimize risk to the
    workers and the public. Environmental challenges involve receipt of
    environmental permit modifications from regulatory agencies in a timely
    manner so that operational schedules can be met and costs contained.
    Also, the ability to expeditiously incorporate into operating
    facilities any new standards and requirements mandated by new and/or
    amended regulations is key to meeting program challenges. Finally,
    developing and achieving approved closure standards, working with the
    various stakeholders at all of our sites, to include state and local
    governments, is a key program objective.
        Question. The most recent report on the Department of Defense
    chemical weapons activities notes that the legal actions have not
    delayed disposal activities or construction. How have you been able to
    address these legal challenges and stay on schedule? What gives the
    Army confidence that it can continue to address future legal challenges
    and stay on schedule?
        Answer. The Army has been able to successfully address all legal
    challenges. Those legal challenges have not affected the schedule for
    several reasons. First and foremost is the fact that all sites
    continually work diligently to comply with all environmental and safety
    requirements. Second, in the situations where our regulatory compliance
    is questioned, we stress safety and problem solving over production.
    Third, the Department of Justice has done an outstanding job of
    demonstrating our record of environmental and safety compliance before
    judicial bodies.
        The Army is confident it can continue to prevent schedule delays by
    following this proven formula in the future. We are confident that we
    will continue to address future legal challenges because it is the
    Department's policy to comply with all applicable laws and regulations,
    and because baseline incineration has proven to be a safe and effective
    technology. Any schedule delays may be attributable to our meeting all
    applicable laws and regulations, while stressing safety and problem
    solving over production.
        Question. There have been reports of chemical leaks at the Johnston
    Atoll and Tooele (pronounced ``Too-elly'') facilities. How did these
    leaks affect the program? Is there flexibility built into your plans to
    account for unanticipated events like these? Can we dispose of chemical
    weapons at a faster rate than we plan?
        Answer. We have experienced a total of five chemical agent releases
    at our Johnston Atoll Chemical Agent Disposal System (JACADS) and
    Tooele Chemical Agent Disposal Facility (TOCDF) during the more than 15
    years of operations destroying more than 7,000 tons of agent. These
    releases have been so small that the agent dissipated to the point
    where it could not be measured within a few feet from the point of
    release. Independent investigations by groups such as the Centers for
    Disease Control and Prevention have concluded that these minute
    releases posed no threat to the public, the workforce, or the
    environment. However, we take these releases very seriously. When such
    an event occurs, it has been and continues to be our policy to suspend
    operations to thoroughly investigate the cause. The purpose of the
    investigation is to determine what happened and to develop corrective
    actions to prevent the reoccurrence of the release. Once the corrective
    actions are implemented, we include these improvements in our lessons
    learned program, which requires these lessons learned be reviewed for
    applicability at all of our other facilities. The corrective actions
    can affect many aspects of our plant operations to include process
    changes, facility changes, management changes, personnel hiring
    practice changes, training changes, etc.
        We plan for, but do not expect, these types of events to occur.
    Because these events are not readily predictable, we have not included
    any associated downtime in the schedules to accommodate such events. We
    also believe that our lessons learned program has been very effective
    in reducing these types of events. Our goal is to eliminate these
    events.
        We are working to identify ways to dispose of the chemical weapons
    faster while ensuring that the safety of the workforce, the general
    population, and protection of the environment remain our top priority.
    Our challenge is addressing the number of new environmental
    requirements that are placed on the program on a yearly basis and the
    number of new issues. We are committed to meeting every new
    environmental requirement while ensuring that we protect the public and
    our workers. The program continues to strive to reduce schedule without
    sacrificing safety or environmental compliance.
        Question. Please comment on how we as a nation are doing in
    disposing of chemical weapons compared to other countries?
        Answer. Four parties to the Chemical Weapons Convention (CWC),
    including the United States, have declared their chemical weapons
    stockpiles. Jose Butsani, Director General of the Organization for the
    Prohibition of Chemical Weapons, the administrative body of the CWC,
    stated that ``three of the four declared possessors of chemical
    weapons--with Russia the only exception--have complied with the first
    CWC timeline for the destruction of their stocks of chemical weapons.
    They have by now destroyed a total of 5,600 tons of chemical agent and
    1.6 million of munitions and containers, or almost 20 percent of the
    total declared quantity of such munitions and containers. The United
    States, which has already destroyed almost one fifth of its chemical
    weapons arsenal, has set an impressive example in this regard.''
        The majority of the world's chemical weapons destroyed to date have
    been from the U.S. stockpile. In addition, the United States facility
    on Johnston Island was the first continuously operating chemical
    weapons destruction facility that completed destruction of its
    stockpile and was recently certified as closed via a letter from the
    Organization for the Prohibition of Chemical Weapons dated April 25,
    2001.
        Russia, the possessor of the world's largest chemical weapons
    stockpile, is still in the process of constructing destruction
    facilities and has not yet begun destroying its chemical weapons
    stockpile. It has also recently requested the five-year deadline
    extension for destruction of its chemical weapons.

                    PUBLIC SAFETY--STORING CHEMICAL WEAPONS

        Question. The Defense Department claims that the greatest risk to
    the nation from our chemical stockpiles is the prolonged storage of
    chemical weapons, and not the disposal of them. What is the greatest
    threat to continued safe storage of these weapons--natural disasters,
    leaky containers, theft, or other? Are there any sites in particular
    about which you are most concerned?
        Answer. Public risks of munitions storage are dominated by a class
    of accidents or external events that result from influences external to
    storage. In particular, the risks of accidents initiated from a seismic
    event (i.e., earthquake), lightning strike, tornado, or aircraft crash
    provide the greatest threat to continued safe storage of chemical
    munitions. The risk values vary substantially among sites due to the
    population differences around the sites, the mix of munitions that are
    stored at the sites, and the site-specific weather. In general, the
    storage risks at the eastern storage sites are dominated by lightning
    induced accidents, and earthquakes dominate the risks at the western
    sites. Because of the high storage risk from lightning (predominantly
    based on the risk of ignition of the M55 rockets) the Army has taken
    steps to evaluate and reduce this vulnerability. Research in this area
    accounts for new bonding procedures within the igloos to reduce the
    threat of lightning induced rocket ignition, and new testing has been
    initiated that has characterized the specific vulnerability of each
    individual rocket storage igloo. These test results have led the Army
    to a better understanding of the susceptibility of the igloos to
    lightning, allowing it to continue to pursue efforts to reduce this
    risk where possible. However, it is unlikely that the risk posed by
    lightning will ever be eliminated and will likely continue to dominate
    storage risks at our eastern sites. Likewise, the risks associated with
    earthquakes at our western storage sites cannot be entirely eliminated.
        Activities related to normal maintenance of the stockpile account
    for less than one percent of the public risk. Agent leakage is a
    minimal public risk because of the typically small amounts of agent
    involved, as well as the containment afforded by the storage structure.
    There is, however, a risk to storage site workers that must deal with
    these leaking munitions. To combat these risks, the Army maintains
    strict personnel safety and procedural standards, which have proved
    successful in protecting our people over the years.
        Overall, the M55 rocket is the highest-risk munition in storage. In
    addition to its susceptibility to lightning-induced ignition, they pose
    a higher degree of deterioration and leakage than other munitions.
        Theft and terrorist activities are possible, but are not considered
    to be the greatest threat to continued storage and are not modeled in
    the risk assessments for each site.
        There is no one site that exhibits a far greater concern than
    another. Each site has a unique set of circumstances that gives it a
    different, but real vulnerability. There is no site that escapes the
    Army's concern for prolonged storage.
        Question. Are you concerned that our storage facilities and
    containers will begin to fail before we can dispose of all chemical
    agents?
        Answer. Since our storage facilities are in good shape, we are not
    concerned that our storage facilities and containers will begin to fail
    before all chemical agents and munitions are destroyed if we continue
    to meet our destruction schedule. We believe we can continue to protect
    the general public from the risks of significant releases until the
    stockpile is completely destroyed. The maintenance of an aging
    stockpile requires intense management. Even though we have had an
    exemplary safety record in maintaining our stockpile, our goal is to
    eliminate the stockpile as quickly as possible to lessen the risk of
    exposure to our workers due to the need for continual handling and
    repacking.
        Agent detection technology has improved significantly, allowing
    early detection of leaks. Leaks do continue to occur in overpack
    containers. During fiscal year 2000, 98 overpacks storing chemical
    munitions leaked. Each leaking overpack container was packed in a
    secondary overpack container. Since 1975, approximately 3,084 leaking
    munitions have been containerized. Many of these are in aging overpacks
    that still remain in storage. (Note: approximately 503 overpacks have
    leaked since then).
        New container procurement will address leakage permanently, pending
    munitions disposal. The Army has a production and fielding plan for new
    containers for overpacking leaking munitions based on the historical
    tendency for items to fail or leak. In other words, propelling charge
    containers tend to leak more frequently than other overpacks, so the
    Army has manufactured new high-performance containers or modified
    existing containers to address this condition.
        On the other hand, Spray Tank containers, Wet Eye Bomb containers,
    and Bull Pup containers have never leaked. The Army has not designated
    or tested containers for this purpose. These items are stored at
    locations where disposal operations are underway or are imminent and
    the potential for failure is minimal.
        The Army has also fielded a portable helium leak tester to allow
    workers to selectively identify and eliminate poor performing
    containers that could otherwise fail after packaging but prior to
    disposal.
        Question. Please provide the Committee with a status report on the
    Army's efforts to protect these chemical weapons facilities from
    terrorist threats.
        Answer. The chemical weapons facilities, which the Army is
    responsible for, are protected from terrorist threats by the
    administration of an ongoing comprehensive chemical security program
    that is an integral part of the Army's Chemical Surety mission.
    Implementation of the Army's chemical security program is monitored on
    a continuing basis by security elements of the U.S. Army Soldier and
    Biological Chemical Command (SBCCOM), the Army Materiel Command, and
    the Department of the Army Inspector General.
        In addition to the chemical security program, SBCCOM administers a
    proactive antiterrorism/force protection program, which implements
    specific Army guidelines for the protection of facilities against
    terrorist threats.
        Finally, within SBCCOM, the chemical depots and activities share
    classified threat information by means of a secure, automated
    Intelligence and Threat Dissemination System (ITDS). The ITDS is a
    stand-alone secure wide area network that was developed and fielded by
    SBCCOM and is administered from SBCCOM headquarters. The secure system
    provides SBCCOM commanders and directors a real-time, secure command
    network with the capability for receiving the most current classified
    threat information, requesting specific threat data or intelligence
    reports, and sharing local threat situations and information with other
    SBCCOM installations and activities.

                            ALTERNATIVE TECHNOLOGIES

        Question. The Department of Defense (DOD) is required to test
    alternatives to the current system of incinerating chemical weapons. Do
    we know of or have we tested any alternative technologies that are as
    safe, effective, and cost efficient as the current system?
        Answer. DOD has completed the demonstration of six alternative
    technologies to the baseline incineration. Four of these technologies
    were successfully demonstrated and found to be possible candidates to
    proceed to pilot testing. As required by Public Law 105-261, DOD is
    assessing whether these alternative technologies can be certified to be
    as safe and cost- and schedule-effective as the incineration process.
    DOD is also assessing whether any of these alternative technologies
    should be pilot tested and if so, where. These related assessments are
    being conducted through a Defense Acquisition Executive review. The
    initial Defense Acquisition Executive review is scheduled to be
    completed in the fall of 2001, with a technology decision expected in
    the fall of 2001 for the Pueblo, Colorado, site and the third quarter
    of fiscal year 2002 for the Blue Grass, Kentucky, site.
        Question. What do you estimate to be the total costs to complete
    testing of all alternative technologies under consideration? When do
    you expect to complete this testing?
        Answer. The cost to complete the six technology demonstrations was
    $99,725,000. The follow-on engineering design studies (phases I and II)
    to determine if these technologies are suitable for certification under
    Public Law 105-261 is estimated to be $113,878,000. The two
    demonstration programs were completed in May 1999 and October 2000,
    respectively. The engineering design study phase I will be completed in
    October 2001 and the phase II will be completed in November 2001. The
    technology decision for Pueblo, Colorado, will be complete in the fall
    of this year and the decision for Blue Grass, Kentucky, is expected in
    the third quarter of fiscal year 2002.

             JOHNSTON ISLAND: COMPLETING CHEMICAL WEAPONS DISPOSAL

        Question. Congress has received reports that the chemical weapons
    disposal operations at Johnston Atoll are now complete. This is in fact
    the case, is it not?
        Answer. The Program Manager for Chemical Demilitarization has
    completed stockpile destruction operations at the Johnston Atoll
    Chemical Agent Disposal System (JACADS). More than 412,732 munitions
    and bulk items were safely destroyed at the facility (over 2,000 tons
    of agent). Treaty oversight by the Organization for the Prohibition of
    Chemical Weapons ended in January 2001 and was certified complete on
    April 25, 2001. The environmental permit required a final closure plan
    that was submitted to the Environmental Protection Agency in July 2000,
    and the Army is coordinating with several federal oversight agencies
    for closure of the JACADS facility.
        Question. Please describe what other chemical warfare materiel
    remain on Johnston Island and how and when the Army intends to dispose
    of these?
        Answer. There are currently 62 Chemical Agent Identification Sets
    (CAIS) stored on Johnston Island. A class 2 Resource Conservation and
    Recovery Act permit modification request has been submitted to the
    Environmental Protection Agency to incinerate the CAIS in Johnston
    Atoll Chemical Agent Disposal System. Following approval of the
    modification, disposal of these CAIS is scheduled for September 2001.
        Question. What chemical warfare materials remain at other sites in
    the Pacific? What is the Army's plan for dealing with these materials?
        Answer. There are a number of additional sites in the Pacific
    theater where chemical materiel may be recovered. These sites are
    addressed in a classified annex to the 1993 Survey and Analysis Report
    and a 1996 update. There were a number of locations in the Pacific
    where chemical weapons were stored and tested. The United States did
    not abandon any chemical weapons at these sites; however, some may be
    recovered as the result of legitimate disposal or testing actions
    conducted during World War II. There was also extensive training with
    Chemical Agent Identification Sets (CAIS), which may be found at any
    World War II training site. CAIS are vials and bottles that contain
    small amounts of actual chemical agent. Complete CAIS sets can contain
    amounts similar to munitions, but do not have explosives associated
    with them.
        In the event chemical warfare materiel is recovered, these items
    would likely be CAIS or chemical weapons from previous chemical weapons
    testing, storage, and disposal. Possible approaches to destruction of
    chemical items, when discovered, will involve evaluating whether they
    should be destroyed on-site, moved to a collection point and destroyed,
    or moved back to the United States or a U.S. territory for eventual
    destruction. If on-site destruction is elected, the Army would consider
    use of the Rapid Response System (RRS) for CAIS and the Explosive
    Destruction System (EDS) for munitions. Other systems are being
    developed and tested as part of the Army's Non-Stockpile Program to
    address this problem in the future, but the RRS and EDS are available
    now.
        Possible movement of recovered chemical items would be subject to a
    destination analysis. This analysis would recommend movement to either
    a site where the mobile systems could be more effectively used or where
    an existing demilitarization system could deal with the problem. Such
    an analysis would be done on a case-by-case basis, and would require
    approval of the receiving site. Site approval would require all
    necessary approvals from regulatory agencies, including local, State,
    territorial, and federal agencies.
        Question. If, in the future, you find non-stockpile chemical
    materials in the Pacific theater, where will you dispose of these? Are
    there environmental and legal issues associated with handling and
    transporting chemical warfare items you uncover in the future?
        Answer. The potential exists to recover additional chemical warfare
    materiel (CWM) from numerous sites in the Pacific, from both U.S.
    territories and foreign sites similar to those items recovered from the
    Solomon Islands, Guam, and Tuvalu Funa Futi in the 1990's. The product
    manager for Non-Stockpile Chemical Materiel has developed a destination
    analysis in coordination with the Department of the Army and the
    Department of Health and Human Services to assist decision makers in
    determining the disposition of recovered CWM. When CWM is recovered, we
    have three options for handling it: storage on-site for future on-site
    treatment; storage on-site until an acceptable alternative storage and/
    or treatment location can be found; and immediate transportation to an
    acceptable off-site location for storage and/or treatment.
        Our preference is to treat and dispose of recovered CWM on-site.
    However, numerous public, environmental, and legal issues will apply to
    all recoveries in the Pacific theater. Any recovered CWM brought into
    the United States from a foreign country will be subject to the
    applicable provisions of environmental regulations and laws to include,
    but not limited to, the Resource Conservation and Recovery Act, the
    Comprehensive Environmental Response Compensation and Liability Act,
    and Title 50 of the United States Code.
        Some of these issues are public health and safety risks associated
    with storage, treatment, and transportation. Additionally, the
    legislative constraints of 50 United States Code 1512a(b) on the
    movement of recovered CWM apply. Specifically, in the case of any
    chemical munitions that are discovered or otherwise come within the
    control of the DOD and that do not constitute part of the chemical
    weapons stockpile, the Secretary of Defense may transport such
    munitions to the nearest chemical munitions stockpile storage facility
    that has the necessary permits for receiving and storing such items if
    the transportation of such munitions to that facility is considered by
    the Secretary of Defense to be necessary; and can be accomplished while
    protecting public health and safety.

         CLOSING JOHNSTON ATOLL CHEMICAL AGENT DISPOSAL SYSTEM (JACADS)

        Question. In your testimony, the Army plans call for completely
    closing the Johnston Island facility by the fourth quarter of fiscal
    year 2003. Yet in a briefing received by the committee staff just two
    weeks ago, the plan at that time was to close the facility by the
    fourth quarter of 2002. Why has the plan changed? Do you foresee any
    problems with meeting the new date?
        Answer. Completion of all Johnston Atoll Chemical Agent Disposal
    System (JACADS) closure activities are scheduled for September 2003.
    This closure plan was issued to the Environmental Protection Agency in
    July 2000 and has remained unchanged since that date. After five months
    of actual JACADS closure activity, the project is on schedule for a
    September 2003 completion.
        Question. What are the key events that must occur before JACADS can
    be completely closed? Are there environmental issues that remain?
        Answer. Closure activities, which began in January 2001, are
    approximately 10 percent complete. These activities include disposal of
    contaminated materials, including all secondary wastes, such as
    contaminated plastic suits and charcoal. Other activities include
    decontamination of the building and related equipment, dismantling
    equipment and putting it in a furnace for thermal treatment, verifying
    ``clean closure'' of materials and structures that will remain in
    place, and defining the future use of the site that is acceptable to
    all stakeholders, including the U.S. Fish and Wildlife Service.
        Question. What are the plans for disposing of the facilities? For
    example, what do you plan to do with the incinerator?
        Answer. Machinery, conduit, conveyors, wall sandwich panels,
    scabbled concrete, etc. will be processed through the metal parts
    furnace (MPF). The deactivation furnace system and liquid incinerator
    will be taken apart and processed through the MPF. The MPF will be
    decontaminated to an agent free standard and shipped to a continental
    United States hazardous waste disposal site.
        Question. What are the costs of closing the facility?
        Answer. The Johnston Atoll Chemical Agent Disposal System (JACADS)
    closure costs are expected to be about $400 million. The closure costs
    for sites in the continental United States are expected to be less than
    Johnston Atoll. Three key contributors to the JACADS closure costs are
    labor, regional cost differences, and the processing of secondary
    wastes during closure activities.

                 MANAGING THE CHEMICAL DEMILITARIZATION PROGRAM

        Question. Congress has received reports that state and local
    officials often get mixed messages about the Chemical Demilitarization
    program because of multiple lines of authority and responsibility for
    the program. Is the Army aware of this criticism and, if so, how does
    it plan to address the issue?
        Answer. Yes, this issue was addressed in the May 2000 General
    Accounting Office Report. The Army is sensitive to the concerns
    expressed by state and local officials who are seeking clear and
    consistent information about the Chemical Demilitarization program. The
    program managers for Chemical Demilitarization and Assembled Chemical
    Weapons Assessment co-chair working integrated product team reviews and
    are working very closely in the development of the required
    environmental documentation to support the technology decisions for
    both the Colorado and Kentucky sites.
        In addition, the Department of Defense is conducting a Defense
    Acquisition Executive Review of the Chemical Demilitarization Program
    in the fall of this year. One of the issues that will be addressed at
    this review includes the formalization of a plan that integrates roles
    and responsibilities of the Program Manager for Chemical
    Demilitarization and the Program Manager for Assembled Chemical Weapons
    Assessment. Such a plan should assist in the future dissemination of
    clear and consistent messages about the chemical demilitarization
    program. However, it should be noted that the management structure of
    the Chemical Demilitarization program has been shaped largely by
    statute and that further streamlining of roles and responsibilities may
    require changes in public law.
        Question. Has restructuring the Chemical Demilitarization program
    been an issue in Secretary Rumsfeld's Strategic Review?
        Answer. No. However, a Defense Acquisition Executive Review,
    scheduled for the fall of this year, is evaluating all aspects of the
    Chemical Demilitarization Program. This review will include the
    Chemical Stockpile Disposal Project (CSDP), Chemical Stockpile
    Emergency Preparedness Program, Alternative Technologies and Approaches
    Project, Non-Stockpile Chemical Materiel Program, and Assembled
    Chemical Weapons Assessment Program. The issues being addressed include
    Chemical Weapons Convention compliance, update of the Life Cycle cost
    estimate, update of program plans for closure of the CSDP facilities,
    and the path forward to implement a destruction method for the chemical
    stockpile sites in Pueblo, Colorado and Blue Grass, Kentucky.
                                     ______

                       Questions Submitted to James Bacon

                  Questions Submitted by Senator Thad Cochran

                      ALTERNATIVE DESTRUCTION TECHNOLOGIES

        Question. Given both the technical problems and poor public
    perception of incineration, and given the technical problems of the
    alternatives looked at by the Army, such as the Plasma or the Bio
    Process, do you think the Army should explore closed systems which
    provide a viable alternative to incinerators?
        Answer. The Army has been looking at closed or ``batch'' systems
    where agent destruction to a non-detectable level can be confirmed in
    the reaction mixture before it is discharged to provide a viable
    alternative to incineration at bulk agent storage sites. In 1994, the
    Office of the Project Manager for Alternative Technologies and
    Approaches was organized to perform research and development of
    chemical neutralization technology at the two bulk agent storage sites
    (Aberdeen, Maryland, and Newport, Indiana). Bulk agents are stored in
    steel containers called ton containers. Thus, there is no requirement
    to handle explosives, energetics, or munitions. In January 1997, the
    Defense Acquisition Executive authorized the Army to proceed with a
    program to establish full-scale pilot plants at these locations.
    Efforts at the Aberdeen site began in October 1998 with award of a
    systems contract to Bechtel National, Incorporated. Efforts at the
    Newport site began in February 1998 with a systems contract award to
    Parsons/Allied Signal (now Honeywell). Design completion and
    construction are ongoing concurrently for both sites. The technology
    employed at the Aberdeen site is chemical neutralization follow by
    biodegradation. The technology employed at the Newport site is chemical
    neutralization followed by supercritical water oxidation.
        Question. I understand that the Adams Process is a closed system,
    which is being researched at the Diagnostic Instrumentation Analysis
    Laboratory (DIAL) Lab at Mississippi State University, and it provides
    more reliable destruction of chemical agents and mixed wastes. Are you
    exploring this alternative?
        Answer. This technology has been evaluated according to the
    procedures and criteria used to monitor the development of emerging
    technologies to support the chemical demilitarization program.
        The Adams Process reacts organic compounds with elemental sulfur,
    either in a vapor phase or liquid phase at temperatures ranging from
    275 to 280 degrees Fahrenheit. Higher temperatures may be present in
    the vapor phase.
        The Army performed lab-scale tests of the Adams Sulfur Process in
    1993 to investigate the destruction of energetics. In addition, the
    Army performed limited testing with dilute mustard at Pine Bluff
    Arsenal, Arkansas, in 1995.
        Based on the small-scale work performed to date, the Adams Process
    does not appear to offer benefits over other alternatives that have
    already been tested for the destruction of agents and energetics that
    are ready for pilot testing.
                                     ______

                  Questions Submitted by Senator Arlen Specter

                           RISK OF CONTINUED STORAGE

        Question. Explain the differences in the risk of continued storage
    versus the risk of destroying the weapons now.
        Answer. Storage risk is higher primarily because of the potential
    for external events, such as earthquakes, tornadoes, lightning strikes,
    and plane crashes to compromise the integrity of the stockpile. Events
    affecting storage have the potential to involve large amounts of agent,
    for example an entire igloo could be affected. These types of accident
    scenarios are low frequency events, but have significant consequences
    to the public due to the release of large quantities of agent to the
    environment. In addition, the degradation of the chemical agent
    stockpile requires intense management that results in significant
    manual handling of the munitions, thus exposing our workers to the risk
    of agent exposure.
        The disposal facilities are exposed to the same external events
    that the storage area is exposed to, but there are limited munitions in
    the process at any time so the potential agent releases are limited.
    The disposal process is carried out in a facility with multiple layers
    of protection to prevent agent release to the environment. The disposal
    facilities have also been designed and built to minimize the effects of
    external forces, such as tornadoes and earthquakes. The Program Manager
    for Chemical Demilitarization has conducted and continues to conduct
    risk assessments to understand and minimize the risks of storage and
    processing. The risk decreases with each round and agent container
    destroyed. Both an independent panel of experts (which included local
    risk experts) and the National Academy of Science's National Research
    Council have and continue to rigorously oversee the risk assessment
    processes. The information from these assessments is the driving force
    behind the demilitarization program and its goal to eliminate this risk
    by destroying the source--the chemical weapons stockpile.

                                  COST SAVINGS

        Question. Has the program realized any cost savings through
    innovation or the use of better business practices during its life
    cycle?
        Answer. While the program has not realized any true cost savings,
    the program manager has undertaken many management initiatives to
    contain program costs through innovative or better business practices.
    For example, the aggressive lessons learned program has helped to avoid
    schedule and cost growth for the Chemical Stockpile Disposal Project.
    Similarly, the Non-Stockpile Chemical Materiel Product has controlled
    costs by employing alternative solutions to address mission
    requirements, for example, the early destruction (fiscal year 1999
    versus fiscal year 2006) of binary M-687 projectiles, thus avoiding
    inflation cost increases.

                          MEETING THE PROGRAM SCHEDULE

        Question. Where do you stand in terms of compliance with the
    Chemical Weapons Convention (CWC) and will you meet the next milestone
    in April 2002?
        Answer. The program continues to meet or exceed requirements of the
    CWC. By April 29, 2000, we are required to have destroyed one percent
    of our Category 1 chemical weapons that were declared at the time of
    the treaty's entry into force. By that date, we will have well exceeded
    that milestone, having destroyed over 15 percent of those weapons. To
    date, the United States has destroyed approximately 19.7 percent of the
    Category 1 chemical weapons (CW) since the CWC entered into force. The
    Category 1 phase 1 deadline requires at least 20 percent destruction no
    later than April 29, 2002. It is expected that the United States will
    have safely destroyed 20 percent of Category 1 CW by the end of fiscal
    year 2001, well ahead of schedule.
        For Category 3 CW, 100 percent destruction is required by April 29,
    2002. Category 3 CW are unfilled munitions or components that were
    designed for use directly in connection with the employment of chemical
    weapons. Presently, 99 percent of the Category 3 CW have been
    destroyed, and the remainder are on target for destruction by 2002.
    Destruction of 40 percent of the production capacity of former chemical
    weapons production facilities is also required by April 29, 2002. This
    milestone was met in March 2000.
                                     ______

                Questions Submitted by Senator Richard C. Shelby

                             EMERGENCY PREPAREDNESS

        Question. Has the Army changed its objective from ``zero exposure''
    to ``zero fatalities?''
        Answer. The Program Manager for Chemical Demilitarization has
    always maintained the goals of zero release--zero exposure during
    chemical weapons disposal operations. However, recognizing the low
    probability for agent release will continue as long as the chemical
    weapons remain in storage, the Army and Federal Emergency Management
    Agency jointly manage the Chemical Stockpile Emergency Preparedness
    Program (CSEPP) in coordination with state and local officials. The
    Army has consistently followed the same objective for the protection of
    the general public from a chemical agent accident since 1991. This
    objective is defined in CSEPP Policy Paper Number 1, dated May 1991,
    which was developed jointly by the Army, the Federal Emergency
    Management Agency and the ten CSEPP states. Policy Paper 1 states that
    the most important objective is the avoidance of fatalities to the
    maximum extent practicable. CSEPP achieves this objective through
    protective actions that protect the public from exposure to chemical
    agents to the maximum extent practicable.
        Question. Does the Army believe that people will be exposed to
    chemical agents?
        Answer. The Army does not believe that people will be exposed to
    chemical agent, either from storage activities or from chemical
    demilitarization operations. First, the probability of a chemical
    weapons accident that could put the public at risk is extremely low.
    Second, the Army and the Federal Emergency Management Agency are
    working with state and local emergency management officials to enhance
    their emergency response capabilities. Improving emergency response
    capabilities further reduces the risk of exposure to chemical agents
    and protects the public from exposure to the maximum extent possible.

                                MEDICAL STUDIES

        Question. What medical studies or data can you share with this
    committee regarding the long-term health impacts of non-lethal exposure
    to chemical agents?
        Answer. A number of studies have been published on the long-term
    health effects of non-lethal exposure to nerve and mustard chemical
    agents. Some of those studies are listed below.
        1. Baker, DJ and Sedgwick, EM 1996. Single fiber electromyographic
    changes in man after organophosphate exposure. Human and Experimental
    Toxicology. Volume 15, 369-375.
        2. Beebe, GW 1960. Lung Cancer in World War I Veterans: possible
    relation to mustard gas injury and 1918 influenza epidemic. J. Natl.
    Cancer Inst. 25:1231-1252.
        3. Case RAM and Lea, AJ, 1955. Mustard gas poisoning, chronic
    bronchitis and lung cancer. An investigation into the possibility that
    poisoning by mustard gas in the 1914-1918 war might be a factor in the
    production of neoplasia. Brit J. Prev Med. 9:62-72.
        4. Duffy, F.H, Burchfiel, J.L. 1979. Long term effects of an
    organophosphate upon the human electroencephalogram. Toxicol Appl
    Pharm, Volume 47, pages 161-176.
        5. Grob D, 1956a. Manifestations and Treatment of Nerve Gas
    Poisoning in Man. U.S. Armed Forces Med J, Volume 7, pages 781-789.
        6. Grob D, 1956b. The Manifestations and Treatment Due to Nerve
    Gases and Other Organic Phosphate Anticholinesterase Compounds. Arch
    Intern Med, Volume 98 pages 221-239.
        7. Grob D and Harvey AM. Effects and Treatment of Nerve Gas
    Poisoning, Am J Med, Volume 14, pages 5263-67.
        8. Harvey, JC. 1952. Clinical observations on volunteers exposed to
    concentrations of GB. Medical Laboratories Research Report Number 114,
    Publication Control Number 5039-114 (CMLRE-ME-52), MLCR 114 Army
    Chemical Center, Aberdeen Proving Ground, MD.
        9. IOM (Institute of Medicine, Committee to Survey the Health
    Effects of Mustard Gas and Lewisite, Division of Health Promotion and
    Disease Prevention). 1993, Veterans at Risk: The Health Effects of
    Mustard Gas and Lewisite, C.M. Pechura and DP Rall, eds. National
    Academy Press, Washington, D.C.
        10. Lekov D, Dimitrov V, and Mizkow A. Clinical observations of
    individuals contaminated by a pinacolic ester of methylfluorophosphine
    acid (soman). Voenno Meditsinsko Delo, 4, 47, 1966.
        11. Inoue, N. Psychiatric symptoms following accidental exposure to
    sarin: A case study. Fukuokaishi Igaku Zasshi, 86, 373, 1995.
        12. Nakajima T, Ohta S, Morita H, Midorikawa Y, Mimura S, et al.
    Epidemiological study of sarin poisoning in Matsumoto City, Japan, J.
    Epidemiol, 8, 33, 1997.
        13. Nozaki H, Aikawa N, et al. A case of VX poisoning and the
    difference from sarin. Lancet, 346, 698, 1995.
        14. NRC (National Research Council), Possible Long-Term Health
    Effects of Short-term Exposures to Chemical Agents. Volume 1.
    Anticholinesterases and Anticholinergics, National Academy Press,
    Washington, D.C., 1982.
        15. NRC (National Research Council), Possible Long-Term Health
    Effects of Short-term Exposures to Chemical Agents. Volume 3, Final
    Report, Current Health Status of Test Subjects, National Academy Press,
    Washington D.C., 1995.
        16. Papirmeister B, Feister AJ, et al. Medical Defense Against
    Mustard Gas: Toxic Mechanisms and Pharmocological Implications. CRC
    Press, Boca Raton, FL., Page 359.
        17. Sidell, FR and Groff, WA. The reactivity of Cholinesterase
    inhibited by VX and Sarin in Man. Toxicol Appl Pharm, Vol 27, pages
    241-252 (1974).
        18. Somani S, and Romano J, eds. Chemical Warfare Agents:
    toxicology at low levels. CRC Press, LLC, 2001.
        19. Taher, AA. 1992. Cleft lip and palate in Tehran. Cleft Palate
    Craniofacial Journal 29:15-16.
        20. Wiedler DJ. Myocardial damage and cardiac arrythmia's after
    intracranial hemhorrage, a critical review. Stroke, Volume 5, 759-64,
    1979. Weimer J.T, McNamara BP, et al. Proposed Revision of Limits for
    Human Exposure to GB Vapor in Nonmilitary Operations Based on One-Year
    Exposures of Laboratory Animals to Low Airborne Concentrations. ARCSL-
    TR-78056, Chemical Systems Laboratory, Aberdeen Proving Ground, MD,
    December 1979.

                            ALTERNATIVE TECHNOLOGIES

        Question. Given the state of the program in Anniston does a faster,
    cheaper and safer alternative exist to eliminate these weapons?
        Answer. No, the incineration facility being constructed at Anniston
    represents the only proven systemized technology available now to
    dispose of assembled chemical weapons. Incineration technology has been
    demonstrated to safely and effectively destroy all of the chemical
    agents and energetics, as well as completely treat contaminated metal
    munition casings. The Army continues to track emerging technologies in
    an attempt to identify alternatives to incineration that may be faster,
    cheaper, and offer more protection.
        The Anniston disposal facility is 99 percent complete and we are
    scheduled to start agent operations in the third quarter of fiscal year
    2002. It would take numerous years to develop the systems, design a
    facility, obtain the requisite environmental permits, construct the
    facility, and prove-out the alternative technology(ies). In that time
    alone, using the incineration facility being constructed at Anniston,
    we could eliminate 90 percent of the risk associated with the Anniston
    stockpile. Incineration has been proven to be a safe technology as we
    have completed the Johnston Atoll Chemical Agent Disposal System
    mission and continue operations at the Tooele Chemical Agent Disposal
    Facility.
        Lessons learned from these facilities have been incorporated into
    the facilities currently being built, continuing to add to the safety
    of the Anniston facility and operations.
        Question. What is your response to opponents of incineration who
    would like to see the facility in Anniston retrofitted for alternative
    technologies?
        Answer. The Army's paramount objective during the storage and
    destruction of chemical weapons is to provide maximum protection to the
    public, the workers, and the environment. All risk analyses prepared to
    date have shown continued storage poses the greatest threat to the
    local community. The risks are dominated by external events such as
    seismic events, lightning strikes, or tornadoes. While the possibility
    of these events occurring are extremely remote, the consequences could
    be severe. However, the Army is continuing to identify alternative
    technologies that may be faster, cheaper, and offer more protection. At
    this time, pilot testing of an alternative technology would be
    necessary since no alternative technology has been used in full-scale
    operations. The construction of an alternative technology pilot-scale
    facility would take at least 18 months from the time all permits were
    received. In that time alone, by operating the incineration facility
    being constructed at Anniston, 90 percent of the risk associated with
    the Anniston stockpile would be eliminated. Retrofitting facilities
    nearing completion will only increase risk to the public by delaying
    the destruction of the stockpile. If at some point in the future, an
    alternative technology is demonstrated to be appropriate for
    consideration for retrofitting the Anniston facility, the local
    community would be encouraged to participate in that decision.
                                     ______

                       Questions Submitted to Mike Parker

                  Questions Submitted by Senator Arlen Specter

            ASSEMBLED CHEMICAL WEAPONS ASSESSMENT (ACWA) TECHNOLOGY

        Question. In order for an ACWA technology to go to pilot testing,
    ACWA must certify its technologies are as safe as and as cost effective
    as incineration, and that weapons will be destroyed on or before
    incineration or CWC deadline, whichever is later. What have the Arthur
    Andersen, General Accounting Office, and National Resource Council
    (NRC) reports concluded about ACWA's ability to meet these criteria?
    Will you meet the cost considerations? Will you meet the treaty or
    incineration schedule deadlines?
        Answer. The scope of the Arthur Andersen, Government Accounting
    Office, and the NRC efforts were focused on other program needs and
    Congressional objectives rather than a comparison of the technologies
    per the requirements of Public Law 105-261. The NRC's report, which is
    technology focused, will be included in the Defense Acquisition
    Executive review process that will be completed this calendar year. The
    NRC report will be published in July 2001.
        One of the objectives of this Defense Acquisition review will be a
    side-by-side comparison of the alternative technologies and the
    incineration-based technologies per Public Law 105-261. Given that the
    plants for either technology approach will be about the same size with
    a similar workforce and operations period, and they will be using
    similar equipment to separate the energetic and agent components from
    the munitions, their cost, schedule, and safety will be roughly equal.
        Question. Are any ACWA technologies ready to go to the pilot-
    testing phase? If so, which ones and on what date will this occur?
        Answer. Four successfully demonstrated alternative technologies
    have been determined to be possible candidates for pilot testing. The
    ongoing Defense Acquisition Executive review process will determine if
    any of these technologies should be piloted consistent with Public Law
    105-261, and if so, where. The Defense Acquisition Executive's initial
    decision regarding pilot testing of ACWA technologies is scheduled to
    be made in the first quarter of fiscal year 2002. The technology
    decisions for Pueblo, Colorado, and Blue Grass, Kentucky, are scheduled
    to be made in the first quarter of fiscal year 2002 and the third
    quarter of fiscal year 2002, respectively, and will consider
    construction of full-scale ACWA technology disposal facilities to be
    operated initially at the pilot-scale, as alternatives.
        Question. ACWA technologies engineering design studies are to be
    completed in July 2001. Can you assure the committee that these reports
    will be complete and final at that date?
        Answer. The Engineering Design Study Phase I testing will be
    completed in October 2001. The test reports will be available within
    six weeks of completing testing. The Engineering Design Study Phase II
    testing will be completed in November 2001 with the reports finalized
    six weeks later.
                                     ______

                Questions Submitted by Senator Richard C. Shelby

                            ALTERNATIVE TECHNOLOGIES

        Question. Given the state of the program in Anniston does a faster,
    cheaper and safer alternative exist to eliminate these weapons?
        Answer. Hard facts to answer this question are yet to be developed.
    One objective of the Defense Acquisition Executive review is to compare
    the alternative technologies' cost, schedule, and safety with the
    baseline incineration process and determine if an alternative should be
    piloted and where. If one or more alternative technologies were
    successfully piloted, an engineering analysis to determine the
    practical feasibility of retrofitting an alternative technology to the
    Anniston facility would need to be completed along with the cost,
    schedule, and safety implications of retrofit to address these issues.
    Once this information is available, there would need to be a comparison
    with the updated baseline facility operating and cost schedule using
    the operating experience at the Johnston Atoll Chemical Agent Disposal
    System and the Tooele Chemical Agent Disposal Facility to determine the
    life cycle cost and schedule implication of an alternative technology
    applied at Anniston.
        Question. What is your response to opponents of incineration who
    would like to see the facility in Anniston retrofitted for alternative
    technologies?
        Answer. Safety is the paramount issue with chemical weapons storage
    and disposal. The most significant risk to the local population at a
    site would be a weapons in storage accident. While the probability is
    very, very small that any accident will occur, the accident that could
    effect the off-installation population would be due to a natural event
    such as an earthquake or lightning strike. Given that natural events
    such as these could occur at any given time, then the timeline for
    disposal drives the safety risk. Shortest time for disposal is the
    lowest risk. The time to dispose of chemical weapons based on the
    actual experience at Johnston Island and at Tooele would need to be
    compared to the time line to retrofit to an alternative technology that
    may dispose of the weapons more efficiently. If one or more alternative
    technologies were successfully piloted, an engineering analysis to
    determine the practical feasibility of retrofitting an alternative
    technology to the Anniston facility would need to be completed along
    with the cost, schedule, and safety implications of retrofit to address
    these issues. The answers would need to be developed in a totally
    transparent manner that assures your constituents that they have all of
    the unvarnished facts to obtain community buy in on what ever the right
    course of action is.

                           NONDEPARTMENTAL WITNESSES

        Senator Inouye. Now our second panel will consist of Mr.
    Russell Salter from FEMA and representatives from the Blue
    Grass and Anniston areas. Representing the Chemical Weapons
    Working Group is Mr. Craig Williams. From Anniston are Mr.
    Rufus Kinney and Ms. Brenda Lindell of Families Concerned About
    Nerve Gas Incineration; and Eli Henderson, former commissioner
    of Calhoun County.
        Pursuant to the instructions of the chairman, I now
    relinquish the chair to Senator Shelby. You are in charge,
    Senator.
        Senator Shelby [presiding]. Thank you.
        All of your written statements will be made part of the
    record without objection. If we could, because of the
    constraints of time, would you briefly sum up your remarks and
    that will give us some time for some questions and a little
    dialogue with you.
        We will start with Mr. Russell Salter. Mr. Salter.

    STATEMENT OF RUSSELL SALTER, DIRECTOR, CHEMICAL AND
                RADIOLOGICAL PREPAREDNESS DIVISION, FEDERAL
                EMERGENCY MANAGEMENT AGENCY

        Mr. Salter. Thank you, Mr. Chairman. Mr. Chairman and
    members of the subcommittee, I am Russell Salter, Director of
    FEMA's Chemical and Radiological Preparedness Division at FEMA.
    Since August of 1997, I have served as the agency's national
    program manager for the chemical stockpile emergency
    preparedness program.
        I am pleased to be here today on behalf of FEMA and on
    behalf of Director Joe Albaugh. I am here at your request to
    answer any questions that you may have about our national CSEPP
    program or those concerning the safety of communities in and
    around any of the particular sites. I have provided the
    committee a more detailed written statement that discusses
    CSEPP from a national perspective.
        Since the focus of this hearing is on chemical
    demilitarization, my brief comments today will address the
    status of public protection in the CSEPP communities in both
    Kentucky and in Alabama, information that I believe is
    relevant, Mr. Chairman, because of the relationship that exists
    between chemical storage and destruction and protection of the
    public.
        In late March I provided the committee a status report that
    presented each State's assessment of their level of
    preparedness for a CSEPP emergency. Most of the communities in
    the report indicated that they had completed or were well on
    their way toward completing and maintaining all 12 of the
    benchmarks that had been established for determining readiness
    in the communities.
        Kentucky's self-assessment indicated that all but two of
    their benchmarks were essentially complete. This means they
    have the ability to alert the population, State and local
    response and emergency management staff can effectively
    communicate in order to guide the protective action process,
    plans and equipment are in place, and operations centers are
    equipped to handle a CSEPP emergency.
        According to Kentucky's assessment, the two significant
    items that remain are the need for more public awareness so
    they can be assured that the local citizens know what to do in
    an emergency; and, secondly, greater emphasis on training to
    make up for some shortfalls over the past year. We applaud the
    hard work that the State has done, and the county personnel as
    well, to provide this level of preparedness.
        In the most recent report, Alabama's self-assessment, which
    includes six counties in and around the Anniston Chemical
    Depot, reported that only 4 of their 12 benchmarks are
    complete. We cannot agree with this assessment, Mr. Chairman.
    Since the beginning of the CSEPP program, we have awarded the
    State of Alabama more than $118 million for public protection.
    These funds have provided a robust alert and notification
    system, mobile communication radios, plans, state of the art
    emergency operations centers, automation support, and
    substantial funding for collective protection.
        We do recognize that work remains to be done and we feel
    that the States and counties need to aggressively work toward
    completion of all of those remaining projects which we have
    funded. Meanwhile, however, based on the resources that they
    now have available to their communities, we must conclude that
    the Anniston community, like Kentucky, is well prepared for a
    CSEPP emergency. Given their state of preparedness, in our
    judgment the emphasis in Alabama, as in Kentucky and many other
    sites, needs to now be directed toward improving public
    awareness so that the citizens know the true risks and what to
    do in the unlikely event of a CSEPP emergency.
        Public understanding about what to do and why it is
    important that they follow protective action recommendations
    during a CSEPP emergency is a critical component of readiness,
    in our view. Consequently, we believe that it is time that we
    join together at the Federal, the State, and the local level to
    provide clear and factual information to the public that will
    enable them to protect themselves and to make informed
    judgments regarding their safety during both storage and
    destruction of the stockpile.
        In closing, through our collective efforts I am confident
    that we can protect the citizens in the counties surrounding
    the stockpiles in the event of a chemical agent release. This
    is significant, Mr. Chairman, because according to the Army the
    risk to the public during storage is greater than the risk
    during destruction. Destroying the stockpile eliminates that
    risk. Working toward that end should be our collective goal.

                               PREPARED STATEMENT

        I would be pleased to answer any questions you may have.
    Thank you.
        [The statement follows:]

                      PREPARED STATEMENT OF RUSSELL SALTER

        Mr. Chairman, and Members of the Committee, I am Russell Salter,
    Director of the Federal Emergency Management Agency's (FEMA) Chemical
    and Radiological Preparedness Division. I am pleased to provide this
    statement to the Committee that addresses FEMA's role in support of the
    Chemical Stockpile Emergency Preparedness Program (CSEPP). My statement
    will cover: FEMA's mission and its roles and responsibilities in CSEPP;
    the structure and operation of the program; and, improvements in
    emergency preparedness in the communities surrounding the stockpile
    sites since the program began in 1988.

                                 FEMA'S MISSION

        FEMA's overall mission is to reduce the loss of life and property
    and protect our institutions from natural and technological hazards by
    leading and supporting the nation in comprehensive, risk-based
    emergency and consequence management programs of mitigation,
    preparedness, response and recovery. FEMA accomplishes this mission in
    cooperation with other Federal Departments and agencies, States, Tribal
    Nations, local governments, private and volunteer organizations.
        Emergency management funds provided by FEMA through grants to
    States, Tribal Nations and local governments ensure that, regardless of
    the cause, emergency managers can determine when an emergency is
    occurring, assess and predict its impact, communicate rapidly to the
    emergency management community and first responders, broadcast
    effective messages to inform the affected population, determine
    appropriate public health and safety strategies, and, if required,
    evacuate and house the population.

           CHEMICAL STOCKPILE EMERGENCY PREPAREDNESS PROGRAM (CSEPP)

        In 1985, Title 14, Part B, Section 1412 of Public Law 99-145,
    directed the Department of Defense (DOD) to dispose of its lethal
    unitary (pre-mixed) chemical agents and munitions while providing
    ``maximum protection for the environment, the general public and the
    personnel involved in the destruction of lethal chemical agents and
    munitions . . .''
        While the possibility of a chemical stockpile incident with off-
    post consequences is remote, the Army recognized that the effects could
    be significant.
        In its final programmatic environmental impact statement, the Army
    recognized that one of the ways to protect the public from the effects
    of an off-post incident was to assist States, Tribal Nations and local
    governments in improving their emergency preparedness. In response to
    congressional direction to protect the public during the destruction of
    the chemical agents, the Army sought funds to support a site-specific
    emergency planning program for off-post communities located within
    those 10 states that could be impacted by the off-post release of
    chemicals during storage or destruction. Thus CSEPP was established.
        Because the Army was not authorized to provide funds directly to
    States, and did not have the infrastructure to manage the program, it
    looked to other Federal agencies for support. FEMA's ongoing emergency
    preparedness programs uniquely positioned the Agency to reach out to
    State, Tribal Nations and local governments and assist DOD in meeting
    the ``maximum protection'' mandate. Therefore, FEMA joined the Army in
    implementing the CSEPP through a Memorandum of Understanding (MOU)
    signed in August 1988.
        While Congress mandated ``maximum protection,'' the intent of this
    mandate was not further defined. Thus, FEMA and the Army developed
    operating guidelines to assure that the congressional mandate is
    achieved. I will further discuss how these guidelines have been
    implemented later in this testimony.
        A strong comprehensive emergency preparedness program is the
    cornerstone to meeting the maximum protection mandate. FEMA and the
    Army have developed high standards to achieve the maximum protection
    objective. Maximum protection has been achieved when all these
    standards are met.

                         FEMA'S CSEPP RESPONSIBILITIES

        Management of CSEPP is a unique partnership among the U.S. Army,
    FEMA, supporting Federal Departments and agencies, and States, Tribal
    Nations, and local jurisdictions. The Federal-level management
    structure is uniquely designed to capitalize on each Department or
    Agency's expertise and administrative infrastructure to develop and
    enhance the emergency preparedness capabilities of the participating
    jurisdictions.
        The August 1988 Memorandum of Understanding established the
    framework for working with affected States, Tribal Nations and local
    governments to provide for the public's health and safety. The MOU
    identified respective roles and responsibilities and established joint
    programs to plan, train and exercise and exchange information. FEMA and
    the Army reaffirmed this original Memorandum of Understanding in
    January 1993.
        As the program matured, FEMA and the Army realized that the
    respective roles and responsibilities needed clarification. On October
    8, 1997, FEMA and the Army signed a revised MOU.
        Under the terms of this MOU, FEMA is responsible and accountable
    for all aspects of off-post emergency preparedness.
        Specifically, FEMA: Administers off-post CSEPP funds; supports
    development of response plans; prepares, develops, delivers and
    evaluates training; provides technical assistance; and develops
    programs to evaluate off-site readiness capability.

                               PROGRAM STRUCTURE

        Ten states and 40 counties surrounding eight U.S. Army stockpile
    sites participate in CSEPP. The eight States with chemical stockpiles
    are Alabama, Arkansas, Colorado, Indiana, Kentucky, Maryland, Oregon
    and Utah. Illinois and Washington also participate in the program
    because of their borders' proximities to the Indiana and Oregon
    stockpiles.
        Thirteen counties are in Immediate Response Zones, the areas
    closest to where the chemical agents are stored, generally within
    approximately a 10-mile radius.
        Twenty-four counties are in Protective Action Zones, beginning at
    the outer edge of the Immediate Response Zones and extending to a
    radius of approximately six to 31 miles. The remaining three counties
    are designated as host counties, which lie outside the Immediate
    Response Zones and Protective Action Zones.
        The CSEPP Program is administered through the States, as are FEMA's
    other emergency preparedness programs. Funds are distributed under
    Cooperative Agreements, based on a work plan negotiated between the
    States and FEMA Regional Offices. Under the agreements, each State
    identifies needs, develops proposed projects, requests funds, and
    disburses the funds at the State level and to local governments.
    Consistent with the requirements of the Government Performance and
    Results Act, States are responsible for financial accountability, and
    periodically report on the capability improvement realized through
    utilizing the funds.
        This management structure is consistent with and supportive of the
    authority and distribution of powers within most States, where the
    State government, rather than counties or municipalities, is ultimately
    responsible for protecting the health and safety of the state's
    citizens.
        At the Federal level, FEMA and Army Headquarters are responsible
    for CSEPP policy and program development, while the FEMA Regions and
    the Army Soldier and Biological Chemical Command manage daily
    operations. Site-specific issues are handled through site-specific
    Integrated Process Teams. These teams (required by Section 1076 of
    Public Law 104-201, the Department of Defense Authorization Act for
    1997) are the primary local forum to identify site-specific operational
    issues, propose solutions to those issues to the appropriate decision
    makers, and implement program and operational decisions.

                            CSEPP MANAGEMENT SYSTEM

        CSEPP has been developed from two perspectives. First, it focuses
    on providing necessary equipment and staff training to establish a
    response infrastructure that enables emergency managers to quickly
    alert the public, manage the response, and communicate with the public,
    the media, and emergency responders. The second equally important focus
    is to ensure that the public surrounding the stockpile locations know
    what to do in the unlikely event of an accident.
        FEMA is responsible for carefully evaluating requests from the
    States and communities to achieve ``maximum protection'' capability
    within the limits of funds provided. As such, our goal is to deliver
    maximum available resources to the local communities facing the most
    significant potential threat. However, we have had to ensure cost-
    efficiencies in procurement and compatibility between major systems
    that benefit multiple jurisdictions. In many cases, this has meant
    procurement at the state level for alert and notification,
    communications and automation systems. Moreover, we must ensure
    effective program management at the Federal level to maintain
    consistent capabilities across all jurisdictions.
        As of April 4, 2001, $411,301,608 has been awarded to the States
    under the annual Cooperative Agreements.

                                CSEPP BENCHMARKS

        In May 1993, the Army and FEMA jointly established National CSEPP
    Benchmarks.
        The benchmarks identified capabilities to be achieved by
    participating State and local jurisdictions in meeting the ``maximum
    protection'' mandate. These benchmarks also are the basis for funding
    decisions, establishing program priorities and assessing capabilities.
    The following benchmarks are essential and must be in place:
      --Alert and notification system for the installations, Immediate
            Response Zones and limited areas of the Protective Action
            Zones;
      --Emergency operating center for each installation and Immediate
            Response Zone county;
      --Communications system for the Immediate Response Zones and
            installation and between the military installation, Joint
            Information Center and the State; and
      --Automated data processing system connecting critical installations,
            on-post and off-post emergency operations centers, Joint
            Information Center and the State emergency operating center.
        In addition, the benchmarks also prescribe the following functional
    capabilities:
      --Training programs, consistent with the FEMA State Training Plan and
            Army certification requirements, that maintain proficiency of
            emergency services providers, responders and CSEPP staff, as
            defined and measured by the CSEPP standards;
      --An exercise program consistent with approved exercise policy;
      --A community involvement program for public information and
            education; and
      --Coordinated plans that conform to established CSEPP Guidance for
            each installation, State and Immediate Response Zone and
            Protective Action Zone, updated as CSEPP guidelines are revised
            or the jurisdiction's circumstances change.
        Over the last several years, it has become apparent that personal
    protective equipment for emergency support personnel, and
    decontamination equipment are also central to operations at many sites.
    Therefore, in addition to the eight CSEPP benchmarks, protective
    equipment and decontamination have been identified as preparedness
    components.

                              IMPROVEMENTS TO DATE

        Significant accomplishments have been achieved in community
    preparedness surrounding the stockpile sites. As demonstrated below,
    stockpile communities are clearly better prepared today than when FEMA
    entered the program in 1988.
    Staffing
        CSEPP funds approximately 280 staff at the State and county levels.
    Personnel include planners, trainers, health professionals, automation
    experts, and logistical personnel. Thus, CSEPP not only provides
    significant equipment to respond to a chemical event, but also pays for
    the staff required to manage the program on a daily basis.
    Planning
        Guidelines for emergency response preparedness to a chemical
    stockpile incident are contained in the Planning Guidance for the
    Chemical Stockpile Emergency Preparedness Program. The CSEPP Planning
    Guidance was most recently revised in May 1996 and covers all program
    areas.
        In addition, a variety of planning tools were developed for use by
    State, Tribal and local jurisdictions. These include a dispersion model
    to predict downwind hazards, an evacuation modeling system to assist in
    estimating evacuation times, and a protective action dose reduction
    estimator used to develop protective action strategies.
        CSEPP-specific emergency response plans have been developed by all
    participating CSEPP jurisdictions. The focus has now shifted to assure
    that all the plans are fully integrated among jurisdictions; and that
    the plans incorporate specific provisions to select appropriate
    protective actions, to protect special populations and to provide
    support to people who must evacuate.
        In addition to developing jurisdiction-specific emergency response
    plans, preparing for a CSEPP emergency requires that various
    jurisdictions integrate their response activities. The preferred method
    to ensure integration is to have agreements in place between the
    jurisdictions before a response is required. These agreements can cover
    response activities such as fire fighting, daily information exchange
    between the on- and off-post communities, and agreements between the
    community and the Red Cross to shelter evacuees. A CSEPP workgroup
    developed and distributed guidance for drafting and negotiating a
    variety of general and CSEPP-specific agreements.

                             ENHANCED RELATIONSHIPS

        CSEPP requires a partnership approach as evident in the numerous
    cooperative activities and planning efforts among the installations,
    the communities surrounding the stockpile sites and the States. Among
    the signs of increased cooperation are monthly or quarterly site-
    specific Integrated Process Teams that bring together all affected
    parties; an approved accident classification system; and dedicated
    communications links between the installations and local government.
    Finally, on- and off-post jurisdictions continue to participate in
    joint CSEPP training and exercises.

    Alert and Notification
        Alert and notification relies on two separate and distinct steps:
    (1) alerting the public; and (2) providing the public with information
    concerning appropriate protective actions. The CSEPP alert and
    notification system consists of a network of outdoor warning devices
    (generally voice capable sirens) covering populated areas of the
    Immediate Response Zones, which are used in conjunction with indoor
    devices in residential dwellings and special facilities.
        Major strides have been made in alert and notification since the
    inception of CSEPP. When CSEPP began, a majority of the States and
    counties employed some form of route alerting (such as loud speakers on
    roving vehicles), along with the Emergency Broadcast (now, Emergency
    Alert) System. Sirens were rare. Today, approximately 500 sirens, most
    with voice capability, have been installed and are operational within
    the CSEPP counties. These sirens are quicker and much more effective
    than previous methods for alerting the general public.
        Three types of indoor receivers are approved for use in CSEPP:
    specially designed Tone Alert Radios; National Oceanic and Atmospheric
    Administration weather radios; and Emergency Alert System-capable
    receivers. Regardless of the type of indoor radio selected--for
    purposes of this testimony, they will all be considered under the
    umbrella term Tone Alert Radios--the indoor alerting device must
    provide both an alert signal and verbal information. To date, nearly
    35,000 Tone Alert Radios have been installed CSEPP-wide.

    Emergency Operations Centers
        Gathering all officials with key command and control responsibility
    at a central location is critical to an effective response. Thus, CSEPP
    has provided funds to build or renovate approximately 20 Emergency
    Operations Centers. These centers combine physical facilities,
    equipment, personnel and procedures to facilitate coordinated
    management of a jurisdiction's emergency response. At this time, all
    centers are operational and conform to CSEPP standards. In fact, they
    also are being used for exercises and real-world emergencies.

    Communications Systems
        Improved communications networks exist in all Immediate Response
    Zones and Protective Action Zone counties. While communication methods
    vary from site to site, communication systems are fully operational at
    this time.

    Automated Data Processing
        Early on, integration of state-of-the-art automated data processing
    into CSEPP was considered to be essential to meet the maximum
    protection requirement. While every site has an operational, integrated
    Automated Data Processing system, selected installations currently use
    the Emergency Management Information System, while many off-post
    communities have switched to the newer Federal Emergency Management
    Information System.
        The Federal Emergency Management Information System allows for pre-
    incident planning, development of categories of protective action
    recommendations and daily electronic messaging. In the event of an
    emergency, the system will be used for chemical event notification,
    consequence analysis and automatic warning activation. It also contains
    plume-projection capabilities, a geographic information mapping system,
    and fully integrated electronic checklists and message boards.

    Personal Protective Equipment
        CSEPP avoids placing off-post emergency workers in harm's way. In
    fact, it is our policy that these workers never enter the chemical
    threat plume area as identified by our very conservative downwind
    hazard prediction software. However, as an added precaution, we have
    funded Level C Personal Protective Equipment ensembles that include a
    chemical protective suit, powered air purifying respirator, gloves and
    boots. This equipment, along with the necessary training, is provided
    to off-post emergency workers who, as an example, man traffic and
    access control points, and medical workers.
        To date, over 5,000 protective equipment ensembles have been
    provided to protect CSEPP's emergency workers.

    Decontamination Equipment
        In the event that emergency workers or the general population were
    exposed to liquid agent contamination, CSEPP provides training and
    equipment for decontamination. Approximately 45 fixed or mobile
    decontamination facilities have been provided to the communities.

    Collective Protection
        In some cases, special, congregate populations in the Immediate
    Response Zones may not be able to evacuate in a safe and/or timely
    fashion should a release occur. In such cases, CSEPP has funded
    enhancements to the facilities these special populations occupy. These
    collective protection enhancements are comprised of expedient (shelter-
    in-place kits) sheltering, enhanced sheltering, use of recirculation
    filters and over-pressurization.
        Expedient sheltering allows an individual to cover facility windows
    with plastic and seal the edges with tape, at the time of a chemical
    agent release. Enhanced sheltering involves permanent improvements to a
    facility's structure, such as additional caulking and improved
    ventilation closures. These deliberate enhancements are accomplished in
    advance as an emergency preparedness measure. Over-pressurization
    involves the installation of positive pressure ventilation and
    filtering systems in a facility to keep its ambient atmosphere free of
    agent.
        Over-pressurization is the most protective of collective protection
    measures, but it also is the most expensive, intrusive, and time
    consuming (in terms of construction) to implement. Decisions on which
    collective protection strategy to use are based upon such
    considerations as the extent of threat to the facility population, and
    ability to implement a strategy prior to destruction of the threat.
    CSEPP has funded over-pressurization for approximately 30 special
    facilities. Enhanced and expedient sheltering has been provided for
    many other structures.

    Training
        Training has been a valuable link among the counties, installations
    and the States. Twenty-two CSEPP specific training courses have been
    developed since CSEPP specific training was first initiated in 1990.
    These 22 courses provide instruction in six general categories: basic
    CSEPP orientation; self and casualty care; planning; protective action
    decision making; public affairs; and communications. Roughly 30,000
    people have enrolled in CSEPP-related emergency preparedness and
    response training programs. The majority of those trained are at the
    county level. While courses are developed at the National level for
    program-wide consistency, local participants remain the target
    audience. [Note: The number of enrollments is likely to exceed the
    actual number of people trained because some individuals have taken
    more than one course.]
        Each state has an Exercise and Training Officer who works directly
    with the counties and often with the installation to enable CSEPP
    personnel to meet the standards and procedures developed by the
    program. Based on needs identified by local officials, early training
    focused primarily on CSEPP orientation, planning, response, public
    affairs and medical preparedness. As new operating systems were
    installed and additional standards and procedures developed, training
    has addressed these new needs identified by local officials. For
    example, recent training covers decontamination, personal protective
    equipment, and use of auto injectors.

    Exercises
        The CSEPP exercise program tests local, installation and State
    emergency operations plans and the jurisdictions' capabilities to
    implement those plans. Through 1998, the mandatory annual exercises
    were always Federally conducted, managed, and evaluated to meet a
    certain set of criteria. Moreover, Federally Managed Exercises are
    designed and managed on-post by an Army co-director and off-post by a
    FEMA regional co-director. The extent of play was negotiated between
    the FEMA co-director and the off-post communities.
        In 1999, the exercise criteria were revised so that CSEPP
    communities can opt to design and conduct a state-led exercise every
    other year. This training oriented Alternate Year Exercise allows CSEPP
    communities to design site-specific exercises at the State and local
    level to focus on specific interests or concerns. To date, more than 70
    CSEPP exercises have been conducted.

    Public Information and Education
        Public education and information programs can present a major
    challenge. At the core of this challenge is our ability to earn the
    public's trust and confidence that the Federal, State and local
    partnership can and will protect those who live and work near the
    chemical weapons stockpiles.
        In 1988, few formal off-post chemical stockpile-specific public
    education and emergency public information programs were in existence
    in the eight stockpile communities. Over the years, FEMA has led a pre-
    emergency public awareness campaign targeting the public, community
    leaders, interested organizations, and the media. At the same time,
    FEMA has helped CSEPP communities and States establish procedures for
    timely, accurate, and coordinated dissemination of information to the
    public in the event of an actual stockpile emergency.
        Today, all CSEPP states and Immediate Response Zone counties have
    CSEPP-funded staff to handle public education and information needs.
    CSEPP educational and informational materials, such as calendars,
    brochures and information sheets, have been distributed throughout the
    CSEPP communities. Site-specific videos explaining alerting procedures
    and appropriate protective actions have also been distributed to each
    of the CSEPP sites.
        We worked hand in hand with the Umatilla Public Affairs group to
    craft a media campaign designed to educate citizens about protective
    actions. Survey results show that residents credit the outreach
    campaign for giving them a better understanding of protective actions,
    such as shelter in place. Oregon's successful outreach campaign soon
    will be implemented nationwide.
        The Joint Information Center is a permanent central facility
    activated in an emergency to facilitate the coordination and
    compatibility of information disseminated by the various agencies and
    jurisdictions to the public and media. These centers are an integral
    part of CSEPP. They operate in all CSEPP communities except Aberdeen,
    Maryland. Instead of establishing a permanent location, the Aberdeen
    community has chosen to center its media operations in a mobile unit.
    Samples of and guidance for Emergency Alert System messages have been
    distributed. The CSEPP counties also have pre-scripted protective
    action recommendation messages

                                   CHALLENGES

    Site-specific Issues
        At the federal level, we believe that we have provided the
    necessary funding and support to achieve the preparedness goals at all
    CSEPP sites. A series of meetings were held during the past year
    between FEMA, Army, and State and local officials in Anniston, Alabama.
    While much headway has been made to purchase additional sirens and Tone
    Alert Radios, initiate a local public education campaign, purchase and
    distribute shelter-in place kits and upgrade the Emergency Alert System
    for all Alabama CSEPP counties, several issues remain unresolved.
    Despite the constructive engagement of dialogue that has taken place,
    in some cases, State and local requests cannot be fully funded due to
    fiscal constraints imposed by life cycle cost estimates for the
    project. In other cases, State and local requests have been determined
    by independent analysis and study to provide no additional protection
    to the public.
        FEMA and the Army are committed to fulfilling commitments made as
    recently as November 2000 for public safety enhancements and to
    resolving the remaining issues. However, as technical studies have
    repeatedly shown, the risk to the public safety from continued storage
    of the chemical stockpile at the Anniston Chemical Depot far exceeds
    the risk of disposal operations, and the best way to ensure maximum
    protection of the citizens living in the Anniston community is the
    prompt and complete destruction of this stockpile without delay.
        In Madison County, Kentucky, community representatives help us to
    identify collective protection needs. Madison County has taken the lead
    in public education by visiting schools, and numerous community
    organizations. Eastern Kentucky University also plays a major role by
    providing technical assistance and training.

    Public Education
        It is clear that the public will continue to differ in their degree
    of involvement and interest in the program. The public's lack of
    involvement poses difficulties in educating them on what to do in the
    event of a CSEPP emergency. Specifically, on a number of occasions,
    residents surrounding the stockpile sites lacked knowledge regarding
    what to do in a CSEPP emergency. When questioned, many of these same
    people admit that while they are aware of the informational resources
    available in their communities (including public information
    storefronts), they have not availed themselves of this information. Our
    attempt to overcome this disconcerting trend is a central component of
    an aggressive national media strategy.

    Risk Communication
        Appropriate, effective and frequent dialogue with the affected
    public about risks is a continual focus for the CSEPP. How that
    information is interpreted or modified by existing beliefs remains
    problematic. To enhance risk communication efforts, we continually
    strive to discuss risk in a manner easily understood by the majority of
    the public.

    Collective Protection
        While the equipment and/or renovations required to complete
    expedient and enhanced sheltering are relatively inexpensive and can be
    installed rapidly, over-pressurization requires renovation of the
    entire ventilation and filtering systems and are extremely time
    consuming. Our goal is to protect public health and provide for their
    safety. However, since over-pressurization is a highly effective method
    to provide public protection, we support its use where warranted. Since
    continued storage is a much greater risk than destruction, the only way
    to eliminate the public's risk completely is to eliminate the
    stockpile. Therefore, we are concerned that delays in collective
    protection projects could increase public risk.

                                   CONCLUSION

        Nearly all major systems are in place and operational. Remaining
    improvements will be put in place to meet the congressional mandate of
    maximum protection as soon as possible. In the near future, all sites
    will enter the maintenance phase, which will continue until all the
    chemical weapons stockpiles are destroyed.
        FEMA is committed to ensuring the successful implementation of the
    CSEPP and protecting the health and safety of our citizens. This has
    been, and continues to be, a formidable task. As previously stated,
    ``maximum protection'' is the most stringent requirement of any
    emergency preparedness program directive, but we are confident that the
    Federal, State, Tribal, and local emergency management community can
    meet the challenge.
        Significant gains have been made since 1988 in the abilities of the
    CSEPP States, Tribal Nations and local jurisdictions to respond to a
    chemical weapons incident. These improvements aid CSEPP communities in
    protecting their citizens from the full range of natural and
    technological hazards they face. We are thankful to the CSEPP
    communities for their commitment and dedication to this important
    program, and pledge to continue to work with them until the risk of a
    chemical stockpile incident no longer exists.

    STATEMENT OF CRAIG WILLIAMS, DIRECTOR, CHEMICAL WEAPONS
                WORKING GROUP

        Senator Shelby. Mr. Williams.
        Mr. Williams. Yes, good morning, Mr. Chairman, members of
    the committee, Senator McConnell. I appreciate the opportunity
    to present testimony before you today. I am Craig Williams,
    Director of the Chemical Weapons Working Group, the CWWG. It is
    a coalition of over 160 organizations that support the
    destruction of chemical weapons in a manner that does not
    destroy the health of our communities or the environment and is
    implemented in an open and honest process.
        The Working Group is very supportive of the international
    campaign to ban these weapons and destroy them, the Chemical
    Weapons Convention. However, we do prioritize the wellbeing of
    our communities above any deadline, whether it be national,
    international, Congressional. Our communities come first.
        I come before you today with a message. The Program Manager
    for Chemical Demilitarization Office, the agency responsible
    for carrying out the chemical weapons program, in our opinion
    has run amok. Although I consider many individuals there to be
    hard-working and honorable people, the current structure and
    leadership in PMCD is more concerned with defending its own bad
    decisions than ensuring the maximum protection of the public,
    as directed by Congress.
        Mr. Chairman, members, the Guiness Book of World Records
    cites VX chemical agents as ``deadliest substance in the
    world.'' It is not a material that should be put in the care of
    an agency that chronically misrepresents facts to the Congress
    and to the American people. Yet I will present to you evidence
    of systemic misrepresentation of technical capability, schedule
    compliance, cost, permit fraud, fiscal mismanagement, and
    outright lies to the citizens and to you, the Congress of the
    United States.
        First let me begin with what PMCD claims is their
    capability to meet the chemical weapons deadlines, treaty
    deadlines. The schedule of disposal operations as offered to
    Congress in September of 2000 and repeated here today shows
    that the operational period for all four incineration sites,
    ending by January 2007, 3 months before the treaty deadline.
    Colorado and Kentucky, as has been pointed out, could vary from
    that. The 1999 status report submitted to Congress by PMCD
    shows Kentucky and Colorado being close to the deadline of
    April 2007, thereabouts, and again we heard that testified to
    this morning.
        In the packet of information that I provided to you is an
    internal report produced by PMCD which shows that these
    representations are knowingly false. The report, entitled
    ``Operations Schedule Task Force Report 2000, Final Report,''
    is accompanied by a memo to the project manager for chemical
    stockpile disposal and copied to every high-ranking person in
    PMCD. It also has a concurrence page that is signed off on by
    each task force member.
        Since the CWWG received this report through unofficial
    channels, we have consulted with three experts with a
    cumulative total of more than 50 years of experience in
    chemical weapons-related activities. Based on that report, the
    Chemical Weapons Working Group developed a methodology and a
    set of calculations which resulted in the actual operational
    schedule on the chart I show you now.
        If PMCD had any inclination to be honest with the
    communities or this committee, they would have presented a
    schedule to you in late 2000 or today that at least made some
    attempt to reflect accurately the knowledge of the true
    schedule. The chart I am showing you is in your packet. There
    is a chart also in your packet that was the schedule presented
    at a public meeting in Anniston, Alabama, on March 17th, 2001,
    5 months after this report internally was completed. That chart
    that was shown in Alabama in Anniston on March 17th presented
    to the citizens of Anniston, the emergency personnel, the local
    elected official, shows that Anniston will be completed in
    2005. Yet their internal report shows that operations will not
    conclude in Alabama until 2014, a 9-year difference.
        Senator Shelby. Why the lapse, the difference? Why?
        Mr. Williams. The difference is in the report. It is based
    on throughput projections based on actual operational
    experience at Johnston Island and in Utah and not just some
    projection that is basically mythical.
        The story is the same at other sites, as reflected in the
    summary chart. What is being told to the American people and
    the Congress simply is not the truth. No one wants these
    weapons destroyed more than we do that live closest to them.
    But we should not be forced to risk the health of our
    communities by burning weapons when safer technologies exist,
    and time and time and time again PMCD has claimed that
    incineration is the way to get the job done faster, the only
    way to meet the treaty deadlines.
        PMCD has repeatedly used these Congressional deadlines,
    treaty deadlines, to manipulate communities into accepting what
    we consider to be a dangerous technology. Now that we have a
    report from the agency's own leaders showing that incineration
    cannot make the treaty deadline or even come close--
    additionally, we now know that citizens will have to be exposed
    to toxic emissions from these incinerators much longer than the
    Army is representing, and all this is unacceptable.
        In the matter of cost, in the 1999 status report delivered
    to you, to Congress, PMCD stated the cost was $13.6 billion. In
    the 2000 report, as Senator McConnell pointed out, $14.1
    billion. But those representations, like schedule, are also
    false. Provided to you in your packet is a one-page memorandum
    received from an anonymous source in the government which
    reconstructs the findings of another internal PMCD document.
    This report is tightly held within PMCD, as was their schedule
    document. The CWWG has not been able to obtain the original.
    Perhaps the committee would request a copy.
        The summary page in your packet reflects what PMCD really
    knows about cost, and what does it tell us? That the actual
    projected cost of the program is not $14.1 billion, as you have
    been told, but actually closer to $24 billion. However, the
    2000 status report cited the life cycle cost at $14.1 billion.
        You will notice in your packet in that paper that there are
    two sections called ``Operational extensions cost overruns''
    and ``Projected operational extension cost overruns.'' The
    total of those two lines are $4.7 billion in known or likely
    cost overruns for operations alone, not construction, not
    CSEPP, not non-stockpile--strictly for construction--I'm sorry,
    simply for operations based on the schedule extension.
        Looking at the information from both documents, I submit to
    you that we have been intentionally misled about not only
    schedule but cost in this program, and this is also
    unacceptable.
        I would submit for the record this statement. It goes into
    areas of permit fraud, particularly in the State of Oregon,
    where we have yet another confidential memo that demonstrates
    the fact that PMCD when they submitted their permit application
    to the State of Oregon knew that what they were submitting to
    that State as representative of that facility and its
    operational capability, they knew it would not function.
        They are required under Federal law to present an accurate
    representation of what they plan to build and operate. Because
    of the time lines in the submission of the application both in
    Oregon, Alabama, and Arkansas, this same fraud was perpetuated
    at all three sites. The Army knew and the confidential memo
    states clearly, and I quote the regulating supervisor from
    Oregon where he says the Army knew in the late eighties that
    the dunnage incinerator would definitely not be able to process
    the material.
        They received the application in 1995. But the regulatory
    supervisor says: ``The Army has presented information to the
    Department of Environmental Quality (DEQ) that clearly shows
    they knew in 1994 that the dun would not meet the required
    performance standards.''
        If these people know that this is not going to meet the
    standards, they are required to modify their application.
    Otherwise they have committed fraud under RCRA, the Resource
    Conservation Recovery Act.
        I am going to briefly walk through the next issue, which is
    of great concern, and that is live agent releases. The Army is
    on the record as saying they have had four live agent releases
    out of the stacks of their facilities. In my testimony and in
    the packet I have given you is evidence of at least 15 live
    agent releases out of the stacks of these facilities that we
    can document. We say that there are very many more, but we are
    only presenting to the committee those that we can prove. They
    say 4, we say 15. We do not really know how many, but four is
    clearly a gross underestimation.
        In summary, I would just like to say what it all boils down
    to, Mr. Chairman and members of the committee, is a lack of
    accountability and oversight based on what I have presented to
    the committee both in oral and in written form in your packets
    today, that there is absolutely no question that these two
    components, accountability and oversight, are in short supply
    in this program.
        I have provided to you in your packets excerpts from over
    10 years of reports generated inside and outside of government,
    all reaching the same fundamental conclusion. That is, when it
    comes to PMCD no one is minding the store.
        The 2000 report from the Secretary of Defense to the
    Congressional defense committees on the management of the
    chemical weapons demil program states: ``CDP''--chemical
    disposal program--``requires a number of management
    improvements. These relate to leadership, organizational
    structure, public outreach, and current contracted support for
    the program.''
        They state: ``No one individual or office appears to have
    day to day authority or responsibility for the program, whether
    internally or in the chemical demil program's external
    relations with the public and the Congress. The Secretary
    recommends restructuring the organization.'' But the report
    also says merging the management of the programs would require
    amending legislation.
        Based on the evidence presented and much more that is in
    your packets, it should be clear that the chemical weapons
    disposal program must be reorganized to bring about honesty and
    accountability to the public, to the Federal decisionmakers. We
    in the communities feel this is of uppermost importance.

                               PREPARED STATEMENT

        We thank you for holding these hearings on this most
    serious matter. I will be glad to take any questions after the
    other panelists present.
        [The statement follows:]

                      PREPARED STATEMENT OF CRAIG WILLIAMS

        Good morning Mr. Chairman and Members of the Subcommittee. I
    appreciate the opportunity to present testimony before you today. My
    name is Craig Williams. I am the Director of the Chemical Weapons
    Working Group (the CWWG). The CWWG is a coalition of over 160
    organizations that support the destruction of chemical weapons in a
    manner which does not destroy the health of our communities and the
    environment, and is implemented in an honest, open process.
        The CWWG supports the Chemical Weapons Convention (CWC), the
    international campaign to rid the world of these weapons.
        However, we put the safety of workers and the public as a priority
    over any arbitrary deadline, for we live in the communities where the
    destruction is to take place.
        I come before you today with a message--that the Program Manager
    for Chemical Demilitarization (PMCD), the agency responsible for
    carrying out the chemical weapons program, has run amuck. Although I
    consider many individuals within the agency to be hard working and
    honorable people, the current structure and leadership in PMCD is more
    concerned with defending its own bad decisions rather than ensuring
    ``maximum protection'' of the public, as was directed by Congress.
        Mr. Chairman, Members of the Committee, the Guinness Book of World
    Records cites VX chemical warfare agent as the ``deadliest substance in
    the World.'' It is not material that should be put in the care of an
    agency that chronically misrepresents facts to the Congress and the
    American people. Yet, I will present to you evidence of systemic
    misrepresentation of technical capability, schedule compliance, cost,
    permit fraud, fiscal mismanagement and outright lies to citizens and to
    you, the Congress of these United States.
        First, let me begin with PMCD claims on their capability to meet
    CWC treaty deadlines.

    Schedule:
        The schedule of disposal operations as offered to Congress on
    September 30, 2000, shows the operational period at all four
    incineration sites ending by January 2007. Three months before the
    Treaty deadline. Colorado and Kentucky have no closure dates in this
    Report as the technology for these sites has yet to be determined. But
    the 1999 Status Report shows a Kentucky completion date of April 2007
    and Colorado at August 2007, using incineration.
        In the packet of information provided is an internal report
    produced by PMCD which shows that these representations are knowingly
    false. The Report, ``Operations Schedule Task Force 2000: Final
    Report'' is accompanied by a memo to the Project Manager for Chemical
    Stockpile Disposal and copied to every high ranking person in PMCD. It
    also has a ``concurrence `` page signed off on by each Task Force
    member.
        Since the CWWG, received this Report through unofficial channels,
    we have consulted with three experts with a cumulative total of more
    than fifty years of experience in chemical weapons related activities.
    Based on the Report, the CWWG developed a methodology and a set of
    calculations, which resulted in the actual operational schedule on the
    chart before you.
        If PMCD had any inclination to be honest with the communities or
    this Committee they would have presented a schedule to you in late 2000
    that at least made some attempt to reflect accurately its knowledge of
    the true schedule.
        But their deception goes further. The chart I am holding up is in
    your packet. It is the schedule presented at a Public Meeting in
    Anniston, Alabama on March 17, 2001--five months after the Task Force
    Report was completed. This chart presented to the citizens of Anniston,
    the emergency personnel and the local elected officials, shows an
    intentionally false schedule for Alabama. It clearly shows operations
    conclude in 2005. Yet their internal Report shows operations will not
    conclude in Alabama until 2014, a nine year difference!
        The story is the same at the other sites as reflected in the
    summary chart in your packet and displayed for you here.
        What is being told to the American people and the Congress simply
    isn't the truth!
        No one wants these weapons destroyed more than the citizens living
    closest to them. But we should not be forced to risk the health of our
    communities by burning the weapons, when safer disposal technologies
    exist. Time and time again, PMCD has claimed that incineration can get
    the job done faster; that it was the only way the United States can
    meet the 2007 CWC deadline.
        PMCD has repeatedly used Congressional deadlines, and now the
    Treaty deadline as a means to manipulate communities into accepting
    this dangerous incineration technology as the only way to met schedule.
        Now we have a report by the agency's own leaders, showing that
    incineration can't make the Treaty deadline--or even come close.
        Additionally, we now know citizens will be exposed to the toxic
    emissions from these incinerators for much longer than they are telling
    us.
        All this is unacceptable.

    Cost:
        In the 1999 Status Report to Congress PMCD stated the cost of the
    stockpile disposal program was $13.6 Billion; in the 2000 Status Report
    it was up to $14.1 Billion. I believe their latest publicly stated cost
    projection is $15.7 Billion. But, like the representations on schedule,
    this information is false.
        Provided to you is a one page memorandum received from an anonymous
    source in government which reconstructs the findings within another
    internal PMCD document.
        This report is as tightly held within PMCD, as was their schedule
    document. The CWWG has not been able to obtain the original. Perhaps
    the Committee would request a copy.
        This summary page reflects what PMCD really knows about cost--and
    what does it tell us? That the actual projected cost of this program is
    not the $15.7 Billion you and I have been told, but is actually closer
    to $24 Billion. However the 2000 Status Report cited the Life Cycle
    Cost Estimate at $14.1 Billion at a time when their true estimate was
    $24 Billion.

    Cost and Schedule Information Integration:
        Note the line items ``Operational Extension ``Known'' and
    ``Likely'' cost increases in the cost chart. It shows a total of $4.7
    Billion in additional costs for operations.
        Calculating the cost of schedule slippage and the figure is $4.21
    Billion.
        Looking at the information from both documents, I submit to you
    that we have all been intentionally misled about the schedule and cost
    of this program.

    Permit Fraud:
        In addition, PMCD has committed permit fraud under federal law. You
    now have a confidential memo sent from Oregon's chief regulator on the
    chemical demilitarization program to the Director of the Oregon
    Environmental Quality Commission.
        The memo's author points to the Army's ``commitment to treat
    secondary waste ``on-site,'' and then says, ``The Army made these
    commitments to secure issuance of the permit . . ..''
        Under the federal Resource Conservation and Recovery Act (RCRA)
    laws (42 USC Sec. 6925 & 40 CFR Sec. 270), applicants are required to
    accurately represent the capabilities of any facility they seek a
    permit for. Information that would substantively change the accuracy of
    the application is required to be submitted in a timely manner during
    the application process and before the permit is issued, if known about
    before issuance.
        The Oregon memo reads, ``We [Oregon DEQ] now know that the Army
    [PMCD] knew as early as the late 1980's that the Dunnage Furnace would
    definitely not be able to process carbon, and would only be able to
    process other wastes (primarily wood) with major design modifications
    to the DUN furnace and it's pollution abatement system.''
        It then reads, ``The application we received in 1995 includes the
    following statement, `On the basis of the incinerator design and the
    JACADS date, it is anticipated that the Dunnage Incinerator will meet
    the applicable incinerator performance standard.' ''
        The memo goes on to say, ``The Army (PMCD) has presented
    information to DEQ that clearly shows they knew in 1994 that the DUN
    would not meet the required performance standards.'' That Members of
    the Committee is permit fraud under federal RCRA law and PMCD should be
    held accountable.
        Furthermore, since the Alabama and Arkansas permit applications
    were also submitted on or after the Oregon application, PMCD repeated
    this illegality at those locations as well.

    Agent Releases:
        Over the years the CWWG has been tracking live chemical agent
    releases from the Army's incinerators in the Pacific and Utah. But how
    forthcoming has PMCD been about these releases? Consider the following:
        When asked about the number of live chemical warfare agent releases
    from their incineration facilities, PMCD's answer is, ``There have been
    a total of four releases, three at JACADS and one at TOCDF.'' But this
    is not accurate.
      --In a memo to Congressman Scotty Baesler in 1995, the Army
            acknowledges three JACADS releases, as well as 9 chemical agent
            releases at CAMDS, the Utah prototype incinerator.
      --A 1995 Report to EPA shows another release at JACADS.
      --A 1999 incident report submitted to the State of Utah said the
            alarms ``. . . did not confirm agent.'' But a subsequent
            internal report on the same incident concludes that agent did
            migrate outside.
        This internal report also shows how the agent confirmation methods
    used by PMCD, ``have allowed false assumptions to be made'' for the
    thousands of alarms that have rung off--always presented to the public
    as false alarms (ie: not confirmed for agent). We believe this is by
    design.
        Counting the May 8, 2000 Utah incident, rather than the four agent
    releases PMCD admits to, we have 15 that can be documented.
        This is unacceptable.

    Oversight and Accountability:
        What it all boils down to then Mr. Chairman . . . Members of the
    Committee . . . is a total lack of accountability and oversight. Based
    on what I have presented to this Committee in both oral and written
    form today there should be absolutely no question that both
    accountability and oversight are in short supply in this program.
        I have provided excerpts to you from over ten years of reports
    generated inside and outside of government all reaching the same
    fundamental conclusion--when it comes to chemical weapons disposal and
    PMCD--nobody is minding the store.
        In the 2000 Report of the Secretary of Defense to the Congressional
    Defense Committees on the Management of the Chemical Demilitarization
    Program it states, ``CDP requires a number of management improvements.
    These relate to leadership, organizational structure, public outreach
    and current contracted support for the program.'' and that, ``No one
    individual or office appears to have day-to-day authority or
    responsibility for the program whether internally or in the CDP's
    external relations with the public and the Congress.''
        The Secretary's recommendation: ``Restructuring of the
    organization.'' But the Report also said, ``Merging the management of
    the programs would require amending legislation.''
        Based on the evidence presented, it should be clear that the
    chemical weapons disposal program must be reorganized to bring about
    honesty and accountability to the public and the federal decision-
    makers.
        Thank You for holding these Hearings on this very serious matter.
        [Clerk's Note.--Due to the volume of the ``Operations Schedule Task
    Force 2000 Final Report'', the report will be placed in the
    subcommittee files.]

        Senator Shelby. Mr. Kinney.
        Mr. Kinney. I have been asked to defer to Mr. Henderson if
    that is okay for now.
        Senator Shelby. Mr. Henderson. Go ahead, Mr. Henderson.
    STATEMENT OF JAMES ELI HENDERSON, ASSOCIATE
                COMMISSIONER, CALHOUN COUNTY, ALABAMA
        Mr. Henderson. Mr. Chairman, Senator Shelby, members of the
    committee: My name is Eli Henderson and I am a Commissioner in
    Calhoun County, Alabama.
        Senator Shelby. Pull that mike up closer to you.
        Mr. Henderson. I am a Commissioner in Calhoun County,
    Alabama. My district includes all the area around the Anniston
    Army Depot (AAD) where 2,500 tons of deadly chemical agents are
    stored in the middle of a population center. There are more
    than 76,000 people residing in the Calhoun County immediate
    response zone, a radius of 9.5 miles around the chemical
    weapons stockpile at AAD.
        In sum, my constituents are at ground zero. Our commission
    is involved because we operate the local emergency management
    agency. The Army says it will destroy the 2,500 tons of deadly
    agents, but they refuse to assume any liability off post,
    refuse to make any final decisions regarding what emergency
    action our county should take, and are only willing to make a
    protective action recommendation based on a faulty guidebook
    they want us to implement.
        When the Army came to Anniston years ago to seek approval
    for the incinerator, I was one of the Army's biggest
    supporters. I am a former Marine. I believe in a strong
    national defense. I know how dangerous the agents stored at AAD
    are because for 10 years I worked at the depot wearing a gas
    mask and looking for leaking munitions, particularly M-55 GB
    rockets.
        When the debate raised about whether to build the
    incinerator or seek alternative technologies, I stood shoulder
    to shoulder with the Pentagon. I believed the Army when they
    told our community that they would provide us with maximum
    protection. I believed them when they said the incinerator was
    failproof. I believed them when they told us that the
    destruction would be done on a no-effect basis, meaning
    exposure to agent would be so low that we would have no adverse
    health effects. I believed them when they told us they would
    provide us with the Federal funds necessary to collectively
    protect our schools, hospitals, senior citizens centers, and
    nursing homes so that our citizens would be shielded from these
    deadly agents. I believed them when they told us that we would
    have sufficient time to evacuate.
        Events during the past few years have shown that I was
    wrong. The Army has misled the citizens of Calhoun County. The
    failproof technology they promised us does not exist. The
    incinerator at Johnston Atoll leaked five times. After a
    thousand design modifications, the Army constructed a second
    incinerator at Tooele, Utah. Despite promises the technology
    had been perfected, the Tooele incinerator leaked 42 milligrams
    of sarin on May the 7th of last year. The accident was due to a
    number of factors, but human error was the biggest problem, and
    human error can never be eliminated.
        The State of Utah shut the incinerator down for the fourth
    time in 5 years, and a month before the leak there were 38
    false alarms, a dozen of unknown origin. The operator illegally
    attempted to restart the furnace and waited 4 hours before
    notifying local emergency personnel. So much for a failproof
    technology.
        Regarding the no-effect standard, our community was always
    told we would never be exposed to agents at a level that would
    affect our health. That promise was made repeatedly during the
    Army's campaign to gain the needed support. That promise has
    continued while the contractor secured the construction permit.
        Then last year, after more than $750 million had been spent
    and the facility was more than 90 percent complete, we were
    given a copy of the Alabama CSEPP guidebook. This guidebook
    contains the protective action recommendations which the Army
    and FEMA want us to tell our citizens to take in the event of
    an accident. The guidebook caught us totally off guard because,
    instead of the no-effect standards we had promised our
    citizens, it contained a new, weaker standard of no deaths and,
    when you read the fine print in the footnotes, an even weaker
    standard of 1 percent lethality. So much for the promise of no
    effects.
        The guidebook contained another disturbing change. Instead
    of the long-promised evacuation option our citizens had been
    practicing for the past decade, the guidebook analyzed
    thousands of potential scenarios and concluded that in more
    than 95 percent of the situations studied for people living in
    the Anniston-Oxford-Saks-Weaver population center there would
    not be sufficient time to evacuate.
        The guidebook instead recommended we tell our citizens in
    the population centers to shelter in place. According to last
    year's letter from the depot's commander, shelter in place
    means--and I am quoting Colonel Williams--

        ``Stay calm. Stay inside or go inside if you are outside.
    Close all doors to the outside and close and lock all windows.
    Turn off all air conditioning, heating exhaust and ventilation
    systems with fans. Do not place the system on recirculate. If
    there is a fireplace, extinguish the fire and close the damper.
    Close as many internal doors as possible in home or other
    buildings. Close all garage doors in attached garages as well
    as doors normally left open for ventilation. Go into a central
    room with the least number of windows, such as a bathroom or
    interior closet. Take an AM-FM radio. Keep your radio on and
    tuned to an EAS station. Stay calm and move as little as
    possible. Activity increases the rate of breathing, which leads
    to greater exposure to any vapors which might seep into the
    room. If you suspect that vapor has entered your structure,
    hold a wet cloth over your nose and mouth.''

        At the same time, the guidebook recommends our Emergency
    Management Agency (EMA) tell citizens living outside the
    population center that they evacuate as soon as possible. Think
    about that. The leaking agent is so toxic the people 10, 20,
    37, 40 miles away need to evacuate, but people in downtown
    Anniston will be just fine if they go into their homes. What do
    you think the people being told to shelter in place are going
    to do if they hear their neighbors in the next zone being told
    to get away from the plume? The answer is they are going to
    run. Roads are all going to be clogged. Traffic accidents are
    going to occur. People will get sick and die.
        The guidebook is a very curious document. Neither the Army
    nor FEMA has been willing to publicly endorse it or validate
    its recommendations or assumptions. Yet they expect us to
    follow it in every respect. Last week all five commissioners
    sent a letter to Governor Don Seigelman asking him to halt the
    implementation of the guidebook. In that letter we pointed out
    that the guidebook was based on a series of false assumptions.
        The most troubling of these assumptions was the guidebook's
    use of the Army's totally outdated and inaccurate toxicity
    thresholds for sarin and VX. A 1997 National Research Council
    criticized the Army's proposal to drop the 50 percent lethality
    threshold for sarin for healthy male soldiers from 70
    milligrams per minute per cubic meter, which reflected the
    Army's overall kill strategy, to 35 milligrams per minute per
    cubic meter. The National Research Council (NRC) stated the 50
    percent lethality threshold should be dropped much further,
    noting 1 percent lethality for healthy male soldiers at 40
    milligrams per minute per cubic meter. The Army has never
    adopted the 35 milligram standard, nor has the guidebook.
        During a 1998 hearing before the Alabama Department of
    Environmental Management, Army witnesses admitted that if the
    NRC's proposed new toxicity thresholds for GB for healthy male
    soldiers were applied to the general population, the toxicity
    threshold would be much lower. Army witnesses also admitted
    that, based on the NRC's recommendations, if the 1 percent
    lethality threshold for GB were translated from healthy male
    soldiers to the general population the 1 percent lethality
    standard would be just 2 milligrams per minute per cubic meter.
        Yet the guidebook assumes the 1 percent lethality threshold
    to be at 10 milligrams per minute. Thus when the Army tells us
    to follow the guidebook's recommendations they are asking our
    citizens to be placed at risk of serious injury or even death.
    We cannot and we will not do that.
        The guidebook assumes that 38 facilities in Calhoun County,
    these schools and hospitals that I mentioned earlier, have been
    overpressurized, a vital factor in deciding whether citizens in
    a zone should be recommended to shelter or evacuate. Instead,
    FEMA has only authorized nine facilities, for collective
    protection, and with the incinerator less than a year away from
    the scheduled start work has started on only five, on only five
    pressurized facilities.
        The guidebook assumes no additional dosage to sheltered
    populations once they leave their home. That is true for sarin,
    but it is false for the other two agents stored at Anniston
    Army Depot, VX and HD. Plumes of VX or HD leave significant
    deposits of vapor and they create a very serious residual
    hazard for long periods of time.
        Finally, the guidebook assumes dosage levels are applicable
    to only healthy male adults or only healthy adults. This
    assumption means weaker regiments of the local population--
    children, senior citizens like myself, individuals with
    debilitating illnesses, people confined to a wheelchair or a
    bed--will likely be subjected to far more serious and
    potentially fatal dosages.
        Of course, the population in many sections of the county
    already face the added problem of having been exposed to large
    amounts of the Polychlorinated Biphenyls (PCB's) over an
    extended period of time, thereby raising the real issue of
    damaged immune systems.
        Mr. Chairman, our commission has developed a 13-point
    checklist which we expect the Army and FEMA to implement if we
    are ever going to assist the Federal Government in providing
    maximum protection. The list is a sensible one and the items
    are not negotiable. The Army knows all the items on the list,
    as do the members of the Alabama delegation.

                               PREPARED STATEMENT

        If we cannot get these safety items funded, we cannot go
    forward in this effort. We will have to turn the keys to the
    local EMA over to the State or to FEMA and let them decide what
    to tell our citizens. But we will reserve our right to take
    legal action to make certain the maximum protection standard is
    met.
        [The statement follows:]

                   PREPARED STATEMENT OF JAMES ELI HENDERSON

        Mr. Chairman, Senator Shelby, and Members of the Subcommittee, my
    name is Eli Henderson, and I am a Commissioner in Calhoun County,
    Alabama. My district encompasses the area around the Anniston Army
    Depot where 2,500 tons of deadly chemical agents are stored in the
    middle of a population center. There are more than 76,000 people
    residing in the Calhoun County Immediate Response Zone, a radius of 9.5
    miles around the chemical weapons stockpile at AAD.
        In sum, my constituents are at ground zero.
        Our Commission is involved because we operate the local Emergency
    Management Agency. The Army says it will destroy the 2,500 tons of
    deadly agents, but they refuse to assume any liability off-post, refuse
    to make any final decisions regarding what emergency action our county
    should take, and are only willing to make a protective action
    recommendation based on a faulty Guidebook they want us to implement.
        When the Army came to Anniston years ago to seek approval for the
    incinerator, I was one of the Army's biggest supporters. I am a former
    Marine. I believe in a strong national defense. I know how dangerous
    the agents stored at AAD are because for ten years I worked at the
    Depot maintaining the stockpile.
        When the debate raged about whether to build the incinerator or
    seek alternative technologies, I stood shoulder to shoulder with the
    Pentagon. I believed the Army when they told our community they would
    provide us with maximum protection. I believed them when they said the
    incinerator was failproof. I believed them when they told us the
    destruction would be done on a ``no effects'' basis, meaning exposure
    to agent would be so low that we would have no adverse health effects.
    I believed them when they told us they would provide us with the
    federal funds necessary to collectively protect our schools, hospitals,
    senior citizens centers and nursing homes so that our citizens would be
    shielded from these deadly agents. And I believed them when they told
    us that we would have sufficient time to evacuate.
        Events during the past two years have shown that I was wrong. The
    Army misled the citizens of Calhoun County. The failproof technology
    they promised us does not exist. The incinerator at Johnson Atoll
    leaked five times. After a thousand design modifications, the Army
    constructed a second incinerator at Tooele Utah. Despite promises the
    technology has been perfected, the Tooele incinerator leaked 42
    milligrams of sarin on May 7th of last year.
        The accident was due to a number of factors, but human error was
    the biggest problem, and human error can never be eliminated. The State
    of Utah shut the incinerator down for the fourth time in five years. In
    the month before the leak there were 38 false alarms, a dozen of
    unknown origin. The operator illegally attempted to restart the furnace
    and waited four hours before notifying local emergency personnel.
        So much for a failproof technology.
        Regarding the ``no effects'' standard, our community was always
    told we would never be exposed to agents at a level that would affect
    our health. That promise was made repeatedly during the Army's campaign
    to gain the community's support. That promise continued while the
    contractor secured the construction permit. Then, last year, after more
    than $750 million had been spent, and the facility was more than 90
    percent complete, we were given a copy of the Alabama CSEPP Guidebook.
    This Guidebook contains the protective actions recommendations which
    the Army and FEMA wants us to tell our citizens to take in the event of
    an accident.
        The Guidebook caught us totally off guard because instead of the
    ``no effects'' standard we have promised our citizens, it contained a
    new, weaker standard of ``no deaths''. And, when you read the fine
    print in the footnotes, and even weaker standard of ``1 percent
    lethality''.
        So much for promise of no effects.
        And the Guidebook contained another disturbing change. Instead of
    the long promised evacuation option our citizens had been practicing
    for the past decade, the Guidebook analyzed thousands of potential
    scenarios and concluded that, in more than 95 percent of the situations
    studied for people living in the Anniston-Oxford-Saks-Weaver population
    center, there would not be sufficient time to evacuate. The Guidebook
    instead recommended we tell our citizens in the population centers to
    ``shelter in place''.
        According to last year's letter from the Depot's Commander, shelter
    in place means--and I am quoting:
      --Stay Calm
      --Stay inside, or go inside if you are outside
      --Close all doors to the outside, and close and lock all windows
      --Turn off all air conditioning, heating exhaust and ventilation
            systems and fans. Do not place the system on recirculate
      --If there is a fireplace, extinguish the fire and close the damper
      --Close as many internal doors as possible in home or other buildings
      --Close all garage doors in attached garages, as well as door
            normally left open for ventilation
      --Go into a central room with the least number of windows, such as a
            bathroom or interior closet
      --Take an AM/FM radio. Keep your radio on and tuned to EAS station
      --Stay calm and move as little as possible. Activity increases the
            speed of breathing, which leads to greater exposure to any
            vapors which might seep into the room
      --If you suspect that vapor has entered your structure, hold a wet
            cloth over your nose and mouth.
        At the same time, the Guidebook recommends our EMA tell citizens
    living outside the population center that they evacuate as soon as
    possible. Think about that. The leaking agent is so toxic that people
    ten, twenty, thirty even forty miles away need to evacuate, but people
    in downtown Anniston will be just fine if they go into their homes.
    What do you think the people being told to ``shelter in place'' are
    going to do so if they hear their neighbors in the next zone being told
    to get away from the plume? The answer is they are going to run. Roads
    are going to be clogged. Traffic accidents are going to occur. People
    will get sick and die.
        The Guidebook is a very curious document. Neither the Army nor FEMA
    has been willing to publicly endorse it or validate its recommendations
    or assumptions. Yet they expect us to follow in every respect. Last
    week all five Commissioners sent a letter to Governor Don Siegelman
    asking him to halt the automation of the Guidebook. In that letter, we
    pointed out the Guidebook was based on a series of false assumptions.
    The most troubling of these assumptions was the Guidebook's use of the
    Army's totally outdated and inaccurate toxicity thresholds for Sarin
    and VX.
        A 1997 National Research Council Report criticized the Army's
    proposal to drop the 50 percent lethality threshold for Sarin for
    healthy male soldiers from 70 milligrams per minute per cubic meter,
    which reflected the Army's ``overkill'' strategy, to 35 milligrams per
    minute per cubic meter. The NRC stated the 50 percent lethality
    threshold should be dropped much further, noting 100 percent lethality
    for health male soldiers at 40 milligrams per minute per cubic meter.
    The Army has never adopted the 35 milligram standard, nor has the
    Guidebook.
        During a 1998 hearing before the Alabama Department of
    Environmental Management, Army witnesses admitted that, if the NRC's
    proposed new toxicity thresholds for GB for healthy male soldiers were
    applied to the general population, the toxicity threshold would be much
    lower. Army witnesses also admitted that based on the NRC's
    recommendations, if the one percent lethality threshold for GB were
    translated from healthy male soldiers to the general population, the
    one percent lethality standard would be just two milligrams per minute
    per cubic meter.
        Yet, the Guidebook assumes the one percent lethality threshold to
    be 10 milligrams per minute. Thus when the Army tells us to follow the
    Guidebook's recommendations, they are asking our citizens to be placed
    at risk of serious injury or even death. We cannot--and we will not do
    that.
        The Guidebook assumes that 38 facilities in Calhoun County--those
    schools and hospitals I mentioned--have been overpressurized, a vital
    factor in deciding whether citizens in a zone should be recommended to
    shelter or evacuate. Instead FEMA has only authorized nine facilities
    for collective protection and, with the incinerator less than a year
    away from the scheduled start, work has started on only five.
        The Guidebook assumes no additional dosage to sheltered populations
    once they leave their home. That is true for Sarin, but it is false for
    the other two agents stored at AAD: VX and HD. Plumes of VX or HD leave
    significant deposits of vapor and they create a very serious residual
    hazard for long periods of time.
        Finally, the Guidebook assumes dosage levels are applicable to only
    the healthy adults. This assumption means weaker regiments of the local
    population--children, senior citizens, individuals with debilitating
    illnesses, people confined to a wheelchair or bed--will likely be
    subjected to far more serious and potentially fatal dosages.
        Of course, the population in many sections of the County already
    face the added problem of having been exposed to large amounts of PCBs
    over an extended period of time, thereby raising the real issue of
    damaged immune systems.
        Mr. Chairman, I ask unanimous Consent that the Commission's April
    18, 2001 letter to Governor Seigelman detailing our objections to the
    Guidebook's automation be including into the record at this point.
        Mr. Chairman, our Commission has developed a thirteen point check
    list which we expect the Army and FEMA to implement if we are going to
    assist the federal government in providing maximum protection. The list
    is a sensible one and the items are not negotiable. The Army knows all
    the items on the list, as do the members of the Alabama delegation. If
    we cannot get these safety items funded we cannot go forward in this
    effort. We will have to turn the keys to the local EMA over to the
    State or to FEMA and let them decide what to tell our citizens. But we
    will reserve our right to take legal action to make certain the maximum
    protection standard is met.
        Finally, Mr. Chairman, our Commission has requested impact funds to
    the County to compensate us for having endured 2,500 tons of deadly
    agents for the past forty years, for the continuing negative effects
    they have on our local economy and our business development, and for
    the risks we will assume over the next decade during the destruction
    process. Your colleague, Senator Sessions, is working hard at the Armed
    Services Committee on this issue. I realize the real power resides here
    in this Subcommittee which controls every dime the Pentagon spends.
        Our senior Senator who sits on this subcommittee and who had the
    wisdom to ask for this hearing will, I believe, ultimately be able to
    resolve all of these thorny problems.
        I thank you and would be happy to answer any questions you may
    have.

        Senator Stevens [presiding]. Can I interrupt there? Have
    you got a list? How much money are you asking for?
        Mr. Henderson. I have got one more page, Mr. Chairman.
        Senator Shelby. He said how much money? How much money?
        Mr. Henderson. That we are asking for?
        Senator Stevens. Yes, sir.
        Mr. Henderson. Can I read this last page and I will get
    into that?
        Senator Stevens. Yes, sir.
        Mr. Henderson. They compensate us for having endured 2,500
    tons of deadly nerve agent for the last 40 years, for the
    continuing negative effects they have on our local economy and
    our business development, and for the risks we will assume over
    the next decade during the destruction process, your colleague
    Senator Sessions is working hard on the Armed Services
    Committee on this issue. I realize the real power resides right
    here in this committee, which controls every dime the Pentagon
    spends. Our senior Senator, who sits on this committee and who
    had the wisdom to ask for this hearing, will I believe
    ultimately be able to resolve all these thorny problems.
        I thank you and would be happy to answer any questions you
    may have. How much money are we asking for?
        Senator Stevens. Yes, sir.
        Mr. Henderson. That is a tough question. We estimated for
    the impact funds alone for our community to provide some
    infrastructure for the evacuation routes and some other items
    would be around $70 million. Please take into consideration,
    Mr. Chairman, that we have got, again, we have got a huge--not
    a huge population I guess related to Washington, D.C., but in
    our area, as Senator Shelby well knows, we have got 75,000
    people roughly in a 10-mile radius.
        We have a terrible time--we would have a terrible time
    evacuating our community as things now exist.
        Senator Stevens. How many communities are within that zone
    of harm, just one?
        Mr. Henderson. This whole area right here is in--our
    community is in the pink zone practically. We have got six pink
    zones and the people actually in our community right there, it
    is densely populated. Probably the whole community or at least
    I think six zones are in the pink zones. So I would say 65,000
    people are in that immediate area.
        Senator Stevens. Are you seeking that amount of money
    annually or what is the time frame for that money?
        Mr. Henderson. That would be nice, if we could get that. We
    would have to talk to our EMA director and my fellow
    commissioners. We have talked about this issue for years. That
    would be something we would probably hopefully get with Senator
    Shelby about and maybe Senator Sessions and Congressman Reilly,
    that we could sit down and talk about hopefully.
        Senator Stevens. Senator, I would like to talk to you about
    that.
        I do think you make a tremendous point about preparedness.
    We cannot depend totally upon FEMA to be able to finance that
    unless we put some money somewhere to help you. But I would
    like to talk about that, Senator.
        Do you have a similar problem, Senator McConnell?
        Senator McConnell. Yes.
        Senator Stevens. How many communities are within the zone
    of harm there in your State?
        Senator McConnell. Well, it is not too far from Lexington,
    which has by Kentucky standards a very large population. What
    is the population of Madison County, Craig?
        Mr. Williams. In the IRZ, the immediate response zone, it
    is about 55,000 people.
        Senator Shelby. Similar.
        Mr. Henderson. Very similar.
        Mr. Williams. To what Mr. Henderson referred to as the pink
    zone.
        Senator McConnell. Yes. We have got an elementary school
    right there as well.
        Senator Shelby. Mr. Kinney, do you want to go, or Ms.
    Lindell?
        Mr. Kinney. Ladies first.
        Senator Shelby. Your written statement was made part of the
    record. If you all want to just move along and give a synopsis
    of your statement, it would move the committee along.

    STATEMENT OF BRENDA LINDELL ON BEHALF OF FAMILIES
                CONCERNED ABOUT NERVE GAS INCINERATION,
                ANNISTON, ALABAMA

        Ms. Lindell. Mine is not that long. I talk slowly, though,
    because I am from the South.
        I want to thank you, Senator Shelby. This hearing has been
    a godsend, and I pray that you help us. My name is Brenda
    Lindell. I have been a resident of Anniston, Alabama, for more
    than 19 years. I am a founding member of Families Concerned
    About Nerve Gas Incineration, otherwise known as ``Families.''
    I have studied and been involved with the issue of chemical
    weapons for more than 9 years. During this time I have learned
    a lot about issues that I never thought I would in raising
    three children in Anniston.
        So the citizens of the surrounding area of the Anniston
    Army Depot where the chemical weapons are stored have no say
    into how the chemical weapons were to be destroyed. Until 1991
    when the Army declassified the stockpile, many citizens,
    including myself, were unaware that chemical weapons were even
    stored at Anniston Army Depot.
        By the time PMCD, the program manager for chemical
    demilitarization, had decided to use on-site incineration as
    the method to destroy the chemical weapons, instead of seeking
    input from the community, the Army made a decision, then
    presented it to us as a done deal.
        Coming from the perspective of a concerned citizen of
    Alabama, hearings are held merely as a formality. Input from
    citizens does not make a difference. For example, in Utah there
    was one public hearing held for all the sites to be permitted
    to burn PCB's in the incinerator. The EPA told us a hearing
    would be held in Anniston after the permit was issued, not
    before.
        Raising concerns after the fact does not seem to have any
    effect. So if outside input does not have any effect, what
    about internal input from the people who work on the project
    but have concerns? There have been three high level managerial
    whistleblowers that have come out of the Tooele facility.
        The first was Steve Jones, who was chief of public safety;
    Trina Allen, chief of hazardous waste operations; and Gary
    Harris, the chief permit coordinator. In addition to that, Gary
    Millar, the EG&G plant manager of the facility, wrote a lengthy
    12-page letter voicing his concerns about the safety of the
    facility, citing it as an accident waiting to happen. All of
    these have stated that the facility is not safe and have voiced
    numerous safety concerns.
        Unfortunately, the Tooele facility continues to operate. So
    it would appear that external and internal forces cannot really
    do anything to change how these thousands of tons of chemical
    weapons are disposed. This almost juggernaut approach is seen
    in the permitting process itself. Instead of a pass-fail test
    like we all had in schools, incinerators are allowed to attempt
    trial burns repeatedly until they are successful. Then they are
    permitted to burn for years on this one-time trial result.
        No chemical weapons incinerator has ever successfully
    passed a PCB trial burn. The Utah incinerator has been plagued
    by technical problems, chronic malfunctions, and repeated
    shutdowns. This is typical of incineration performance
    nationally.
        The Anniston area is a community that is already heavily
    contaminated with PCB's due to Monsanto, now known as Solutia,
    illegally dumping the chemical for decades. Many citizens are
    already burdened with PCB's. Lead and mercury are also a
    contamination problem there. Recently we learned that the
    agents to be burned in the incinerator are at least twice as
    toxic as originally believed.
        Taken together, this poses severe problems for more than
    the 75,000 people who live in the immediate response zone. Even
    if everything goes as promised with the incinerator, we will be
    exposed to many toxins and chemical agents being emitted from
    the incinerator for around 4 years, according to Army
    statistics. According to the data supplied by PMCD in the
    environmental impact statement, there is a list of more than
    100 toxins that will be emitted from the incinerator in good
    working order.
        Information obtained by the Chemical Weapons Working Group
    indicates that the incineration process in Anniston will take
    longer than the Army has told us, probably three times as long.
    The implications of this prolonged exposure to toxins are a
    major health concern. The incinerator operates using large
    volumes of heat and air flowing through it. If there is ever an
    accident, there is nothing that can be done to stop the agent
    from reaching the community. The alarms will sound when the
    agent leaves the stack. There will not be enough time for
    people to evacuate and there will be chaos and panic. The
    community will have less than 8 minutes to respond.
        If an accident occurs during rush hour, people will not
    have time to get to an enclosed structure. Maybe this is why
    PMCD recently changed their standard from no deaths instead of
    no exposure.
        The best way to protect the community is to use a
    technology that has no smokestack. Incineration uses high
    temperature, high pressure. Neutralization uses low
    temperature, low pressure. Neutralization allows for the
    operator to be able to make a test release. An incinerator does
    not. Neutralization allows for analysis of effluents each step
    of the way before these effluents are released into the
    environment. Neutralization is a controllable technology.
    Incineration is not. By being controllable, neutralization
    allows for the lowest potential of releasing toxins into the
    environment.
        As someone that lives in the immediate response zone in
    Anniston, my family and I have the most at stake in the Federal
    Government's decision about how these chemical weapons are
    destroyed. I urge you to consider the health and safety needs
    of our community, but this should be done at more than my
    urging. The Federal Government has a statutory duty to provide
    maximum protection.
        Senator Shelby, you mentioned early about costs. This has
    no budgetary constraints. Maximum protection was not mandated
    by budget. It has an open budget for the health and safety of
    the citizens. This subcommittee should make sure that that duty
    is met.
        I believe only a safer method of destruction than
    incineration can accomplish this goal. Fortunately, we do have
    time if we act now. All reports today by SBCCOM, which is
    Soldier Biological Chemical Command, show the storage
    capabilities are stable through the year 2043. This allows time
    for implementation of a safer technology. It does not mean you
    have to start over from scratch. The incinerator can be
    retrofitted. The alternative technologies were designed with
    that in mind, so they can use the footprint of the incinerator.
    The safety of our community outweighs everything.

                               PREPARED STATEMENT

        Just a P.S. from earlier comments about the Centers for
    Disease Control (CDC): It is funded by the Pentagon.
        Thank you very much.
        [The statement follows:]

                      PREPARED STATEMENT OF BRENDA LINDELL

        Mr. Chairman. Senator Shelby, and Members of the Subcommittee: My
    name is Brenda Lindell. I have been a resident of Anniston, Alabama,
    for more than 19 years. I am a founding member of Families Concerned
    About Nerve Gas Incineration, or Families. I have studied and been
    involved with the issue of chemical weapons for more than 9 years.
    During this time, I have learned a lot about issues I never thought I
    would face while raising our three children in Anniston.
        The citizens of the surrounding area of Anniston Army Depot (AAD),
    where the chemical weapons are stored, had no say into how the chemical
    weapons were to be destroyed. Until 1991 when the Army de-classified
    the stockpile, many citizens were unaware that chemical weapons were
    even stored at AAD. By that time PMCD (Program Manager for Chemical
    Demilitarization) had decided to use on-site incineration as the method
    to destroy the chemical weapons. Instead of seeking input from the
    community, the Army made a decision, then presented it to us as a done
    deal.
        Coming from the perspective of a concerned citizen in Alabama,
    hearings are held merely as a formality. Input from citizens does not
    make a difference. For example, in Utah there was one public hearing
    held for all the sites to be permitted to bum PCBs in the incinerator.
    The EPA told us a hearing would be in Anniston after the permit was
    issued, not before. Raising concerns after the fact doesn't seem to
    have any effect.
        So if outside input doesn't have any effect, what about internal
    input from people who work on the project but have concerns? There have
    been 3 high level, managerial whistleblowers that have come out of the
    Tooele facility. They are: Steve Jones, chief of safety operations,
    Trina Allen, chief of hazardous wastes operations, and Gary Harris,
    chief permit coordinator. In addition, Gary Millar, the EG&G plant
    manager, wrote a lengthy letter voicing his concerns about the safety
    of the facility, citing it as an accident waiting to happen. All have
    stated that the facility is not safe, and have voiced numerous safety
    concerns. Unfortunately, the Tooele facility continues to operate.
        So it would appear that external and internal forces can't really
    do anything to change how these thousands of tons of chemical weapons
    are disposed. This almost juggernaut approach is seen in the permitting
    process itself. Instead of a pass/fail test like we all had in school,
    incinerators are allowed to attempt trial bums repeatedly until they
    are successful. Then they are permitted to bum for years on this one-
    time trial result. No chemical weapons incinerator has ever
    successfully passed a PCB trial bum. The Utah incinerator has been
    plagued by technical problems, chronic malfunctions, and repeated shut
    downs. This is typical of incineration performance nationally.
        The Anniston area is a community that is already heavily
    contaminated with PCBs due to Monsanto illegally dumping the chemical
    for decades. Many citizens are already burdened with PCBs. Lead and
    mercury also are a contamination problem there. Recently, we learned
    the agents to be burned are at least twice as toxic as originally
    believed.
        Taken together this poses severe problems for the more than 75,000
    people who live in the Immediate Response Zone.
        Even if everything goes as promised with the incinerator, we will
    be exposed to many toxins and chemical agents being emitted from the
    incinerator for around 4 years. According to the data supplied by PMCD,
    there are more than 100 toxins that are listed in the Environmental
    Impact statement. However, information obtained by the Chemical Weapons
    Working Group indicates that the incineration process in Anniston will
    take longer than the Army has told us--probably 3 times as long. The
    implications of this prolonged exposure to these toxins are a major
    health concern.
        The incinerator operates using large volumes of heat and air
    flowing through it. If there is ever an accident, there is nothing that
    can be done to stop the agent from reaching the community. The alarms
    will sound when agent leaves the stack. There will not enough time for
    people to evacuate and there will be chaos and panic. The community
    will have less than 8 minutes to respond. If an accident occurs during
    rush hour, people will not have time to get to an enclosed structure.
    Maybe this is why PMCD recently changed their standard to ``no deaths''
    instead of ``no exposure''.
        The best way to protect the community is to use a technology that
    has no smokestack. Incineration uses high temperature/high pressure.
    Neutralization uses low temperature/low pressure. Neutralization allows
    for the operator to be able to make a test-release. An incinerator does
    not. Neutralization allows for analysis of effluents each step of the
    way, before these effluents are released into the environment.
    Neutralization is a controllable technology. Incineration is not. By
    being controllable, neutralization allows for the lowest potential of
    releasing toxins into the environment.
        As someone living in the IRZ in Anniston, my family and I have the
    most at stake in the federal government's decision about how these
    chemical weapons are destroyed. I urge you to consider the health and
    safety needs of our community. But this should be done at more than my
    urging. The federal government has a statutory duty to provide
    ``maximum protection''. This subcommittee should make sure that duty is
    met. I believe only by a safer method of destruction than incineration
    can this be accomplished.
        Fortunately we have time if we act now. All reports to date by
    SBCCOM (Soldier, Biological, Chemical Command) show safe storage
    capabilities through the year 2043. This allows time for implementation
    of a safer technology. It does not mean you have to start over from
    scratch. The incinerator can be retrofitted. The safety of the
    community outweighs everything.
        Thank you.

        Senator Stevens. Mr. Kinney.

    STATEMENT OF RUFUS KINNEY ON BEHALF OF FAMILIES
                CONCERNED ABOUT NERVE GAS INCINERATION,
                ANNISTON, ALABAMA

        Mr. Kinney. Mr. Chairman, Senator Shelby, members of the
    committee: My name is Rufus Kinney and I am an English
    instructor at Jacksonville State University in Jacksonville,
    Alabama, which is in Calhoun County about 12 miles downwind of
    the incinerator. I greatly appreciate the opportunity to
    address you this morning and I thank you for all of your
    efforts in this vital issue. I especially want to thank you,
    Senator Shelby, for responding to the concerns of your
    constituents on this issue and for your positive leadership on
    this issue. Thank you so very much.
        You know I have a lengthy statement and I am a verbose
    person, so I am going to cut the whole thing in two real quick.
    I know that is what you want me to do.
        One brief note about expenses. The incinerator sits at the
    Anniston Army Depot today, its construction virtually complete.
    U.S. taxpayers have spent about a billion dollars for this
    facility that was originally supposed to cost $350 million. It
    contains multi-million dollar systems that have already been
    abandoned, already obsolete, never going to be used--a
    monumental waste of taxpayers' money--reduction area, dunnage
    incinerator, never going to be used.
        The gelled rockets, they are going to wing it on the gelled
    rockets. Let me put it this way. There is no equipment designed
    to treat gelled rockets in this incinerator. Yet 30 percent of
    the rockets stored at Anniston are gelled rockets. So good luck
    on the efficiency for that.
        This incinerator is already demonstrably, already
    demonstrably inefficient, out of date, a huge waste of money,
    and it has yet to become operational. That is one thing I
    wanted to say.
        A second thing is about safety concerns. My concerns about
    safety have already been articulated very well by Mr. Henderson
    and Mrs. Brenda Lindell. I just want to say this as a father
    and a husband with a family. I am deeply concerned about my
    family and especially my wife and my children, my 12 year old
    and my 10 year old, with this business we can expect exposure
    but no fatalities.
        What if my children get exposed but do not die? What kind
    of suffering are they going to go through, for how long and at
    what cost? That is just not acceptable.
        As far as response in an emergency, that has already been
    articulated, but I want to show you the Army's plan. Here is my
    shelter in place kit, and the Army has suggested distributing
    these to the 75,000 people, however many, 30,000 homes in
    Calhoun County that are downwind of this incinerator. Mr.
    Henderson has already read the instructions, but I will show
    you what is inside. $130 million went to pay for this.
        We have got duct tape and plastic and scissors. Now, the
    duct tape and plastic appear to be of the finest quality. The
    scissors look a little cheap, but I guess you have got to cut
    corners wherever you can.
        This is maximum protection for 75,000 people, and 35,000 of
    them live within a 2-mile radius of this incinerator.
        Senator Shelby. What would the duct tape be, to tape up the
    doors and windows?
        Mr. Kinney. Well, you can use the duct tape to hold the
    plastic sheeting over the doors and windows, and then you put a
    wet towel under the doors and have a wet rag.
        Senator Shelby. Is this all going to be in 8 minutes or 5
    minutes?
        Mr. Kinney. In 8 minutes. So I do not know if you carry it
    with you. I do not know if we carry it with us when we are
    outside. We are not told what to do if we are outside.
        Senator Shelby. Mr. Chairman.
        Senator Stevens. Could I ask one question? Are there any
    kind of gas masks that are effective against these gases?
        Mr. Kinney. Mr. Williams can answer that. I know that they
    decided a long time ago not to give us gas masks. They were
    talking about giving gas masks to everybody in Calvert County
    and they decided they would not do that.
        Mr. Henderson. Mr. Chairman, I would like to answer that
    question. I wore a gas mask for 10 years. You have got to be
    personally fitted for a gas mask. You cannot just get one and
    put it on. Everyone would have to be personally fitted. Almost
    half the population could not wear one because of the breathing
    apparatus.
        Senator Stevens. Well, I asked that. You know, during the
    Gulf War some of us were in Israel when the Scuds came in and
    they put gas masks on us and put us in a room and they sealed
    the inside like you're suggesting, with duct tape and plastic.
    We stayed there for a few hours, until they told us that there
    was no nerve gas in what was exploded outside.
        But the implication was that those gas masks would do some
    help. Have they ever explored that as far as you all are
    concerned?
        Mr. Kinney. They talked about it several years ago and
    rejected the idea, and I do not think it would be real good for
    public relations (PR) for the community: You move to Anniston,
    Alabama, and get your gas mask. Who is going to move to
    Anniston, Alabama, and get their gas mask and live their life
    in that way? I think you see what I mean. It is just not--it
    cannot be done.
        Senator Stevens. How many are going to stay there after
    this hearing?
        Mr. Kinney. Not many. They are already leaving. They are
    already leaving, and that is part of my--I will go to the
    second part of my address. The thing that I have to talk about
    that has not been discussed very much is--and this is my second
    major area of concern besides safety. It has to do with the
    possible negative health effects on the people and their
    children of constant low-level emissions of poison from the
    smokestack during routine operations of the incinerator.
        The stack emissions sheet, which I am holding up and which
    you have in your record, was done at Johnston Atoll Chemical
    Agent Disposal System (JCADS) for the final testing for
    Anniston, so these are the emissions that would be coming out
    of the stack during routine operations of the incinerator.
    These emissions include PCB's, dioxins, furines, heavy metals
    including lead and mercury and arsenic, trace amounts of the
    nerve agents GB, HD, HT, and VX, and hundreds if not thousands
    of other poisons.
        This will impact our health directly and a large number of
    agribusinesses, mostly Tyson Chicken farms and beef cattle
    farms and a major food processing plant in Anniston. Anniston
    is a city that has already been visited by a great deal of
    poisoning over the years as a result of the operations of a
    Monsanto, now Solutia, chemical plant in the same part of town
    as the incinerator, a plant that produced PCB's for several
    decades. Anniston is the most PCB-poisoned community in
    America.
        I am holding up the June 19, 2000, issue of U.S. News and
    World Report, and you also have that in your packet, whose
    cover story says: ``Kids at Risk: New Evidence Points to a Link
    Between Environmental Poisons and Learning Disabilities.'' This
    cover story focuses on Anniston and explores the chemical
    poisoning of our children. Scientific studies now link
    environmental poisons with learning disabilities in America's
    children stemming from PCB poisoning, lead poisoning,
    pesticides, and mercury poisoning.
        Regarding Anniston in particular, the article reports that
    the Monsanto-Solutia plant for decades ``saturated west
    Anniston with polychlorinated biphenols.'' PCB's have long been
    linked to cancer. More recently, however, researchers have
    discovered evidence tieing the compounds to a lack of
    coordination, diminished Intelligence Quotient (IQ), and poor
    memory among children.
        Anniston has the highest level of PCB contamination in
    children ever tested anywhere. Why in the name of sanity would
    the community with the Nation's highest level of PCB poisoning
    have its children subjected to a constant flow of PCB's from an
    additional source, 24-7, 365 days a year, for how many years?
        Anniston has become what is known as a human sacrifice
    zone. A human sacrifice zone is a community that is deeply
    poisoned, has long been poisoned, cannot seem to get itself
    cleaned up, and can only seem to attract poisoning industries.
    A human sacrifice zone is shunned by professional people and
    families with children.
        This is what caused Anniston to land at the bottom of the
    heap of American cities a couple of years ago in a survey done
    by Money magazine. We are posing population. There is
    widespread poor health. I could talk about it for an hour. Home
    and property values are plummeting. Anniston was the only major
    city in Alabama to lose population during the decade of the
    1990's. See, we are already losing it. Anniston is becoming an
    even more unhealthy place to live. Do not do this to the
    children of Anniston.

                               PREPARED STATEMENT

        I am now ready to conclude. I urge the U.S. Senate to pull
    back from this incineration program and let advanced
    alternative technologies have every opportunity to show what
    they can do. Give ACWA full funding. We need technology that
    can do the job safely, with minimal risks to the community, and
    that will be a closed loop system that by law cannot release
    poisons into the community.
        Senators, thank you for doing the right thing from the
    citizens of Alabama, especially for the children.
        [The statement follows:]

                       PREPARED STATEMENT OF RUFUS KINNEY

        Mr. Chairman, Senator Shelby, and Members of the Committee: My name
    is Rufus Kinney and I am an English instructor at Jacksonville State
    University in Jacksonville, Alabama.
        Mr. Chairman, I'd like to begin with a brief mention of the
    incinerator itself as it sits at the Anniston Army Depot, its
    construction virtually complete. The U.S. taxpayers have spent about $1
    billion for a facility that was originally supposed to cost $350
    million. That incinerator is not what was originally permitted by the
    Alabama Department of Environmental Management in June 1997. Systems at
    the plant, costing millions, have already been abandoned. This is a
    monumental waste of taxpayers' money. There is no data to show that
    this so-called state-of-the-art incinerator can safely destroy jelled
    rockets, yet jelled rockets compose 30 percent of the rockets stored in
    Anniston. The Army plans to stick the jelled rockets into the
    deactivation furnace, which was designed to be utilized for other
    purposes, and good luck! When jelled rockets are burned, the feed rate
    will go down from 40 per hour to 1 per hour, and that's about as
    inefficient as you can get. This kind of incinerator is demonstrably
    inefficient, out-of-date, a huge waste of money, and it has yet to
    become operational.
        The two major areas of concern I have are first, safety, and
    second, the possible negative health effects on the people of Anniston
    and Calhoun County, and their children, of constant low-level emissions
    of poisons from the smokestack during routine operations of the
    incinerator.
        Regarding safety, or emergency response, a November 1985
    Congressional Directive (Public Law 99-145) relating to the chem
    weapons demilitarization program requires ``maximum protection for the
    environment, the general public, and the personnel who are involved in
    the destruction of the lethal chemical agents and munitions.'' This
    mandate has been reaffirmed several times and has the force of law.
    But, on June 20, 2000 in Montgomery the Alabama Department of
    Environmental Management (ADEM) denied the incinerator permit appeal of
    Families Concerned about Nerve Gas Incineration and Serving Alabama's
    Future Environment.
        One of the most important aspects of the appeal was its insistence
    on a strong, workable contingency plan in case of an accident at the
    incinerator, a plan that would insure the safety of our children.
        In total contradiction of Public Law 99-145, cited above, ADEM's
    unconscionable action freed the Army of any legal requirements to
    respond in an emergency beyond simply advising residents to stay at
    home, close windows, and turn off central air. The Calhoun County
    Commissioners' meeting with Army representatives on June 14, 2000,
    which I attended, clearly affirmed that indeed the Army intends to do
    nothing more than the absolute minimum. Thirty-five thousand people
    live within a two-mile radius of the incinerator. Seventy-five thousand
    reside in the Immediate Response Zone, a radius of 9.2 miles. After
    spending $120 million of taxpayer money in Alabama on this program,
    here is your protection: duct tape and plastic. Lt. Col. Paula Lantzer
    said, ``They seem a bit simplistic, but we've done studies and these
    are very effective shelters.''
        After ten years of telling us to evacuate in an emergency, at the
    last minute, and with construction on the incinerator 80 percent
    complete, ten years of emergency planning are thrown out the window
    just as the Army learned that ADEM will absolve it of any further
    responsibilities. Thanks, ADEM. Now we can sit in our homes and hold
    our breath in an emergency! The Alabama Department of Management is a
    disgrace.
        Special assistant to the Secretary of the Army Denzel Fisher
    shocked everyone present at the Commissioners' meeting with the
    revelation that the Army expects people will be exposed to agent, but
    likely won't die from it, at least at the time of the initial exposure.
    ``Our objective is to have zero fatalities. That doesn't mean we won't
    have exposure,'' stated Fisher. In view of the nerve agent release at
    Tooele 1 month earlier, which we were guaranteed would never happen,
    could never happen, I suppose Fisher felt it would be best to be
    candid.
        Personally, I wonder what it would be like for my children to be
    exposed, yet survive. What kind of pain and illnesses might they
    endure. and for how long and at what cost emotionally and financially?
    And who would pay for their medical expenses?
        There's more. For ten years the Army promised us that if we'd just
    let them build the incinerator they'd never attempt to bring in one
    ounce of additional stuff to burn in it. But in fact, just 1 month
    after they received ADEM's permit to build in June 1997, PMCD
    spokesperson Tim Garrett wrote a letter on U.S. Army stationery to ADEM
    secretly seeking permission to bring in off-site conventional and non-
    stockpile military munitions to burn in the incinerator. And he got a
    lovey-dovey response from Gerald Hardy of ADEM, a pure attempt to turn
    Anniston into a toxic dumping ground. This same Tim Garrett continues
    to smile in our faces while he tells us to trust the Army!
        ADEM's damnable ruling also lets Washington Group International, or
    Westinghouse Anniston as it is known locally, off the hook. The
    incinerator permit appeal requested reasonable compensation from the
    contractor to victims of incinerator accidents, but ADEM disallowed it,
    without discussion. The total liability of the contractor has been set
    at one million dollars, the exact same amount as the liability
    insurance held by my home appliance repairman for his one-man company!
    Yet Washington International Group just announced it was not going to
    file its annual 10-K form. Their stock has taken a nosedive and they
    are on a credit watch.
        This has left the Calhoun County EMA in a quandary. What kind of
    workable, coherent plan can they use now? And how can they carry out
    any kind of plan in view of the constant denials of their requests for
    funding, staffing, and materials?
        Toxicity levels are underestimated and out-of-date. Thus, risk
    assessments can't validly be made by our local EMA.
        The Calhoun County EMA originally requested that 133 buildings be
    over pressurized to use in an emergency. That number was reduced by the
    Army and FEMA to 37 and then to 9! And it includes only one school.
        This is outrageous. This is not maximum protection. It isn't
    protection at all--and through no fault of our county EMA or our county
    commissioners. It just won't work. It seems to me that when the U.S.
    Army chose to store these munitions on the edge of a large city instead
    of some place where no one lives, it was taking upon itself an
    obligation to be absolutely certain that no civilian resident ever be
    harmed by living in proximity to those munitions. Obviously the Army
    has utterly failed to carry out this responsibility.
        My second major area of concern has to do with the possible
    negative health effects on the people, and their children, of constant
    low level emissions of poisons from the smokestack during routine
    operations of the incinerator. The stack emissions include PCB's;
    dioxins; furans; heavy metals including lead, mercury, arsenic; trace
    amounts of the nerve agents GB, HD/HT, and VX; and hundreds if not
    thousands of other poisons. This will impact our health directly and a
    large number of agribusinesses, mostly Tyson chicken farms and beef
    cattle farms, and a major food processing plant.
        Anniston is a city that has already been visited by a great deal of
    poisoning over the years. As a result of the operations of a Monsanto
    (now Solutia) chemical plant in the same part of town as the
    incinerator, a plant that produced PCB's for several decades, Anniston
    is the most PCB-poisoned community in America. I am holding up the June
    19, 2000 issue of U.S. News and World Report whose cover story says.
    ``Kids at Risk: New Evidence Points to a Link between Environmental
    Poisons and Learning Disabilities.'' This cover story focuses on
    Anniston, and explores the chemical poisoning of our children.
    Scientific studies now link environmental poisons with learning
    disabilities in America's children stemming from PCB poisoning, lead
    poisoning, pesticides and mercury poisoning.
        Regarding Anniston in particular, the article reports that the
    Monsanto (Solutia) plant for decades ``saturated west Anniston with
    polychlorinated biphenyls. PCBs have long been linked to cancer. More
    recently, however, researchers have discovered evidence tying the
    compounds to lack of coordination, diminished IQ, and poor memory among
    children.'' Anniston has the highest level of PCB contamination in
    children ever tested! Why in the name of sanity would the community
    with the nation's highest level of PCB poisoning have its children
    subjected to a constant flow of PCBs from an additional source?
        Anniston has become what is known as a human sacrifice zone. A
    human sacrifice zone is a community that is deeply poisoned, has long
    been poisoned, can't seem to get itself cleaned up, and can only seem
    to attract poisoning industries. A human sacrifice zone is shunned by
    professional people and families with children. This is what caused
    Anniston to land at the bottom of the heap of American cities.
        We're losing population. There is widespread poor health. Home and
    property values are plummeting. Anniston was the only major city in
    Alabama to lose population during the decade of the 1990s. Anniston is
    becoming an unhealthy place to live.
        Don't do this to the children of Anniston.
        I urge the U.S. Senate to pull back from this incineration program,
    and let advanced alternative technologies have every opportunity to
    show what they can do. Give ACWA full funding. We need technology that
    can do the job safely, with minimal risk to the community, and that
    will be a closed-loop system that by law can not release poisons into
    the community.
        Senators, thank you for doing the right thing for the citizens of
    Alabama, especially for the children.

        Senator Shelby. Mr. Salter, has there been a change of
    policy from zero exposure to zero fatalities?
        Mr. Salter. Sir, our policy statement number one, which is
    more than 10 years old, indicates that there be no deaths as
    the policy.
        Senator Shelby. What about exposure? You know, we have been
    talking about exposure.
        Mr. Salter. Well, we are certainly concerned about the
    exposure of the residents.
        Senator Shelby. How concerned?
        Mr. Salter. Concerned enough to work very closely with the
    residents in and around the Anniston area to do whatever is
    possible to protect them in the event that there is any kind of
    release.
        Senator Shelby. What should be the central issue that you
    are facing here? Safety, is it not?
        Mr. Salter. Yes.
        Senator Shelby. Safety, safety, safety.
        Mr. Salter. And public education, sir.
        Senator Stevens. And what?
        Senator Shelby. And public education?
        Mr. Salter. Yes, sir.
        Senator Shelby. Well, is that to alleviate their fears? Why
    do we not just deal with safety and then if that is part of it,
    fine.
        Mr. Salter. We certainly want to make sure that the public
    is protected. But a major part of that protection is the public
    understanding the full picture and what to do in the event
    there is a release.
        Senator Shelby. Mr. Kinney, do you have a comment?
        Mr. Kinney. Would you repeat that?
        Mr. Salter. I said, the public safety certainly is one of
    our utmost concerns in the CSEPP program. However, a major part
    of readiness of the community in the event there is a release
    is the public's understanding of what to do and the importance
    of taking that protective action.
        Senator Stevens. Mr. Salter, you heard the statistic Ms.
    Lindell gave about the leaks from the other places in Utah and
    Johnston Island?
        Mr. Salter. There have been a number of stories about leaks
    at different locations, leakers inside of the bunkers, yes, and
    we are very concerned about the risks of storage as much as the
    risk of incineration. Risk of storage is greater.
        Senator Stevens. Who has the authority to order the place
    shut down until it is perfected?
        Mr. Salter. That would have to be the Department of the
    Army or Department of Defense, sir.
        Senator Shelby. The Secretary of Defense?
        Mr. Salter. The Secretary of Defense, thank you.
        Senator Stevens. Well, I do not know about the rest of you.
    I am scared to hell by what you guys have just told me. I do
    not understand this policy, and I thought we had straightened
    this out years ago as a matter of fact.
        How long since FEMA examined this place for the contingency
    that might bring you into operation there? You would have a
    contingency job there as an emergency management agency if
    something went wrong down there, would you not?
        Mr. Salter. Yes, sir, we would.
        Senator Stevens. How long since you examined this place?
        Mr. Salter. We have examined this place continuously over
    the last 10 years and work very closely with the State and the
    counties in putting the necessary protection in place.
        Senator Stevens. Do you think that box that was just
    demonstrated to us was enough to deal with this as far as the
    families are concerned?
        Mr. Salter. I think, depending on the location of the
    residents, yes, sir, I do.
        Senator Shelby. What about children on the playground?
        Senator Stevens. Eight minutes? You can put that thing up,
    that plastic up inside a house in 8 minutes?
        Mr. Salter. Sir, again it depends on the location of the
    residents, and 8 minutes is not necessarily the true picture.
    In the case of those residences that are closer to the depot,
    in a letter that we have provided to the county commissioners
    on the 1st of February we indicated that we should include in
    their shelter in place kits recirculation filter fans and
    public education telling them to create a safe room in their
    residence because they simply would not have time to do
    anything else.
        In addition to that, sheltering has been proven in a number
    of instances in the past 10 to 20 years, that sheltering is a
    protective action that works.
        Senator Stevens. Any policy other than no emissions is
    unacceptable. Any policy that puts people at risk of using
    these instructions you have got is unacceptable. I am going to
    tell you, I think we ought to all have a meeting with the
    Secretary of Defense to tell him this is unacceptable.
        I remember the hearings on Johnston Island and one of the
    effects there was--that was on an island and there was very
    little at risk. This is an enormous risk that I did not realize
    your people were being exposed to. I am going to tell you, it
    is unacceptable to us.
        I can pledge to you both, Kentucky and Alabama, we will get
    you some money so your people can start getting really ready
    for this. But meanwhile the best thing we can do is to tell
    them to shut the place down until we are sure of what we are
    doing. Time is not the factor here. Time is not a factor.
        Senator Shelby. Mr. Chairman, I appreciate that.
        Senator Stevens. I think this continued exposure to your
    people is unacceptable.
        Senator Shelby [presiding]. I appreciate your comments, but
    my concern has always been the safety of the people. That
    should be paramount, period.
        Senator McConnell.
        Senator McConnell. So, gentlemen, thank you very much.
    Thank you for asking for this hearing.
        Senator Shelby. Thank you.
        Senator McConnell. Well, the symbol of the Army's concern
    about public input is the fact that they all got up and left
    before your panel sat down to testify.
        I am sure you all heard Mr. Bacon say in response to a
    question from Senator Shelby that the demilitarization process
    was 100 percent transparent. All of you who agree with that,
    raise your hand.
        Mr. Williams, in your testimony you referred to the task
    force report in 2000, which I have here in my hand, which you
    have provided to the subcommittee. Are you suggesting to us
    that the Army has evidence that none of these sites can meet
    the Chemical Weapons Convention deadlines?
        Mr. Williams. Yes, Senator, that is exactly what this
    report states. The treaty, as you know, requires us to complete
    operations by April 2007.
        Senator McConnell. Let me interrupt just for the benefit of
    the people in the audience. This is a report, internal report
    prepared by the Army, right?
        Mr. Williams. Yes, Senator.
        Senator McConnell. I see about one, two, three, four, five,
    six, seven, eight, nine, ten signatures on this of people
    inside.
        Mr. Williams. Yes, sir.
        Senator McConnell. This report says what about meeting the
    Chemical Weapons Convention deadlines?
        Mr. Williams. It says for the 2007 deadline that none of
    these sites will meet it, other than JCADS of course.
        Senator McConnell. You were here earlier this morning and
    you heard the witnesses say that, as I recall, all but two of
    the sites would meet the Chemical Weapons Convention.
        Mr. Williams. That is what I heard, Senator. That is what I
    have been hearing for a number of years.
        Senator McConnell. So your thought is that they are saying
    one thing inside and another thing when they come up here and
    talk to us?
        Mr. Williams. Absolutely, Senator.
        Senator McConnell. How much will the delays outlined in
    this report that I am holding cost over the life of the
    program?
        Mr. Williams. Well, as I referred to in my statement, we
    have a reconstructed summary document, which is also an
    internal document, on cost. It is in your packet. I do not have
    a graph of it, but I do have a graph of its implications on the
    right. Sorry, Senator Shelby might not be able to see it.
        According to their own life cycle cost estimates, which
    they reassured you this morning are holding pretty steady at
    $14.1 billion, they anticipate known and likely cost growths of
    over $10 billion.
        Senator Shelby. Excuse me a minute.
        Mr. Williams. Yes, sir.
        Senator Shelby. You used the phrase ``they reassured'' us.
    I think they tried to reassure us, but I do not have any
    reassurance.
        Mr. Williams. I understand. They attempted to reassure you,
    sir.
        Senator McConnell. You stated in your testimony, Mr.
    Williams, that the Army told the citizens of Anniston, a number
    of whom we have with us here--I might say parenthetically, I
    started my life in Alabama in Athens, Alabama, north of you. I
    spent the first 8 years of my life there. So it is always great
    to have witnesses who speak without an accent.
        You stated in your testimony that the Army told the
    citizens of Anniston in March of this year, 5 months after
    this, the internal memo, was complete, that their facility
    would be closed by 2006. Was this an honest mistake, an
    oversight, or how would you characterize it?
        Mr. Williams. Well, Senator, I would characterize it as a
    result of a public relations campaign that is funded to $30
    million to try and convince folks that this program is
    workable. It is not just in Anniston. I have that chart that
    was presented that date. It is in your packet here. I asked one
    of my colleagues in Oregon, another chemical weapons
    construction site, to go down to the public outreach office and
    pick up the latest information there, and this was done on
    Thursday last week. They have a chart as well from the outreach
    office in Oregon that clearly states operations will take from
    2001 to 2005.
        So it is no mistake that they are circulating this
    information around these communities while their internal
    documents show that Alabama will not get completed until 2014
    and Oregon will not get completed until 2012. I do not think
    there is any misinterpretation on their part of what they are
    talking about.
        One of the problems with transparency or one of the
    realities of transparency is you do not have to get secret
    documents smuggled out to concerned citizens in order to find
    out what is really going on.
        Senator McConnell. That is what in fact happened here,
    right, is somebody inside, who will obviously remain nameless,
    has provided you this report which contradicts most of what was
    said earlier this morning here, right?
        Mr. Williams. I believe it contradicts everything that was
    said here, Senator, yes.
        Senator McConnell. What I do not understand--and Mr.
    Williams, you and I have been involved in this issue as long as
    I have been in the Senate--is what the problem is in not just
    being truthful and forthcoming about this. I have never
    understood the internal thinking that led to this effort to
    obfuscate the facts here. It seems to me it would be in
    everybody's best interests, both the citizens and the Army, to
    have a completely transparent process from beginning to end.
        I am mystified by this. Have you ever figured out why this
    continues?
        Mr. Williams. Well, my wife has the degree in that area,
    sir, so I would not want to speculate in any professional
    manner. But I can tell you this, that in the 15 years that I
    have been monitoring this program there has been an increased
    mentality inside PMCD to defend the image of this program. I do
    not know if that is based on careers inside the program, if it
    is based on just the military mentality, which generally--and
    being a Vietnam veteran myself, I certainly understand that in
    a battlefield situation when your superior gives you an order
    you salute and you respond promptly. You do not sit down and
    negotiate.
        But this is not a battlefield situation. But I think the
    military mentality.
        Senator McConnell. Also, do you think a problem has been
    the lack of interest at the top in DOD, a feeling of sort of
    out of sight, out of mind, do not bother me with this?
        Mr. Williams. Absolutely, Senator. The chain of command in
    this program is that PMCD reports to one higher authority once
    a month. They say: How is it going? They say: It is going fine.
    They say: We will see you next month. There is no oversight,
    day to day management accountability of this program. PMCD is
    outside the chain of command in a way that the Army Inspector
    General (IG) report itself in 1998 said was contrary to Army
    philosophy. They are outside of any normal chain of command and
    that is a big problem with this program. They have nobody. This
    program needs some adult supervision, sir, if I might say.
        Senator McConnell. Finally, given the difficulty we had
    getting to the point of actually getting alternate technologies
    looked at within the Department, we will not recount how
    difficult all that was. You were pushing for it for years. I
    was pushing for it for years. We finally got it.
        Do you think that people within the Department doing that
    review of alternative technologies for disposal now have a
    chance to prevail in a final decision, or do you still think
    within the building it is so tilted in favor of on-site
    incineration that even if these alternate technologies make
    sense they are not likely to be pursued?
        Mr. Williams. First of all, let me thank you for your
    efforts. I know that it has been a very uphill struggle to try
    to force these folks to look at safer ways to dispose of the
    materials. I appreciate that. Many, many of us appreciate that.
        My response would be that as long as PMCD is using these
    kinds of schedules and representing costs, schedule, technical
    capability, and all of these factors inside the building to the
    defense acquisition review and those kinds of people who are
    going to make the final decisions, instead of these kinds of
    information, which is what they really know about it, I am very
    concerned that that process will be subverted simply by a
    continued pattern of misinformation that is going to lead to an
    eventual appropriations level that is at this point almost off
    the chart based on what they really know, and that these kinds
    of factors are going to play into a decision that will
    perpetuate this construction program because it has been
    misrepresented.
        On the other part of your question, sir, I feel the
    alternative technologies program, not only from a public
    involvement perspective, but clearly these technologies that
    have a hold, test and release capability, which means as the
    process goes along there is no process to stop, you can analyze
    what you have got, have you achieved the destruction levels you
    want; if you have not, you continue the process until you reach
    them, and you control the material until you get to the point
    where the material is easily handleable or can be then released
    to a landfill or whatever, but you have control.
        With these baseline construction technologies, as we have
    seen repeatedly--and they have misrepresented to everyone about
    the number of agent releases that have come out of the stacks--
    once you put that material in, it is out of your control. That
    is a major consideration. These alternatives do not have that
    problem, sir.
        Senator McConnell. Well, we are going to get to the
    critical decision point here shortly, right?
        Mr. Williams. Yes, sir.
        Senator McConnell. What did we hear this morning about that
    decision?
        Mr. Williams. That should be May of next year. That appears
    to be on track. The representation by Mr. Bacon that they can
    get any where close to 2007 in Blue Grass is a pure fiction.
        Senator McConnell. Let me just say in closing, they better
    have a good justification for their final decision or we are
    going to be--and Senator Shelby I am sure will agree with
    this--we are going to be interested in hauling them back up
    here again to give some rationale for their decision if it does
    not pass the public smell test.
        Mr. Williams. Well, sir, I would repeat and I will end. It
    depends on which side of their mouth they are talking out of,
    Senator. If they talk out of the mouth with the real facts, I
    think we will get to a good decision. If they talk out of the
    side of their mouth that is driven by public relations, public
    affairs, and propaganda and manipulation, then we will get to a
    decision that will land us right back here.
        Senator McConnell. Let me just conclude my part of this by
    thanking all of you for your community activism here. We would
    not have known about this had you all not gotten active and had
    taken the time to study it and brought it to our attention. So
    you are all to be congratulated for the great work you are
    doing on behalf of both of these communities, which have
    legitimate reasons for deep concern about how this process is
    going to go forward.
        Senator Shelby. Thank you, Senator McConnell.
        I just want to say, I think I brought up the word
    ``transparency'' earlier and I think it goes to the heart of
    this, because it has got to be trust, trust between the people
    who are going to destroy these very, very, very dangerous
    chemical weapons and the people that it could affect in God
    knows how many ways and the children.
        But I also want to thank you for coming to the town meeting
    that I had in Jacksonville several months ago, when you asked
    me would I talk to Senator Stevens about holding this committee
    meeting. I think it was very instructive.
        Mr. Williams. Thank you so much for doing that.
        Senator Shelby. But whatever we do, I believe this is an
    Appropriations Committee. This is where we fund things, and
    this is very expensive to do this, but nothing is more
    expensive than to lose people's lives or destroy their lives,
    destroy their communities, I think. Senator Stevens, the
    chairman of the full committee and the subcommittee here,
    pointed out we should leave no stone unturned as far as safety
    is concerned. I believe this. Senator Stevens has asked me to
    do this on behalf of the committee.

                              SUBCOMMITTEE RECESS

        I want to thank you again for your testimony and also
    announce that the full Committee on Appropriations will meet
    next to consider Plan Colombia a week from today. The
    subcommittee now stands recessed. Thank you.
        [Whereupon, at 12:23 p.m., Wednesday, April 25, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                             WEDNESDAY, MAY 9, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:05 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Inouye, Leahy, Dorgan,
    and Feinstein.

                             DEPARTMENT OF DEFENSE

                                    Reserves

    STATEMENT OF MAJOR GENERAL THOMAS J. PLEWES, CHIEF,
                ARMY RESERVE AND COMMANDING GENERAL, UNITED
                STATES OF AMERICA RESERVE COMMAND,
                DEPARTMENT OF THE ARMY

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. This morning the subcommittee will hear
    from the leadership of the Reserve components. Because of the
    number of witnesses, the hearing will be conducted in two
    parts.
        We will hear from two panels. First, the leaders of the
    four Reserve forces, followed by the National Guard, so let me
    welcome Major General Thomas Plewes, Chief of the Army Reserve,
    Rear Admiral John Totushek, Chief of the Naval Reserve, Major
    General Dennis McCarthy, Director, Marine Corps Reserve,
    Affairs Division and Major General James Sherrard, Chief of the
    Air Force Reserve.
        I congratulate each of you for your recent nominations for
    third stars. I think there is an increasing role and importance
    to the Reserve in our military strategy, and we welcome this
    move. All of your forces continue to make substantial
    contributions to the total force, and this committee wants to
    work with you as much as possible to address readiness and
    modernization requirements to the Guard and Reserve.
        We have witnessed the results of these investments when the
    tremendous participation now of Guard and Reserve forces in all
    recent overseas contingency operations, as well as disaster
    relief and major training events throughout the United States.
    I think it is of tremendous importance to all of us that the
    Reserve forces and Guard forces are used in this manner. We
    still, however, have some problems, problems about tempo,
    recruiting and retention, and modernization infrastructure
    demands, and it is not going to be easy to deal with it.
        My partner will be along in a little while. We will listen
    to his statement, but there is no question that we are going to
    try and assess your priorities and make sure that they are
    fully met. Each of your organizations continue to contribute a
    great deal to the total force. Let me start off first by
    calling on General Plewes.
        General Plewes. Mr. Chairman, thank you for the opportunity
    today to talk to you on behalf of the citizen soldiers of the
    Army Reserve.
        Last month, the Army Reserve celebrated its 93rd birthday.
    This is a force that began with 160 doctors, and we have not
    forgotten our roots even as we have grown and matured. We
    remain an organization of trained professionals with civilian-
    acquired skills and talents to serve the Army, and we are able
    to protect and sustain ourselves in danger.
        We are very busy these days, and we are proving every day
    that you can mobilize quickly and deploy swiftly. Wherever the
    Army has gone in recent years, the Balkans and Central America,
    the Gulf, East Timor, so has the Army Reserve. As of this year
    we have sent over 15,000 members of the Army Reserve to Bosnia
    and Kosovo. Today, over 2,000 of us are deployed around the
    world, offsetting the operational tempo of a very busy Active
    Army.
        To meet this high operational tempo, the soldiers and units
    of the Army Reserve work very hard to be trained and ready. As
    a matter of fact, our readiness levels are the highest in our
    history, up 8 percent over the last 2 years alone. We are
    showing also that we are able to recruit a force of high-
    caliber citizens we need to accomplish our missions, and we are
    able to retain proven soldiers we need to meet our growing
    responsibilities.
        After several years of a difficult recruiting environment,
    we met our recruiting and retention goals in fiscal year 2000.
    As I speak today, at the mid-point of fiscal year 2001, we are
    exceeding those goals. We are involved in transforming our Army
    into a more deployable, more lethal force. Additionally, we are
    taking on new missions and consequence management and
    information operations, and we take on these new missions with
    confidence.
        The civilian-acquired skills of our Reserve soldiers put
    them on the cutting edge in the latest of technological
    innovation. We are inventorying those skills and making them
    available to the Army, with the understanding that these
    civilian skills are precisely what we need to counter the
    growing threats to our national security.
        Our citizen-soldiers are doing great things. Our challenge
    is to provide them with the tools and support they need and
    deserve. One way is to increase full-time support. This is a
    critical item and critical to improve our readiness. There is a
    direct correlation between full-time manning and readiness, and
    Congress knows this.
        Last year, Congress added 300 Active Guard and Reserve
    soldiers and 650 military technicians to our force this year,
    and we thank you. This is a great help, but we are still short
    of what we need to meet our validated requirements for full-
    time support. We also need to have compatible and modern
    equipment to perform our missions alongside of the Army.
        We have developed creative methods to increase the life of
    what we have, including an initiative to place a good part of
    our equipment in long-term controlled humidity storage, but
    there is only so much we can do on our own. Resourcing
    equipment, capitalization and modernization is essential to
    keep us the relevant force that we are today.
        Our soldiers in the Army Reserve deserve good facilities in
    which to train and work. That is too often not the case. Our
    facilities are aging, and we are not putting the best face on
    the Army in the 1,100 communities in which we serve across this
    great country. We must work to make infrastructure
    improvements. This quality-of-life issue impacts on recruiting
    and retention and readiness and soldier morale. Our
    construction and real property maintenance programs
    unfortunately have needed the support of Congress every year.

                               PREPARED STATEMENT

        Again, we appreciate your commitment to our soldiers. I
    thank you for the opportunity to brief you and I look forward
    to the opportunity to answer any questions you might have.
        [The statement follows:]

              PREPARED STATEMENT OF MAJOR GENERAL THOMAS J. PLEWES

                                  INTRODUCTION

        Mr. Chairman, members of this committee, thank you for the
    opportunity to testify on behalf of the more than 360,000 men and women
    serving in Army Reserve units and as individual mobilization assets--
    all soldiers of The Army. The United States Army Reserve, now 93 years
    young, enters the first century of the new millennium as an
    indispensable and strategically responsive force, an essential
    component of The Army.
        The opportunity to testify before this subcommittee comes at a time
    of new challenges in which we are transforming our force in support of
    the Chief of Staff of the Army's Vision. The Army Reserve is no longer
    a force in reserve; it is integral to all Army operations today. Our
    task through the next decade is to remain flexible and responsive to
    the needs of our Army. ``We Can Do!''
        At the outset, I wish to convey my sincere appreciation to this
    subcommittee for its sustained, consistent, strong support of citizen-
    soldiers. Providing the opportunity to discuss the challenges we are
    faced with is another demonstration of your concern for our Reserve
    forces and how well they can fulfill the missions assigned to them.
        The Army Reserve, the Army National Guard and the Active Army are
    full partners in the fully focused American Force that is the most
    responsive ground combat force in the world. Wherever the Army has
    gone, so has the Army Reserve. Wherever the Army is, so are we.
        This is not rhetoric but plain truth: the U.S. Army today cannot
    perform its missions or meet its mission goals without the Army
    Reserve. We are being utilized more frequently than ever before, an
    indispensable Army partner, a new Army Reserve--one increasingly
    committed to our national defense in several important ways.
        The scope and variety of Army Reserve activities illustrate the
    frequency that the Army Reserve is called upon as part of the Army in
    answering the nation's needs. Army Reserve soldiers continue to take
    part in every kind of mission we face at the beginning of the new
    century. These missions range from combat operations to peacekeeping,
    from disaster relief to major training events, both at home and abroad.
    We support communities as a hometown organization. We honor our past,
    but constantly prepare ourselves for the future.
        The Army Reserve has played a vital Army role from major theater
    war to training the entire force. Army Reserve soldiers supported NATO
    operations in the former Republic of Yugoslavia and continue to support
    peacekeeping operations in Bosnia, Kosovo, and Southwest Asia.
    Additionally, Army Reserve civil affairs and logistics soldiers have
    even supported the U.S. mission in East Timor.
        The Army Reserve's key challenges are the same as the rest of the
    Army--provide trained and ready units and soldiers. In order for the
    Army Reserve to maintain its many capabilities and continue to meet the
    requirements of the National Military Strategy, your continued support
    is vital to secure critical resources for full-time support manpower,
    recruiting and retention, equipment procurement and modernization,
    information technology, and facility revitalization.

                                     PEOPLE

    Equal Opportunity
        The Army Reserve is rich in diversity and gender mix. It's the
    nation's most culturally diverse and upwardly mobile reserve force in
    the military today. Minorities represent 40 percent of the soldiers in
    the Army Reserve, and they have, on their own merits, been promoted
    into the highest enlisted and commissioned officer ranks. This also
    holds true for women, which comprise 24 percent of reserve strength.
    Other impressive data include the facts that 57 percent of all the
    Black officers, 42 percent of all the Asians officers, and 39 percent
    of all the Hispanic officers in all the Reserve Components in DOD are
    in the Army Reserve. Our high minority population thrives in an
    environment that promotes the basic concepts of treating others with
    ``Dignity and Respect''. Our Equal Opportunity programs are well
    resourced. The return on that investment is handsomely represented in a
    force rich in cultural, ethnic and gender diversity.

                            RECRUITING AND RETENTION

        An area of highest importance to the Army Reserve is recruiting and
    retention. The Army Reserve is a major participant in supporting and
    training a 21st century Army. This requires the best soldiers America
    can provide. In this regard, we are most appreciative of the help your
    committee has provided us. We certainly would be remiss if we did not
    thank you for the attention you have paid to our recruiting needs in
    recent legislation. With your help we were, for the first time in
    several years, able to meet our recruiting mission in fiscal year 2000,
    and at the mid-year point of fiscal year 2001, we have exceeded our
    mission.
        The Army Reserve, in partnership with the United States Army
    Recruiting Command (USAREC), recently conducted a thorough review of
    Army Reserve Recruiting. This review has helped us forge a stronger
    relationship with the Recruiting Command and has streamlined our
    processes to support the symbiotic relationship between recruiting and
    retention. To that end, we are doing the following:
      --We are seeking to ensure that all Army Reserve soldiers are
            involved in recruiting and retention activities--we all are a
            part of the Army's recruiting efforts.
      --We are removing mission distracters allowing the Recruiting Command
            to focus on their core competency of recruiting non-prior
            service applicants.
      --We are focusing on life cycle personnel management for all
            categories of Army Reserve soldiers, troop unit members, and
            soldiers in the Individual Ready Reserve. We are ensuring that
            career counselors talk to Army Reservists about joining the
            Active Guard Reserve (AGR) program, training to become Warrant
            Officers, or Commissioned Officers, and we are sharing
            opportunities available in our troop units.
      --Our retention program seeks to reduce attrition, thereby improving
            readiness and reducing recruiting missions.
      --And we are jointly working with the Recruiting Command to ensure
            AGR personnel assigned to that command are given leadership and
            professional growth opportunities.
        This fiscal year we commenced these activities by transferring
    responsibility for the prior service mission from the Recruiting
    Command to the Army Reserve. This transition will occur in a phased
    process that culminates in fiscal year 2003. Tenets of this transfer
    include: establishment of career crosswalk opportunities between
    recruiters and retention transition NCOs; localized recruiting,
    retention and transition support at Army Reserve units and increased
    commander awareness and involvement in recruiting and retention
    efforts.
        We expect to reduce attrition and improve recruiting efforts by
    reducing no-shows to initial active duty training, highlighting all
    Army Reserve personnel life cycle opportunities and improving delivery
    of recruiting promises. In Phase I of the prior service mission
    transition, we transferred 61 recruiters from USAREC and assigned them
    to Reserve Centers within the southeastern United States and Puerto
    Rico. The assignment of new Retention NCOs will allow the Army Reserve
    to lower its attrition significantly and to ensure prior service
    soldiers are provided opportunities in our units, and assist our
    commanders in delivering recruiting promises. With the beginning of
    Phase II, the total Army Reserve Retention and Transition Division
    (RTD) mission will increase to 10,000 prior service transfers. We will
    continue extensive collaboration with USAREC to ensure a smooth
    transition of these responsibilities.
        To support these efforts, the Army Reserve uses the non-prior
    service and prior service enlistment bonuses, the Montgomery GI Bill
    (MGIB) Kicker and the Student Loan Repayment Program in combinations to
    attract soldiers to fill critical MOS and priority unit shortages.
    Program funding must be sufficient to attract and retain both prior and
    non-prior service soldiers. The Army Reserve must be able to provide a
    variety of enlistment and retention incentives, for both officer and
    enlisted personnel, in order to attract and retain quality soldiers.
        Our new retention program is a success. Faced with an enlisted
    attrition rate of 37.5 percent at the end of fiscal year 1997, we
    adopted a corporate approach to retaining quality soldiers. Retention
    management was a staff responsibility before fiscal year 1998. In a
    mostly mechanical approach to personnel management, strength managers
    simply calculated gains and losses and maintained volumes of
    statistical data. Unfortunately, this approach did nothing to focus
    commanders on their responsibility of retaining their most precious
    resource--our soldiers.
        To correct this shortcoming, the Army Reserve developed the
    Commander's Retention Program. A crucial tenet of this program places
    responsibility and accountability for retention with commanders at
    every level of the organization. Commanders now have a direct mission
    to retain their soldiers and must develop annual retention plans.
    Additionally, first line leaders must ensure all soldiers are
    sponsored, receive delivery on promises made to them, and are provided
    quality training. In this way, the Commander's Retention Program
    ensures accountability because it establishes methods and standards and
    provides a means to measure and evaluate every commander's performance.
    Since the introduction of the Commander's Retention Program, the Army
    Reserve has reduced enlisted attrition by nearly 5 percent. The
    enlisted attrition rate in fiscal year 2000 was 28.9 percent. However,
    persistent pressure from increased job market competition that is
    intensified by a robust economy makes it difficult to maintain this
    degree of improved retention. Consequently, funding delays and
    projected program shortages threaten our goal of continuing to reduce
    attrition.
        The Army Reserve also is experiencing a company grade officer
    shortfall. Retention goals focused commanders and first line leaders on
    junior officers, as well.
        Our retention program seeks to reduce attrition, thereby improving
    readiness and reducing recruiting missions. Our retention efforts bore
    fruit earlier this year with a 1,200 non-prior service recruit mission
    reduction to USAREC. Given our current strength posture and attrition
    outlook, another mission reduction is being assessed.
        The Army Reserve will successfully accomplish its 43,000 recruiting
    mission for fiscal year 2001 while achieving the Department of the Army
    and Department of Defense quality marks. Next year our enlisted
    recruiting mission will stabilize at about 42,000 due to the success of
    our retention efforts. The accomplishment of the recruiting mission
    will demand a large investment in time on the part of our commander's,
    our retention NCOs, and our recruiters as they are personally involved
    in attracting the young people in their communities to their units.
        However, the same environmental pressures that make non-prior
    service recruiting and retention difficult affects prior service
    accessions. With the end of the defense drawdown we have seen a
    corresponding decrease in the available prior service market as
    reflected in the IRR. This has meant greater training costs, due to the
    increased reliance on the non-prior service market, and an overall loss
    of the knowledge that comes when NCO leadership fails to transition to
    the Army Reserve. Consequently, the Army Reserve's future ability to
    recruit and retain quality soldiers will be critically dependent on
    maintaining competive compensation.
        Additionally, the young people of today need to be made aware of
    the unique opportunities available in the different military
    components. The best way to get this message out is to advertise
    through the mass media. Special attention needs to be placed on the
    recruiting budget, especially for advertising, to meet our requirements
    in the next several years. Funding our critical advertising needs is
    imperative if we are to be honestly expected to meet our recruiting
    goals. Your continued support of our efforts to recruit and retain
    quality soldiers remains essential if we are to be successful.

                                   READINESS

        Over 84,000 Army Reserve soldiers mobilized and served in Desert
    Storm. We were ready then, and are ready today. We continue to improve
    Duty Military Occupational Skill Qualification (DMOSQ). The Army Chief
    of Staff set a goal for the Reserve Components to achieve and sustain
    an 85 percent DMOSQ and Professional Development (PDE) qualification
    level by fiscal year 2005. Recent increases in funding have raised both
    DMOSQ and PDE qualification rates by several percentage points. The
    Army Reserve is projecting that DMOSQ rates will climb to 85 percent by
    fiscal year 2005 and NCOES qualification rates will achieve 85 percent
    by fiscal year 2004 due to programmed increases to our funding level.
    We also continue to aggressively manage and monitor soldiers attending
    DMOSQ to achieve this goal. Your continued support of our mutual goal
    to have a trained and ready force remains essential to our success.
        Unit readiness improved 8 percent in the past two years. Force
    Support Package (FSP) units average 88 percent deployable readiness.
    The Army Reserve's readiness status continues to improve. As of January
    2001, 75 percent of our units meet deployment standards, an 8 percent
    increase over the previous two years. At the same time, the readiness
    level of FSP units remained constant. The Army Reserve continues to
    achieve a high number of units rated deployable, despite having the
    lowest level of full-time support of any reserve component. Today's
    readiness levels are a testimony to the Army Reserve's ability to adapt
    and succeed in our assigned mission.

                                   RELEVANCE

        As I testify today, we have over 1,400 Reserve soldiers supporting
    contingency operations in Operations Joint Forge and Joint Guardian
    (Bosnia and Kosovo) in the European Theater. These Reservists comprise
    the latest rotation in support of operations spanning five years and
    totaling over 16,000 troops, and we remain heavily employed. Overall in
    fiscal year 2000 the Army Reserve deployed over 71,000 soldiers to 64
    countries, and we provided a total of 3.5 million mandays in the United
    States and abroad. Employments were worldwide from Central America and
    Southwest Asia to places like East Timor. Furthermore, the Army Reserve
    did this at the same time that it achieved its highest readiness status
    in history. As of January 2001, 82 percent of our units reported being
    combat ready, up from 79 percent just two years ago. Much of this
    achievement was the direct result of your support to improve our full-
    time manning and provide the funding required for our operating tempo
    and training requirements.
        We are a force sized and ready to fight full-scale war as well as
    support smaller scale contingencies. We bring trained units who can get
    to where they are needed quickly and then perform as a seamless part of
    the Army team. We bring professionals from the civilian world, leaders
    and experts in many fields, with skills and abilities the Army may not
    have or cannot afford to develop or sustain. We are as accessible as
    any component of any service, ready to respond to the needs of the
    National Command Authority.
        The Army Reserve continues to support Active Army exercises,
    operations, and training worldwide. Some of the major exercises and
    training events supported included: BRIGHT STAR, NEW HORIZONS,
    Operation JOINT GUARD, Operation JOINT FORGE, and many National
    Training Center/Joint Readiness Training Center rotations.
        For the last year, Army Reservists have been deployed
    simultaneously to two troubled parts of the world, in Europe for
    Operation JOINT FORGE (Bosnia) and JOINT GUARDIAN (Kosovo) and in
    Southeast Asia for Operation STABLISE (East Timor).
        Worldwide deployments are nothing new for the soldiers of the Army
    Reserve. Since 1995, more than 16,000 Army Reservists have participated
    in Operations JOINT ENDEAVOR, JOINT GUARD, and now JOINT FORGE, either
    in Bosnia or in support operations in neighboring countries, and in
    Operation JOINT GUARDIAN in Kosovo. The Army's reliance on the Army
    Reserve's capabilities, especially in such areas as civil affairs,
    medical, engineering, logistics, transportation, military police,
    postal, public affairs and psychological operations, will ensure the
    Army Reserve will be in the Balkans as long as the Army remains there.
        When not working alongside their active Army, Army National Guard
    and sister services, Army Reserve soldiers honed their always-in-demand
    skills on exercises.
        More than 2,000 soldiers from 46 units took part in the annual
    TRANSLOTS exercise in June, using landing craft to unload equipment and
    then truck supplies to the ``front lines''. For the first time, this
    annual transportation exercise was run in conjunction with the annual
    ROVING SANDS exercise, a joint-theater air and missile defense exercise
    that involved more than 18,000 troops from several nations. More than
    half of the units for TRANSLOTS were from the Army Reserve, to include
    the lead unit for the exercise, the 143rd Transportation Command from
    Orlando, Fla. Army Reserve units were also significantly involved in
    ROVING SANDS.
        Hundreds of Army Reserve Military Police soldiers from the 77th and
    99th Regional Support Commands trained to handle enemy prisoners of war
    by setting up and operating two internment facilities and a corps level
    internment operation during Exercise PLATINUM SWORD 2000 at the Army
    Reserve installation at Fort Dix, N.J. Prior to conducting this hands-
    on exercise, the soldiers prepared with a simulation exercise hosted by
    the Battle Projection Group of the Army Reserve's 78th Training Support
    Division. All of the Army's Internment/Resettlement brigades are Army
    Reserve units.
        Army Reserve soldiers trained overseas, as well as in the United
    States. For the first time since 1995, U.S. soldiers, sailors, airmen
    and Marines returned to the Philippines to conduct the BALIKATAN
    exercise with the Philippine Armed Forces. Army Reservists played key
    roles in this exercise, to include an Army Reserve officer serving as
    the U.S. co-exercise director for the combined force.
        As has been demonstrated by our ever-present use in operations and
    exercises, so, too, does the Army Reserve's role in contributory
    support demonstrate that the Army Reserve is no longer a ``for
    emergency use only'' organization.
        We are utilized in every way, contributing daily to the Army. This
    support reduces operational costs, increases efficiency and provides
    excellent production-based training opportunities. Our soldiers benefit
    from this contributory support by performing challenging, time-
    sensitive missions. Soldiers do not like make-work missions. They want
    to do something meaningful something, which has a benefit and a
    purpose, which offers a challenge. We have moved from a training model
    of ``train, then do'' to ``train and do.'' Army Reserve soldiers rise
    to that challenge constantly.
        Army Reserve Materiel Management Commands conduct year-round
    resupply operations for active Army units in Southwest Asia and the
    National Training Center in California. Army Reserve intelligence
    centers at Fort Gillem, Ga., and Fort Sheridan, Ill., provide strategic
    analysis for the Army on a full-time basis. This seamless support of
    real-world missions clearly demonstrates how effectively Army Reserve
    units integrate into the Army.
        Contributory support helps the Army focus its active forces on
    their primary warfighting tasks. Another way we help the Army
    concentrate on warfighting is in our core competency of training.
        Through focus on our part of the training function, we help the
    Army return soldiers to combat divisions. Army Reserve soldiers are
    fully integrated into every aspect of training. Our soldiers provide
    quality training to soldiers and units from all components.
        Army Reserve Institutional Training Divisions provide skill,
    leadership, and professional development training. They also provide
    basic combat and one station unit training at Army Training Centers.
    Army Reserve Training Support Divisions provide collective lanes and
    simulation training to units of all three Army components.
        The Army Reserve Readiness Training Center (ARRTC) at Fort McCoy,
    Wis., which provides a myriad of training support to all components of
    the Army, is developing a well-earned reputation as a center of
    training innovation. Army Reserve, as well as Army National Guard and
    Active Component soldiers, can now graduate from a Military
    Occupational Skill (MOS) producing school by taking an interactive,
    distance-learning course, developed and taught by ARRTC, using off-the-
    shelf civilian equipment.
        Another innovation at ARRTC is the mirror site classroom (so-called
    because it ``mirrors'' the training offered at the Army Computer
    Science School at Fort Gordon, Ga.) used to provide security
    certification instruction to information system administrators. ARRTC
    conducts this training with a ground-breaking single classroom set-up,
    using a single set of computers, thus saving scarce resources and
    serving as a model for future planned mirror sites.
        The Army Reserve is well placed to benefit the Army in finding
    innovative ways to do business because of the civilian acquired skills
    of our soldiers. Our soldiers bring their civilian acquired skills,
    talents and experience with them. This has been true from the beginning
    of the Army Reserve: the very first Reservists were civilian doctors
    who could be called up in time of emergency.
        Civilian technological advances are taking place at a dramatic
    pace. Army Reserve soldiers who take part in these advances in their
    civilian jobs are ideally placed to bring them into the Army for its
    benefit.
        To better capitalize on the ``citizen'' part of ``citizen-
    soldier'', the Army Reserve is collecting information on the civilian
    skills of its soldiers, skills acquired outside the Army and thus
    perhaps unknown to it.
        Army Reservists can now input those skills into the Civilian
    Acquired Skills Database (CASDB) at the Army Reserve Personnel Command
    (AR-PERSCOM). By going to the website at www.citizen-soldier-
    skills.com, soldiers can enter those skills they obtained from civilian
    training or work experience. Soldiers who volunteer to register their
    civilian acquired skills are afforded the opportunity to serve in
    duties outside of their traditional branch or MOS. CASDB gives
    commanders at all levels the means to identify those soldiers with
    specific skills to meet special needs. Those skills and talents can
    then be used to benefit the Army Reserve, the Army and the nation.
    Using our skills in the information area is one part of our strategy
    for assisting the Army to become a more strategically deployable and
    responsive force. By leveraging advanced communications and information
    technology, we can conduct split-based support operations. Army Reserve
    units can operate from home station to accomplish missions in forward
    locations utilizing this technology, thus reducing lift requirements.
    We are evolving our support organizations to build a reach-back
    capability for logistics, intelligence, and training support, thereby
    reducing the deployed logistical footprint.
        We will also reduce lift requirements by strategically stationing
    Army Reserve equipment and forces, capitalizing on our forward-
    stationed Reserve units and soldiers, such as the 7th Army Reserve
    Command in Europe and the 9th Regional Support Command in the Pacific.
        Since Army Reserve power projection units have key roles in moving
    the Army overseas and receiving deployed units once they arrive, it is
    vital we get our own equipment--that not already strategically
    positioned--overseas quickly. An innovation now underway to better
    facilitate deployment response times is the Strategic Storage Site
    (SSS) Initiative. Our goal is to maintain 37 percent of our equipment
    in these sites. Besides improving equipment readiness and maintenance
    operations, this equipment, located at strategic ports around the
    country, will be immediately ready for deployment. The initial
    Strategic Storage Site is a 150,000 square foot facility at Gulfport,
    Miss. Six to seven SSS facilities are planned.
    Consequence Management
        The Army Reserve is ready to answer our Nation's call at home, too.
    Should terrorists strike the American homeland, Army Reserve units and
    soldiers, possessing a variety of capabilities, would be immediately
    available. These units include chemical detection and reconnaissance
    companies and medical and medical support organizations, all ready to
    support civil authorities should disaster strike. As should be
    expected, we train for this worst-case eventuality diligently. One such
    training exercise involving Army Reserve units, the Air Force Reserve,
    other Defense Department and U.S. agencies, as well as state and local
    agencies, was CONSEQUENCE MANAGEMENT 2000, held last May at the
    Regional Training Site--Medical at Fort Gordon, Ga.
        The Army Reserve is ideally placed for civil support. Our units are
    stationed in Hometown, U.S.A., with our soldiers located in 1,200 Army
    Reserve Centers in towns and cities all across America, putting the
    Army's footprint in every part of our country. They are part of
    America's communities because those communities are their communities.
    Our soldiers are the local doctors, nurses, teachers, lawyers, police
    officers, Little League coaches and soccer moms and dads, who enable
    the Army Reserve to respond with a multi-faceted capability. We provide
    key emergency preparedness leaders. Army Reserve Civil Affairs units
    contain 97 percent of the Army's expertise to rebuild shattered
    infrastructure--social, civil and physical. Military Police units can
    shelter up to 56,000 displaced persons. The Army Reserve, ready to
    respond to a chemical incident, contains 63 percent of the Army's
    chemical capability. Today, the Army Reserve has the largest chemical
    decontamination capability within DOD. The Army Reserve is currently
    training 100 out of a total of 127 decontamination platoons and 8 of
    the 15 reconnaissance platoons called for in Defense Reform Initiative
    Directive 25.
        Our medical professionals are working closely in DOD and among the
    interagency community to leverage our capabilities in Weapons of Mass
    Destruction (WMD) Consequence Management. Residing within the Army
    Reserve are 68 percent of the Army's medical assets. The Army Reserve
    contains 50 percent of resourced Mortuary Affairs units, 83 percent of
    Psychological Operations units, as well as Aviation, Logistics,
    Engineer and Signal units, which are essential capabilities for WMD
    Consequence Management. The Army Reserve stands ready to support WMD
    Consequence Management operations in combat, in the homeland or
    overseas in support of our coalition partners.
        The challenge of defending America's Homeland continues to grow.
    Although the Army Reserve is not a ``first responder'' organization, it
    is ready to provide assistance to support and sustain those
    organizations that do respond first. The Civil Support mission requires
    capabilities resident in the Army Reserve.
        Civil Support and Weapons of Mass Destruction (WMD) operations are
    combat support and combat service support intensive. Army Reserve core
    capabilities enable the Army to provide rapid support that complements
    the Federal response that sustains local responders.
        As a community-based force, the Army Reserve is--by definition--
    America's people. We are a reflection of the values and traditions
    embodied in our culture. Those values and traditions are what make the
    Army Reserve, the National Guard and the Army strong, able to meet the
    Nation's missions for the past 225 years and continuing into the new
    millennium. The men and women of the Army Reserve, all of whom
    volunteered to be ``twice the citizen'', have taken on the sacrifices
    to serve the Nation. In their hands is the future of the Army Reserve.
    Information Operations
        We use Information Operations (IO) to defend our own information
    and information systems while disrupting those of the enemy. IO ensures
    that our leaders have the information they need, when they need it, in
    a form they can use to win the fight and protect America's vital
    interests.
        These are not new concepts. The Army has long understood the
    importance of controlling the decision cycle. Units with IO
    capabilities that intercept or interrupt communications, that collect
    and analyze information about the battlefield and that influence the
    attitudes and will of the opposition, are a legacy in the Army Reserve
    structure. The Army Reserve provides a wide variety of experts who
    accomplish missions, such as Civil Affairs, Psychological Operations,
    Public Affairs, Military Intelligence and Signal. The Land Information
    Warfare Activity (LIWA), the National Ground Intelligence Center and
    the Joint Reserve Intelligence Program now are utilizing Army Reserve
    units, facilities and personnel to conduct Information Operations.
        The Army Reserve also is building additional capability to
    reinforce Army information and LIWA operations. The Army Reserve Land
    Information Warfare Enhancement Center directly expands the scope and
    sophistication of LIWA information capabilities. When complete, one-
    fifth of LIWA manpower will be Army Reserve soldiers. The Defense
    Information Systems Agency has created a 22-member Joint Web Risk
    Assessment Cell. This cell will monitor and evaluate Department of
    Defense web sites to ensure no one compromises national security by
    revealing sensitive defense information. Five members of this cell,
    whose civilian skills are particularly suited to this hard skill
    requirement, are Drilling Individual Mobilization Augmentees of the
    Army Reserve.
        Further, the Army Reserve is actively carving its niche in this
    evolving area of cyber warfare by creating the Reserve Information
    Operations Structure. This organization will be activated to provide
    contributory support to the Army's Computer Network Defense and
    information assurance efforts. Army Reserve Information Operation
    Centers (IOCs) identify and respond to viruses and intruders in Army
    computer networks. Currently, Army Reserve IOCs are forming in the
    National Capital Region, Massachusetts, Pennsylvania, California, and
    Texas, and satellite units can be found in over a dozen large cities.
    Information Operations support the Army's portion of the Defense
    Information Infrastructure to ensure the availability, integrity and
    confidentiality of information systems.
    Counter Drug Operations
        The Army Reserve provides intelligence, linguistic, transportation,
    maintenance, and engineer support to drug law enforcement agencies and
    unified commanders-in-chief in an ongoing program in effect since 1989.
    The Army Reserve supports local, state and federal law enforcement
    agencies in operations designed to reduce the flow of illegal drugs
    both within and outside of American borders. Feedback from High
    Intensity Drug Trafficking Area directors was overwhelmingly positive.
    The Army Reserve also participates with the Drug Demand Reduction
    Program to help reduce the demand for illegal drugs and alcohol abuse
    through education and through deterrence by randomly testing our
    soldiers on a regular basis. We received a program funding increase to
    raise our testing level to more closely match the Active Component
    testing level. The increased funding also allows the retention of those
    civilians most critical to program administration.

                                   RESOURCING

        Resourcing is a difficult subject to discuss at this time because
    we don't as yet have complete details of the Defense portion of the
    President's Budget pending completion of the ongoing strategic review.
    However, I do wish to discuss several challenges we face in providing
    the Army Reserve the resources it needs. At the outset, I would like to
    emphasize that many of our resourcing challenges are a consequence of
    our being victims of our own success. Successful operations lead
    additional successful operations down the road. This increases
    operating tempo and personnel tempo costs and puts stress on personnel,
    equipment and facilities with bills that ultimately must be paid.

    Modernized Equipment Procurement is a Challenge for the Army Reserve
        The compatibility of current Army Reserve equipment with the Active
    Component is a great challenge. As a result of incremental
    modernization of Army units, the Army Reserve equipment compatibility
    and unit interoperability require constant attention. The dynamic
    global environment requires that military forces have the added
    flexibility of modern equipment systems. To meet challenges of future
    operating environments and the wide range of potential threats, the
    United States will require an agile, world class Army capable of rapid
    response and dominance across the entire spectrum of operations in a
    joint, interagency, and multinational environment. Increasing demands
    signify the Army Reserve must be properly equipped to perform the
    mission. Moreover, the increased use of Reserve forces in support of
    operational missions has highlighted the importance of having
    compatible and modern equipment. The Army Reserve must be seamlessly
    integrated into contingency operations and wartime scenarios. Key to
    this integration is ensuring equipment is both operationally and
    logistically compatible. Without complete interoperability, the
    capacity of the Army Reserve to offer combat support and combat service
    support would be degraded, and the effectiveness of the force would
    suffer.
        The Army's goal to improve compatibility incrementally, within the
    constraints of the Total Obligating Authority becomes a question of
    affordability. Because the Army Reserve is dealing with limited
    funding, creativity in developing ways to stretch these funds and
    extend the life of existing equipment is essential. The Army Reserve
    increasingly relies on limited overhaul and re-build programs of
    existing equipment to extend service life, to reduce operating costs,
    and improve system reliability, maintainability, safety, and
    effectiveness. Army digitization initiatives may accelerate
    incompatibility and obsolescence of equipment when supported forces are
    digitized and Army Reserve forces are not.

    Military Construction
        The Army Reserve Installation Community proudly sustains two of the
    Army's major Installations and 12 Regional Support Commands. These
    regional commands function as ``virtual installations'' with facilities
    in 1,200 sites across all 50 states, most U.S. territories, and in
    Europe. As of this fiscal year, the Army Reserve military construction
    backlog is $2.25 billion. We are constructing on average only 5-6 new
    facilities per year.
        Army Reserve infrastructure is deteriorating, and this adversely
    affects soldier training and readiness on a daily basis. Quality, well
    maintained facilities provide Army Reserve units with the means to
    conduct necessary individual and collective training, to perform
    operator and unit maintenance on vehicles and equipment, and to secure,
    store, and care for organizational supplies and equipment. These
    facilities also provide other important benefits. Fully functional and
    well-maintained training centers have a positive impact on recruiting
    and retention, unit morale, and the readiness of the full time support
    personnel who work in the facilities on a daily basis. In addition to
    supporting the quality of life of units and support staffs, Army
    Reserve facilities project an important and lasting image of America's
    Army in the local community.

    Sustainment, Restoration and Modernization
        Historically, Army Reserve Sustainment, Restoration and
    Modernization (formerly known as Real Property Maintenance) has been
    inadequately resourced. To train our citizen soldiers, we use more than
    45,000,000 square feet of widely dispersed Reserve Centers and support
    facilities worldwide. This equates to more square footage than Forts
    Hood and Sill combined, with Fort Belvoir thrown in for good measure.
    Like these posts, we experience inherently the same challenges, but in
    a different setting.
        For today's Army Reserve soldier, the impact of poor facility
    conditions is even more acute. Overcrowded, inadequate and poorly
    maintained facilities seriously degrade our ability to train and
    sustain units and weaken soldier morale and esprit de corps. Years of
    inadequate resources have brought to this state of deterioration and
    disrepair. For eight of the past ten years, we've been functioning on
    less than 40 percent of required funding to sustain existing
    facilities. Couple these facts with the advancing age of the inventory,
    greater mission demands, and a shifting population; it's easy to see
    that we are in a facilities death spiral unless resources are
    immediately applied.
        Most Army Reserve facilities consist of 1950's era, red brick, flat
    roofed, tired looking structures that remain virtually the same as when
    they were constructed. They're sorely in need of modernization or, as
    in most cases, replacement. Our primary facilities, Army Reserve
    Centers, are prominent symbols of The Army on ``Main Street America.''
    They often create the first and lasting impressions of the entire Army
    and stand as permanent ``billboards'' for all Americans to see.
    However, we have hundreds of deplorable facilities that siphon off an
    inordinate amount of our maintenance and repair dollars. Given current
    Sustainment, Restoration and Modernization funding, we're unable to
    break free from sustainment and begin improvements on our facilities.
        Additional funding will prevent further facility deterioration and
    premature aging, improve the environment in which our soldiers work and
    train, promote and project a positive Army Reserve image in communities
    across the country, and enhance recruiting and retention efforts for
    all components of the Army. We're replacing the aging inventory at the
    rate of five or six centers at a time, but it's not enough. We've
    developed an overall strategy to modernize our Army Reserve facility
    inventory in concert with the Army's Facility Strategy that establishes
    a focused 30-year roadmap for active and reserve components to sustain
    facilities and to focus modernization funding, principally military
    construction, in 10 year program increments. The first modernization
    increment calls for replacement of one-third of the Army Reserve
    Centers but without resources the plans falls apart. We have the will
    to succeed, but resources are the essential yet elusive key to success.

    Recruiting and Retention Bonus Programs and Increased Army Reserve
            Advertising
        Recruiting resources pay dividends beyond the year of execution.
    For example, Army Reserve advertising in fiscal year 2002 influences
    potential recruits making enlistment decisions in fiscal year 2003-
    2005. Thus, we must look at recruiting resources over time and not
    limit consideration to the current or next fiscal year.
        Resourcing the Army Reserve sufficiently to achieve its average
    recruiting workload over the next several years enables the Army
    Reserve to achieve its end strength. A steady, even flow of resources
    ensures a better recruiting environment.
        Media advertising costs continue to increase. Television is most
    effective at targeting desired Army audiences because it dramatically
    illustrates the Army experience through sight, sound, and motion.
    Successfully meeting the recruiting mission, which we did in fiscal
    year 2000, following several years of failure, comes from many complex
    and rapidly changing factors. The recruiting advertising program,
    however, is one of the few factors that we can control.

                               FULL-TIME SUPPORT

        An increase in Full-Time Support (FTS)--Active Guard/Reservists
    (AGRs) and Military Technicians (Miltechs)--is essential to improve
    Army Reserve readiness. One of the greatest challenges facing the Army
    Reserve today is an insufficient number of FTS authorizations to
    support over 2,300 Army Reserve units in day-to-day operations. FTS
    levels directly impact the readiness of Army Reserve units by providing
    the additional training, command and control, technical, functional,
    and military expertise required to transition from a peacetime to a
    wartime posture. The FTS staff performs all the day-to-day support
    functions for the unit. When FTS levels drop, this affects readiness
    levels.
        The Army has identified critical thresholds for FTS, based on the
    minimum essential levels to prepare and maintain units to meet
    deployment standards identified in Defense Plans. The fiscal year 2003
    transformation of the Army's go to war structure includes eliminating
    approximately 300 Title XI Active Army authorizations from Army Reserve
    units. As a coordinated ``Army'' decision, the Army Reserve AGR
    resource ramp will be accelerated by 300 beginning in fiscal year 2003.
    The goal is to restore the loss of Active Army end strength from Army
    Reserve units with AGRs while continuing to work towards improving the
    overall unit readiness with increased full-time support.
        Congress has been sensitive to the importance of FTS, and we are
    grateful for the fiscal year 2001 Congressional increase in AGRs and
    MILTECHs. This increase reduced the Army Reserve FTS shortfall by
    almost a thousand (650 MILTECHs and 300 AGRs). Additional authorization
    increases are essential for the Army Reserve to meet acceptable
    readiness standards.

                                    SUMMARY

        For 93 years, the United States Army Reserve has served as a
    community-based federal force of trained and ready units and
    individuals supporting The Army, here and abroad. We are adaptable,
    relevant and an integral part of The Army. We stand ready to answer the
    call and with that bring the support of Hometown, USA to the forefront,
    demonstrating the resolve of the American people. The citizen-soldiers
    of the Army Reserve are proud of their country. They share a deep sense
    of satisfaction and accomplishment in the peace and stability they help
    create on behalf of all Americans. We are grateful to the Congress and
    the Nation for supporting the Army Reserve and our most valuable
    resource, our soldiers--the sons and daughters of America. Thank you.

        Senator Stevens. Thank you very much. We have been joined
    by my partner here. Would you like to give us your opening
    statement, Senator?

                     STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. Thank you very much, Mr. Chairman. I would
    like to join you in welcoming our witnesses this morning, and I
    think we all know that since the very beginning of our Nation
    we have depended upon our citizen-soldiers. At that time, they
    were State militias, the forerunners of our National Guard, and
    I think most of our school kids are well aware of the
    Minutemen. You are their successors. I look upon the Reserves
    and the Guard as an essential part of our defense, one that
    deserves our full support, and should not be and cannot be
    short-changed.
        Over the years, there have been disagreements between
    active and the Reserve forces. I am pleased that most of these
    problems are past history, but there are many other concerns.
    We find that it is still difficult to convince the active
    component to procure new weapons for the Guard and Reserves.
    All too often you have been getting the left-overs. I am
    certain you know that with our budgetary picture of today, and
    with transformation in the works, it is going to get a bit more
    difficult to get more weapons. I hope we can do so in this
    cycle.
        Needless to say, military construction remains a real
    problem, and here again I am certain the chairman can come up
    with something. Our Reserve forces are being called on to serve
    more often and in more challenging missions, but it is
    difficult to get the full-time support that they require.
        So Mr. Chairman, I thank you for holding these hearings,
    and I look forward to hearing the testimony of our witnesses.
    This is an important part of our defense.
        Senator Stevens. Senator Dorgan, do you have a comment?
        Senator Dorgan. Mr. Chairman, I have, as perhaps you do,
    two other subcommittees meeting at the same time, and let me
    thank the officers of the Reserve and National Guard for being
    here. We get a lot of bang for the buck, as I think the
    chairman and others have said. It is an awfully good
    investment. We thank them for their service to our country, and
    I am anxious to hear their testimony today.
        Senator Stevens. Thank you.
        Gentlemen, we have already heard from General Plewes. We
    would now like to call on Rear Admiral Totushek.

    STATEMENT OF REAR ADMIRAL JOHN B. TOTUSHEK, CHIEF,
                NAVAL RESERVE AND COMMANDER, U.S. NAVAL
                RESERVE FORCE, DEPARTMENT OF THE NAVY

        Admiral Totushek. Thank you, Mr. Chairman, members of the
    committee. Thank you for allowing me the opportunity to talk to
    you about some important issues that are affecting the Naval
    Reserve today. A few months ago, I had the pleasure of briefing
    my top five priorities to our Chief of Naval Operations,
    Admiral Vernon Clark, a former Naval Reservist himself.
        In March, I had the honor of briefing the House Armed
    Services Personnel Subcommittee on my highest priority, which
    is manpower. Today, I am pleased to be before you to talk about
    each of my top five, manpower, training, equipment
    compatibility, force-shaping, and fleet support.

                                    MANPOWER

        Allow me to explain a little bit about my priorities,
    starting with manpower. I have stated many times that whatever
    else we will do, it will not matter much unless we can recruit
    and retain a well-trained career force. This is key to our
    success, and it is why we are offering bonuses for reenlistment
    extension. A Montgomery kicker bill increase of $200 per month
    for undermanned ratings, a program to allow conversions to
    undermanned ratings and benefits, such as space-available
    flights.
        Clearly, recruiting remains a constant priority of mine in
    an economy with a record-low unemployment rate, and where the
    perception is that the active force and by extension the
    Reserve force is shrinking. The fact is, the Naval Reserve
    offers career-building jobs with extraordinary benefits to
    qualified people. Our challenge is to identify them, introduce
    them to the opportunities we offer, sign them up, and meet our
    end strength targets.
        To do so, we have added more than 90 Reserve recruiters,
    tripled our advertising budget to $8 million annually,
    individually contacted service members scheduled to leave duty,
    built ties between the active and Reserve recruiters, and
    better defined the career progression for my recruiting
    professionals.
        In addition, we are adding new nonprior service programs
    that targets medical and seabee skills. My most pressing
    funding needs are in the areas of recruiting, advertising, and
    additional bonus money to entice sailors to change from our
    overmanned ratings to those that are undermanned.
        With regards to my training priority, we have Naval
    Reservists drilling in every State in the Nation. Some are
    close to their gaining commands in naval facilities, but the
    majority are not. It is vitally important that we provide
    realistic training that meets the Navy needs, whether our units
    are in Alaska or Nebraska.

                                    TRAINING

        There are some promising developments in the works using
    new technologies, but we need to continue to think innovatively
    to conduct more practical training. Additional duty training
    (ADT) school funding will be needed to give our selected
    Reserve in all States the opportunity to satisfy their training
    requirements and to be able to advance in rate. Lastly, we need
    to increase inactive duty training travel (IDTT) funding so
    that our heartland reservists can visit their gaining command
    every quarter.

                               AIRCRAFT UPGRADES

        Shifting gears to equipment and information technology (IT)
    compatibility, the two critical funding priorities of the Naval
    Reserve for the near term are aircraft upgrades and information
    technology improvements. When completed, these initiatives will
    provide the Naval Reserve force much-needed interoperability.
        On the air side, that means replacing my aging C-9 skytrain
    fleet. In April, we received the first C-40A clipper, and we
    will receive an additional two C-40's by August of this year.
    The new aircraft will allow us to continue our mission of
    providing 100 percent of the Navy's worldwide in-theater medium
    airlifts in support of the fleet, at the same time ensuring the
    safety of our sailors and Marines, while meeting the new noise
    and emissions standards. Our goal is to replace all 27 of our
    aged C-9 aircraft, which will require a procurement rate of
    three per year.
        In addition, two of our four F/A-18 Hornet squadrons will
    benefit from the purchase of 28 upgrade kits that will improve
    radar systems, armament controls, weapons-station wiring and
    cockpit indicators. We are pursuing funding to purchase
    additional kits for our third squadron.

                             INFORMATION TECHNOLOGY

        On the IT front, information technology affords us new
    possibilities for improving efficiencies. For example, we have
    embarked on IT upgrades that will streamline the process of
    getting the right sailor to the right place at the right time
    every time. Under the New Order-Writing (NOW) System
    applications for active duty will become much more automated,
    which will generate orders and travel itinerary with a
    dramatically shorter lead time.
        Correcting deficiencies, and maintaining existing IT Legacy
    systems built on eighties technology continues to place a
    strain on my Operations and Maintenance (O&M) appropriation. We
    need to invest in new systems with data bases that are
    compatible. We are a key player in the Navy-Marine Corps
    Internet (NMCI). We are working with Navy to ensure that the
    Reserve NMCI needs are met. However, additional dedicated
    investments in O&M funds need to be made to enable our upgrade
    of IT systems to take advantage of NMCI.

                            FLEET SUPPORT PRIORITIES

        Lastly, but no less important, my force-shaping and fleet
    support priorities. In some ways, the Naval Reserve is in an
    enviable position. The active duty Navy has an increasing need
    and appetite for Reserve skills. Many reservists possess skills
    gained in the civilian workforce for which there is no direct
    operational counterpart in the active force, and we work
    closely with active manpower personnel on a daily basis to
    better shape my Reserve force to meet fleet needs.
        Though mobilization remains our primary mission, we have
    provided close to 2\1/2\ million man days support to the fleet
    in fiscal year 2000, and for fiscal year 2001, Congress added
    $13 million to ADT training for fleet support, and $23 million
    to Annual Training, which has allowed unprecedented levels of
    assistance to the fleet. Additional ADT fleet support funding
    will likewise be needed this year to meet anticipated demands.
        In summary, Mr. Chairman, the Navy's ability today to tap
    into its Reserve force is the reward of prudent investment in
    Reserve people, equipment, IT, facilities, and training. As
    with Navy, additional funds will be needed to support the
    challenged Reserve programs I have just outlined to ensure that
    we will be able to continue essential day-to-day peacetime
    support to the fleet, and preserve the capability to surge
    decisively in a time of war.

                               PREPARED STATEMENT

        Thank you again, sir, for allowing me the opportunity to
    appear before the committee, and I look forward to any
    questions you may have.
        [The statement follows:]

                PREPARED STATEMENT OF REAR ADMIRAL JOHN TOTUSHEK

                                  INTRODUCTION

        One of my greatest satisfactions from my tour as Chief of Naval
    Reserve is the acknowledgement by the Active Navy that the Naval
    Reserve is crucial to their mission success. As this Subcommittee
    knows, there had been reluctance by many to accept the fact that active
    duty missions cannot be accomplished without the Reserve components.
    Indeed, beyond the value of their military specialty training and
    training for mobilization, Reservists provide an essential link to
    American society. In many parts of the country, Naval and Marine Corps
    Reservists are the only representatives of the Department of the Navy.
        Yet despite our noteworthy accomplishments, we find ourselves at a
    paradoxical crossroads, because our own recruiting and retention
    efforts have been challenged by a near full-employment economy, when,
    at the same time, the active force is relying more heavily on our
    Reserve support to reduce stress on active PERSTEMPO. With an expanded
    role to provide trained and equipped, cost-effective support to the
    fleet, and an aging fleet of Reserve aircraft and ships, I believe
    strongly that now is the time when we must make further investments in
    the Reserve Forces of the United States.
        I am confident that we are strengthening our management, increasing
    our recruiting and retention efforts, and continuing to equip and
    modernize our Naval Reserve Force to the best of our abilities: all to
    meet the Navy's day-to-day challenges and maintain readiness for
    wartime missions. As I briefly describe the status of our Reserve
    Force, I will also explain my ``Top Five'' priorities, which are the
    core issues I am focusing on to fully achieve the goals I have set for
    the Naval Reserve Force of the future. As I discuss these priorities in
    detail, you will notice that they closely align with the top priorities
    of our Chief of Naval Operations (CNO).

                            PAYING DIVIDENDS TODAY!

        As I consider the status of the Naval Reserve Force in relation to
    the mission of our active force, I am reminded again and again--
    sometimes quite starkly--that the world is still a dangerous place. As
    actions in the Middle East over the past few months have shown, our
    active and reserve Sailors put themselves at risk every day in support
    of national policy objectives. The unsettling events around the world
    clearly illustrate the need to maintain well equipped, trained, and
    ready Armed Forces. But that capability does not come cheaply.
        Naval Reserve Sailors are on difficult assignments--and on the
    front lines--in some of the most hazardous areas where our Navy
    operates. In the last year alone, we have responded to the call to
    service by providing more than 2.5 million mandays of assistance to the
    fleet. In response to three concurrent Presidential Reserve Call-ups
    and to other crisis response operations, we are at work today in flash-
    point regions such as the Balkans and the Arabian Gulf.
        In supporting counter-narcotics operations around the world, for
    example, Naval Reservists over the past year contributed 54 percent of
    all the Navy's days spent underway and 41 percent of all naval flight
    hours flown in support of the War on Drugs. Although our authorized end
    strength has dropped to 88,900 Full-Time Support and Selected
    Reservists from a high of 152,789 in 1990, we are fully employed and
    are conducting daily fleet support operations around the world. There
    is no shortage of work for Naval Reservists in their units or in the
    Fleet.
        Without Naval Air Reserve squadrons, Naval Surface Reserve Force
    guided missile frigates, mine hunters and mine countermeasures ships,
    or the dedicated augment units and staffs that constitute the Naval
    Reserve, the active Navy simply could not accomplish its missions.
    Fleet exercises could not take place without Naval Reservists. Routine
    logistics support of forces deployed around the world would be
    impossible without Naval Reservists. Sustained peacekeeping missions
    could not be conducted without Naval Reservists.
        Fortunately, where our skills are required by the fleet for
    exigencies, the Reserve Force today is better equipped and more
    dedicated than at any time in the past. A substantial portion of
    certain critical missions can only be accomplished by Naval Reserve
    surface and air assets. Here are just a few of the areas where the
    Naval Reserve has become virtually indispensable: 100 percent of the
    Navy's organic airlift capability; 100 percent of adversary support
    flight hours, which simulate enemy aircraft for aviators preparing for
    deployment; 100 percent of Inshore Undersea Warfare assets; 99 percent
    of all Naval Control of Shipping assets; 93 percent of all Cargo
    Handling assets; and 60 percent of all Navy Construction Battalion
    forces.
        Today's Naval Reserve Sailors maintain full-time operational
    missions, serving seamlessly alongside active forces in such specialty
    areas as intelligence, special warfare, public affairs, medicine and
    dentistry. They operate fleet hospitals, aviation squadrons and mine
    warfare forces.
        By any standard, you will find that the Naval Reserve provides this
    country with unsurpassed value. Our authorized 88,900 Full-Time Support
    and Selected Reservists represent about 20 percent of the Navy's total
    personnel strength at a marginal cost of only 6 percent of the Navy's
    total operating budget. We say it over and over again, but it bears
    repeating: the Naval Reserve is an astonishing bargain at only six
    percent of the Navy's operating budget.

                              TOP FIVE PRIORITIES

        A few months ago, I had the pleasure of briefing my top five
    priorities to our new CNO, Admiral Vern Clark. For this fiscal year, I
    have set the following priorities: Manpower, Training, Equipment
    Compatibility, Force Shaping and Fleet Support. If we are able to
    execute our plan in these areas, we will make significant progress in
    continuing the Naval Reserve as a world-class organization. Let me
    explain a little about some of our initiatives.

    Manpower
        I have stated many times that no matter what else we do well, it
    won't matter unless we can recruit and retain a well-trained career
    force. This is key to our success. It is why we are offering bonuses
    for reenlistment and extension; a Montgomery GI Bill kicker increase of
    $200 per month for undermanned ratings; a program to allow conversions
    to undermanned ratings; and other benefits such as space-available
    flights.
        We are taking steps to ensure that our Sailors have the highest
    quality workplace environment, that they are recognized and rewarded
    for their work, and that they have input into improving their work
    lives and running our force more efficiently and effectively.
        Clearly, recruiting remains a constant priority in an economy with
    a record low unemployment rate, and where the perception is that the
    active military force--and, by extension, the Reserve Force--is
    shrinking. The fact is that the Naval Reserve offers career-building
    jobs with extraordinary benefits to qualified people. Our challenge is
    to identify them, introduce them to the opportunities we offer, and
    sign them up.
        To do so, we have added 90 more Reserve recruiters; detailed 30
    enlisted personnel into two-year recruiting billets; tripled our
    advertising budget to $8 million annually; individually contacted
    service members scheduled to leave active duty; built ties between
    active and reserve recruiters; and better defined the career
    progression for reserve recruiters. In addition, we are planning to add
    a new non-prior service program that targets medical and Seabee skills.

    Training
        There are Naval Reservists drilling in every state in the nation.
    Some are close to their gaining commands and Naval facilities, but a
    large number are not. It is vitally important that we provide realistic
    training that meets the Navy's needs, whether our units are in Norfolk
    or Indiana. To that end, we've been able to increase funding to provide
    for unit travel, and we've added special funding for schools. There are
    some promising developments in the works using new technologies, but we
    need to continue to think innovatively to conduct more practical
    training. Forcing a Reservist to sit in a classroom for 16 hours a
    weekend is forcing them out of the Naval Reserve.

    Equipment Compatibility
        To ensure that our Reserve Force equipment is interoperable with
    the active force, we have begun replacing and upgrading Naval Reserve
    air assets, and are working to set in motion substantial upgrades to
    our IT systems.
        On the air side, that means replacing our aging fleet of C-9
    Skytrains. In April, the first C-40A Clipper was delivered and three
    additional C-40A's will be delivered by August of this year. The new
    Clipper will allow us to continue our mission of providing 100 percent
    of the Navy's worldwide intra-theater medium airlift in support of the
    Fleet, while at the same time ensuring the safety of our number one
    resource and most valued asset, ``our people''. The C-40A delivery
    begins the process of increasing safety, improving capability and
    meeting environmental requirements. Our goal is to replace all 27 of
    our aged C-9 aircraft.
        Two of four of our F/A-18 Hornet aircraft squadrons will benefit
    from the purchase of 28 upgrade kits that will improve radar systems,
    armament controls, weapons station wiring and cockpit indicators. We
    are pursuing funding to purchase additional kits for our F/A-18
    aircraft.
        Information technology affords us new possibilities for improving
    efficiencies. For example, we are embarked on IT upgrades that will
    streamline the process of getting the right Sailor to the right place
    at the right time, every time. Under the New Order Writing (NOW) system
    that we're working on, applications for active duty will become much
    more automated and approved by the local command, which will generate
    orders and travel itineraries within a much shorter period of time.
    Similarly, travel expense vouchers would be submitted electronically,
    resulting in rapid payment of claims to our Reservists.
        Correcting deficiencies in the existing IT systems, built on 1980s
    technology, has absorbed one-third of the Naval Reserve discretionary
    funding in the past year. We are building a unified information
    technology system that will eliminate existing barriers to Fleet
    support, and which is essential to the Navy Marine Corps Intranet
    (NMCI). We are a key player in NMCI and are working with the active
    forces so that NMCI can meet our unique needs.

    Force Shaping
        The Naval Reserve is working closely with Fleet manpower personnel
    to better shape the Reserve Force to meet Fleet requirements. Force
    shaping tools include the use of bonuses, targeted recruiting and
    retention efforts, and programs to transition Sailors from overmanned
    to undermanned ratings. Reservists are being matched to specific job
    requirements, and this allows the Navy to determine, at any given time,
    specific skill requirements and where Reserve personnel are most
    needed.
        In late 1998, we introduced into the Naval Reserve a continuous
    improvement initiative. Drawn from industry and academia, it is based
    on a concept called ``Leading Change,'' and is built around time-tested
    procedures for improving the effectiveness of large organizations. For
    two years now, my Executive Steering Committee has been hard at work on
    this undertaking.
        ``Leading Change'' is profound in its scope. It involves nothing
    less than the systematic analysis of, and structured improvements in,
    the Naval Reserve's fundamental ways of doing business. The road has
    been long, but we have charted a course with distinct and measurable
    goals, in the context of a clear vision for tomorrow's Naval Reserve.
    The result will be a Naval Reserve much more responsive to the needs of
    both the Reservists and the Fleet. We are well on the way toward
    achieving that goal.

    Fleet Support
        The Naval Reserve contributed nearly 2.1 million man-days in
    support of national defense during fiscal year 2000. More than 2,000
    Reservists participated in fleet exercises outside the continental
    United States while 1,100 Naval Reservists participated in exercises
    stateside. Operationally, Naval Reservists 37,239 workdays of
    contributory support to Fleet Air Mediterranean alone. Naval Reserve
    air assets flew in support of Operation NORTHERN and SOUTHERN WATCH,
    participated in counter drug operations in the Caribbean theater, and
    supported Navy's aircraft carrier deployments. In addition to providing
    Navy's entire air adversary training, the Naval Reserve provides 100
    percent of Navy's intra-theater logistics lift.
        Throughout the year the Naval Reserve safely airlifted more than
    4.8 million pounds of cargo and 2,635 passengers in direct support of
    carrier battle group (CVBG), amphibious ready group (ARG), and other
    naval and allied units in the Mediterranean and Southwest Asia.
    Additionally, Reservists filled key billets on the Commander Fleet Air,
    Mediterranean (COMFAIRMED) staff in functions ranging from watch
    standing to deputy commander. At any given time, Reservists are
    performing annual training around the globe in such places as Korea,
    Japan, Italy and Spain in support of Navy current operations. Notably,
    following the bombing of the U.S.S. Cole, a Reserve C-20 and C-9
    responded immediately to airlift Navy divers and a Naval Criminal
    Investigative Service team to Yemen to assist in recovery and port
    security operations. In addition, Navy Coastal Warfare (NCW) Group 2
    Reservists were recalled to active duty at the request of Commander in
    Chief, Central Command (USINCCENT) for ongoing force protection
    operations on the Persian Gulf. In some ways, the Naval Reserve is in
    an enviable position: the active duty Navy has an increasing need, and
    appetite, for Reserve skills. Many Reservists possess skills gained in
    the civilian workforce for which there is no direct occupation
    counterpart in the Active forces. For fiscal year 2001, Congress added
    $13 million to Active Duty Training for Fleet Support and $23 million
    for Annual Training, allowing for increased levels of assistance.

                               AN ENVIABLE FORCE

        The Naval Surface Reserve and the Naval Air Reserve forces deploy
    assets that would be the envy of many individual nations.
        Let's take a look first at the Surface Naval Reserve Force, which
    includes many commissioned and augment units. The ship assets are as
    follows: 8 Perry-class Guided Missile Frigates; 1 Newport-class Tank
    Landing ship; 1 Mine Countermeasures Command, Control and Support ship
    (U.S.S. Inchon); 5 Avenger-Class Mine Countermeasures ships; and 10
    Osprey-class Coastal Minehunter ships.
        Other Surface Naval Reserve resources include many other essential
    specialties, such as mine warfare forces; explosive ordnance disposal
    mobile units; expeditionary logistics support; cargo handling
    battalions; construction battalions; joint and unified command staffs;
    Fleet training teams; allied commands and staffs; mobile inshore
    undersea warfare; Merchant Marine; medical; dental; fleet hospitals;
    public affairs; special warfare; legal; and special boat units. It's an
    extraordinarily impressive list of professional warriors and support
    personnel!
        The Naval Air Reserve Force operates some of the most sophisticated
    aircraft anywhere, including numerous commissioned and augment units.
    The Naval Air Reserve aircraft inventory as of April 1, 2001 consists
    of the following:
      --27 high-speed, medium-lift transport aircraft: the C-9 Skytrains,
            (being replaced by the C-40A Clipper)
      --18 C-130 Hercules transport aircraft
      --6 C-20 Gulfstream long-range, high-speed, medium-lift transport
            aircraft
      --6 C-12 King Air, light, twin-engine, turbine-driven aircraft
      --4 EA-6B Prowlers used for tactical electronic warfare
      --8 E-2C Hawkeye early warning radar aircraft
      --22 F-5 Tigers, used for air-to-air adversary training
      --48 F/A-18 Hornets, for interdiction, adversary, close air support
            and air combat
      --16 HH-60H Seahawk helicopters used for combat search and rescue
      --8 MH-53E Super Dragon mine countermeasures helicopters
      --8 UH3H Sea King logistics helicopters (being replaced by the CH-60
            Knighthawk)
      --48 P-3C Orion land-based maritime patrol aircraft
      --5 SH-2G Super Seasprite ASW helicopters (being replaced by the SH-
            60B Seahawk ASW helicopter)
      --8 SH-60B/F Seahawk ASW helicopters.
        Other Naval Air Reserve assets include a range of specialty units,
    such as fleet logistics support; fleet information warfare; strike
    warfare; airborne countermeasures; combat search and rescue;
    intelligence and cryptology; mobile maintenance facilities; audio
    visual and combat camera documentation; tactical support; mobile
    operations control; carrier group and air wing staff augment units;
    naval meteorology and oceanography; tactical air control and squadron
    augmentation units.
        It's easy to see how the Fleet becomes dependent on its Reserve
    Force when our men and women represent such a diversified array of
    professional talent who seamlessly blend into our active forces.

                   FISCAL YEAR 2001 FUNDING OUTLOOK IMPROVED

        Our operations, maintenance and personnel funding levels for fiscal
    year 2001 are much improved, thanks to Navy support and Congressional
    adds. As a result, we have increased the number of days of overseas
    Annual Training and Special Training for Fleet support, and added more
    funding for attending professional development schools.
        A small policy initiative also helps us honor those who sailed
    before us. As our retired shipmates and World War II veterans pass
    away, Naval Reservists, as the Navy's representatives in thousands of
    communities, increasingly have been called upon to assist in providing
    funeral honors. It is gratifying that we have received additional
    funding to support such a noble cause.

                                   CONCLUSION

        Our new CNO, who was once a Naval Reservist himself, has first-hand
    knowledge of the importance of maintaining a strong Navy and Naval
    Reserve. As Admiral Clark remarked at the beginning of his tenure in
    July: ``The way ahead involves focusing on the Fleet; organizational
    speed and agility; commitment to our proven strengths and values; and
    commitment to our people as the Navy's most important resource.''
        We underscore what the CNO says about our One Navy team:
        ``In a nutshell, this is who we are: credible, combat-ready,
    forward-deployed naval forces, manned by well-trained Sailors motivated
    by a sense of mission and a desire to serve, committed to their Navy as
    their Navy is committed to them. We sail anytime, anywhere as powerful
    representatives of American sovereignty.''
        Every member of the Reserve Force--our Selected Reserve, our Ready
    Reserve and our Retired Reserve personnel, more than 700,000 in all--
    takes pride in our assignments, and in the opportunity to serve.
    Today's Naval Reserve Force is sought after and relied upon by the
    Fleet, yet still dynamic enough to be constantly re-evaluating itself
    for more productive and more efficient service in the future.
        At the beginning of a new decade, and a new national
    administration, every Reservist should take stock of what we are: a
    cost-effective organization of mission-ready men and women. Our
    hallmark words: We are ready when called!

        Senator Stevens. Thank you very much, Admiral. We have been
    joined by Senator Cochran. Senator, do you have an opening
    statement?
        Senator Cochran. Thank you. I am glad to be here with you
    today to thank those who are appearing to testify before our
    committee for the good work they are doing. I know their
    budgets are tight and they are being asked to do more and more
    to share the responsibility for keeping peace in the world and
    also maintaining security of our United States.
        We are grateful to you for your continued work in that
    regard, both the Reserves and the National Guard, and it is
    good to have the component heads here today all together to
    talk about your funding needs for the next fiscal year. I want
    to be sure we have the money in our bill that will support what
    you need to do your job. That is what the purpose of the
    hearing is today.
        Thank you very much, Mr. Chairman.
        Senator Stevens. Senator Feinstein, do you have any
    comments?
        Senator Feinstein. Thanks, Mr. Chairman, no. I will await
    questions. Thank you.
        Senator Stevens. Thank you very much.
        Major General McCarthy.

    STATEMENT OF MAJOR GENERAL DENNIS M. McCARTHY,
                DIRECTOR, RESERVE AFFAIRS DIVISION, U.S.
                MARINE CORPS RESERVE, DEPARTMENT OF THE
                NAVY

        General McCarthy. Mr. Chairman, members of the committee,
    it is my privilege to report to you on the status and future
    direction of your Marine Corps Reserve, and to thank you for
    your support as a real contributor to our total force. I
    appreciate very much the opportunity and the honor to do that.

                           WAR-FIGHTING CAPABILITIES

        The foundation of the Marine Corps is its war-fighting
    capability. Whether the war-fighter's mission is to seize the
    high ground, secure the beach, maintain air superiority, or
    provide humanitarian relief, the Marine Corps active and
    Reserve components routinely join forces to accomplish whatever
    missions are assigned.
        The value of the Marine Corps Reserve is measured in our
    ability to effectively augment and reinforce the active
    component, regardless of scenario, geography, or time frame. If
    we are to sustain the Marine Corps Reserve's war-fighting
    capability, we need the resources to maintain a high level of
    operational readiness.
        The Marine Corps readiness is a primary concern. Our
    Reserves, like the active forces, needs adequate skills
    training, professional military education, administrative
    support, and well-deserved benefits. The challenge we now face
    lies in recruiting and retaining a dedicated, talented pool of
    Marines who will commit to both the present world operational
    tempo and be prepared for whatever the future may hold.
        To meet this challenge, the Marine Corps, both active and
    Reserve, is focusing on four pillars of readiness. First, the
    Marine Corps values its Reserve Marines and their families, and
    we must develop family-oriented programs that will enable us to
    meet our recruiting goals and to enhance our retention.
    Equitable pay and benefits reward the Corps' most precious
    asset, our Marines.

                             LEGACY WEAPONS SYSTEMS

        Second, the Marine Corps must find ways to maintain and
    upgrade Legacy weapons systems, and to adequately budget for
    the associated operational cost The operating cost of our
    aircraft are increasing, and some require upgrades to meet
    today's requirements. Adequate funding ensures crew
    performance, unit morale, and most importantly, mission
    readiness.
        Third, we are experiencing higher operational and
    maintenance cost at our training facilities around the country,
    yet that infrastructure cannot afford any more downsizing.
    Inadequate and environmentally outdated training facilities
    make the job of recruiting and retaining dedicated Marines even
    more difficult. Inadequate training facilities jeopardize
    mobilization, readiness training, and mission readiness.
        Finally, the Marine Corps' effort to replace aging systems
    and equipment is an ongoing process. We must find ways to
    modernize our inventories and budget accordingly without
    jeopardizing current mission readiness. Timely modernization
    will ensure our capability to continue to defend national
    interest.
        Keeping the right number of Marines is vital to the total
    force concept, and to the unwavering relationship between the
    active and Reserve forces. The foundation of the Marine Corps
    will be preserved if we recruit and retain talented and
    dedicated Marines. When you look at the Marine Corps Reserve,
    you see the Marine Corps, because our blueprint for the future
    is the same.

                               PREPARED STATEMENT

        Thank you very much, and I look forward to responding to
    any questions that the committee may have.
        Senator Stevens. Thank you, General.
        [The statement follows:]

             PREPARED STATEMENT OF MAJOR GENERAL DENNIS M. MCCARTHY

        Senator Stevens, Senator Inouye, and distinguished members of the
    Committee, it is my privilege to report on the status and future
    direction of your Marine Corps Reserve as a contributor to the Total
    Force. On behalf of Marines and their families, I want to thank the
    Committee for its continued support. Your efforts reveal not only a
    commitment to ensuring the common defense, but also a genuine concern
    for the welfare of our Marines and their families.
        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 Active Component, performing
    a variety of missions including providing civil affairs expertise in
    the Balkans, aviation support in Southwest Asia, and logistics support
    in Central America. Reserve Marines and units participated in a variety
    of exercises in locales as distant and varied as Germany, Romania,
    Egypt, Macedonia, Korea, Thailand, and Australia. To quantify this
    effort, Marine Forces Reserve (MARFORRES) deployed approximately 3,200
    Marines and 1,200 Short Tons of equipment, via strategic lift, to
    support our National Military strategy during fiscal year 2000. Force
    deployments during the first two quarters of fiscal year 2001 show the
    same level of effort.
        Marine Reserve units and individuals participated in at least 75
    percent of the counternarcotics missions assigned to the Marine Corps
    in fiscal year 2000. In the United States, they trained to maintain
    readiness for mobilization, and conducted community service projects in
    their hometowns, thereby strengthening the link between the military
    and our society. We continue our contribution to Marine Corps
    operational planning as we review and implement even more options for
    greater premobilization Reserve integration with active units.
        My intent today is to quantify the state of the Marine Corps
    Reserve with respect to the Corps' Four Pillars of Readiness: Marines
    and their families, legacy systems, infrastructure, and modernization.
    During my comments today, I will discuss the status of many programs. I
    should note, however, that the programs I will discuss, and the
    associated funding levels may change as a result of the Secretary of
    Defense's strategy review that will guide future decisions on military
    spending. I ask that you consider my comments in that light.
        Overall, our budget has been barely adequate to sustain the
    readiness of our Marines. We have been maintaining readiness at the
    expense of modernization and maintenance of our infrastructure. Recent
    spikes in the cost of utilities have put even this fragile balance in
    jeopardy.

                           MARINES AND THEIR FAMILIES

        The Marine Corps role as we enter the new millennium demands that
    the Marine Corps Reserve be a ready, willing, and able contributor to
    the Marine Corps' Total Force effort. Reserve Manpower Augmentation is
    required in order to meet the Reserve commitment as a capable, ready
    partner in America's force in readiness. Reserve manpower augmentation
    consists of ADSW and a reassessment of the remaining Quadrennial
    Defense Review (QDR) reductions in the Marine Corps Reserve. The Marine
    Corps Reserve is no longer only a force for mobilization for Major
    Theater War but is now a daily use force. We are using the Reserve for
    manpower augmentation to Active and Reserve staffs, units, and exercise
    forces with short-term, fulltime personnel to plan and perform
    training, administration, maintenance and logistical support not
    otherwise available through existing manpower levels or traditional
    Reserve participation (drills and annual training). These additional
    personnel are also of absolute necessity in maintaining our ability to
    plan and participate in operational tempo (OPTEMPO) relief operations,
    Joint and Combined Exercises, and essential combat, combat support, and
    combat service support training. MARFORRES has traditionally provided
    150,000 workdays per year in support of the Active Component--we
    doubled that to well over 300,000 in fiscal year 2000. Our expanded
    measures for OPTEMPO relief, including the two important actions of
    recurring security deployments to Guantanamo Bay and the assumption of
    the (United American States (UNITAS) deployment to South America in
    alternating years, contribute to ADSW requirements outpacing available
    resources.
        The second issue affecting the first pillar of readiness is the
    QDR. Although the last QDR initially led to tangible improvements, it
    also resulted in a reduction in our end strength that essentially
    removed the flexibility in meeting the personnel demands inherent in a
    robust operational tempo. One of the major factors facilitating Reserve
    readiness is the significant investment of active duty manpower in full
    time support of the Reserve. The QDR directed reductions of active duty
    support of the Marine Corps Reserve, particularly the Active Reserve
    program, are challenging our ability to maintain readiness and meet
    requirements for Reserve employment. Eighty-one percent of the QDR
    Reserve reductions will have been taken by the end of fiscal year 2001
    but any further reductions would negatively impact our ability to
    provide OPTEMPO relief and maintain Reserve readiness.
        Internal Marine Corps reviews, including the Fiscal Year 1999 Force
    Structure Planning Group and Fiscal Year 2000 General Officers Future
    Group determined that the 1997 QDR Reserve reductions require a minor
    adjustment. An adjustment would stem the degradation of the Marine
    Corps Reserve's capability to provide OPTEMPO and PERSTEMPO relief to
    Active Marine Forces, maintain sufficient Full Time Support at our
    small unit sites, and retain critical aviation and ground equipment
    maintenance capabilities. Our plan calls for maintaining overall
    Selected Marine Corps Reserve (SMCR) end-strength at 39,558 (including
    2,261 Active Reserves) through fiscal year 2003.
        The most sacred honor we can provide veterans is that of a military
    funeral. The active duty staff members and Reserve Marines at our 185
    manned sites performed approximately 5,500 funerals last year, a 45
    percent increase over 1999. We project a 39-40 percent increase per
    year giving us potentially 7,500 funerals to support this year. The
    steps that Congress took last year to allow Reserve participation at
    the inactive duty drill rate for funeral honors duty have helped us
    meet this growing obligation. Our current Reserve end strength supports
    funeral honors at our small sites (where there are less than 10 active
    duty Marines on staff), not as a primary duty, but as one of the many
    tasks incident to training and administering the Reserve and providing
    a military connection to the local community. As a result, we have
    realized increased operations and maintenance costs associated with
    vehicle maintenance and fuel for transportation of funeral honors
    parties and for the cleaning and maintenance of dress uniforms.
    Continued support for military funeral honors funding, in our Military
    Personnel and Operations and Maintenance accounts, is critical to
    ensuring mission success in this most worthwhile endeavor.
        Recruiting and retaining quality men and women in the Marine Corps
    Reserve continues to be a challenge in today's competitive environment.
    The economy has been strong and young people are presented with
    numerous alternatives to military service. Our mission is to find those
    who choose to manage a commitment to family, community, a full time
    job, and the Corps. While such dedication requires self-discipline and
    personal sacrifices which cannot be justified by a drill paycheck
    alone, adequate compensation and retirement incentives are an element
    of attracting and retaining quality personnel.
        Because many of our Reserve Marines serve first in the Active
    component, we continue to man transitional recruiting stations at
    Marine Corps bases and stations to begin the prior service recruiting
    process before Marines leave active duty. I appreciate the
    Congressional support for the increased educational benefits and
    reenlistment and affiliation bonuses that help us attract these Marines
    to join and stay in our units. The transitional recruiters are also the
    portal of entry for a program of high value to the Commandant, ``Marine
    for Life.''
        The Marine For Life Program is being developed to achieve the
    Commandant's vision of ``improving assistance for our almost 27,000
    Marines each year who honorably leave active service and return to
    civilian life, while reemphasizing the value of an honorable
    discharge.'' The Marine For Life Program will enhance current
    assistance by providing valuable sponsorship to these Marines as they
    transition to civilian life. The Marine for Life Program will build,
    develop, and nurture a nationwide network of transitioning Marines,
    veterans, retirees, Marine Corps affiliated organizations, and friends
    of the Corps. The program will foster a mutually supportive life-long
    relationship between the Marine, his/her Corps, and the public that we
    serve, thereby strengthening our ethos of ``Once A Marine, Always A
    Marine.''
        During the past fiscal year we achieved 103.4 percent of our goal
    for prior service and 102.5 percent for non-prior service Marines. It
    was not easy. Our retention rates for Reserve enlisted Marines staying
    beyond their initial obligation are also improving. We do, however,
    still have some work to do in keeping non-prior service Reserve Marines
    satisfactorily participating for the full length of their obligated
    drilling commitment. The incentives provided by Congress, such as the
    Montgomery G.I. Bill (MGIB), the G.I. Bill Kicker (Kicker), enlistment
    bonuses, medical and dental benefits, and commissary and PX privileges,
    have all contributed to the stability of our Force. These incentives
    have helped us find and retain capable, motivated, and dedicated
    Marines. Continued Congressional support of these programs is critical
    to attracting and retaining the high-quality individuals our Corps
    needs for the future.
        The MGIB and Kicker, which can provide up to $600 per month for
    college, is the most popular incentive we provide to Marines but it
    must compete with the National Guard's enticement of a full paid
    scholarship to a state run college or university. I appreciate the
    additional MGIB funding the Congress provided in fiscal year 2001. It
    expanded our ability to offer the Kicker to more Marines in critical
    billets and helped to level the field of competition between the Guard
    and the Reserve Component.
        Our Career Management Team (CMT) continues to expand its efforts to
    support ``Career Reservists''--those Marine officers and enlisted who
    have completed their initial obligation and remain affiliated. The CMT
    staff is available to provide record reviews and counseling, career
    guidance, and promotion information to assist and guide Reserve Marines
    in making the best possible career decisions. Via the CMT website,
    Marines can access CMT services as well as find and apply for open
    Reserve billets and Active Duty Special Work (ADSW) opportunities using
    the Reserve Career Management Support System (RCMSS) database. RCMSS
    also allows units and the CMT staff to contact Marines qualified for a
    particular job, and provides units visibility of Marines who are
    actively seeking Reserve career options.
        Our benchmark for achieving our goals is simple--``One Corps, One
    Standard'' for all Marines, Active and Reserve. The Marine Corps Total
    Force System (MCTFS), our single integrated personnel and pay system,
    encompasses the records of all Marines in a single logical database. To
    meet the unique requirements of the Reserve, we are constructing MCTFS
    compatible automated systems to reduce costs and provide better service
    to our Marines. An example is the Marine Corps Medical Entitlements
    Data System (MCMEDS) that automated injury claims processing for
    Reserve Marines, reducing paperwork and facilitating rapid
    determination of entitlements for the injured Marine. We will shortly
    field our Reserve Order Writing System (ROWS) to integrate our orders
    request and writing systems, facilitate reconciliation of funding
    obligations, and ultimately interface with MCTFS and the Defense Travel
    System. It will expedite orders and travel processing, and smooth the
    Marine's transition to active duty, guaranteeing timely orders and pay
    actions. We actively participate in development of the Total Force
    Administration System (TFAS), a Marine Corps program to update and
    further automate our Manpower Management System.
        The U.S. Navy medical, dental, religious, and naval gunfire support
    furnished to MARFORRES also contributes to our personnel readiness.
    There is a requirement for over 2,700 Naval Reserve officer and
    enlisted personnel to support MARFORRES. I enthusiastically support the
    Navy plan to fund a full 15 day annual training for these sailors in
    fiscal year 2002 and out. Their training alongside the Marines that
    they support is essential to the successful accomplishment of our
    training and operational mission. The Navy also provides near total
    manning for two Status of Resources and Training System (SORTS)
    reportable Marine Corps commands, the Medical and Dental Battalions of
    the 4th Force Service Support Group, as well as significant support of
    air/ground combat elements. I will work with the Director, Naval
    Reserve to maintain a minimum of C2 readiness.

                                 LEGACY SYSTEMS

        Our second pillar of readiness, legacy systems, represents the
    equipment we will fight with today--our near term readiness. These
    systems are currently ready due to the hard work of our Marines and the
    assistance of Congress in providing additional resources for
    maintenance and spare parts. The cost, however, of keeping this
    equipment ready continues to climb. In a constrained environment,
    maintaining the readiness of aging equipment competes with monies that
    would otherwise be spent on modernization. While we must maintain our
    equipment, we cannot afford to continue to do it at the expense of
    modernizing the force.
        Maintaining our aging equipment continues to challenge the Force.
    Even though the Marine Corps is replacing some equipment and
    modernizing others through extensive modifications, these initiatives
    will take a few years to complete. Since the Reserve generally receives
    new equipment and modifications to existing systems after the Active
    force, the equipment we currently possess will continue to age and
    require more frequent repairs. Lengthy repair cycle times greatly
    reduce the amount of time that reservists have for annual training.
    Time is a valuable commodity that is extremely limited in the reserve
    environment. The more burdensome these repairs become to our units, the
    more the quality of training will diminish.
        To maintain current levels of readiness, we must have sufficient
    operations and maintenance funding for corrective and preventive
    maintenance programs. Due to topline constraints, the existing depot
    maintenance backlog for MARFORRES equipment is growing. Corrosion
    control funding is, as always, a high priority to all Marine Corps
    units. Current funding provides relief, but the pending requirement for
    corrosion control repairs to equipment located at our home training
    centers remains a challenge. The aging of our equipment plays a major
    role in this area. We are outsourcing and competitively bidding some of
    our intermediate maintenance requirements as an innovative way to
    stretch the maintenance dollar. Two success stories are UNICOR Federal
    Prison Industries and the Anniston Army Depot, both of which provide
    competitive costs and a timely turnaround of a quality product.''
        We are experiencing higher maintenance costs for our heavy and
    medium mechanized weapons systems--M1A1 Tanks, Assault Amphibious
    Vehicles (AAVs), and Light Armored Vehicles (LAVs). Our 135 LAVs
    particularly have experienced high operational tempo and a consequent
    increase in maintenance requirements. We are procuring dehumidification
    systems to prevent the detrimental effects of moisture intrusion on the
    sophisticated electrical and optical components of these ordnance
    vehicles. Nonetheless, a shortfall in maintenance funding continues to
    exist.
        Our aviation equipment is facing a similar situation. With the
    exception of our KC-130Ts and CH-53E aircraft, many of our aircraft are
    approaching block obsolescence. Our CH-46E averages over thirty years
    old--some of our younger pilots are flying the exact same aircraft that
    their fathers flew. Continued aviation modernization is a critical path
    to future readiness.
        While on the subject of aviation, I would like to discuss our
    Flying Hour Program. In fiscal year 2000 MARFORRES executed 100 percent
    of the programmed funding while flying 92 percent of the programmed
    hours. If we execute our current fiscal year 2001 Flying Hour Program
    without additional funds--either an increase to topline or through
    reprogramming--our squadrons will not have enough funding to achieve
    the desired Primary Mission Readiness. There will also be a decrease in
    Mission Capable/Full Mission Capable rates and a potential 6-8 month
    recovery time for the re-qualification of aircrews. The prospect for
    such a stand down is a major readiness concern.
        Until the gap between the cost of our aging ground equipment and
    aviation fleet and the requirement for modernization is addressed with
    additional resources, we will continue to realize exponential increases
    in the levels and frequency of maintenance necessary to achieve
    acceptable levels of equipment readiness. Meeting these requirements is
    critical. In most cases the Reserve will operate its legacy systems
    longer than the Active Component.

                                 INFRASTRUCTURE

        Investment in infrastructure has been a bill-payer for near-term
    readiness for eight of the last ten years. Maintaining and modernizing
    our training center infrastructure has become extremely challenging.
    Under current construction plans, the 24 sites owned outright by
    MARFORRES are on a schedule to be replaced once every 100 years. Our
    costs for facilities operations and maintenance have increased 20
    percent in less than 3 years. This fiscal year we are experiencing
    unusually high utilities costs, both at sites we own and those where we
    must reimburse a host. In November 2000 we were alerted that our
    electricity and natural gas costs at our facilities on Marine Corps
    Base Camp Pendleton would increase by 87 percent and 60 percent,
    respectively. These increases, in conjunction with current maintenance
    and repair of real property projects of more than $21.6 million, exceed
    the annual resources programmed for training. Rising infrastructure
    costs, largely beyond our control, challenge our finite resources.

                                 MODERNIZATION

        MARFORRES' top modernization priority is to upgrade our fleet of 48
    F/A-18A aircraft (4 Squadrons) with Engineering Change Proposal (ECP)-
    583. While our Marines and their F/A-18A's performed superbly last year
    in the Bright Star exercise, these are the same type aircraft that
    could not be employed in support of Kosovo operations due to the lack
    of self-designating capability. ECP-583 is a hardware and software
    upgrade designed to make the current aircraft compatible both
    operationally and logistically with other F/A-18C/D models utilized in
    theater by CinCs or Marine Air Ground Task Force Commanders. This
    upgrade provides the capability to self-designate precision munitions,
    to employ the newest generation of air-to-ground/air-to-air weapons,
    and to conduct night operations. Although billed as a modernization
    program, ECP-583 is also a readiness and sustainment issue linked
    directly to the roles and missions these squadrons uphold in the Total
    Force. This Total Force program also includes 28 Active Component
    aircraft for a total of 76. The modernization of these F/A-18A's will
    make these Active and Reserve aircraft capable, relevant, and fully
    interoperable in support of the Total Force Marine Corps. Current
    funding will upgrade 22 active and 22 reserve aircraft to full ECP-583
    standards, while 32 aircraft await funding for their upgrades.
        Our second modernization priority is upgrading the remaining 11 of
    our 21 CH-53E helicopters with the helicopter night vision system
    (HNVS). The HNVS improves the capability to navigate and operate at
    night and during periods of reduced visibility and supports the full
    operational and logistical integration of Reserve forces with Active
    forces. Another top priority is the KC-130T Avionics modernization/
    standardization which closely parallels the USAF C-130 modernization
    effort. The current Reserve aircraft configuration is not compliant
    with emerging Communication, Navigation, and Surveillance/Air Traffic
    Management or mandated Navigation/Safety requirements. Funding these
    and other modernization initiatives to maintain readiness and safety
    will facilitate the effective integration of Reserve aviation assets
    with the Active Component.
        While fixed and rotary wing aviation modernization are the most
    pressing needs of the Marine Corps Reserve, they must not eclipse vital
    ground combat and logistics modernization that will ensure the Reserve
    remains an effective combined arms team. The Marine Corps commitment to
    Reserve modernization to expand Total Force capability is demonstrated
    by our plans to field the High Mobility Artillery Rocket System
    (HIMARS) to the Reserve to provide all weather fire support for major
    theater war. As currently planned, the fielding of the Medium Tactical
    Vehicle Replacement (MTVR) and the HMMWVA2 to the Marine Corps Reserve
    is scheduled to be completed by 2004 and 2005, respectively. These
    assets will materially increase the readiness posture of the MARFORRES.
    We are continuing to work with Headquarters Marine Corps and the Marine
    Corps Materiel Command to develop optimum Total Force fielding plans
    for new equipment.
        The Marine Corps Strategy 21 reaffirmed that Reserve Integration
    Expertise is a core competency of the Marine Corps. Ready, rapidly
    responsive Marine Reserve forces are a vital part of the Marine Corps
    and provide depth, flexibility, and sustainment. Modernization of our
    Reserve force should parallel the modernization of our Active force if
    we are to ensure our Total Force is ready, when called upon, to fight
    and win tomorrow's battles. Modernization of equipment, along with
    investment in infrastructure has been a bill-payer for near-term
    readiness for eight of the last ten years. We must reverse this trend
    and invest appropriately in these critical areas.

                           FUTURE ROLES AND MISSIONS

        The value of the Marine Corps Reserve has always been measured in
    our ability to seamlessly and effectively augment and reinforce the
    Active Component. All operational units of the Selected Marine Corps
    Reserve have been assigned to a unified combatant commander and
    apportioned to the CINCs for war planning and are, in fact, included in
    major theater war (MTW) plans. In the event of an MTW our Reserve
    commanders know: when and where they can expect to mobilize and deploy,
    what missions and tasks they will be expected to perform, and which
    Active Component commander will employ them in combat. Most Marine
    Reserve units are identified to deploy in the earliest phases of a
    conflict, to include units identified to fall in on Maritime
    Prepositioned Shipping equipment. These facts clearly demonstrate how
    important the Marine Corps Reserve is to the total Marine Corps MTW
    planning effort. Although our primary roles will not change, current
    global conditions will require increasing contributions from the
    Reserve to support Total Force demands as contributors to exercises,
    OPTEMPO relief, and actual operations.
        Operational tempo relief missions will continue to provide
    increased opportunities for reservists to support the Total Force
    effort throughout the world. Requests for reserve support cross the
    spectrum of unit type and capabilities. This past year we supported
    contingency operations by providing a Civil Affairs detachment for
    Kosovo and KC-130 support for both Operation Northern Watch and for
    forward deployed Marine Expeditionary Units (MEUs), relieving Active
    component aviation units of the missions. Additionally, our Air Naval
    Gunfire Liaison Companies (ANGLICO) supported both east and west coast
    MEUs in exercises within the United States and overseas.
        Outside of the Continental United States Reserve deployments in
    fiscal year 2001 are planned to support contingency operations,
    bilateral exchanges, and to provide OPTEMPO/PERSTEMPO relief to the
    active component. These units will conduct live-fire exercises and
    participate in amphibious, jungle, mountain, and cold weather training,
    which will enhance unit and individual skills, proficiency, and
    readiness. This Reserve participation includes: six New Horizons
    operations conducted in Central and South America, two Civil Affairs
    detachments to Kosovo for a six month rotation each, two Dutch
    bilateral exchanges in Curacao, an Australian exchange in support of
    Exercise Gold Eagle, and numerous Partnership for Peace Exercises in
    support of the European Command.
        This year the Marine Corps Reserve is also supporting two
    additional OPTEMPO relief efforts. We have deployed a provisional
    security unit from the 23rd Marine Regiment to Guantanamo Bay, Cuba to
    serve a four-month deployment, relieving the Marine Corps Security
    Force Battalion of the requirement to send one of its FAST platoons to
    perform that mission. We have been tasked to assume the Marine portion
    of the UNITAS exercise. The goal of this initiative is to assign the
    UNITAS deployment to the Reserve every other year. We will begin
    training a reinforced company from the 23rd Marine Regiment, this year,
    in preparation for the 2002 UNITAS deployment. A robust Special
    Training (ADSW) account is a critical element in meeting the
    requirements of the Total Force.
        The Marine Corps Reserve at the beginning of the new millennium
    must be able to adapt to new missions in response to future challenges.
    The role played by our Reserve units in Weapons of Mass Destruction--
    Consequence Management (WMD-CM) will not detract from their primary
    mission of augmenting and reinforcing the Active Component. The Marine
    Corps Reserve, already ``forward deployed'' in cities across America,
    can play an important role in supporting civil-military responses to
    crises.
        Given that we are to continue to increase the employment of the
    Reserve in support of Total Force missions, we must maintain current
    readiness while ensuring resources are available for modernization.
    Congressional support for increased use of the Reserve has been a key
    element in our Reserve Marines and Sailors providing OPTEMPO relief and
    training alongside their Active counterparts without impinging on other
    resources. Your support permits us to meet commitments that may go
    beyond the normal two week annual training period. While the historical
    Reserve mission to augment and reinforce our Active Component remains
    our focus, the demands of this and emerging missions will increase
    operational challenges and amplify the need to effectively resource the
    Marine Corps Reserve. With proper planning that takes into account the
    specific demographics of the Marine Corps Reserve, and with adequate
    resources, we can do more and still take care of our Marines. We are
    not yet approaching the limits on the use of the Marine Corps Reserve.
        We are ready today, but our readiness has come at the expense of
    investment in our infrastructure, modernization, and quality of life
    accounts. We are ever mindful that it has been Congress' consistent,
    steadfast, and unfailing support that preserves our ability to answer
    the Nation's call. The Marine Corps appreciates your continued support
    and collaboration in making the Marine Corps and its Reserve the DOD
    model for Total Force integration and expeditionary capability.

        Senator Stevens. General Sherrard.
    STATEMENT OF MAJOR GENERAL JAMES E. SHERRARD, III,
                CHIEF, AIR FORCE RESERVE AND COMMANDER,
                UNITED STATES AIR FORCE RESERVE COMMAND,
                DEPARTMENT OF THE AIR FORCE
        General Sherrard. Mr. Chairman, Senator Inouye, members of
    the committee, I am indeed proud to be representing nearly
    74,000 men and women of the Air Force Reserve, as we have a
    chance today to discuss our challenges and some of our
    accomplishments with you today.
        Our Air Force Reserve is strong and continuing to grow
    stronger, with your help. Particularly, I need to thank you for
    funding the pay raise above the employment cost index; for the
    additional recruiters you gave us last year for recruiting and
    retention; incentives you gave us which allowed us to have
    pilot bonuses for our Active Guard and Reserve (AGR) pilots; as
    well as provisions for the Montgomery GI bill kicker--
    additional dollars for our reservists.

                         EXPEDITIONARY AEROSPACE FORCE

        Today, our citizen airmen are engaged in missions around
    the world, stepping up to the task with enthusiasm and
    expertise. We are an integral partner in the Expeditionary
    Aerospace Force of our Air Force. In cycle 1, which was
    recently completed, more than 14,000 members of the Air Force
    Reserve were participants. As we engage in cycle 2, we have
    more than 12,000 members either engaged or will be engaged
    prior to completion of the cycle.
        We currently have more than 5,000 members deployed, both in
    the States and outside the Continental United States (OCONUS),
    with almost 1,300 of them being out of the country.
        As we face the future, I am confident that it will be the
    people of the Air Force Reserve, working seamlessly with our
    friends in the Air National Guard and our active duty partners,
    to assure our continued success as we provide the world's most
    premier Aerospace Force.
        Before I mention some of our challenges, I would like to
    discuss what I believe are some of the reasons we are so
    successful. First, our people are the best, and as has been
    mentioned by my colleagues, we are, in fact, a reflection of
    the active force that we support. This is so key, because they,
    too, are also the very best that we could ever hope to have in
    our military.
        We have in our fold a sufficient number of prior service
    members, and their experience is invaluable. We have individual
    mobilization augmentees who bring very, very specialized
    skills, which is also essential to our success and our service.
    A pivotal factor to our success to date, is our organizational
    contract-management of reservists by reservists. The support
    for families, civilian employers, of the Air Force, and the
    Department of Defense (DOD), of communities and, most
    importantly, of Congress, are vital to our success and that has
    never wavered.

                                   READINESS

        We are a combat-ready force, ready for deployment, because
    we have one tier of readiness in the Air Force. Our readiness
    standards are, in fact, measured by the active force, while
    training is controlled by Reserve members. We train and deploy
    with our active force. We have comparable and interoperable
    weapons systems, and we believe that our force is ready, at any
    given moment, to extend our capabilities whatever the Air Force
    needs may be.

                            RECRUITING AND RETENTION

        Our challenges include, as has been mentioned by my
    colleagues, recruiting and retention. Overall, our force
    remains at over 80 percent prior service, with high-quality
    recruits available. However, the active duty force drawdown is
    at an end, and so therefore we are looking at additional
    nonprior service members to fill our recruiting needs.
        That pool of eligible service members for us to recruit is
    faced with a good economy. They appear to have a lesser
    propensity to serve, and have abundant opportunities both for
    college tuition assistance and things of that type, which make
    recruiting initiatives very, very important for us.
        We need to have the ability to offer incentives which will
    help us enhance retention of those members beyond the minimum
    satisfactory years of service to achieve a Reserve retirement.
    It is essential that we keep them for the maximum period that
    we can, and budgeting for recruiting on retention incentives
    and advertising are a top priority. Resourcing additional
    recruiters, leased office space, and advertising are critical
    if we are going to have our message placed out in the public
    where, in fact, we can have the opportunity to address
    potential nonprior service individuals.
        Additionally, resolution of follow-on missions for our C-
    141 unit-equipped organizations, completion of our KC-135E to R
    engine conversion programs, the rising cost of O&M with an
    aging fleet, modifications of aging equipment, and then
    providing facilities and infrastructure which meet the needs to
    enhance readiness in our training are all key challenges that
    we face and will continue to face. We must ensure that we have
    modernization initiatives which are compatible with the active
    programs to include new systems and upgrade of current systems.

                               PREPARED STATEMENT

        I thank you for the opportunity to present our story today,
    and I look forward to answering any questions that you may
    have.
        [The statement follows:]

           PREPARED STATEMENT OF MAJOR GENERAL JAMES E. SHERRARD III

       Mr. Chairman, Senator Inouye, and distinguished members of the
    Committee, I appreciate the opportunity to appear before you today. I
    would like to thank the Committee for your continuing support, which
    has helped your Air Force Reserve address vital recruiting, retention,
    modernization, and infrastructure needs. Your passage of last year's
    pay and quality of life initiatives were especially important as your
    actions sent an unmistakable message to our citizen airmen that their
    efforts are truly appreciated.
        I am pleased to tell you that the Air Force Reserve continues to be
    a force of choice for the Air Force and the warfighting Commanders in
    Chiefs (CINCs), whenever an immediate and effective response is
    required to meet the challenges of today's world. We are ready in peace
    or war, available for quick response, and able to stay the course when
    called upon.
        Air Force Reserve Command (AFRC) members are essential to nearly
    everything we do today, and we intend to do more. Our day-to-day
    involvement has increased markedly in recent years. The Air Force
    Reserve participated in 11 contingencies in the 37 years between 1953
    and 1990, and in the last ten years we have played a significant role
    in more than 50 major operations. This is part of life in the Air Force
    Reserve and we are proud to do it. From the end of Desert Storm until
    the 1999 Presidential Recall for Operation ALLIED FORCE, and in every
    instance since, we have met these obligations with volunteers. The Air
    Force Reserve ethic of volunteerism is something we are very proud of,
    believing it reflects the quality and enthusiasm of our people.
        People are our most important asset. In an effort to retain our
    best and brightest, we need to reward our people through compensation
    and promotion and ensure they know their efforts are appreciated. We
    need to look after their families while they are deployed and reach out
    to their employers with our thanks for their support. We need to ensure
    that there is open dialogue among the troops and from the troops to me
    to make sure that we're doing our job the best that it can be done.
    More than ever, we need to continue to partner with you to ensure we
    maintain the strongest air force in the world. In the Air Force
    Reserve, we put people first, emphasize readiness, and continue to seek
    balanced, time-phased modernization and infrastructure programs.
        The Air Force is a team--we train together, work together, and
    fight together. Wherever you find the United States Air Force, at home
    or abroad, you will find the active and Reserve side-by-side. You can't
    tell us apart and that's the way it should be. The bottom line is that
    when the Air Force goes to war, enforces a peace agreement or
    undertakes prolonged humanitarian missions anywhere in the world today,
    the Air Force Reserve will be there. During my comments today, I will
    discuss the status of many programs. I should note, however, that the
    programs I will discuss, and the associated funding levels may change
    as a result of the Secretary of Defense's strategy review that will
    guide future decisions on military spending. I ask that you consider my
    comments in that light.
        Fiscal year 1999 ended with a bang, as Hurricane Floyd plowed into
    the coast of North Carolina. As the flooding peaked, AFRC coordinated
    with Federal disaster response personnel to bring in five HH-60
    helicopters from the 920th Rescue Wing at Patrick Air Force Base,
    Florida to initiate rescue operations. Over the next six days, Reserve
    rescue crews worked day and night, flying 59 sorties and pulling 215
    flood victims from rooftops, trees, cars, and isolated areas of high
    ground.
        Another Reserve mission, Coronet Oak, faced a very difficult
    transition in 1999. Coronet Oak is an operation that provides C-130s
    from Air Force Reserve Command and the Air National Guard to U.S.
    Southern Command to provide airlift support in the Caribbean, and South
    and Central America. When America transferred the Canal Zone back to
    Panama in 1999, this long-established operation had to look for a new
    home. At first, only temporarily placed at Muniz Air National Guard
    Base in San Juan, Puerto Rico, it was decided to go ahead and make
    Muniz the permanent location for the operation. Far from ideal for a
    number of reasons, Muniz was still more cost effective than other
    locations because basic facilities were available that did not need a
    huge infusion of money to make them operable. Still, the year was full
    of growing pains as new logistics trails had to be developed, work-
    arounds had to be initiated for some of the facility limitations, and
    so on. The missions continued to flow without a break, though, and our
    crews flew countless sorties in support of counter-drug operations,
    embassy resupply, and a variety of airlift requirements.

                               HIGHLIGHTS OF 2000

        It was another busy, productive, but challenging year for Air Force
    Reserve aircrews. Natural disaster responses, the relocation of a long-
    standing forward operating location, an election year surge in
    presidential and congressional airlift support, the growing pains of a
    new deployment concept, the taking on of new missions, the introduction
    of a new weapons capability--the Air Force Reserve was there. Through
    it all, our outstanding people met the challenges, found ways to
    succeed, and proved beyond doubt that the Air Force Reserve is an
    indispensable part of America's Total Force military.
        Unfortunately, the heavy rains of 1999 also brought on a potential
    medical crisis caused by a super-heavy mosquito infestation. In these
    opening days of the new fiscal year, AFRC stepped to the forefront
    again with another of its specialized missions, aerial spray. The 910th
    Airlift Wing, Youngstown, Ohio is the only unit in the entire Air Force
    to provide this critical mission for disease suppression, natural
    disaster relief, oil spill dispersion, and invasive species management.
    In the aftermath of Hurricane Floyd, the 910th's specially equipped C-
    130s logged over 100 hours of flying time spraying 1.7 million acres in
    Virginia and North Carolina for mosquito control. Again, a superhuman
    effort by a small number of Reserve crews responding to the needs of
    their fellow countrymen.
        Fiscal year 2000, also saw the worst forest fires in U.S. history.
    Within the Air Force Reserve, only one unit, the 302nd Airlift Wing at
    Peterson Air Force Base, Colorado, is trained to support the U.S.
    Forest Service's fire fighting efforts with the C-130 based Modular
    Airborne Fire Fighting System. Last year, the fires were so bad that
    the 302nd was called early in the season and stayed until rain showers
    in September finally brought some relief.
        From the end of July to early September, 302nd crews flying two
    aircraft completed 154 sorties in California and Washington, dropping
    over 400,000 gallons of fire retardant. The crews logged as many as
    eight sorties per day, going back for load after load of retardant to
    attack critical points in front of the raging fires. Their efforts have
    continued to pay off long after the fires died out, as the retardant is
    also a fertilizer that promotes the rapid regrowth of the fire-charred
    terrain, helping to prevent erosion as the land comes back to life.
        An ongoing mission the Reserve is involved with which has an impact
    on people's lives throughout the world is the transportation of
    humanitarian relief goods under the auspices of the Denton Amendment
    Program. This program allows DOD transportation assets to move
    humanitarian cargo for free on a space-available basis. In fiscal year
    2000 the Air Force Reserve moved over 1.9 million pounds of Denton
    cargo, flying 122 missions. AFRC is the top supporter of the Denton
    program year after year. It provides good training opportunities for
    our airlift crews while enabling them to make a positive difference
    throughout the world.
        Though the Expeditionary Aerospace Force (EAF) was a completely new
    concept for the Air Force, the Air Force Reserve's tradition of
    training to be a deployable force allowed a relatively seamless
    transition to the EAF and its force projection packages, the Aerospace
    Expeditionary Forces (AEFs). However, Reserve deployments in the past
    primarily involved aircrew members and maintenance support personnel,
    so it was an adjustment for some Expeditionary Combat Support (ECS)
    personnel such as security forces, civil engineering and services. The
    transition was not without its growing pains, but after the first few
    rotations, predictability and timeliness of requirements had vastly
    improved, transportation was much more efficient, and working
    relationships between AFRC and the various active duty organizations
    involved in the AEF process had greatly matured.
        Despite the initial challenges, AFRC's transition to AEF support
    must be considered a success by any measure. The command more than met
    its initial requirements in aviation operations, and support from the
    ECS side was notable regardless of the problems they faced. The
    exceptionally strong participation by AFRC security forces was
    outstanding, and greatly relieved the high deployment stress of their
    active duty brethren. Overall, more than 14,000 Reservists deployed in
    support of the AEFs by the end of cycle 1, a testament to the
    readiness, patriotism, and proud professionalism of the Air Force
    Reserve.
        I would be remiss if I didn't mention the outstanding support from
    our more than 12,500 Individual Mobilization Augmentees (IMAs). Found
    in nearly every career field, IMAs augment active duty manning by
    filling wartime surge and national security requirements. Due to
    sustained high OPTEMPO, active component Air Force intelligence relies
    heavily upon ARC intelligence personnel to meet peacetime, surge and
    wartime requirements. This intelligence force provides approximately 40
    percent of the overall Air Force intelligence capability. IMAs in Air
    Force Material Command performed more than 530 projects, ranging from
    humanitarian services to highly technical resolutions for major support
    challenges. As with all our reservists, IMAs continue to proudly and
    professionally meet the challenges of integrating seamless support.

                            RECRUITING AND RETENTION

        While some progress has been made in recruiting and retention, my
    principal concern today remains attracting and retaining high quality
    people in an increasingly competitive economic environment. The
    additional recruiting funding we received last year was sincerely
    welcomed and we are grateful for your support. In spite of accessing
    nearly 9,500 personnel, which is our highest number of accessions since
    fiscal year 1995, we missed our recruiting goal by 14 percent in fiscal
    year 2000. However, our production recruiters continue to lead the
    Department of Defense in annual accessions per production recruiter
    with an average of over 38 accessions in fiscal year 2000. Equally
    important to Air Force Reserve Command's ability to meet the
    requirements being levied on us is family and employer support. Their
    sacrifice and continual support make it possible for our members to
    carry out their duties in such a spectacular manner.

    Recruiting
        Historically, the Air Force Reserve accession mix has been between
    80-90 percent prior service, with 75 percent of those drawn from active
    duty Air Force. High prior service accession rates have contributed to
    making us one of the most experienced reserve forces in the world.
    Moreover, we have found that prior service personnel are more likely to
    be retained until the 20-year point or longer, making the force more
    stable. In the past, we recruited heavily from trained personnel
    leaving active duty during the force drawdown and we are currently
    accessing more than 21 percent of the active duty Air Force recruitable
    separatee market. However, the end of the active duty drawdown demands
    new recruiting strategies and expectations. By fiscal year 2001, active
    duty accessibles (those eligible to join the Air Force Reserve) equaled
    less than one-third of those who left active duty in the early 1990s.
    If we cannot maintain high accession levels in the prior service
    market, we'll be forced to increase our non-prior service (NPS)
    accessions to meet manning needs. As it is, NPS accessions required to
    meet our recruiting goal may soon quadruple, from less than 1,000 in
    the early to mid-90s to more than 4,000 in the outyears. As college
    enrollment and funding opportunities increase, the declining tendency
    to enlist in the military, a smaller prior service pool as well as the
    decrease in propensity to affiliate after leaving active service, our
    reserve recruiters will continue to find innovative ways to reach the
    NPS market.
        Yet, we're making positive in-roads with the NPS market. We believe
    there are many outstanding young people across America who want to
    serve their country, but they prefer to do it from home and on a part-
    time basis. These are the people we are after, especially the ones who
    are attending college, either full or part-time. To help us attract
    these candidates and retain our current members, we profess the value
    of the Selected Reserve Montgomery G.I. Bill (SR-MGIB) that pays up to
    $9,468 in total benefits. The SR-MGIB is non-contributory on the part
    of the reservist, and to be eligible, members must agree to a 6-year
    enlistment. As an added bonus, applicants who enlist in selected career
    fields that are in short supply can qualify for the SR-MGIB Kicker that
    pays up to an additional $350 per month. Our NPS numbers are steadily
    climbing and we're pleased with the progress we're making here. On
    another front, we're asking all our people to become ambassadors for
    the Air Force Reserve. Officially, we call it the ``Get One Program,''
    and this initiative recognizes reservists who are successful in
    referring potential applicants to speak with one of our Air Force
    Reserve recruiters. Studies have repeatedly shown that most people who
    join the military already know someone who is a member and has good
    things to say about their experiences.
        As of April 2001 we are meeting our fiscal year 2001 recruiting
    goal and are hopeful that we will achieve our goal of 10,064 despite
    the earlier mentioned barriers. We need to increase our recruiting
    efforts and refocus our advertising to compete. In fiscal year 1999, we
    increased our recruiting budget to $5.4 million and our advertising
    budget to $8.7 million. We have increased our recruiting staff by
    nearly 10 percent, adding 30 recruiters to help bring our numbers up.
    Congress has been very responsive in helping us with additional
    recruiters and funds to do this. Together, these initiatives should
    help us turn the tide.

    Retention
        While we continue to meet our overall command retention goal of 82
    percent, the strong economy has had a significant impact on our ability
    to retain personnel--particularly in critical skills. The economy will
    undoubtedly continue to challenge us in attracting and retaining the
    skilled professionals we need, so we must find new ways to strengthen
    our retention rates particularly for full-time pilots and second term
    enlisted personnel. While overall officer retention rates are healthy,
    the current pilot retention rates do not reflect the projected
    escalating attrition rates that will challenge all Air Force
    components. Historically, pilots stayed until retirement, but recent
    indicators reveal an increase in the number of Air Reserve Technician
    pilots who are leaving early. As with the active component, increased
    hiring by major airlines, high OPTEMPO and perceptions of better
    civilian pay and working conditions are the reasons for leaving. The
    USAFR predicts a pilot shortfall of 325 for fiscal year 2002 based on a
    35 percent Active Duty pilot capture rate. A Rated Management Task
    Force has been formed to study this issue and develop a Total Force
    approach to solve it. We hope that some of the pay incentives, as well
    as other enhancements such as improvements in scheduling predictability
    that the EAF provides, an increased use of telecommuting to better
    manage ancillary training requirements, protection of current benefits
    and increased parity of benefits will help us solve this problem.
        These initiatives should have an equally positive effect on
    retention of our first term airmen. Our retention rate in this category
    remained equal to our fiscal year 1999 rate this past year, probably
    due to OPTEMPO concerns. We believe our plan to relieve some of the
    turbulence associated with OPTEMPO should turn the trend upward. In the
    future, we will continue to focus on achieving an equitable parity of
    pay and benefits, as well as some other important initiatives.
        In sum, the matter of recruiting and retention is the issue of
    greatest concern to me, and we are taking positive steps to fix this
    situation as I lead the Air Force Reserve in this new millenium.

                             OPTEMPO AND READINESS

        As full participants in the Total Air Force, our readiness remains
    good overall, and we are part of nearly every Air Force mission. One of
    the keys to our success is the leverage inherent in a fully trained and
    accessible force waiting on call. In reality, today's global situation
    dictates that we serve as a peacetime augmentation force as well as a
    ready, wartime force.

    Readiness
        The current Reserve Component force structure is of sufficient size
    and composition to meet the wartime requirements identified by the
    Bottom-Up and Quadrennial Defense Reviews. Reserve missions and roles
    have expanded, despite decreasing end strength. We are trained and
    resourced to meet our part of the National Military Strategy and
    currently are programmed with enough forces to help prosecute two major
    theater wars. Air Force Reserve units maintain readiness levels on par
    with active duty units. More than 95 percent of Air Force Reserve units
    are currently combat ready, closely paralleling our active force.
    Reserve units have comparable equipment in quantities proportional to
    their active duty counterparts and participate in day-to-day
    operations, exercises, and training. In addition, Reserve units train
    to active duty standards and receive regular inspections from their
    gaining major commands. Historically, during operational readiness
    inspections, 100 percent of the inspected Reserve units received
    satisfactory or higher ratings, with most of these units rated as
    outstanding or excellent.

    Accessibility & Volunteerism
        Volunteerism remains our mainstay. The Air Force Reserve and Air
    Force lead the way in providing responsive Reserve forces to meet
    service and national needs. In the Persian Gulf and Haiti, as well as
    on-going operations in Turkey, Bosnia, Southwest Asia, the Caribbean
    and Central and South America, the Air Force Reserve responds to all
    requests for additional forces with volunteers only. And, while the
    1999 Presidential Recall activated approximately 1,400 Reservists,
    hundreds more volunteered as well.
        The Air Force Reserve remains on the leading edge of volunteer
    participation for peacetime operations, as demonstrated by the
    implementation of the Expeditionary Aerospace Force (EAF). By using
    volunteers, we minimize potentially adverse impact on readiness and
    training, recruiting, and retention. Long range Aerospace Expeditionary
    Force (AEF) scheduling allows our personnel to plan well ahead and to
    volunteer for deployments that best fit their schedules, permitting
    better management of PERSTEMPO. Reserve resources integrate with those
    of the Air National Guard and the active Air Force to provide maximum
    capability for our AEFs.
        Of concern is the impact of OPTEMPO on our Reserve families.
    Between EAF, other operations, exercises, and required inspections,
    participation rates continue to rise steadily each year. The Reserve
    set a record pace for OPTEMPO in 1999 as a result of Operation ALLIED
    FORCE. Then, an average of nearly 3,000 Reservists deployed overseas
    each month and worked more than 712,000 Military Personnel
    Appropriation (MPA) mandays, the highest number since Desert Storm. In
    fiscal year 2000, our average number of personnel deployed overseas
    averaged nearly 1,700 per month. We began fiscal year 2001 at a lower
    number but grew to over 2,000 deployed in March. This total does not
    include the number of Reserve Personnel Appropriation mandays and other
    training days that also were worked. There can be no doubt that the
    days of the ``weekend warrior'' are long gone.
        This level of participation provides unique challenges for the Air
    Force Reserve. Aircrew members are participating an average of 125 days
    per year, with some weapons systems averaging even higher. Unit
    personnel average about 90 days and Individual Mobilization Augmentees
    (IMAs) average 69 days per year. This is in addition to their civilian
    jobs and comes at a time when the economy is supporting near full
    employment.

    Approaching limits
        Our force is leaning forward to meet each new tasking as it occurs,
    but this is not without cost. While we have received few complaints
    from our Reservists' employers, our people tell us that their bosses
    have started to question their participation. Our solution is to
    provide as much notice as possible of impending deployments as well as
    to educate our employers about the importance of their Reservists'
    contributions. We strengthen our partnership with civilian employers in
    several ways. We foster two-way communication between Reservists and
    their employers, sponsor Employers' Days and support Employer Support
    of the Guard and Reserve (ESGR) Bosslifts, all of which give civilian
    employers the opportunity to see what their Reservist does when he or
    she is away from work. We also have vigorously pursued feedback from
    employers and they have expressed an interest in monetary relief. We
    strongly support efforts to recognize the sacrifices of employers of
    members of the Ready Reserve and National Guard. As long as we have the
    backing of our Reservists' employers, we anticipate being able to
    continue to meet future requirements with volunteers. But we must
    continue to be able to manage the rotation of our forces and the length
    of their deployments.
        The Air Force Reserve is also aggressively pursuing ways to better
    leverage the time of Air Force Reservists. We are building a
    telecommuting program, restructuring our inspections program and
    reviewing ancillary training requirements. Finally, we continue to
    pursue the quality of life issues that are key to our people. As noted
    earlier, our focus is on entitlements, improved lodging facilities,
    family services, reducing personnel turbulence and parity of benefits,
    regardless of length of orders.

    Reserve Health Care Reform
        While pay is only one reason people join the Reserve, there is more
    involved in their decision to stay than just money. A number of
    intangibles are part of the total decision process, most of which are
    characterized as quality of life issues. Advances in Reserve quality of
    life are in no small part the result of congressional interest. A
    number of recent initiatives have lightened the burden a Reservist
    carries. In 1999, medical care for members who are injured while on
    inactive duty was clarified and extended in the fiscal year 2000 bill,
    dental plans were expanded and the Secretary of Defense was given the
    authority to waive Tricare deductibles for dependents of members called
    to active duty for less than one year. The positive effect these
    measures have had on the USAFR is enormous. It provides peace of mind
    to our members to know that they and their families will have access to
    health care when they need it most.
        This past year demonstrated that the health care provided for our
    Reservists has cleared some major hurdles, but still has a few to go. I
    know that health issues have been the subject of several hearings this
    year. We appreciate the Congress' continued interest in the welfare of
    our members.

                                 MODERNIZATION

        For the past 30 years the C-141 has been the backbone of mobility
    operations for the United States military in peacetime and in conflict.
    In the very near future the C-141 will be retired from the Active Duty
    Air Force. However, the Air Force Reserve continues the proud heritage
    of this mobility workhorse. AFRC crews will continue to fly the C-141
    through fiscal year 2006. It is crucial that we remain focused on
    flying this mission safely and proficiently until follow on missions
    are found.
        With the release of the Mobility Requirements Study 05 (MRS-05), it
    is still uncertain as to follow-on missions for our C-141 personnel.
    Replacement missions must be more than the insertion of another
    airframe. They must be a viable mission that includes modernized
    equipment. I will continue to push for modernization initiatives to
    keep AFRC the ``go to'' organization when conflicts arise.
        One of the most challenging modernization issues concerns our unit-
    equipped KC-135s. Five of our seven air refueling squadrons are
    equipped with the KC-135R, while the remaining two squadrons are
    equipped with KC-135Es. The KC-135E, commonly referred to as the E-
    model, has engines that were recovered from retiring airliners. This
    conversion which was accomplished in the early- to mid-1980s was
    intended as an interim solution to provide some improvement in
    capability while awaiting the conversion to the R-model with its new
    high bypass turbofan engines and other system modifications. We
    continue to look for support to modernize our remaining KC-135E fleet.
        As AFRC moves into the future and we analyze our interoperability
    with the Active Component (AC), a key issue is our ability to work
    within the AC structure while providing like capability. AFRC has 127
    C-130s including the E, H, J and the N/P models. Air Mobility Command,
    as the lead command for C-130 modernization, has published a ``Road
    Map'' detailing the fleet modernization schedule. Near term
    modernization specifics for the AFRC C-130 fleet are additional
    removable cockpit armor sets for deploying aircraft, traffic alert and
    collision avoidance systems, and autopilot replacements. These
    modifications target aircrew safety and survivability. Future plans
    look to include forward-looking infrared for the HC-130 fleet.
        In order to fly productive and effective missions as part of the
    Total Force, the theater CINC requires aircraft equipped with a core
    combat capability. We call this core capability the Combat Quadrangle.
    The quadrangle's sides represent our four focus areas: 24 Hour
    Operation Capability, Combat Identification Capability, Precision
    Attack Capability, and High Threat Survivability. All of these core
    capabilities are required to maintain combat compatibility with the
    active forces before the theater CINC will allow AFRC participation in
    theater. With shrinking budgets and reduced active duty force
    structure, the Air Reserve Components face a challenging goal. Reserve
    aircraft are poised to make significant progress in the near future.
    For example, Air Combat Command (ACC) is upgrading the F-16 Block 25/
    30/32 in all four core areas with Night Vision Imaging System (NVIS),
    Situational Awareness Data Link (SADL), smart weapons, and the ALE-50.
        The A-10s are also poised to make progress in satisfying the core
    capabilities of the combat quadrangle. ACC is upgrading the A-10 with
    much-needed new Attitude Indicators for safety of flight concerns. The
    most promising development is the revamped precision engagement program
    that will incorporate SADL, targeting pods and smart weapons capability
    by 2006.
        The 403rd Wing at Keesler Air Force Base, Mississippi, oversees
    both the Weather Reconnaissance and ``Slick'' J-model conversions for
    the Air Force Reserve Command. Once conversion is complete, the 53rd
    Weather Reconnaissance Squadron will consist of 10 WC-130J models and
    the 815th Tactical Airlift Squadron is scheduled to have 8 C-130Js.
    Presently, there are four WC-130J models at Keesler undergoing
    Qualification Test and Evaluation (QT&E). All 10 of the WC-130J
    aircraft were to be at Keesler in the first quarter of fiscal year
    2001, but discrepancies discovered during the QT&E are delaying AFRC's
    acceptance of the aircraft from the manufacturer. AFRC is working with
    the manufacturer to resolve the QT&E recognized deficiencies.
        The acquisition of the LITENING II targeting pod marked the
    greatest jump in combat capability for AFRC F-16s in years. At the
    conclusion of the Persian Gulf War, it became apparent that the ability
    to employ Precision Guided Munitions, specifically Laser Guided Bombs
    (LGB), would be a requirement for involvement in future conflicts.
    Without this capability, AFRC F-16s took a backseat to other fighters
    that could employ LGBs. A joint effort with the Air National Guard
    resulted in the fielding of a targeting pod equivalent or better in all
    aspects to what active duty fighters were using. Delivery of this
    targeting pod, LITENING II, began last spring, just in time to support
    an AFRC F-16 deployment to Operation Northern Watch in support of AEF.
    LITENING II affords the capability to employ LGBs effectively in both
    day and night operations, any time at any place. This capability allows
    AFRC F-16s to fulfill any AEF tasking requiring a self-designating
    targeting pod platform, providing needed relief for heavily tasked
    active duty units. This acquisition has put AFRC F-16s at the leading
    edge of combat capability, second to none, and ready to deploy and
    operate in any theater of operation.
        In the early 1980s as an initiative to improve readiness in the
    Reserve Components, Congress provided funding through an appropriation
    called the National Guard and Reserve Equipment Appropriation (NGREA).
    Public laws and legislative language provided that this equipment
    appropriation would be intended to enhance readiness and combat
    capability, and to resolve the modernization issues of the reserve
    forces. The Air Force Reserve Command quickly put it into use as the
    primary source for modernizing its fleet of aircraft. It procured new
    weapon systems, miscellaneous and special operations equipment. With
    NGREA, the AFRC was able to fix many shortcomings in many operational
    aspects. However, several years ago, the Department of Defense
    initiated a shift in the equipping philosophy by encouraging the
    Services to be more responsive in funding the equipment needs of its
    Reserve components. This requires the Air Force to be more cognizant in
    the budget process by providing the necessary equipment and
    modernization funding for the Reserve and Guard. As the implementation
    of this initiative took place and NGREA levels declined as planned
    (from as high as $362 million in 1992 to as low as $5 million in fiscal
    year 2001).
        With potential elimination of NGREA, modernization and relevant Air
    Force Reserve mission capabilities and combat readiness remain top
    priorities in a very tightly constrained fiscal environment.

                                  NEW MISSIONS

        New missions picked up by AFRC this year support Air Force Material
    Command (AFMC) with their Test Support and Depot Flight Test
    requirements. As Reserve Associate programs, AFRC provides personnel to
    man these two programs while the aircraft and equipment will be owned
    by AFMC. The Test Support program at Edwards Air Force Base involves
    flight testing of new aircraft modifications and equipment. The Depot
    Flight Test program involves the flight testing of aircraft that are in
    the maintenance depots for periodic maintenance and overhauls. These
    are excellent missions for the Air Force Reserve as they take advantage
    of the high experience levels generally found with Reserve personnel.
    To date, AFRC has approximately 75 percent of these new positions
    filled, and operations procedures and agreements are still evolving,
    but we are looking forward to a long and successful Reserve presence
    with these important test missions. Congressional support of these
    mission transfers in the fiscal year 2000 Defense Acts was instrumental
    in starting these efforts successfully.
        In another first, the Air Force Reserve became active in the
    operational test process last year as well. The 403rd Wing at Keesler
    AFB is working hand-in-hand with the Air Force Operational Test and
    Evaluation Command and Air Mobility Command (AMC) as operational
    testing required to bring the new C-130J into the inventory continues.
    The C-130J has many improvements over the older variants of the C-130.
    Updated engines provide greater power and fuel efficiency and the
    modernized avionics are a great step forward for this workhorse of our
    airlift fleet. Changes in the cabin area have also reduced the time and
    effort involved in loading and unloading cargo. The 403rd Wing's 53rd
    Weather Reconnaissance Squadron is also working with AMC's 33rd Flight
    Test Squadron to complete operational testing on the Weather
    Reconnaissance version of the C-130J to replace their aging aircraft.
        The 944th Fighter Wing, Luke Air Force Base, Arizona, is scheduled
    to transfer from Air Combat Command to Air Education and Training
    Command (AETC) with student training planned for July 2001. This
    conversion is the result of an identified F-16 Formal Training Unit
    (FTU) shortfall that was addressed at the 1996 Aircrew Management
    Summit. The unit will provide Total Force support for the active duty,
    Air Force Reserve and Air National Guard that is needed to accomplish
    F-16 formal training requirements and satisfy the determined FTU
    shortage.
        AETC undertook a study to assess the feasibility of Air Reserve
    Component Formal Training Unit associate units and approved a program
    at Corona Top in June 1999. This concept made more active duty fighter
    pilots available for operational assignments while retaining an
    experienced Reserve Instructor Pilot cadre to train students in the F-
    16. Activated in January 2000, the 301st Fighter Squadron operates
    under the integrated associate concept which requires a manpower and
    administrative commitment from the USAFR while flying hour, aircraft
    and facilities are provided by the active duty.
        The 94th Airlift Wing (AW) at Dobbins ARB, Georgia, transferred
    from Air Mobility Command to Air Education Training Command in October
    1999. The unit converted from a Combat Support coded mission to a
    Training coded mission. It was determined that the Air Force needed
    additional C-130 FTU capability and AFRC could provide that support.
    With a significant portion of the tactical airlift mission in the Air
    Reserve Components, the additional schoolhouse-basing requirement was
    necessary. The unit conducts comprehensive C-130 training for both the
    H-2 and H-3 models and is already producing students. With an fiscal
    year 2003 production goal of 72 pilots, the 94th AW will also train
    navigators and flight engineers, all to augment the Total Force.
        In fiscal year 2000, Air Force Reservists joined the 414th Combat
    Training Squadron, the ``Aggressors'', as associate members. The
    program established a Reserve associate organization collocated with
    the elite 57th Wing at Nellis Air Force Base, Nevada. The Aggressors
    provide expert simulation of potential threat systems and tactics
    during the advanced composite force training conducted on the Nellis
    ranges over Southern Nevada. The most notable of these exercises is the
    world-renown Red Flag. The objective of adding reserve personnel is to
    retain corporate knowledge pertaining to adversary threat and
    operational expertise in the Aggressors. Additionally, it allows the
    Aggressors to select from an expanded resource pool to enhance the
    training received by the Combat Air Force.
        Two USAFR full time enlisted positions were established with the
    Thunderbird Demonstration Team at Nellis in fiscal year 2001. These
    individuals perform aircraft maintenance duties of Crew Chief and
    Aircraft Specialist. This mission is considered associate in nature as
    the reserve personnel are assigned to the Thunderbirds and integrated
    within the unit.
        Today's Air Force Reserve Space Program is an operationally
    integrated space force that will continue to grow in a robust, highly
    technical environment. The Air Force Reserve 310th Space Group is the
    first Air Force Reserve organization totally dedicated to leveraging
    Air Force Reserve talent to space operations. They will continue to
    meet the challenge of providing leadership and a vision of future Air
    Force Reserve space operations involvement.

                                 FINAL THOUGHTS

        In summary, Air Force Reserve Command is committed to meeting our
    people, readiness and modernization challenges, so we remain a fully
    integrated partner with the Air Force. Reservists with the support of
    their families and civilian employers enable AFRC to be fully combat
    capable and meet its worldwide commitments.
        Mr. Chairman, I thank you and your committee once again for your
    assistance in making us part of the worlds best Air Force, the USAF. I
    appreciate the opportunity to meet with the committee today to share my
    views with you and I look forward to answering any questions you might
    have for me.

                       RECRUITING NONPRIOR SERVICE PEOPLE

        Senator Stevens. Thank you very much. Each of you has
    mentioned in a way the possibility of acquiring people who have
    no prior military service, and I was wondering about that the
    other day. Do you have sufficient tools and authorization to
    reach out and attract young men and women to come in who have
    no prior service and give them training so they could, in fact,
    be part of a deployable force within a period of time, and what
    is the cost of that, compared to the cost of acquiring someone
    with prior service? General Plewes.
        General Plewes. We are going under a change right now. In
    the past, we did about 50 percent prior service and 50-percent
    nonprior service. This year we are exceeding our goals in
    regard to the nonprior service folks by about 122 percent and
    missing our goal on recruiting prior service by 80 percent. We
    are at 80 percent of where we should be. We are undergoing a
    shift there, and it has, as you mentioned, some very
    interesting and important consequences for us. First of all, it
    increases the training load in our initial entry training base,
    and we are now competing with the National Guard, which is
    going through the same kind of a change, and the active force
    for training slots in the highest times of activity during the
    year.
        Senator Stevens. Take us through that, General. What do you
    do if you attract someone--let us say they are out of high
    school and a year in college. What do you do with them when
    they sign up?
        General Plewes. We give them up to a year to schedule
    themselves to go into the regular training program, which is
    the same training program that the active force does.
        Senator Stevens. How long does that take?
        General Plewes. That is usually a 4-month program, and it's
    up to 6 months in some cases.
        Senator Stevens. They have to work out an opportunity to
    leave their employment?
        General Plewes. That is correct.
        Senator Stevens. There is no other way to do it at night
    and weekends?
        General Plewes. No, sir. We have a split options program
    where they can do it over the course of two summers, if they
    are going to school, for example, and we make it easy for them
    to do that. Otherwise, they do essentially the same thing to
    get into the service as the active duty soldiers do, but that
    does have repercussions for us. First of all, it increases our
    training bill.
        Senator Stevens. Tell us about that, too. How does it
    increase the cost?
        General Plewes. Because the prior service folks that come
    to us are previously trained, they already have the training
    and the skills they need. They just easily come over to us and
    enter our units. So the folks who are nonprior service have to
    be not only recruited from recruiting stations around the
    country, but they have to be provided, initial entry training.
    Then the units have to train them in their additional skills
    when they get back. It does increase the training bill.
        Senator Stevens. We are not talking about specialists now.
    We are not talking about medical people. This is just a general
    comment.
        General Plewes. It is a general comment across the board.
        Senator Stevens. For riflemen?
        General Plewes. That is correct.
        Senator Stevens. Admiral, what is your experience?
        Admiral Totushek. We are a little bit different. We have
    got a unique situation where we recruit nonprior service people
    only if they have a skill that we can use in the Navy. We do
    not go out and get a generalist. We are looking for specific
    skills.
        Senator Stevens. What do you do when your enlistments fall
    off?
        Admiral Totushek. The enlistments of the nonprior service
    people?
        Senator Stevens. The prior service people.
        Admiral Totushek. That is why we are out there in this
    market, because we cannot--if you take the people that leave
    active duty every year, throw out the ones that are too senior
    or do not fit the skill set we are looking for, if we recruit
    every one of them we would not make our goal, so we have got to
    be in this market, and that is why we are in that market, but
    not in as big a way as some of the other services.
        In our particular service, because they have the skill
    already we need, we take them to a nonprior accession school
    that is 2 weeks long, and then we spend the rest of the year
    working with them in their centers to turn them into a sailor.
        Senator Stevens. Thank you. Let us move along. General
    McCarthy, what do you do?
        General McCarthy. The Marine Corps Reserve, since it is
    organized exactly like the active, or almost exactly like the
    active component, has essentially the same demographics, so it
    is primarily a first-term force.
        Senator Stevens. Can you become a Marine Reserve without
    prior service?
        General McCarthy. Yes, sir. About 65 percent of the
    drilling reserves are nonprior service.
        Senator Stevens. How long does it take them to become
    qualified?
        General McCarthy. Over all, it takes about 9 months to a
    year, but they go through exactly the same recruit training,
    they go through exactly the same initial training, the initial
    combat training and so forth.
        Senator Stevens. It is the same assignment, then, with the
    marines, right?
        General McCarthy. Exactly.
        Senator Stevens. Why would I not just join the Marines if I
    was going to do that?
        General McCarthy. Many change their mind after they go to
    boot camp and switch over and stay on active duty, which is
    fine with us, but many want to come back to their home town.
    They want to pursue a career or go to college. We do not have
    an exact number on it, but we think that about 35 to perhaps up
    to as high as 40 percent of the Marine Corps, of the enlisted
    Marines in the Marine Corps Reserve are college students, but
    they take a year off, they go to recruit training, they go to
    initial combat training, get a skill, and then come back and
    start their education.
        Senator Stevens. What is the age limitation of getting in
    the Reserves, in the Marines?
        General McCarthy. Sir, I believe it is 28, but I ought to
    take that question for the record to be 100 percent sure.
        [The information follows:]

        Generally, the maximum age that Non Prior Service
    applicants can enlist in the Marine Corps Reserve is 28 years
    of age, inclusive. Our policy is that an applicant must be
    accessed onto active duty in the Marine Corps Reserve prior to
    their 29th birthday. Commanding Generals of the Marine Corps
    Recruiting Regions may waive the maximum limit up to age 35.

                                   RECRUITING

        Senator Stevens. General Sherrard.
        General Sherrard. Sir, as I mentioned in my opening
    statement, we are about 80 percent prior service. That is
    really the key to our success, because we are able to grab that
    highly experienced member and bring he or she into our force
    and they step up as a full combat-ready individual on day one.
        Senator Stevens. Is that true for other than pilots? Do you
    have greater administrative----

                              NONPRIOR RECRUITING

        General Sherrard. Yes, sir. We accept them across the
    board. But as I previously mentioned, the low number of prior
    service is a real issue for us. In the early nineties there
    were some 50,000 members eligible who were separating from the
    Air Fore. Today it is about 15,000, and we are in competition
    with the Air National Guard, as well as with the other Reserve
    components for those members. Thus, we are being forced to go
    look at that nonprior service individual in much greater
    numbers than we ever have in the past, and that does, exactly,
    as General Plewes said, it does drive up our training costs. It
    extends the time for that member to attain the combat-readiness
    level necessary for them to be ready and able to deploy with
    the units.
        So we have got to make certain that we retain those members
    we have today, and then for every active duty member that
    separates, we need to do our dead level-best to have an
    opportunity and a place for them inside our force, and make
    certain our entitlements and the benefits make an attractive
    offer for them. With the economy being so good, there are a lot
    of opportunities out there for them to go and engage in and not
    bring that real investment that we have made, that the American
    taxpayers have made in those individuals, back into our Reserve
    force to be used.

                                PILOT RETENTION

        Senator Stevens. It was about 18 months ago we were told
    the reenlistment rate for pilots had turned around. We used to
    get about 60, 70 percent of them on the first time for
    reenlistment, and we were told it was about 27, 29 percent
    actually reenlisting. Did you do any studies? How many of those
    did you pick up in the Reserve, if they did not stay on the
    Active Air Force? Did enough of them keep contact with you?
    Were you able to recruit enough of those people into the
    Reserves to maintain the strength?
        General Sherrard. We maintained our strength. We could
    certainly take more. We did not get them all, and that is the
    battle. We are retaining about 83 percent retention on our
    pilots. It runs around 84 percent of our----
        Senator Stevens. Back up.
        General Sherrard. Excuse me, sir?
        Senator Stevens. That is back up. We were told it was very
    low. Oh, this is Reserves, pardon me. I was talking the Regular
    Air Force now.
        General Sherrard. We try to bring as many active duty
    separates into our fold, as possible. I do not have actual
    numbers, sir, which show you how many of those we hired. I will
    tell you, depending on the organization and the locale, there
    are some that have waiting lists and others that have vacancies
    today, but in our Reserve force today we are roughly 200 pilots
    under what our requirement.
        But the important thing is, retention, and retaining those
    members so that we do not lose them. We are seeing, as I said
    earlier, there has been an increase in recent years for
    members, when they get 20 satisfactory years they are willing--
    or are stepping up and saying ``I have to depart, I cannot
    afford to give you the time that you are asking for me to
    continue to operate.'' So we need to have some type of
    incentives, not only pilots, but across the entire spectrum, to
    carry those members to the max extent possible inside their
    career, whether it be their mandatory separation, or if they
    are enlisted their high year tenure date.
        Senator Stevens. I do not want to belabor this now, but it
    looks like we are going to have to start some innovative
    concepts, perhaps even a summer school type thing for college
    students between their semesters so they can take a summer and
    in 90 days become a part of the Guard and Reserve forces. We
    have got to do something innovative, I think, to pick up the
    pace of attracting these young people if we want to expand the
    way it looks like we are going to have to expand in the near
    future.
        Senator Inouye.
        Senator Inouye. Thank you. I would like to follow up where
    you just left off. There was a time, and we hate to admit this,
    when recruiting was not that difficult, when the economy was
    bad, or when there was a hot war going on there were those who
    wished to avoid the hot war by getting into the Reserves. I can
    understand that, but today we have a different situation.
        For example, a recent study indicated that a little over 5
    percent of our population between the ages of 18 and 65 have
    seen any military action, put on the uniform. Over 94 percent
    of our people between the ages of 18 and 65 have never put a
    uniform on and, as a result, you have most of our employers
    with a little or no military background and, as such, may have
    some difficulty really appreciating what military service is,
    as far as our country is concerned.
        Add to this another dimension, that the new military is
    becoming high tech. A few days ago, I went to an exhibit here
    in the Senate which showed the infantry rifleman projected for
    10 years from now. He looked like a spaceman, you know, with
    the Star Wars helmet and body armor, and all of this, and
    obviously he happened to be someone who knew something about
    high technology if he is going to fire a rifle around the
    corner through some kind of scope.
        When you add all of these things--I must congratulate you
    for what you have done in your recruiting so far, but as the
    chairman has indicated, I think the time is coming when
    recruiting the proper man and woman for the positions you have
    is going to become almost impossible. I for one have seriously
    thought about the possibility of reinstating the draft again.
        Senator Stevens. I thought you were going to say
    reenlisting again.
        Senator Inouye. The studies I have seen would indicate that
    we are at a very crucial point. All the services are now taking
    the leap forward to become modern, and if you are going to be
    compatible with the active forces you will have to keep up with
    them. I do not know if the budget calls for that.
        Add to this another element that was not in place 15 years
    ago, the operational tempo, the op tempo of the Army, for
    example, in the Guard and Reserves, I think it is 20 times what
    it used to be 15 years ago, and I cannot imagine what the
    employers are saying to themselves.
        So when you add all of these up, I think the chairman is
    right on target, we had better sit down and figure out, how we
    are going to get these men and women to fill these slots. You
    know, we are not just looking for category 4's now. We cannot
    be satisfied just with category 3's, so Mr. Chairman, I think
    we have got to do something.
        Senator Stevens. It calls for some innovation, it really
    does.
        Senator Inouye. Senator Dorgan had to leave the hearing,
    but he had a few questions he would like to submit.
        Senator Stevens. Yes, sir.
        Senator Cochran.

                                   TAX REFORM

        Senator Cochran. Mr. Chairman, thank you. One thing that
    occurs to me that we can do in this debate on our tax reform
    issue is include the provision that I have heard is needed in
    the Reserves, and this may apply to the National Guard as well,
    for people who are going to drill and incur out-of-pocket
    expenses for bills or lodging and the like, I understand that
    those that are not reimbursed now cannot be deducted from
    income tax, but to make those deductible would be a benefit
    that might keep somebody going to the drills and staying in the
    Guard and Reserve who might drop out. Is that a consensus among
    the Reserve forces today?
        Admiral Totushek. If I could speak for the group, I would
    say it is. It will be a cost to the Guard and Reserve, because
    we recruit an individual, but we retain the family, and any
    break we can give them will get that family to want to stay.
        Senator Cochran. But as I understand it, too, that
    legislation that we have pending in our Finance Committee here
    in the Senate, and I am cosponsor of it, also provides a tax
    credit to employers as incentive to let them employ somebody
    and still not suffer unnecessary financial harm, because that
    person is going to be away from work from time to time. Is that
    something that you think is also needed?
        General Plewes. Yes, sir. I will just comment on that, if I
    could. First of all, our employers are doing wonderful things
    for our soldiers. We have very few cases in which there are
    issues between employers and soldiers. But there is a cost to
    the employer when the soldier is deployed, and that cost
    includes, not only the cost of the substitute for that
    employee, but also the lost productivity. A tax credit would, I
    think, go a way toward taking care of that.
        Senator Cochran. There are two parochial issues in
    procurement that have been brought to my attention. We have a
    Raytheon plant in our State and we were told that two of the
    highest modernization priorities, one in the Army and the other
    for the Marine Corps, is in the hands of this company that make
    these modernization changes.
        One has to do with the aircraft in the Marine Corps,
    upgrading the air control radar that provides information and
    helps you better protect troops in the field during battle. Is
    this something that is an unfunded need for the Marine Corps
    that we should consider putting in our bill?
        General McCarthy. Sir, the aircraft upgrade is for our F-
    18A models, to enable them to fire precision-guided munitions,
    and we are in the process right now of upgrading those aircraft
    a few at a time. Both the active component and the Reserve
    component have aircraft to be upgraded, and as it stands right
    now we still have both active and Reserve component aircraft
    that require that upgrade.
        Senator Cochran. I understand, too, that the Army has a
    Sentinel battlefield radar where you are trying to modernize
    and upgrade that. That is also something that I think the
    contractor in Mississippi could provide. Is that a need that is
    unfunded in this budget request?
        General Plewes. I will have to get back to you on that,
    sir. It is not part of the needs of the Army Reserve. I believe
    it is part of the active force, and I will have to get back to
    you on the funding.
        [The information follows:]

                           SENTINEL BATTLEFIELD RADAR

        Although the Army Reserve does not have any requirement for
    the Sentinel, the Total Army requirement is 228. Of that
    number, 140 have been funded.

        Admiral Totushek. If I could, the Naval Reserve is
    upgrading our F-18's as well. It is a similar, same contractor
    item that we need to upgrade our F-18's as well, so it is an
    unfunded need for us.
        Senator Cochran. That is good to know. Thank you, Mr.
    Chairman.
        Senator Stevens. Senator Feinstein.

                                   TERRORISM

        Senator Feinstein. Thanks, Mr. Chairman. Gentlemen, I
    wanted to confine my time to the issue of terrorism. Last
    month, Senator Kyl and I, as the chair and Ranking Member of
    the Terrorism Subcommittee of Judiciary, heard the Hart-Rudman
    report, and their belief, that commission's belief is that the
    largest single threat we face is a major terrorist incident in
    this country.
        The 27 National Guard Weapons of Mass Destruction Civil
    Support Teams are supposed to be the backbone in the United
    States defense system in the case of a terrorist attack on
    American territory. They are supposed to be active by this
    spring, and yet their preparedness and management has been
    criticized by a whole host of Government reports. In addition,
    DOD has certified them as, quote, not ready, unquote.
        The main criticism, as I understand it, is that these teams
    would arrive too late at an incident to really be effective.
    What is your assessment of the criticism, and what can be done
    to improve the preparedness of these Civil Support Teams? Any
    one of you that wants to go first would be fine with me.
        General Plewes. The next panel may be able to more
    specifically address the issues with the teams that are being
    established, but all of us have capabilities within the Reserve
    components that are necessary if we are to make a national
    response to some of these threats.
        For example, in the Army Reserve I have 70 percent of the
    Army's chemical, which equates to over half of the Nation's
    chemical defense in our force. I have over 70 percent of the
    hospitals as well. We are training with and supporting the
    National Guard in these matters, and I believe that we are at
    the first step, only the first step of being prepared in these
    areas.
        Senator Feinstein. So these teams, in your view, are not
    ready?
        General Plewes. I cannot assess whether those teams are
    ready. I will say that the teams are the first step, and that
    there is a very large component of Reserve support behind them.
    So there are two different things I think we can look at here.
        Senator Feinstein. Does anyone else want to comment on
    that?
        General McCarthy. I would just comment again, the teams are
    not within either my purview or expertise, but like the Army
    Reserve, the Marine Corps Reserve is, as they say, forward-
    deployed all over the country, and so it is prepositioned to
    provide assistance, and we consider that one of our missions,
    and something that we have resources that can be put at the
    Nation's disposal and, like everybody else, we have a long way
    to go in terms of preparing for that, but that is clearly an
    issue that we are engaged in.
        Senator Feinstein. Well, now I am really concerned, because
    clearly, if you gentlemen do not know, the chances are that the
    support efforts are not available, and are not going to be very
    effective, and I am very concerned, because both from my
    Intelligence Committee briefings as well as what we have done
    in Judiciary, we are not ready to respond to any kind of a
    major terrorist act, and there is no real attribution, nor is
    there anyone really in charge that I can see at this stage. So
    my concern is that if the Guard is going to be the heart of
    this sort of national support effort, and you gentlemen are the
    head people, what are you going to do?
        Senator Stevens. Senator, if I may, the Guard will be up
    next. These are the Reserve forces.
        Senator Feinstein. Is not the Reserve involved in that as
    well?
        Admiral Totushek. Not directly. That is what we are trying
    to say.
        Senator Feinstein. Then I must apologize to you.
        Admiral Totushek. But the point is, we all do have
    capabilities. Part of the issue, as you kind of touched on it
    there is who is in charge, and it starts off to be a Federal
    Emergency Management Agency (FEMA) kind of issue, and if it
    becomes nationalized and those Guard teams kick in, any of us
    who happen to have forces in that area would be put on notice
    to provide forces, depending upon the size and the scope of the
    catastrophe.
        Senator Feinstein. Because what I do is, I go back to my
    days as mayor. If there were to be a major terrorist attack, I
    would need somebody to pick up the phone on a national level
    and say, I need help, and I need it right now. I mean, it is
    hard to believe that I would call FEMA for that to be able to
    really mobilize. Whether it is a military response or a Federal
    Bureau of Investigation (FBI) response, that response has to
    happen right away.
        Senator Stevens. Senator, if I may interrupt again, those
    are the hearings going on upstairs right now, our committee and
    Armed Services and Intelligence, and I think Commerce to some
    extent, and we are trying to find out--there are 46 different
    agencies now charged with some portion of the response to
    disasters, and we are trying to find out----
        Senator Feinstein. I know that, Mr. Chairman. I have had
    those briefings in the Intelligence Committee. I am aware of
    it. I have also read all of the reports.
        Senator Stevens. We are trying to work out answers to your
    questions. We are trying to work out, with the administration,
    an answer to your question of who should be in charge, but if
    we may, we could go right to the Guard forces and you could ask
    that question of them, because they are the ones that currently
    have the assigned responsibility, if that is all right with you
    gentlemen, and you Senators, we will excuse you gentlemen and
    we will be back to you after we listen to the Guard perhaps
    sometime.
        I do want to have this dialogue, though, about enlistments,
    and I want to suggest to you we may have to convert some of
    your positions to civilian positions, and let you bring people
    in without putting them through this training process,
    particularly in the IT area, the medical area, and other areas,
    and see what we can do to give you additional people that you
    do not have to train, but they are going to do things in
    peacetime, and you can concentrate on training people for
    wartime.
        Thank you very much, gentlemen. We will talk to you later
    if we may.
        We would like to call up the Guard, and Senator, I do not
    mean to interrupt you or in any way be offensive, but that
    hearing, we have got 4 days of hearings with this committee and
    Armed Services, and you are a member of two of those
    committees.
        Senator Feinstein. Yes, and we have had the briefings, and
    they have been disappointing at best.
        Senator Stevens. Thank you very much to the Reserves.
                             National Guard Bureaus

    STATEMENT OF GENERAL RUSSELL C. DAVIS, U.S. AIR FORCE,
                CHIEF, NATIONAL GUARD BUREAU
        Senator Stevens. We are now going to hear from the
    leadership of the National Guard, Lieutenant General Russ
    Davis, Chief of the National Guard Bureau, Major General Roger
    Schultz, Director of the Army National Guard, Major General
    Paul Weaver, Director of the Air National Guard.
        I congratulate you, General Schultz, on your third star.
    General Weaver, I understand this may be your last appearance
    before us. We want to go on record immediately to thank you for
    your dedicated service and for your assistance to this
    committee over the years. We look forward to your statements
    here today, and I believe that if you could--I have to chair
    that other hearing at 11:30, so Senator Inouye will continue
    this, but we would appreciate it if you could keep your
    statements as short as possible, and we will go immediately to
    Senator Feinstein so she can ask her questions.
        Senator Feinstein. Thank you. I will not repeat it, but if
    you gentlemen can respond, that would be terrific.

                          WEAPONS OF MASS DESTRUCTION

        Senator Stevens. The question is, who is in charge?
        General Davis. Well, we just had a statement yesterday.
    Prior to yesterday, the Assistant to the Secretary of Defense
    for Civil Affairs, or Civil Support was the position that was
    in charge of weapons of mass destruction in any of the
    incidents and all the operations relating to that. There were
    some other subordinate agencies within the Department of
    Defense who are working in conjunction with that position.
        Yesterday, it was announced that all those activities would
    move to the Assistant Secretary of Defense for Special
    Operations and Low Intensity Conflicts.
        Senator Feinstein. Can you comment on the Civil Support
    Teams, and the reports that have come out saying that they are
    not ready, and that they were due apparently to be ready and
    deployed this spring?
        General Davis. Yes, ma'am. There are a number of issues
    associated with that. The Department of Defense Inspector
    General, they report, after having gone out and talked to the
    teams, and looked at their equipment and made some assessments,
    those, some 26 issues came out of that. One of the issues dealt
    with the issue of doctrine training, to what standard, and to
    do what, as a specific mission.
        These teams were really designed to do three things, to get
    to an area and assess what was there, if it were a chemical,
    radiological, or biological incident, to determine what the
    agent was, and to pass that information back, number 1.
        The other thing they were to do is advise on the kinds of
    measures that you take. If it is a biological incident, say, as
    an example, smallpox or something like that, know which
    agencies are available to assist, and the local population, if
    it is in a city, or if it is in county, they would go and they
    would assess what is there and then they would advise them, if
    it is biological, you need medical personnel, you need this,
    because they have medical personnel on these teams.
        These teams are 22 people, and they are highly trained
    folks who have been training for about 2 years, and they have
    met all of the training standards that we have established for
    them. We are working our way through some additional issues.
    Unique for this operation, ma'am, are things like, we tried to
    put together these teams in a 2 to 3 year period.
        The norm for establishing a brand-new operation like that,
    with the training and the equipment, and teaching people to
    operate the equipment, is about 5 years, to establish the
    doctrine, get all the training programs, get them certified and
    that kind of a thing. In an effort to fast-track, or what is
    called spiral development in the research and development
    community, in order to do that, you are doing a lot of things
    simultaneously, and we missed a few beats in the process of
    that.
        The report deals with the fact that we have some equipment
    which has not been certified. It is a mobile analytical lab. It
    is a vehicle, and into that we put in equipment, a gas
    spectrochromography, or something like that. What you do is,
    you hold it out and it will give you an analytical, both in
    terms of what the agent is, the quantity, that is the relative
    strength, which will give you an indication of what you need to
    be doing, whether it is deadly or not.
        One of the difficulties with this piece of equipment, it is
    designed to connect to a communications vehicle, which will
    give it communications, satellite communications and back-
    reach. What we would hope to do is analyze what is on the site
    and then send it back--if it is biological, send it to, say,
    the CDC, the Centers for Disease Control, and they would verify
    it, but that is a secondary verification.
        The equipment was not certified. Most of the pieces of
    equipment individually were, but when you put them all together
    they did not quite operate the way they should, and that is
    what the team wrote up, and that is one of the reasons the
    teams were not certified, but as far as individual people go,
    they have done the training that was required.
        There was some discussion in the report about how they were
    evaluated. They did an external evaluation where the United
    States Army sent some teams out and gave them some scenarios
    after they had received individual training, institutional
    training, and what we call collective training, where they all
    get together as a team and train, and as a result of that, the
    Army said they felt they were ready.

                   STATUS AND LOCATION OF CIVIL SUPPORT TEAMS

        Senator Feinstein. Unless the other gentlemen have a
    response in addition, let me ask this question. When will the
    teams be ready, and how are they going to be geographically
    deployed when they are?
        General Davis. I will handle that, if you do not mind,
    ma'am. We do not know exactly when the teams will be certified.
    That report--and it has been adopted by the Department of
    Defense, and the Army and the Guard are working very closely
    together as a part of a team to make sure that we have all of
    those requirements met.
        The result of that report puts us on two courses of action,
    number 1, to get the teams certified first and foremost, and so
    we are working with the Inspector General, we are working with
    the United States Army, and we are working with some
    subordinate commands within the United States Army and
    Department of Defense to see and make a final determination of
    what needs to be done, what are the next five, six, eight, ten
    steps that need to take place, and then what do we need to do.
        We are in the process of working that out. We have much of
    our work already done, but there are meetings ongoing, I
    believe later this week--I want to say Thursday, ma'am, I
    believe, to continue to work that, so that part will get the
    teams certified. We are hoping that will get done sometime in
    the next 60 to 90 days.
        Senator Feinstein. And then will the teams be
    geographically distributed?
        General Davis. The teams have already been geographically
    distributed, at least for the first 27 teams, ma'am. We
    initially received 10 teams for the National Guard. We put
    those teams in the 10 FEMA regions, the Federal Emergency
    Management Agency regions around the country, because that is
    really how we are, at this point at least, designed. The
    Federal response to anything that happens, we do it by FEMA
    region.
        Those initial 10 teams were put into place, and we used a
    150-mile radius of action for deploying those teams. It was
    very quickly decided that those were not enough teams, because
    we were not covering enough of the population. Seventeen
    additional teams were given to the Guard, and through a
    Department of Defense program they looked at such things as, in
    locating the next 17 teams, where would they be in relationship
    to the first 10, the population base they would cover, as they
    were trying to cover the maximum population for the United
    States, the geography of getting a team to some of those
    locations, and so there were about four or five factors that
    were included.
        As a result of these factors being applied, the decision
    was made on the basing of the second grouping of teams, some
    17, and those 17 teams are in the process, they have completed
    their individual training, a lot of the institutional training,
    and they are working their way through the collective training.
        Of the 17 teams, 12 have completed their training at Fort
    Leonard Wood, training on the equipment, and then finding out
    what they need to do. We have two additional teams that are out
    there now who will wrap up their training at the end of this
    week, and we have three additional teams. Those have already
    been decided on in terms of geography.
        If I might, ma'am, the next part of this program following
    certification will be to go out and look at the entire program,
    what we call a program review, and other things they will look
    at is, how many teams do we need in our country, or they will
    try to make an assessment of that.
        There were five additional teams that were allocated last
    year. It is the department's approach to do this study,
    comprehensive review of the teams to decide if we have enough
    teams, do we need more, and where should they go, so these five
    teams will not be deployed or designated until that study is
    complete, and that study should be complete about 1 August,
    ma'am.
        Senator Feinstein. Thank you very much. Thanks, Mr.
    Chairman.
        Senator Stevens. I am glad you asked the questions. We need
    to keep these things clear as to how we are proceeding. I think
    this is the most important issue we have with the Department of
    Defense and the executive branch as a whole, is how can we
    assist to make sure we have the capability to deal with the
    potential threat that seems to be increasing as far as weapons
    of mass destruction. Thank you, Senator.
        Gentlemen, General Davis, would you like to summarize your
    statement?

            SUMMARY STATEMENT OF LIEUTENANT GENERAL RUSSELL C. DAVIS

        General Davis. Mr. Chairman, distinguished members of the
    committee, I thank you for the opportunity to come and testify
    before you and make a presentation, very short. We have
    submitted an official statement for the record, posture
    statement, but I would like to summarize a few of the things
    that are going on in the National Guard.
        I will talk in general summary about the National Guard and
    specific programs we do at the national level, and then Major
    General Schultz on my right will talk to the Army Guard issues,
    and Major General Weaver on my left will talk to the issues
    that impact on the Air Guard, and then we will all be prepared
    to handle any questions you have.
        But increasingly, the National Guard is playing a
    significant role in our national defense, particularly since
    the drawdown of the active components has started in the early
    nineties, where they have drawn down in the area of around 38
    to 40 percent. The National Guard has played an increasing role
    with respect to providing forces to the Commanders-in-Chief
    throughout the world.
        As a result of this activity, and our being a force
    provided to both the United States Army and United States Air
    Force, our people are very busy. We have increased the tempo
    with which we operate about 50 percent above what we were doing
    last year. You talked to some of those issues, and we have some
    statistics in terms of retention, but we would suggest that we
    are not--we are not--being overtasked.
        We need to look at how we are tasking our folks, and
    General Schultz will talk to most of those issues, but as we
    have engaged in activities in peacekeeping in Kosovo and
    Bosnia, to include last year, where we had the 49th Division
    over there as the command and control element for Task Force
    Eagle, some 6,000 people we had over there from 11 different
    countries, and our two-star Division Commander was in charge of
    that operation.
        For the first time since the Korean War we have had a Guard
    commander in charge of active Guard and Reserve forces deployed
    forward, plus the soldiers of 11 nations in that multinational
    brigade. The Air National Guard has flown missions in Northern
    Watch and Southern Watch. Their tankers participated in the
    Allied force, and the airlifters are working on a continuous
    basis, and so we are very heavily engaged in both the Army
    Guard and in the Air Guard.
        In the Army Guard, as an example, we had our first battery
    of Patriot missile personnel in Riyadh, and they are being
    guarded, by the way, by the Minnesota National Guard, those
    patriot folks from Alabama, and that is kind of a first for us,
    too, as we deployed forward our combat forces of the National
    Guard.
        While at the same time we are doing this, what we call our
    Federal mission, taking care of the issues of augmenting the
    Army and Active Air Force, we are still doing missions at home.
    We have folks out on the line, bagging sand. Just recently in
    North Dakota and up in Minnesota as a result of the Red River,
    and certainly down along the Mississippi River. I happen to
    have an association with Iowa, and we have had that happen a
    number of times, and I spent a little time over there myself
    working issues, but fires, floods, hurricanes, those kinds of
    issues, the Guard is out there responding.
        President Bush said recently that because of the nature of
    the threat, the National Guard will be used in some different
    ways than maybe we have been used in the past, and we encourage
    that and we support that. We will transform our forces to meet
    whatever challenge is there.
        We have done that in the past for 364 years, sir. We have
    had situations occur where we have had to change the nature of
    the Guard, from the early days of the muskets to the modern
    days of Apache Aircraft and Patriot missiles to F-16's, and our
    first line tankers, KC-135's, but we need to continue to
    modernize our equipment, and we need to be allocated resources
    for these new missions, and we talk about resources, it comes
    in the form of, number 1, perhaps dollars, but as importantly,
    full-time manning.
        We have to have full-time manning, the people to do the
    job, to take care of the soldiers and airmen and make sure they
    are paid, to make sure the equipment is kept up to standard
    between the drill weekends, between those active duty periods
    when our soldiers and airmen show up. We need to make sure that
    we continue to modernize that equipment that they have.
        Much of the equipment we have, as is true in the active
    component, was purchased a number of years ago, so we need to
    add dollars to that. The previous panel talked to
    modernization. We have got to do that, and recapitalize those
    assets so we will have first-line assets.
        As we become more expeditionary in the Air Force, and as
    the Army transforms to keep pace with what the active component
    Army is doing, and allying their forces to remain relevant and
    ready, we have got some challenges, but we want to continue to
    serve our communities, our States, and the Nation, and that is
    what the Guard is for, and that is what we think we can do.
        Homeland security, I will talk about that a moment. As that
    emerges, I would suggest we have been in the homeland security
    business in the National Guard for 364 years, protecting our
    country. If we go back to the Nike missile era of the late
    fifties and the sixties and early seventies, we had that
    mission in the Army National Guard. Air defense of our
    continental United States was done by the Air National Guard,
    so we know we can participate in that mission and be a part of
    that, and we do not think we have to modify our forces a lot.
    Certainly we will have to make some modification of them, but
    we think we can do it.
        In the area of counterdrug we have an excellent program
    where we go out and we interdict drugs as they come into the
    country, and we work very closely with law enforcement
    agencies. In the process of that we go to schools and work
    demand reduction programs to try to teach kids the horrors and
    pain that is caused by drugs, and we have some programs there.
        We have youth programs, and one where we have a science-
    based program called Star Base, where we go out and emphasize
    science and mathematics in schools. We have another program we
    call our Challenge program. It is a 22-week residence program
    for kids 16 to 18 years old, high school dropouts who have an
    opportunity to turn their lives around. We have a 6-month
    program and then there is a year-long mentorship program
    following that. That is another program that has been
    excellent, I think, for the country.
        We are involved in doing some things in the State
    partnership program, where we have aligned States in the United
    States with countries in the former Soviet Union and former
    Warsaw Pact, and we are working issues with those. It starts as
    a military program and has expanded in a number of other areas,
    and we would be happy to talk about that later.
        The Reserve Component and Automation System (RCAS) is a
    true success story. We revamped that program in about 1995 and
    moved on with that. That is a program for the Army National
    Guard and the Army Reserve, where we put together programs so
    that we will be able to more quickly and more ably manage our
    organizations.
        As a result of that program and the infrastructure that was
    put in place, we have a distance training program, where we are
    able to go out and train some of our soldiers without them
    having to come into the armory, or certainly go off to schools,
    the same thing in the Air Guard, and we have put together about
    two-thirds of the classrooms that we will need and require for
    that.
        Just in summary, I want to say since Desert Shield and
    Desert Storm we have increased our operational tempo quite a
    bit. It is having some impact, but as we look at it
    statistically, not a significant impact. We are busier this
    year than we were last year. We are trying to figure out how to
    do that best.
        We are concerned about the length of deployments, and we
    are working some issues in that arena, but we think we are
    probably a pretty good force for the Nation because of our
    cost. We only pay our soldiers and airmen when they show up for
    work. We have a small cadre of folks who are there full-time.
        The last item that I would like to talk about is military
    construction. We have a number of facilities in the Guard, our
    quality of life is where the soldier and the airman works, so
    that is very key to him or her. We do not have facilities like
    recreation and child care and that kind of thing, although we
    are looking at child care, because it has a similar impact on
    the National Guard.
        Our diversity program--we want to make sure that we have
    opportunities for all of our people--is going very well.

                               prepared statement

        I thank you for the opportunity to make my opening
    statement, and I would defer to General Schultz.
        [The statement follows:]

           Prepared Statement of Lieutenant General Russell C. Davis

             NATIONAL GUARD POSTURE STATEMENT FOR FISCAL YEAR 2002
        AROUND THE WORLD, THROUGHOUT OUR STATES, WITHIN OUR COMMUNITIES

                               EXECUTIVE SUMMARY
        Today, more than ever before, the National Guard is actively
    engaged in national defense. Since the drawdown of active component
    forces in the early 1990's, the National Guard has been a significant
    provider of forces to the Commanders in Chief around the world.
    Currently, over half of all Army and Air Force personnel are retained
    in the reserve components.
        In fulfilling this role as a force provider, the National Guard has
    transformed from an organization designed for mass mobilization in the
    unlikely event of a major global war to an integral member of the Total
    Force, actively engaged in peacekeeping and combat operations around
    the world. When the Texas National Guard sent its 49th Armored Division
    to Bosnia last year, it marked the first time since the Korean War that
    a Guard unit had headquarters command over active component soldiers.
    The Air Guard also works side by side with the active component, as F-
    16 fighter jets patrol the no-fly zone above Iraq on a daily basis.
        In addition to deployments in support of federal missions, the
    National Guard also plays an important role in each of the states and
    territories. As part of its unique ``dual-mission'' responsibilities,
    Guard units routinely respond to protect life and property in state
    emergencies such as riots, floods, fires, earthquakes, ice and
    snowstorms. Homeland Security is an increasingly prominent element of
    the threat to America's national security.
        The National Guard has recently taken significant steps to focus on
    this important mission as we continue to evolve and remain a ready,
    capable and relevant force in responding to our national security
    needs. With the help of the Congress, Department of Defense, Joint
    Chiefs of Staff, and the Services, the National Guard is building and
    identifying the tools, the organization, and the unique training
    requirements to help meet this evolving threat. As future capabilities
    are identified for Homeland Security requirements, the National Guard
    is ready to adapt to the evolving needs of our nation.
        The National Guard faces many challenges as we begin this new
    century. As President Bush has recognized, ``[a]s threats to America
    change, [the National Guard's] role will continue to change.''
    Transforming our force structure to meet evolving and emerging threats,
    modernizing our equipment, allocating limited resources among numerous
    missions, and attracting and retaining qualified people to serve are
    formidable challenges. The Army is moving to ``lighter'' forces; the
    Air Force has become an ``expeditionary'' force. The National Guard is
    adapting, as a total force partner, to support these initiatives. While
    we continue to evolve in order to meet the needs of the Services, the
    commanders, and our states and territories, the National Guard will
    remain relevant and ready to serve our communities, states and nation.

                              OUR STRATEGIC VISION

    National Guard Bureau Vision
        To ``provide for the common defense'' * * * of the nation, the
    National Guard Bureau provides the leadership and resources required to
    set the standard for the world's premier reserve force, the National
    Guard of the United States. Our destiny is to respond to current and
    future worldwide commitments of the National Security Strategy with
    community-based, dedicated citizen-soldiers and airmen; well trained,
    organized, and supported with state of the art technology and
    equipment.
        This vision provides the framework for the premier reserve force in
    the world. Providing for the ``common defense'' requires local,
    national, and global deployments of military personnel and equipment.
    When our national interests are threatened, the involvement of citizen-
    soldiers and airmen insures the full commitment of our Nation.
        ``For a people who are free, and who mean to remain so, a well-
    organized and armed militia is their best security.'' Thomas Jefferson,
    in his 8th annual message to the Congress, November 8, 1808

                             CONNECTED WITH AMERICA

    National Guard in Our Communities
        We are first and foremost an institution of people--soldiers,
    airmen, civilians, and families. The National Guard is the military
    face of the nation representing a familiar presence in almost every
    community in America. Our greatest strength emanates from the diversity
    of our force--diversity of education, political affiliations,
    vocations, social and economic status, race, color, creed and age. More
    Americans connect their vision of the military with the local National
    Guard than any other service. Guardsmen and women are our neighbors,
    friends, co-workers and relatives. The professionalism, dedication, and
    trust of the nation in our military starts with the local Army National
    Guard armory and the Air National Guard unit. People from all walks of
    life fill the ranks of the National Guard and, as such, provide a
    direct connection to over 2,700 local communities across the nation
    where Guard facilities are located. We share a common conviction and
    purpose built upon a bedrock set of values: integrity, loyalty,
    selflessness, compassion, family, dedication, service, and patriotism.

    National Guard Serving the States
        This community connection brings a unique perspective to the
    culture of the National Guard making it the prime choice for emerging
    national priorities like Homeland Security and such core missions as
    National Missile Defense, countering Weapons of Mass Destruction,
    Counterdrug support, and support against cyber-terrorism. Commanded by
    the state governor in peacetime, Guardsmen bring critical skills and
    resources to bear during state emergencies. Whether fighting forest
    fires, protecting our communities from the ravages of floods, or
    assisting local and state civil authorities recover from a terrorist
    attack, the National Guard is ready and trained to preserve life and
    protect property.

    National Guard Around the World
        Since the organization of its oldest units in 1636 in the
    Massachusetts Bay Colony, the National Guard has participated in every
    national conflict. The colonial period saw Guard activities largely
    confined within the nation's borders while later 19th century conflicts
    found the Guard contributing to the nation's defense both at home and
    abroad. The first half of the 20th century witnessed the establishment
    of the modern Army National Guard, with Guard soldiers participating in
    both World Wars. The Guard's evolution continued in the years following
    the Second World War with the creation of the Air National Guard. The
    Guard fought in Korea, Vietnam, and the Gulf war. During the 1990s, the
    Guard's role dramatically increased to a ``Total Force'' partner at
    home and throughout the world.

                             STRATEGIC INTEGRATION

    A Corporate Entity Shaping National Security Solutions
        To provide cost-effective, well-trained, and relevant military
    reserve forces, the National Guard must be a peer participant in the
    development of national security strategy. The National Guard Bureau is
    uniquely positioned, in this regard, as a Federal organization that
    resources and regulates the reserve components (the Army National Guard
    and the Air National Guard) of two military departments. To be a
    significant force multiplier in this area, the National Guard Bureau is
    engaged in the processes that formulate national security strategies as
    well as national military strategies.
        The National Guard Bureau is represented in the Quadrennial Defense
    Review effort. This effort explores possible national security
    strategies and their implications on military force structure. Aligning
    possible strategies against the perceived risk to the nation and
    identifying financial and force structure implications is essential in
    building a table of security options for civilian decision makers. By
    participating in this process, the National Guard ensures its rich
    history, traditions, and core competencies will be incorporated into
    all strategy options.

    A Joint Entity Coordinating with the Chairman, Joint Chiefs of Staff,
            Joint Staff
        The National Guard Bureau does not direct the military operations
    of the Army National Guard or the Air National Guard. However, under
    Section 10501, Title 10, United State Code, the National Guard Bureau
    is the channel of communications between the military departments and
    the 54 states and territories. To ensure timely, complete coordination,
    the National Guard Bureau staff communicates with the Chairman, Joint
    Chiefs of Staff, and Joint Staff personnel. Joint training exercises
    are coordinated to insure the inclusion of Guard personnel and
    equipment and to maximize the training opportunities for National Guard
    personnel as full partners in the total force.
        The Chief, National Guard Bureau meets periodically with the
    Chairman, Joint Chiefs of Staff. Members of the National Guard serve
    full-time on the Joint Staff. Substantive policy issues pertaining to
    the National Guard are coordinated with the Guard representative to the
    Chairman, Joint Chiefs of Staff. National Guard members are working in
    a collective manner throughout the Department of Defense to create a
    seamless total force.

    A Connected Entity Contributing to the Quadrennial Defense Review
        The Congress has mandated that we review our defense direction
    every four years. The review addresses our assessment of the perceived
    threat, strategies to meet the threat, and the ensuing force structure
    to implement the strategy. The Department of Defense will use the
    congressionally mandated Quadrennial Defense Review for 2001 as a tool
    to help determine our national defense priorities. The role of the
    National Guard in that review is to be fundamentally supportive of the
    parent service components in addressing the review. However, there are
    some parts of the threat that are especially relevant to the National
    Guard as a state institution.

                               HOMELAND SECURITY

        With respect to Homeland Security, we agree with the April 2000
    statement of the U.S. Commission on National Security/21st Century that
    ``The National Guard--successor to the militia, and acknowledged in the
    Second Amendment as the historic defender of the Republic--must be
    trained and equipped to assume, among its other responsibilities, a
    significant role in defending the homeland in the 21st century.'' The
    National Guard looks forward to taking part in defining its role in
    securing the homeland. Although not the only mission of the full
    spectrum of forces the National Guard provides to our National Security
    Strategy, the Guard currently supports Homeland Security through its
    National Missile Defense, Countering Weapons of Mass Destruction and
    Terrorism, and Counterdrug efforts.
        The Army defines Homeland Defense as ``Protecting our territory,
    population and infrastructure at home by: Deterring and defending
    against foreign and domestic threats. Supporting civil authorities in
    crisis and consequence management. Helping to ensure the availability,
    integrity, survivability, and adequacy of critical national assets.''
        We believe Homeland Security in a National Guard context includes a
    response to weapons of mass destruction to include biological and
    chemical agents. We believe it is linked to the air defense and air
    sovereignty of our nation and protection against the threat of rogue
    missiles. We would also add countering drugs as a component of the
    threat to our citizen's security. Protecting information operations is
    another important facet of this defense.
        Homeland Security is a national program that will be executed at
    the local level. It requires federal funding and national standards,
    but local administration in a peacetime environment. No one has more
    experience at interfacing with local and community government agencies
    than the National Guard. We have had decades of experience coordinating
    with local responders, and working in interagency environments. The
    Guard has provided military aid to civil authority on a regular basis,
    in natural disasters and emergencies all across our nation. The
    National Guard can use its forward-deployed strengths and its core
    competencies to best advantage in this mission.
        The U.S. Commission on National Security/21st Century report takes
    a comprehensive look at this vital mission and identifies many areas
    the Guard can play a major role. The National Guard is a trained,
    organized, equipped and disciplined force in almost every community in
    America. That embedded capability offers a large part of the solution
    to national coverage. This mission will require some additional
    organization and specialized training and equipment to supplement what
    is already at hand. We are already making solid progress in that
    direction with our Civil Support Teams. Those teams will be deployable
    assets able to respond across state lines.
        The Department of Defense, through the Quadrennial Defense Review
    of 2001, is working to align its structure, resources and systems to
    counter these new threats to our homeland. This process must produce
    deterrent strategies and response capabilities for the best interest of
    our nation. The National Guard, as a participant in the QDR process, is
    working closely with the Department of Defense to create cost-effective
    solutions for Homeland Security.
        The National Guard Bureau is positioned to offer solutions that
    transcend single-service solutions. Quadrennial Defense Review
    solutions supported by State Adjutants General as well as multiple
    services will provide workable alternatives. Working to this end, the
    National Guard remains committed to support and implement full-spectrum
    solutions to our national security challenges.
        Homeland Security is a work in progress--developing a definition,
    written doctrine, and finding ways to resource this national concern.
    We know that the Guard will play a significant role. Currently, the
    National Guard is already heavily involved in missions that constitute
    the heart of Homeland Security.

    National Missile Defense
        The end of the Cold War brought a relaxation of tensions between
    America and the Soviet Union and reduced concerns about nuclear war.
    Unfortunately, the spread of ballistic missile technology and weapons
    of mass destruction to new parts of the world has accelerated. The
    danger posed by this proliferation prompted a shift in objectives for
    the Strategic Defense Initiative program in early 1991. Keeping with
    this reorientation, the name of the Strategic Defense Initiative Office
    was changed to the Ballistic Missile Defense Office in 1993. This
    organization's goals now include developing systems to defend the
    United States against limited missile attacks and protecting deployed
    U.S. forces and American allies against shorter- and mid-range
    ballistic missiles. The decision to reorient the U.S. missile defense
    program was validated by the Gulf war, which demonstrated the
    increasing need for these capabilities.
        This year President Bush will determine whether to deploy a limited
    National Missile Defense (NMD) against ballistic missile threats to the
    United States from states that threaten international peace and
    security. The decision will be based on four factors: whether the
    threat materializes, the status of technology and the proposed system's
    operational effectiveness; the implications for the overall strategic
    environment and our arms control objectives; and affordability. The NMD
    program is currently structured so that an initial capability for
    defending all 50 states against limited ballistic missile attack could
    be available in 2005, with expanded capabilities ready in 2006-08.
        The National Guard Bureau has established an office cell to support
    the National Guard's role as the ``force provider'' for the NMD system.
    Two states, Alaska and North Dakota, are under consideration for
    possible fielding of a new missile defense warning and interception
    facility.

    Countering Weapons of Mass Destruction and Terrorism
        The unique dual state and federal role of the National Guard sets
    it apart from any other military organization to fulfill the special
    requirement of supporting Weapons of Mass Destruction (WMD) emergency
    responders and consequence management. In this important role, the
    National Guard is in the process of validating and fielding 32 full-
    time Civil Support Teams (CSTs) as authorized by Congress. States that
    do not have these full-time CSTs will have CSTs made up of traditional
    Guard personnel. These traditional CSTs will receive training and
    provide a partial response capability. The Guard is also planning
    additional, relevant training and equipment for other Guard units,
    which will be used for the reconnaissance of chemical, biological and
    radiological events, and patient decontamination.
        The mission of a CST is to: Assess a chemical, biological,
    radiological or nuclear event in support of the local incident
    commander; Advise civilian responders regarding appropriate actions;
    and Facilitate requests for assistance to expedite arrival of
    additional state and federal assets to help save lives, prevent human
    suffering, and mitigate property damage. These teams will respond as a
    part of a state emergency response, deploy outside the state to assist
    another state or mobilize in a federal support role.
        The National Guard is developing a plan to task organize existing
    units within each state to form a Joint State Task Force Headquarters
    for Consequence Management. This headquarters will have responsibility
    to develop the consequence management annex to a state's emergency
    response plan. In addition, it will act as the interagency coordinator
    for conducting community readiness exercises to assess the state plan.
    The National Guard has also provided Distance Learning Network time for
    all emergency responders to receive training. Additional resources must
    still be focused to more effectively manage and enhance the national
    and state terrorism response assets identified above. The National
    Guard will work to assist state and federal agencies in conducting
    coordinated training and exercises so that we are prepared to respond
    in the event of terrorist activity in our homeland.

    National Guard Counterdrug Program
        The National Guard is an organization grounded in hometown America,
    and each Guardsman and woman knows that our neighborhoods and schools
    are also battlefields where the struggle is waged one precious life at
    a time. Our members participate and support a number of proven drug
    demand reduction programs nationwide that focus on community coalition
    building, substance abuse education, youth mentoring, anti-drug message
    broadcasting and distribution, leadership development within vulnerable
    groups, and the promotion of high standards of citizenship.
        In our federal role, we support the Commanders-in-Chief by
    detecting and monitoring attempts to smuggle narcotics into the United
    States. Members of the National Guard fly fighter aircraft to identify
    suspected and known drug smuggling air and sea craft in the Caribbean;
    collect and report near-real-time narco-trafficking intelligence;
    provide radar support to the U.S. Customs Service Air and Maritime
    Interdiction Coordination Center and the Joint SOUTHCOM Surveillance
    Reconnaissance Operations Center; and provide mechanical and logistics
    support to contracted radar sites in Colombia and Peru.
        Within the United States, the National Guard supports various
    federal, state and local law enforcement agencies, task forces, and
    community-based prevention organizations. Law enforcement agencies
    greatly depend on the National Guard for specialized military equipment
    and highly trained soldiers and airmen, without which many interdiction
    operations would cease. During fiscal year 2000 approximately 3,600
    soldiers and airmen with skills in foreign languages, intelligence
    analysis, map-making, communications, engineering, diving, marijuana
    eradication, transportation, logistics, cargo inspection, and surface
    and air reconnaissance were involved in counterdrug operations.
        The National Guard has established goals and strategies to guide
    our efforts as we provide support to law enforcement agencies. The
    first goal is to increase cost effective, guard unique support by
    increasing the use of specialized or emerging technology, such as
    military aircraft and thermal imaging devices. The second goal of the
    National Guard Counterdrug Program is to reduce the drug threat within
    our communities by increasing the level of support to High Intensity
    Drug Trafficking Areas, state and local task forces, and local
    community coalitions. The third goal is to enhance the quality of our
    workforce by stabilizing the State Plans Budget to support the 4,000
    personnel authorized by Congress, and increase the amount of training
    for counterdrug personnel.
        As we move into the new millennium, the National Guard will
    continue to provide valuable support to various federal, state and
    local law enforcement agencies, task forces, and community-based
    prevention organizations in hopes that drug use will continue to
    decrease.

    Preventive Defense
        Another federal role of the National Guard is that of Preventive
    Defense. We are uniquely positioned to promote democratic practices
    abroad and find ourselves in frequent demand for overseas nation-
    building programs. Under the auspices of the National Guard's State
    Partnership Program, National Guard personnel participate in various
    command sponsored engagements. The National Guard participates in
    programs such as the North Atlantic Treaty Organization's Partnership
    for Peace program, European Command's Joint Contact Team Program,
    Southern Command's Traditional CINC Activities Program, and similar
    activities sponsored by the Office of the Secretary of Defense, the
    Joint Staff and the State Department.
        National Guard personnel, and the militia system under which they
    operate, are models for the role of a military in a democratic society.
    They provide an influential example of how a military force can be
    effective while demonstrating military subordination to civil
    authorities and illustrate how a military force of the people remains
    committed to the people. The wealth of civilian skills our Guard
    members take overseas--and the diversity of non-military professions
    they represent--are also important, giving our men and women a
    versatility and credibility as goodwill ambassadors that no other
    American military arm can match.

    The State Partnership Program
        The purpose of the State Partnership program is to build long-
    standing institutional affiliations and people-to-people relationships
    with nations currently establishing democratic military organizations.
    By using National Guardsmen in their dual roles as citizen-soldiers,
    the partner nation's military leaders encounter highly trained and
    cost-effective members of the United States Armed Forces. Guardsmen
    serve as role models in making a compelling case for the ideals of
    democracy, professionalism, and deference to civilian authority. They
    also demonstrate the necessity and economy of Reserve Components with
    the ability to react immediately to civil and military emergencies.
        Much of the Guard's success in promoting democracy abroad is the
    result of the State Partnership Program. To date, thirty-two states,
    two territories and the District of Columbia have joined as Partners or
    Associate Partners in extending the hand of friendship from grassroots
    America to thirty-two countries that would emulate our ways and
    institutions. Foreign military personnel and political leaders visit
    our country to observe how the National Guard operates within the State
    and Federal framework. National Guard members reciprocate by visiting
    the partner country and providing detailed information on civil-
    military topics like search and rescue, medical support, disaster
    response, military law, and family programs. Importantly, these are
    more than just military-to military contacts. By involving governors,
    mayors, and their staffs, state legislators, and the families and
    friends of our Guardsmen and women in building these bridges of
    friendship, we promote political ``buy-in'' on national security
    strategy at the local level. We also foster cooperation between the
    federal and state government in other productive ways.
        Sharpening the military skills of our Guardsmen and women while
    demonstrating their ability and willingness to enhance the quality of
    life for hemispheric neighbors is just one benefit of this timely and
    innovative engagement. We are firmly committed to sustaining this
    effort which has our Guardsmen and women helping to shape emerging
    democracies, and preparing for and improving readiness by engaging in
    international events and activities, and responding as our national
    security needs require.

                            READINESS AND RELEVANCE

    Citizens First: Warriors When Called
        Citizen involvement in national defense is critical to the
    longevity and health of democratic government. It is a reinforcing
    thread in the fabric of democracy itself. How the leadership defines
    our national security interest, in the end, is validated through the
    support of the people. Our rich heritage of Guardsmen and women
    involved in national defense is rapidly taking on new dimensions. As we
    transform our organization, we must insure that we recognize, respect,
    and protect our citizens' ``commitment to serve.'' Only by preserving
    this commitment can we attract the needed personnel to our ranks and
    retain them in service throughout a productive career.

    Preserving the Commitment to Serve
        We entrust a tremendous responsibility in our young men and women
    and are committed to ensure that such trust is not taken for granted.
    Today's National Guard provides a number of quality of life programs
    designed to ensure we recruit, train, deploy and retain the quality
    force our country deserves.
        The National Guard is struggling with recruitment and retention
    issues primarily due to the increasing number of active-duty days
    required to support contingency operations around the world. Because
    Guard duty is a second job for most of our personnel, the increasing
    number of deployments creates unique retention problems with civilian
    employers. The National Guard has taken steps to retain our personnel
    through Aviation Continuation Pay and special salary rates for
    aviators, as well as authorizing special pay and enlistment bonuses for
    critical specialties.

    Recruitment and Retention
        Army National Guard: In fiscal year 2000, the ARNG had success in
    enlisted personnel recruiting and retention, accessing over 100 percent
    of its goal of 54,034. However, while officer accessions were up 11.8
    percent from fiscal year 1999, officer end strength fell 908 officers
    short of the goal of 38,308. This shortfall was due to a higher than
    expected loss rate among ARNG officers. The ARNG is working vigorously
    to identify the reasons for these higher than projected losses by
    conducting telephonic and mail surveys with departing officers.
        The ARNG initiated an accelerated National Guard Bureau (NGB)
    Officer Candidate School (OCS) Program in 1996 that has proven very
    successful. This accelerated program cuts 11 months off the traditional
    OCS course duration--eight weeks versus 13 months. This is particularly
    beneficial to states experiencing large company-grade officer
    vacancies. The NGB has been programming about 80 students per year for
    the last five years. The class size doubled to 160 students in fiscal
    year 2001 due to forecasted training requirements submitted by the
    states.
        In addition, Cadet Command authorized 800 Guaranteed Reserve Forces
    Duty contracts for the Army Reserve Components for fiscal year 2001.
    This is the first year that Cadet Command has established a separate
    mission for Reserve Component accessions. The ARNG will receive
    approximately 500 new accessions from this program.
        The ARNG also supports the Army's initiative for Selective
    Retention Boards that will allow selected captains and majors to be
    retained so that they may reach 20 years of active service. Further,
    the ARNG also supports the Army's initiative to select captains for
    promotion who do not possess a baccalaureate degree or military
    education certification. The actual promotion to the next higher grade
    will become effective at such time as the individual provides proof of
    civilian or military education requirement completion.
        Air National Guard: The ANG met its fiscal year 2000 recruiting
    goal by accessing 11,936 new members. Coupled with fewer losses
    (10,873), the ANG was able to attain a fiscal year 2000 end strength of
    100.1 percent. However, beginning fiscal year 2001 with an increase in
    congressionally programmed end strength of over 1,300 personnel
    (106,678 to 108,022), the ANG starts fiscal year 2001 at 98.8 percent.
    Additionally, the ANG is projecting 11,785 losses for fiscal year 2001,
    making their recruiting goal an astonishing 13,620.

    Full-Time Support
        A major strength of the National Guard and its contributions to
    national defense continues to be the National Guard Technician and
    Active Guard and Reserve (AGR) programs. The full-time Guard cadre must
    be a ready and relevant force that is well trained, organized, and
    equipped with state-of-the-art technology. Also, sufficient numbers of
    full time personnel must be provided to ensure that the numerous
    mission requirements and modernization goals can be met. The uniformed
    members of the Guard's full-time force, including Technician and AGR
    personnel, continue to be readiness multipliers and an important pillar
    of support to national, state and local requirements.
        Although progress in full-time support has been made, we face
    challenges in a very competitive marketplace. Full-Time Support
    personnel are the single most critical readiness enabler, providing
    stability and institutional knowledge at every level of command. Full-
    Time Support functions include administrative, payroll, supply,
    training, maintenance and recruiting support at the unit level. Other
    functions include AC/RC integration management, and coordination of
    CINC requirements, mobilization and pre and post mobilization training.
        Current and future operations depend on a fully integrated force
    with the flexibility to respond quickly to meet rapidly changing
    operational requirements. Additionally, the current frequency and
    number of operational deployments causes the Army and Air Force to rely
    to a greater extent on the National Guard to meet its commitments to
    the National Military Strategy. Full-Time Support personnel are
    critical links to the interoperability of the National Guard and the
    active components.

    Transforming Our Organization
        As we begin the 21st century, the National Guard reflects upon our
    service over the last hundred years. America entered this century
    without the ability of powered flight and yet, in little more than 60
    years, placed a man on the moon. The National Guard has also undergone
    dramatic changes over this century. We have transitioned from a force
    focused on crisis response at home to a full partnership with the
    active components in defending our national security interests around
    the world.
        Of major concern to the active components is the dramatic increase
    in operations tempo and deployments. Many Commanders-in-Chief support
    additional funding and equipment for the National Guard so that the
    Guard may better assist them in meeting their worldwide operational
    requirements. Many believe that increased reliance upon Guard and
    Reserve forces to augment, reinforce, and support missions has become
    the norm because of personnel reductions in the active components.
        Meeting the demands placed on our military in light of available
    resources is a challenge for the Department of Defense. Today, more
    than ever, the National Guard is a significant part of the solution.
    The National Guard is a cost-effective and capable force-multiplier. We
    provide over half of the Army's combat assets and about 37 percent of
    the Air Force aircraft for less than 5 percent of the national defense
    budget. Additionally, over half of Army and Air Force personnel are
    retained in the reserve components.
        Key to our ability to remain a ready and relevant force is
    obtaining adequate resources to continue our transformation. National
    Guard priorities include equipment modernization, adequate facilities
    and recruiting, training, and retaining quality soldiers. Because of
    the increased reliance on upon Guard and Reserve forces, funding these
    priorities is essential to ensure America's continued military
    superiority.

    The Army Transformation
        The Army is transforming based on the emerging security challenges
    of the 21st century and the need to respond more rapidly across the
    full spectrum of operations. As an integral part of the Army, the Army
    National Guard (ARNG) will transform as well. One ARNG brigade is
    expected to begin transformation prior to fiscal year 2008. In the
    current plan, the entire ARNG will transform by fiscal year 2032.
    Before transformation is complete, the portion of the ARNG not yet
    transformed will form the Legacy Force. The Legacy Force is the
    strategic hedge that provides the essential capability to support the
    National Command Authority and warfighting Commanders In Chief. The
    active Army will cascade the most modern equipment to the ARNG.
    Selected legacy formations in both the active and reserve components of
    the Army will be recapitalized to enhance key armored and aviation
    systems as well as improve light force survivability. The ARNG Combat
    Support and Combat Service Support forces will also transform to meet
    the changing support requirements of the transformed Army.

    Expeditionary Air Forces
        Last fall the Air Force implemented the most significant change
    since its inception over fifty years ago--the Expeditionary Air Force
    (EAF) construct. This change affects the fundamental ways the Air Force
    organizes, operates, and even relies on the Air National Guard. Under
    this structure Active, Guard, and Reserve flying and support units are
    assigned to an AeroSpace Expeditionary Force (AEF). Ten AEFs are
    organized with the ANG playing a significant role.
        By accepting ten percent of the total AEF tasking, the ANG will
    contribute close to 25 percent of its complete force structure every 15
    months. The benefits to this new level of involvement and integration
    with the Air Force are many. It will bring predictability and stability
    to our people who must manage family concerns and civilian employment
    responsibilities. This is truly a great ``total force integration''
    success but it also brings with it some challenges. We must make this a
    positive experience for all our men and women as well as their
    families, employers, and communities.
        As the Air Force and Department of Defense recently noted in a
    report to Congress: ``Simply stated, the Air Force could not perform
    its expeditionary mission without the contributions of its Air National
    Guard and Air Force Reserve forces. They contribute 71 percent of the
    tactical airlift, 67 percent of the strategic tankers, 62 percent of
    the strategic airlift, and a significant portion of other Air Force
    capabilities critical to its expeditionary capability. In addition to
    providing expeditionary support, the Air Force Reserve is the sole
    provider of unique capabilities such as aerial spraying and hurricane
    tracking, while the Air National Guard provides the nation's airborne
    air defense capability. The seamless integration of the Guard and
    Reserve into the Total Force is a crucial step toward realizing the
    full potential of the EAF.''

    Modernizing Our Equipment
        To meet the needs of the new century, the Guard must modernize its
    equipment. Modern, mission-capable equipment is an essential element to
    maintaining readiness. State-of-the-art weapons, aircraft,
    communications, and other equipment are necessary for Guard units to
    interface and operate seamlessly with their active component
    counterparts. Although we have come a long way in the last several
    years in upgrading systems, much still remains to be done.

                Army National Guard (ARNG)
        The goal of the ARNG modernization strategy is to provide for a
    compatible and interoperable force. This force will be capable of
    fulfilling state, national and international missions in war and peace.
    Providing modern equipment with associated training and logistics
    support to the ARNG is integral to maintaining the quality force the
    nation expects.
        The Army Transformation announced by Army Chief of Staff General
    Eric K. Shinseki and briefed to Congress in fiscal year 2000 proposed
    sweeping changes to aviation force structure. The Transformation will
    impact ARNG aviation in every state, not only in personnel and
    aircraft, but also in facility construction and qualification training
    for aviators and maintainers. Simultaneous with the restructuring, the
    Army will accelerate the retirement of legacy aircraft (AH-1, OH-58A/C
    and UH-1) resulting in the divestiture of the AH-1s in fiscal year 2001
    and the OH-58A/Cs and UH-1s in fiscal year 2004. Implementation of the
    retirement plan within these time frames depends upon transferring
    older aircraft (AH-64s and UH-60s) from the active Army to the ARNG.
    The ARNG has proposed limited retention of AH-1s, OH-58s and UH-1s so
    that valuable aviation personnel skills can be retained pending
    acquisition of replacement aircraft.
        The aging AH-1 and UH-1 fleets have rapidly become an expensive
    maintenance burden. Long-term modernization plans called for the AH-1
    to be replaced by the AH-64A/D Apache Longbow and the UH-1 to be
    replaced by the UH-60L Blackhawk. The retirement of the UH-1 in fiscal
    year 2004 may leave the states without sufficient utility aircraft to
    execute state contingency missions such as disaster relief responding
    to floods and earthquakes, as well as fire fighting.
        Significant fire support modernization initiatives included the
    M109A6 Paladin, a 155 mm artillery system, the Multiple Launch Rocket
    System (MLRS) and the Highly Mobile Artillery Rocket Systems (HIMARS).
    By the end of fiscal year 2001, the ARNG will have 18 Paladin
    battalions. The ARNG divisional battalions still require Paladin for
    modernization. The fielding of the HIMARS to the ARNG is tentatively
    scheduled to begin in fiscal year 2005.
        The Javelin is the Army's medium weight manportable Infantry anti-
    armor weapon system and replaces the Dragon medium anti-tank weapon.
    The current budget fields the Javelin Command Launch Unit to all of the
    ARNG's eSBs and Special Forces (SF) Groups. Fielding will begin in
    fiscal year 2004 and be completed in fiscal year 2006. A second phase
    of fielding is planned, but is not yet fully funded.
        The ARNG is programmed to receive 1,034 M1078 Light Medium Tactical
    Vehicles (LMTVs) to modernize high priority units. The ARNG will
    receive the first of 380 LMTVs by the fourth quarter of fiscal year
    2001. The next phase will start in fiscal year 2007 and conclude in
    fiscal year 2008.
        M1 Abrams Modernization: Efforts are currently underway to upgrade
    tanks in the eight eSBs from M1A1s to M1A1AHs and in the non-eSB Guard
    units from the 105 mm equipped M1 tank to the 120 mm M1A1. This will
    provide armor units with greatly increased firepower and survivability
    while eliminating ammunition compatibility issues with the rest of the
    Army.
        Bradley Fighting Vehicle Modernization: Congress appropriated money
    in fiscal year 1999 for the procurement of the M2A2ODS Bradley Infantry
    Fighting Vehicle (BIFV) for the ARNG. This initiative, along with the
    cascade of older Bradleys into ARNG Divisions, will assist the Guard in
    moving along in its modernization strategy to ultimately have a pure
    fleet of BIFVs.
        The ARNG has assumed the corps level air defense artillery role
    with the activation of nine Avenger battalions. All nine corps Avenger
    battalions are fully fielded with the weapon system. The remaining
    eight corps Avenger battalions will be fielded with the Forward Area
    Air Defense Command, Control and Intelligence System and Sentinel
    radars from fiscal year 2001 through fiscal year 2003.
        The continued fielding of Single Channel Ground Airborne Radio
    System (SINCGARS) radios is a key component in interoperability with
    the Army. The fielding plan window runs from June 2000 through June
    2004 for all eSBs, ARNG divisions and remaining units. Currently ten
    eSBs are equipped with SINCGARS and the remaining five are scheduled to
    receive them by June 2001. In addition, echelons above division, field
    artillery brigades and air defense units, which support early deploying
    forces, are receiving SINCGARS SIP radios.
        The Army Battle Command System (ABCS) is The Army's architecture
    for the overall integration of the digital command and control system
    found at all echelons from theater level to the weapons platform.
    Currently, ARNG units assigned to III Corps will receive the required
    ABCS applications by fiscal year 2004. However, to make the ABCS
    applications inter-operable and functional, units will require a
    digital pipeline, such as the Enhanced Position Location Reporting
    System. Funding to support digitization of the eSB and ARNG divisions
    does not currently exist.
        The Reserve Component Automation System (RCAS) is an automated
    information system that provides the Army the capability to administer,
    manage, and mobilize Army Guard and Reserve forces more effectively.
    The RCAS provides an integrated capability between the ARNG and the
    USAR that supports mobilization and improves day-to-day administration
    and management of Reserve and Guard forces. Fully deployed, RCAS will
    link approximately 10,500 Guard and Reserve units at approximately
    4,000 sites located in all 54 states, territories, and the District of
    Columbia.
        RCAS has already been used to communicate with soldiers in Bosnia
    and to respond to disasters such as Midwest floods, Northeast ice
    storms, and El Nino storms on the West Coast and hurricanes in the
    Southeast. Full functionality is expected in fiscal year 2002.
        The National Guard Distributive Training Technology Project (DTTP)
    represents the future of training and education in the Army National
    Guard. This award winning program converts space into high tech
    classrooms linked via state of the art telecommunications to a
    centralized training and teleconference facility, resulting in a fully
    interactive classroom where both military and civilian studies can be
    conducted. The project spans 15 time zones and impacts over 3,000
    communities.
        Collaboration between organizations, e.g., federal, state, public,
    private, is ongoing to establish partnerships focused on fully
    implementing the program's potential for extending educational venues
    into communities across the country. Under this ``shared use''
    approach, classroom facilities are made available to non-military
    organizations on a direct cost reimbursement basis. The synergistic
    effect of this approach is the expansion of access to automated
    information and communications capabilities across the nation, while at
    the same time helping to defray the cost of operating the system. The
    eventual impact on improved mobilization readiness and community access
    is expected to be substantial.

                Air National Guard (ANG)
        A critical investment in readiness is required to achieve full
    Expeditionary Air Force core combat capability.
        Precision Strike: Precision Attack Targeting System (PATS), Global
    Positioning System (GPS), High Speed Anti-Radiation Missile (HARM)
    Targeting System (HTS) 24-hour Operations: Night Vision Goggles (NVG)
    and Night Vision Imaging System (NVIS).
        Survival in a Complex Threat Environment: Countermeasure Management
    System (CMS), Towed Radio Frequency (RF) Decoys, and Pylon Integrated
    Dispensing System (PIDS) Universal.
        Information Dominance: Situation Awareness Data Link (SADL),
    Fighter Data Link (FDL), Theater Airborne Reconnaissance System (TARS),
    and Improved Data Modem (IDM).
        These ANG core combat capabilities integrate directly into the Air
    Force's core competencies for providing Aerospace Superiority, Global
    Attack, Rapid Global Mobility, Precision Engagement, Information
    Superiority, and Agile Combat Support. Together, they provide the most
    rapid and effective way to achieve national objectives while also
    reducing risk to the men and women serving our nation.
        In addition to acquiring new, state of the art systems like the F-
    22, C-17, and C-130J model aircraft, modernization requirements also
    require us to focus on collateral supporting programs and equipment.
    These programs include: the Combat Upgrade Plan Integration Details
    (CUPID) program adding GPS, CMS, NVIS and SADL to our F-16, Block 25/30
    aircraft; upgrading our KC-135E fleet through the Pacer Compass, Radar
    and Global Positioning System (CRAG) program and the re-engining
    program; service life extension modifications for the remaining C-141Cs
    to sustain their flying until the C-17 transition is complete; and the
    C-130X program to bring all C-130E, H1, H2 and H3 variants to the same
    basic aircraft avionics and systems configuration to increase their
    reliability, maintainability, supportability, and performance.
        We face a future of changing training requirements driven by a
    growing reliance on precision-guided, stand-off weapons and night
    operations for all airspace users. Further, we will be training in the
    evolving environment of a re-designed National Airspace System. We must
    ensure access to the training space we need, and provide our crews with
    realistic training--in a more complex aviation environment.
        The Air National Guard seeks to ensure that its attack assets will
    have the latest and best in precision attack capability and battlefield
    information equipment. Our objectives are to ensure all ANG aircraft
    have the latest, best, defensive and all weather equipment.
    Modernization of all our aircraft, C-130s, KC-135s, C-5s, F-16s, F-15s,
    A/OA-10s, HH-60s and others, requires adequate and timely funding for
    replacement parts, enhancements, and ``mid-life'' upgrades for our
    weapon systems. Equipment modernization is essential for a relevant Air
    National Guard.

                Military Construction
        Investment in military construction and real property maintenance
    will also enhance our readiness capabilities. The National Guard
    currently operates and maintains approximately 3,200 facilities in more
    than 2,700 communities. The Guard has facilities in all 50 States; the
    District of Columbia; and in the three territories of Guam, Puerto
    Rico, and the Virgin Islands. Quality of life, and more important to
    reserve component members, quality of service is directly impacted by
    the facilities in which they serve.
        Their replacement value exceeded $30 billion in fiscal year 2000.
    The number of facilities has increased in recent years because of new
    missions and the Base Realignment and Closure process. While the
    inventory has grown, military construction funding has not kept pace
    with estimated requirements. More than half of the facilities need
    replacement or extensive renovation because of their age or condition.
        The ARNG and ANG submit construction requirements separate from the
    Army and Air Force and compete directly with the active duty forces for
    military construction dollars. In the end, the ARNG and ANG receive
    only a fraction of the total military construction program in the
    President's Budget. Traditionally, Congress has inserted military
    construction projects into the budget process. However, even with the
    congressional add-ons, the National Guard has traditionally been able
    to fund less than half of its validated requirements.
        Military construction for the Guard is much more than just putting
    up new structures. The facilities that house the Guard represent to us
    what a post or base represents for our active counterparts. It is the
    headquarters, the aircraft hangars, the motor pool, the mobilization
    station, the classroom, the family support group gathering place and is
    a significant quality of life issue for our people. The poor condition
    of National Guard facilities affects training, recruiting and
    retention. Our goal will be to communicate this message to our elected
    and appointed leaders so that they too can develop an appreciation for
    this vital issue.
        Fiscal year 2000 and fiscal year 2001 saw a number of much needed
    Army National Guard military construction (MILCON) projects initiated
    throughout the nation. However, much still needs to be done.
        In fiscal year 2001 the ARNG completes the Real Property
    Development Plan (RPDP) Initiative as part of a rigorous and
    disciplined process using Army standards to establish priorities for
    MILCON requirements. This planning tool provides states with a
    decision-making guide for long range acquisition, utilization and
    development of real property. In addition, the ARNG plans to complete
    incorporating our facility needs into the Standard Army Systems by the
    end of 2002 to provide the Department of the Army a more accurate view
    of what type and how many facilities the ARNG needs to successfully
    complete its missions.
        The Air National Guard had record setting years for MILCON in
    fiscal year 1999 and fiscal year 2000 with nearly $450 million in
    projects to address environmental concerns, beddown new missions,
    replace outdated and inefficient facilities and restore failing
    infrastructure. Strong Congressional support of ANG requirements made
    this possible.
        This support will be desperately needed in the future as we
    continue to struggle with a constrained Air Force program. Both real
    property maintenance (RPM) and MILCON have been cut to make room for
    other high priority modernization initiatives. The relatively small
    amounts set aside for MILCON for the ANG will be dedicated to beddown
    of our new missions (C-17, C-130J, KC-135). If past trends continue,
    backlogs in current mission requirements, both RPM and MILCON, will
    continue to grow beyond the $1 billion mark.

    Employer Support of the Guard and Reserve (ESGR)
        The National Guard has dedicated this year as the Year of the
    Employer. We have long recognized that without the dedicated patriots
    who employ our Guardsmen and women, our militia could not perform at
    the magnificent level we see today. Our soldiers and airmen sacrifice
    when they answer the call to duty, and in a parallel manner, so do the
    employers of these soldiers and airmen.
        To foster employer-Guard partnerships, the National Committee for
    Employer Support of the Guard and Reserve (NCESGR) was chartered by
    presidential proclamation in 1972 under the Office of the Secretary of
    Defense. It is the sole agency within Department of Defense directed to
    ``promote public and private understanding of the National Guard and
    Reserve in order to gain employer and community support to ensure the
    availability and readiness of National Guard and Reserve forces.''
    NCESGR has 54 state-level employer support committees, comprised of
    over 4,200 volunteer members and is supported by a small joint service
    staff in Washington. The volunteers implement a variety of programs and
    services for both reserve component members and their employers. They
    provide information on employment rights and responsibilities related
    to the performance of military duty; offer informal employment conflict
    mediation; and conduct employer recognition and public affairs events
    that promote understanding of the vital role of the reserve components.

    National Guard Family Programs
        Support of National Guard families is a critical component of
    readiness and retention. The National Guard Family Program provides an
    extensive infrastructure with a national network linking over 2,700
    communities within the 54 states and territories. This network includes
    54 full-time State Family Program Coordinators who work with military
    points of contact and volunteers at every organizational level. This
    team promotes family member volunteerism, family readiness groups and
    networks, and quality of life issues, and facilitates family readiness
    training throughout the National Guard.
        During periods of increased Guard activity, such as deployments and
    state emergencies, Family Assistance Centers are set up to support the
    immediate and post deployment needs of families. Family Program
    services include basic family readiness training and counseling in
    preparation for the deployment of military family members; information,
    referral, and follow-up; community involvement; emergency assistance;
    crisis intervention; reunion preparation and activities; and youth
    outreach programs for children of Guard personnel. A key National Guard
    quality of life goal is to provide assistance to all military families,
    regardless of branch or component, who find themselves beyond the
    support capability of active duty military facilities or their home
    units.

                Youth Programs
        Consonant with its role in local communities and state mission, the
    National Guard operates two youth programs, ChalleNGe and Starbase.
    These programs make use of the National Guard's strengths in
    organization, planning, execution, self-discipline and leadership and
    leverages its existing infrastructure in the states, so that there is
    great value added with a minimum of additional resources.
        ChalleNGe is a program for youth between 16 and 18 years of age who
    are not in trouble with the law and are drug free, unemployed, and have
    dropped out of high school. The program consists of a five-month
    residential phase and a one-year post-residential mentoring phase. Its
    goal is to significantly improve the life skills and employment
    potential of these youth through military-based training.
        Starbase is a nonresidential program for students in grades K-12,
    which targets ``at risk'' students, and provides instruction
    specifically designed to meet a state's math and science objectives.
    The program provides the students with real-world applications of math
    and science through experiential learning, simulations, and experiments
    in aviation and space related fields.

                         ON GUARD FOR THE 21ST CENTURY

        During the past 365 years, the National Guard has built a
    distinguished record of service, and will continue to provide the
    primary first line ready reserve force for our national defense. The
    National Guard is a reliable insurance policy for national defense that
    pays daily dividends in our communities and states. It provides the
    social connective tissue between hometown America and our national
    security strategy, bonding the support of our citizens to our
    leadership objectives. The Guard has flexibly adapted to centuries of
    growth, challenge, and change--transforming to meet the challenge of
    the time.
        As we move into the 21st Century, Americans enjoy relative peace at
    home and one of the longest economic expansions in our nation's
    history. Truly, these are blessed times for the majority of Americans.
    But we must maintain our vigilance, and we must maintain the necessary
    level of readiness to counter threats to our nation.
        As time passes, be assured the National Guard will continue to be
    engaged globally as full partners with the Army and the Air Force in
    discharging missions under the National Security Strategy. We will
    continue to pursue innovations in strategy, training and technology. We
    will continue to adapt to meet the national security requirements of
    the time in order to remain the world's premier reserve force.
        The National Guard is connected to the American people through
    3,200 training centers in 2,700 communities throughout 54 states and
    territories. To have a strong common defense, all Americans must feel
    connected to the armed forces. The National Guard is that mechanism
    which involves local citizens in meaningful community service and
    allows them to serve their nation while remaining in their communities.
        The National Guard is unique in the world. No other military
    organization has a constitutionally based dual responsibility to state
    and nation. No other military organization is community based,
    providing combat ready, mission-capable forces throughout the entire
    spectrum of conflict. The National Guard is deployed around the world,
    throughout our states and within our communities.

        Senator Stevens. General Schultz.
    STATEMENT OF MAJOR GENERAL ROGER C. SCHULTZ, DIRECTOR,
                ARMY NATIONAL GUARD, DEPARTMENT OF THE ARMY
        General Schultz. Thank you, Mr. Chairman, and distinguished
    committee members. On behalf of 350,000 soldiers today, I
    extend my appreciation to you for what you have done for us by
    focusing on our priorities in the past.
        I am here today to tell you it has made a difference, and
    it continues. As we talk today, we have 14,900 soldiers from
    the Army Guard deployed from their homes. Two thousand, one
    hundred are deployed in the Balkans and in Southwest Asia. The
    rest are on training missions and operational kinds of
    exercises. My message is this, as we talk about increased
    deployment, meaning a person away from their place of work or
    their home, we applied more pressure on our full-time staff.
        We have worked with your committee in the past. I am here
    today to continue to ask for your support of full-time manning
    as we talk about a changing role in the schedule, really the
    activity, that we apply across the Guard today. We responded
    last year, for example, to 512 missions in support of the Army.
    We were in 64 countries last year. We have been in 57 countries
    already this year.
        So my request today, Mr. Chairman, is twofold: One, assist
    us with our full-time manning requirements. That is, the
    personnel looking after the readiness of that unit. The second,
    modernization of our equipment. As we rely on Guard units to
    respond more and more every day, deploying with our active
    units, we need things like radios that talk to one another, and
    equipment that is compatible across the systems that are
    delivered in our unit inventory.
        Mr. Chairman, thank you.
        [The statement follows:]

              PREPARED STATEMENT OF MAJOR GENERAL ROGER C. SCHULTZ

        Mr. Chairman, distinguished members of this committee, thank you
    for the opportunity to testify on behalf of the more than 351,000 men
    and women serving in the Army National Guard. Your Army National Guard
    today is fully engaged around the world as an integral part of the
    Army, as well as responding to the call to protect life and property in
    state emergencies.
        Recent events have demonstrated, now more than ever, the crucial
    role the Army National Guard plays when called upon by our nation
    during times of need. We were there to help friends and neighbors
    weather floods, fires, ice and snowstorms. We were also there when our
    nation asked us to help keep peace in a war weary region. When called,
    the Army National Guard has proven it can be relied upon.
        Fiscal year 2000 brought many opportunities to our organization. We
    saw the 49th Armored Division Headquarters of the Texas Army National
    Guard deploy and command a multi-national force in Bosnia. We look
    forward to the 29th Infantry Division of the Virginia Army National
    Guard assuming this responsibility in October of this year. Currently,
    the 48th Infantry Brigade of Georgia Army National Guard is providing
    security forces for stabilization operations. As I sit before you
    today, we have more soldiers deployed on Presidential call up orders
    than at anytime since the Persian Gulf War. At home in fiscal year
    2000, ARNG soldiers spent a total of 212,896 man-days in support of
    state missions. As of May 1st of this year, the number of man-days is
    45,127.
        The reasons for our success are clear--the people of our Guard
    family. The Army National Guard is a team of people from every state,
    territory, and the District of Columbia. These soldiers have personal
    lives to lead, families to support, and careers to pursue in the
    civilian sector. In addition, we not only ask our service members to be
    available for regularly scheduled duty, but also to support an
    increased operational tempo. Soldiers are our most precious resource.
    They need our assistance to balance their personal, professional, and
    military lives.
        The Army National Guard surpassed its recruiting goals in fiscal
    year 2000 in spite of difficult recruiting challenges brought about by
    a robust economy and we are on track to surpass our goals for fiscal
    year 2001. When soldiers join the Guard, they know their talents and
    abilities are going to be fully utilized, they know they are going to
    work and work hard. We owe it to them to fight for the highest quality
    training, state of the art equipment, sufficient numbers of dedicated
    full-time support staff and appropriate resources for support of the
    missions we assign them.
        The Army National Guard plays an increasingly significant role in
    the National Military Strategy, now aligned even more closely with
    Active Component forces. Fulfilling our obligation to this strategy and
    ensuring we are ready when called upon is paramount. This close
    relationship with active forces makes concerns about our aging
    equipment even more worrisome. The Guard must modernize at rate
    commensurate with the active force. As the active Army transforms, so
    too must the Guard. The increased reliance on the Army National Guard
    and its soldiers places an even higher priority on the inter-
    operability of our equipment.
        At this time I would like to submit our annual Posture Statement to
    the committee in support of my testimony here today. This Posture
    Statement will provide you with an update on what the Army National
    Guard has been doing, the progress we are making and how we will help
    meet the needs of the country as defined in the National Military
    Strategy. Some of the major issues addressed are equipment
    modernization, operational tempo, readiness, full-time manning, and
    transformation. Additionally, we outline the many challenges we face as
    an organization. We particularly focus on our ability to balance
    requirements placed upon us by our states and nation and still maintain
    the support of our families and employers versus our ability to sustain
    acceptable readiness. The strides made by the Army National Guard are
    evidenced by the performance of our units. Our foundation is first-rate
    individual soldiers, molded into teams. These soldiers and teams are
    what make the Army National Guard a very special organization indeed.
        Of course, the bottom line for us will remain the readiness of our
    soldiers and our units. Mr. Chairman, again I would like to thank you
    for the opportunity to appear before you today and thank you for the
    support this committee provides. I look forward to answering any
    questions you might have.
                                     ______

             Army National Guard Fiscal Year 2002 Posture Statement
                                    forward

        The 2002 Army National Guard (ARNG) Posture Statement highlights
    our activities of the past year, and the Army Guard's programs and
    challenges to meet the needs of our nation in the coming year and
    beyond.
        The ARNG vision is: ``A force missioned across the spectrum of
    contingencies, structured and resourced to accomplish its mission,
    capable and accessible when called, with trained citizen-soldiers
    committed to preserving the timeless traditions and values of service
    to our nation and communities.'' With a unique federal and state
    mission, the Army National Guard is poised to respond when our nation
    or communities call. As a forward thinking organization, the ARNG is
    mindful of the needs of our fellow citizens whom we serve.
    Unprecedented Involvement
        The Fiscal Year 2002 Posture Statement tells of unprecedented
    involvement of the ARNG in both federal missions and in civil support
    matters. The 49th Armored Division's (Texas ARNG) assumption of multi-
    national ground forces command responsibilities in Bosnia highlighted
    an eventful year that saw record numbers of Guard soldiers deployed
    worldwide in support of the federal mission. In addition, six more ARNG
    division headquarters were alerted for future Bosnia missions.
    Continued pursuit of new mission requirements to serve in the areas of
    Weapons of Mass Destruction and Information Operations ensures that the
    capabilities of the ARNG will advance with the needs of the nation. A
    challenging year with Y2K concerns, wild fires, winter storms and other
    natural disasters provided many opportunities to demonstrate the value
    of the ARNG at home.
        Looking to the future, it is imperative that the ARNG continues to
    work closely with The Army to balance manning, modernization,
    missioning and resourcing issues. The relationship with The Army
    continues to develop and prosper, and it is essential to continue this
    to ensure ARNG plans and programs are firmly rooted in protecting the
    present and preparing for the future.
    Significant Challenges
        Significant challenges for the future are as follows:
        Manning.--Our most critical issue is full-time manning. In order to
    remain a trained and ready force, ARNG units must have sufficient full-
    time support personnel. The Army Guard's current full-time manning
    level of 57 percent of validated requirements is the lowest of all the
    reserve components. With the Guard's increased role in worldwide day-
    to-day operations, it is extremely important to have sufficient full-
    time soldiers ready to help their units meet current readiness
    operational tempo needs. Maintaining and sustaining personnel readiness
    in our units is a high priority. Continued support to recruiting and
    retention is paramount. The ARNG continues to achieve its endstrength
    mission.
        Missioning.--This past year The Chief of Staff of the Army (CSA)
    announced his intent to mission ARNG divisions and create affiliations
    with Active Army forces. The Army also supported a change to the Joint
    Strategic Capabilities Plan, recommending the single apportionment of
    all 15 enhanced Separate Brigades and the apportionment of six ARNG
    divisions to a combatant command. The CSA further aligned all ARNG
    combat maneuver forces to one of the four Army corps, enhancing mission
    focus. This initiative enhances the understanding that we must remain
    on the same technological level with active forces to ensure full
    interoperability and integration.
        Modernization.--The Army National Guard is committed to the Chief
    of Staff's vision of transforming The Army to better meet the demands
    of the 21st century. Our challenge during this period of Transformation
    will be to ensure that ARNG units are equipped and sustained at levels
    that provide them with the capability to execute their missions. Under
    the current Army plan, the ARNG will complete its Transformation in the
    year 2030. It is therefore essential that we remain vigilant in
    addressing critical current force modernization shortfalls in aviation,
    armored fighting vehicles, artillery platforms and support systems. To
    execute full spectrum operations in support of the National Military
    Strategy, Joint Strategic Capabilities Plan and the unified combatant
    commands, The Army must establish interoperability across the entire
    force. It is therefore essential that the ARNG acquire the requisite
    digital equipment capabilities needed to maintain command, control and
    situational awareness throughout the force.

    Resourcing and Civil Support
        Resourcing.--The Army National Guard is fully engaged with the
    Department of the Army to ensure critical resourcing needs are met.
    Although much progress has been made in achieving satisfactory funding
    levels in the past, certain critical shortfalls remain. Proper
    resourcing is essential to meeting readiness targets and particularly
    critical for full-time manning, recruiting and retention, schools and
    special training, and automation.
        Civil Support.--At the request of a state's governor the Guard is
    poised to respond to emergencies. We aid state agencies and our
    communities in minimizing the effects of floods, fires, hurricanes and
    other natural disasters. We must stay prepared to aid communities when
    there is a threat of civil disturbances. It is also necessary for the
    Guard to be ready to help civil authorities mitigate the effects of
    weapons of mass destruction.

    Infrastructure
        Infrastructure.--The ARNG maintains 3,174 training facilities. To
    many communities, these are more than just military buildings. They are
    meeting places as well as places for community members to come together
    and share common interests. These structures must be maintained and
    have full-time manning in the units to keep them open. The ARNG is also
    one of the greatest stewards for preservation of public lands. Our
    training areas across the nation are an important part of area eco-
    systems and contribute to local economic development.
        As you read this posture statement, keep in mind the ARNG's unique
    dual mission. A mission built upon the foundation of full-time manning,
    missioning, resourcing, infrastructure, modernization and civil
    support. Since 1636, we have proudly served the defense of our nation.
    Today and in the future, we continue to assist our communities, and
    stand ready to defend our nation. With your continued support, we will
    meet and exceed our nation's expectations.

                                THE GUARD TODAY

    The Army National Guard in Stability and Support for Contingency
            Operations
        Fiscal year 2000 saw an increase in Army National Guard (ARNG)
    support for contingency operations in the Balkans and Southwest Asia.
    During the course of the year, 2,932 ARNG soldiers supported efforts
    under the auspices of OPERATION JOINT FORGE (Bosnia), OPERATION JOINT
    GUARDIAN (Kosovo) and OPERATION DESERT SPRING (Kuwait/Saudi Arabia).
        Operations in fiscal year 2001 are dramatically illustrating the
    increasing role of the ARNG in supporting theater Commanders In Chief
    (CINCs) in stability and support operations. To date, the ARNG has
    provided approximately 5,400 soldiers in fiscal year 2001, which is an
    increase of 2,500 soldiers from fiscal year 2000.
        During fiscal year 2000, the ARNG deployed more than 22,000
    soldiers under the Overseas Deployment for Training (ODT) program in
    support of CINCs.

    Military Support to Civil Authorities
        In addition to ARNG deployments in support of federal missions, the
    ARNG fulfills an extensive and highly visible domestic role. As part of
    its unique ``dual-mission'' responsibilities, the ARNG routinely
    responds to domestic requirements within each state. Local governments
    in 50 states, three territories and the District of Columbia requested
    emergency support through their state governments 288 times in fiscal
    year 2000.
        The ARNG provided 200,590 soldier man-days in response to these
    requirements in an effort to lessen suffering and meet crucial support
    needs in local communities. Services provided by the ARNG in support of
    state requirements included establishing security, providing electrical
    power, heat, water, transportation services, food and shelter. The ARNG
    provided emergency engineering support to victims of numerous natural
    disasters, including floods, hurricanes, droughts, ice storms,
    tornadoes and search and rescue.

    U.S. Joint Forces Command Exercises
        Beginning in fiscal year 2001, nearly 850 service members are
    scheduled to participate in Joint Forces Command exercises such as
    Joint Task Force Exercises (JTFEX) Unified Endeavor and Northern Viking
    Iceland. This will mark the first time ARNG troops have participated in
    a major role in Category 2 (multi-service) and 3 (joint force) type
    exercises. This participation improves the ARNG soldiering skills in
    joint interoperability and positions our units for higher levels of
    readiness.

    National Guard State Partnership Program
        Embedded within the support to U.S. European Command (EUCOM), U.S.
    Central Command (CENTCOM), U.S. Southern Command (SOUTHCOM) and U.S.
    Pacific Command (PACOM) were activities conducted under the State
    Partnership Program initiative. This National Guard program grew from
    the Partnership for Peace initiative to assist nations emerging from
    the Soviet Union in establishing a defense infrastructure. Today 32
    states, two territories and the District of Columbia are partnered with
    32 countries around the world.
        Through its cooperative efforts with other nations, the Guard plays
    an important role in shaping the international environment in support
    of the national security strategy. The National Guard's international
    initiatives directly support United States national security and
    national military strategies by fostering democracy, encouraging free
    market economies and promoting regional cooperation and stability.
        The state partners actively participate in a host of engagement
    activities, including bilateral training and familiarization events,
    fellowship-style internships and civic leader visits. These deployments
    provide valuable training for the ARNG, reduce Active Component
    Operational Tempo (OPTEMPO) and assist the Unified Commands in shaping
    the security environment.

                            PREPARING FOR THE FUTURE

        Current world globalization trends, which include rapid and
    unrestricted flow of information, present an uncertain security
    environment for the future. We must provide our soldiers with the
    resources they need to remain trained and ready. The Army National
    Guard (ARNG) must anticipate the requirements of today's world while we
    plan for tomorrow's challenges.
        The ARNG will have a primary role in supporting emerging civil
    support missions, including such diverse tasks as managing the
    consequences of Weapons of Mass Destruction, National Missile Defense
    System and threats to our nation.
    Organizational Goals
        To focus our efforts, we have defined 11 key organizational goals
    that are critical to our support of the nation's defense. These are:
        Manning.--Develop and execute an Army-wide integrated human
    resource system to acquire, distribute, manage, compensate, retain and
    transition people, enabling the ARNG to provide combat ready units.
        Organizing.--Provide the maximum possible number of missioned ARNG
    units based on the Total Army Analysis (TAA) process, with required
    support as part of The Army's total force structure required to achieve
    directed capabilities.
        Equipping.--Obtain and distribute mission capable equipment to
    optimize ARNG unit readiness, modernization and force relevance.
        Readiness.--Ensure all ARNG units are resourced to attain and
    sustain readiness levels needed to meet Commander in Chief (CINC)
    mission requirements and deployment timelines.
        Sustaining.--Provide appropriate and efficient support for
    personnel, equipment and operations to accomplish all ARNG missions.
        Training.--Produce ready units to meet the National Military
    Strategy. This requires the development of strategies and the planning,
    acquisition, distribution and execution of resources to train
    individual, leader and collective tasks in the live, virtual and
    constructive environments.
        Quality Installations.--Provide state-of-the-art, environmentally
    sound, community-based power projection platforms that integrate all
    functions required to sustain and enhance unit readiness and community
    support.
        Missioning.--Ensure 100 percent of all ARNG force structure
    federally missioned--all Modified Table of Organization and Equipment
    (MTOE) units and Table of Distribution and Allowances (TDA) structure
    included within Time Phase Force Deployment Data (TPFDD) or supporting
    the Commander in Chief (CINC) war plans.
        Quality of Life.--Provide an environment and culture that promotes
    equal opportunity for all, fosters environmental stewardship and
    provides for the safety, health and fitness of the force, families and
    communities.
        Knowledge Infrastructure.--Develop the infrastructure necessary to
    capture and create information and knowledge, store it in an organized
    manner, improve it, clarify it and make it accessible in a usable
    format to anyone who needs it.
        Resourcing.--Secure resources for all statutory and critical
    requirements. Achieve parity within each force package across all
    components to provide trained and deployable forces for The Army and
    CINCs.

    Army National Guard Vision 2010
        No successful plan to shape our future military forces can be
    completed without a thorough understanding of the global environment.
    The Army National Guard Vision 2010 provides the foundation for
    determining our future roles and missions in support of our nation's
    security strategy. The Army National Guard Posture Statement documents
    the link between Army Vision 2010, The Army Transformation Campaign
    Plan and the Joint Staff Joint Vision 2020. These integrated planning
    documents provide the ARNG direction for meeting its goals, objectives,
    missions and responsibilities in the new millennium.
        In fulfilling its role as a part of this integrated road map to the
    future, Army National Guard Vision 2010 notes that the development of a
    full spectrum land force will be a major factor in meeting our long-
    term readiness objectives. The Army's Transformation Strategy and the
    missioning of our combat divisions support these objectives. To
    continue on our current path of success in Active Component/Reserve
    Component (AC/RC) integration, the ARNG will participate in The Army's
    Transformation and form an Interim Brigade Combat Team (IBCT) prior to
    2008.
        Our existing and transformed forces must possess an unprecedented
    degree of operational and strategic flexibility, allowing ARNG soldiers
    to fulfill a wide variety of mission requirements. With capabilities
    ranging from sustained, high intensity combat to the conduct of
    disaster relief and assistance operations, this full spectrum land
    force will draw on traditional ARNG strengths as well as a variety of
    new capabilities in meeting the nation's military and civil needs.
        Recognizing the need for both traditional and non-traditional
    capabilities in the years ahead, Army National Guard Vision 2010 notes
    that the ARNG's heritage as a community-based force will play a crucial
    role in meeting these challenges. From 2,679 communities in all 50
    states, three territories and the District of Columbia, the ARNG's
    350,000 personnel are well positioned to meet both existing and
    emerging state and federal mission requirements. These diverse
    capabilities ranging from Combat to Combat Service Support (CSS)
    combine with the Guard's community orientation to provide unparalleled
    capability and responsiveness both at home and abroad. The attributes
    of the ARNG, coupled with rapidly emerging capabilities, will make the
    Army National Guard Vision 2010 a reality.

    The Future is People
        The well-being of our soldiers, families, and employers is vital in
    meeting future challenges. Although we recruit soldiers, we recognize
    the significant contributions made by their families and employers.
    This transcends our traditional view of part-time citizen soldiers. Men
    and women of the ARNG, supported by their families, are the bedrock
    upon which the organization is founded. Continuing nationwide support
    from ARNG employers also plays a significant role in the readiness and
    availability of our soldiers for any mission. Without this employer
    support, our readiness is adversely affected at every level. Working
    together, ARNG members, families and employers create the basis for
    what counts most--our readiness.

    Army Personnel Transformation Plan
        Lessons learned from Desert Shield/Desert Storm demonstrate that
    The Army must provide more timely information to commanders to support
    their soldiers during times of war. We must change our business
    processes to support soldiers no matter where they serve.
        With the increased participation of reserve components during war
    as well as peacekeeping missions, our systems of providing information
    must be more uniform, accurate and timely. The vision for personnel
    transformation is to create a system that is simple, accurate and
    accessible. This system will give commanders, regardless of component,
    the ability to manage and support all of their soldiers' needs.
        The concept of personnel and human resource support calls for a
    plan that closely matches The Army Transformation Plan. Key to
    achieving the vision of Army human resource support is a single,
    integrated (multi-component) human resource database, referred to as
    the Integrated Total Army Personnel Database (ITAPDB). Also important
    to the success of this concept is the redesign of more than 1,170
    personnel tasks and functions required to support soldiers, commanders
    and family members.
        A structured plan that contains the personnel manpower requirements
    must be developed insuring that soldiers, civilians and contractors are
    trained to work as personnel experts in the more complex future.
        The personnel support concept of the future lessens the burden of
    personnel service support organizations and manpower on strategic lift
    and sustainment requirements, as well as demands on Army manpower. The
    new design and concept of support will not only simplify the current
    complex delivery systems of support and improve access to information
    for commanders and soldiers, but will also offer improvements in the
    overall quality of human resource support to soldiers and family
    members.

    The Army QDR Strategy
        The ARNG is a full partner in the Quadrennial Defense Review (QDR)
    process with the United States Army Reserve (USAR) and the Active
    Component. The Army's approach is to conduct a strategy-based review to
    achieve low to moderate risk in accordance with the congressional
    mandate. The process will first assess The Army's capabilities as part
    of a joint force in meeting the current National Military Strategy
    (NMS), then look at possible alternative strategies and their
    implication for required capabilities.
        We are also looking at a range of possible alternatives identified
    in the process to determine the requirements for the ARNG in its unique
    role as the nation's dual missioned force. We are working closely with
    The Army to ensure the ARNG's capabilities are identified and
    recognized by the Office of the Secretary of Defense (OSD), the Joint
    Staff, combatant commanders and other services through the QDR process.
        A successful outcome of the QDR process for the ARNG will include
    the following:
      --A formal recognition of past and future contributions and continued
            relevance to the full spectrum of operations in executing our
            NMS.
      --All of our force structure fully missioned and resourced to execute
            the NMS.
      --The end strength of the ARNG adjusted to our force structure
            allowance to allow the attainment and sustainment of the
            readiness requirements of the CINCs.
      --A force structure rules of allocation policy be developed among the
            components of The Army optimizing the stewardship of limited
            resources available with the least amount of risk in meeting
            the CINC's requirements.
      --A Reserve Component (RC) rotation duration and frequency policy be
            developed that provides the least amount of impact to employers
            and families yet provides CINC required capability and relief
            to the AC deployment tempo.
      --The Army's missions and role in Civil Support be defined.

                              MISSIONING THE GUARD

        The missioning goal of the Army National Guard (ARNG) is to have
    all ARNG force structure federally missioned--Modified Table of
    Organization and Equipment (MTOE) units and Table of Distribution and
    Allowances (TDA) structure included within Time Phase Force Deployment
    Data (TPFDD) or supporting the Commander in Chief (CINC) war plans.
        As our organization enters the new century, the ARNG, both at home
    and abroad, finds itself doing more than it has at any time previously
    in its peacetime history. We provide Partnership for Peace activities
    in Eastern Europe and humanitarian relief efforts in Central America.
    We provide units for peacekeeping missions in Bosnia and Kosovo as well
    as force protection in Southwest Asia. The ARNG is fully engaged in
    meeting its federal as well as state and local obligations.

    U.S. Southern Command (SOUTHCOM)
        The ARNG provided extensive support to Active Component (AC) forces
    in U.S. Southern Command (SOUTHCOM) through the Overseas Deployment for
    Training (ODT) program. ARNG soldiers performed a variety of important
    missions as SOUTHCOM and U.S. Army South established operations in
    Miami and Puerto Rico. During fiscal year 2000 the ARNG deployed more
    than 4,500 soldiers to support SOUTHCOM's regional engagement strategy
    through Medical Readiness Training Exercises (MEDRETE), unit exchanges
    and joint-combined exercises such as NUEVOS HORIZONTES, TRADEWINDS and
    FUERZAS ALIADAS.

    U.S. European Command (EUCOM)
        The ARNG mobilized and deployed 1,395 soldiers to support the
    Commander in Chief, U.S. European Command (CINC EUCOM) for Operation
    Joint Forge (OJF) in Bosnia during fiscal year 2000. Units deployed in
    support of this effort included medical, public affairs, aviation,
    military police and transportation. To date, approximately 6,837
    soldiers from more than 253 units, from 50 states, three territories
    and the District of Columbia have mobilized for active duty in support
    of Operation Joint ENDEAVOR/GUARD/FORGE.
        The 49th Armored Division (AD), Texas ARNG, provided a division
    Headquarters and Headquarters Company (HHC) for Task Force Eagle
    (Bosnia) from March to October 2000. Fiscal year 2000 also saw the
    first mobilization of elements from two enhanced Separate Brigades
    (eSBs) as part of the maneuver force in Bosnia. Two companies (one
    armor/one mechanized) from the 30th eSB supported the Heavy Task Force
    while two light infantry companies from the 45th eSB supported the
    Light Task Force. Follow-on Division HHCs that have been notified for
    rotation to Bosnia are, in sequence: 29th Infantry Division (ID), 28th
    ID, 35th ID, 34th ID, 38th ID and 42nd ID.
        The ARNG has provided 27 units for a total of 605 soldiers from 20
    different states in support of Operation Joint Guardian (OJG) to date.
    These soldiers provided medical, legal, religious and security support
    for base camp operations at Camp Able Sentry in Skopje, Macedonia.
    Fiscal year 2001/02 will see expanded usage of ARNG units.
    Mobilizations in fiscal year 2001/02 include a Mobile Public Affairs
    Detachment, Target Acquisition Battery, Rear Area Operations Center,
    Military Intelligence Force Protections Teams, Medical Company (Air
    Ambulance) and a Combat Engineer Asphalt Platoon.
        Support to EUCOM has steadily increased from 8,200 soldiers
    deployed in fiscal year 1997 to nearly 13,500 in fiscal year 2000.
    These soldiers participated in more than 20 exercises and supported
    annual infantry/engineer rotations in the Combat Maneuver Training
    Center-Europe.
        The ARNG also provides Combat Support (CS) and Combat Service
    Support (CSS) functions across the spectrum to include ground and
    aviation maintenance, military police, signal, medical, judge advocate
    general, chaplain, finance, public affairs and engineer facility
    support.

    U.S. Central Command
        The ARNG continues to support U.S. Central Command (CENTCOM) with
    deployments in support of OPERATION DESERT SPRING (ODS). In July 2000,
    Aviation Task Force 111 with units from Florida (AH-64 Apache) and
    Arizona, Idaho, Montana, and Utah (UH-60 Blackhawk), provided the task
    force headquarters and aviation crews. Air traffic controllers for the
    task force were provided by the Indiana ARNG. Aviation Task Force 211,
    consisting of aviation crews from the Utah ARNG (AH-64 Apache),
    Wisconsin and Indiana ARNG (UH-60 Blackhawk), will deploy in August
    2001.
        The ARNG has been heavily involved in providing force protection
    assets in support of ODS. Company level force protection missions began
    with the mobilization and deployment of two infantry companies
    involving 272 soldiers from the 39th eSB, Arkansas ARNG, in May 1999. A
    second rotation involving 272 soldiers from two infantry companies--one
    from the 39th eSB, Arkansas ARNG, and the other from the 41st eSB,
    Oregon ARNG--began in September 1999. A third deployment occurred in
    January 2000, with the 41st eSB, Oregon ARNG, providing two infantry
    companies.
        Rotations for the force protection mission are continuing with the
    ARNG divisional combat infantry companies from the 35th ID, Illinois
    ARNG, and 34th ID, Iowa and Montana ARNG, through May 2001. Infantry
    companies from the 35th ID, Kansas and Nebraska ARNG, 40th ID,
    California ARNG, and 29th eSB, California ARNG, will support the force
    protection mission from May 2001 through May 2002.
        Additional ARNG support to CENTCOM through the ODT program
    increased to nearly 400 service members in fiscal year 2000. This
    support consisted primarily of military intelligence, equipment
    maintenance, military police, special forces and communications efforts
    in support of AC exercises such as LUCKY SENTINEL and BRIGHT STAR. In
    fiscal year 2001, more than 1,100 soldiers will participate in CENTCOM
    exercises, including CENTRASBAT.

    U.S. Pacific Command (PACOM)
        The U.S. Army Chief of Staff announced in September 2000 the
    alignment of ARNG divisions and enhanced Separate Brigades (eSB) to the
    Korean Major Theater War Area of Operations. Now, in the Pacific
    theater, bilateral and multinational training exercises require ARNG
    participation. In fiscal year 2000, more than 700 ARNG personnel
    participated in the three major Joint Chiefs of Staff (JCS) exercises
    in Korea, and two exercises in Japan, Singapore and Thailand. Also
    linguists, engineers, aviation, maintenance, and public affairs
    personnel provided support in non-exercise events. In fiscal year 2001,
    more than 3,000 ARNG personnel will team up with wartrace headquarters
    in these same exercises to support the Commander in Chief, Pacific
    Command (CINCPAC) and Commander in Chief, United Nations Command
    (CINCUNC) in the Pacific region.

    U.S. Special Operations Command
        A significant portion of The Army's Special Operations capability
    resides in the force structure of the ARNG. As key players in the
    National Military Strategy, the 19th and 20th Special Forces Groups,
    located in 15 states across the United States continue to provide a
    high level of mission related operational tempo relief to Special
    Forces Command as a result of deployments throughout the world.
        Both 19th and 20th Special Forces (SF) Groups supported JCS
    Exercises and Joint Combined Exercise Training (JCET) in several
    theaters with a total of 1,449 soldiers deploying on 28 missions to 18
    countries. In the Pacific theater, the ARNG Special Forces provided 384
    soldiers to support PACOM Exercises and JCETs. These exercises included
    FOAL EAGLE, ULCHI FOCUS LENS, and COBRA GOLD. Of the 384 soldiers
    deployed to PACOM, 275 soldiers participated/conducted JCS Exercises
    and JCETs in Korea.
        In SOUTHCOM, the ARNG Special Forces supported TRADE WINDS and
    CABANAS JCS exercises as well as conducted JCETs with 795 soldiers in
    Honduras, Jamaica, Argentina, Antigua, Trinidad and Tobago, Saint
    Lucia, Bahamas, Dominican Republic, Saint Kitts, Dominica, Grenada,
    Barbados and Bolivia.
        In EUCOM, the ARNG Special Forces conducted JCETs with 62 soldiers
    in Germany and Portugal as well as provided 37 soldiers under
    Presidential Reserve Call-up (PRC) and Temporary Tour of Active Duty
    (TTAD). In CENTCOM, ARNG Special Forces supported the Special
    Operations Command with four Special Forces soldiers. In U.S. Joint
    Forces Command (JF COM), ARNG Special Forces supported JCS sponsored
    Exercise ROVING SANDS with six soldiers. A total of 1,449 soldiers
    deployed into five different theaters in support of our National
    Military Strategy.

    Intelligence Contributory Support (ICS) Programs
        ARNG soldiers also perform real-world intelligence missions in
    support of unified commanders, intelligence agencies and military
    departments. Mission support areas include intelligence production,
    collection, imagery analysis and linguist support. ARNG intelligence
    soldiers provide cost-effective, time critical, capability-based value
    to meet peacetime and contingency requirements of commanders.
    Intelligence Contributory Support (ICS) programs include the Joint
    Reserve Intelligence Program, the Funded Reimbursable Authority Program
    and the Defense Intelligence Reserve Program. Readiness Training,
    Intelligence (REDTRAIN) also provides live environment scenarios for
    tactical intelligence training.

    Military Intelligence
        The Army National Guard's Military Intelligence (MI) force is the
    largest of any of the Reserve Components. With trained and ready MI
    soldiers, the ARNG performed approximately 20,000 man-days in support
    of military operations.
        In fiscal year 2000, MI operations ranged from individual language
    training in the Republic of Vietnam to conducting document exploitation
    for the Department of Defense's (DOD) Prisoner of War (POW) and Missing
    in Action (MIA) Task Force.
        In addition, the ARNG's MI soldiers and units supported all the
    theater CINCs and their major subordinate commands.
        Guard MI soldiers in Japan participated in joint exercises, acting
    as watch officers in Korea and for Joint Task Force Bravo in South
    America. In addition, ARNG MI soldiers provided a wide array of support
    from acting as translators for EUCOM personnel while in Poland to
    analyzing intelligence for Balkans operations.
        The ARNG military intelligence community continues to play a vital
    role in the Balkans. Numerous ARNG MI soldiers have deployed to Bosnia
    and Kosovo as part of force protection teams as well as individual
    augmentees. The 629th MI Battalion, 29th ID (L) deployed 129 soldiers
    to support the 49th Armored Division (AD) for its rotation. The 241st
    MI Company/41st eSB will support the 29th ID for its deployment.
        ARNG MI elements also conducted mission augmentation for agencies
    such as the Office for the Deputy Chief of Staff for Intelligence
    (ODCSINT), Defense Intelligence Agency (DIA), U.S. Border Patrol, U.S.
    Customs, and the U.S. Coast Guard. These soldiers also participated in
    counterdrug operations and other law enforcement activities.
        This starts the second year for the newly created ARNG Anti-
    terrorism/Force Protection (AT/FP) program. The program started from
    scratch and has come a long way. The program has made great inroads
    with at least one soldier from every battalion in the ARNG receiving
    training in AT/FP.
        The ARNG directorate provided training on how to write and
    formalize state level AT/FP plans and has been able to validate
    requirements in the Program Objective Memorandum (POM). Additionally,
    the ARNG has been instrumental in the rewrite of Army Regulation 525-
    13, the Army's AT/FP guide.
        The ARNG coordinated with the Department of the Army in identifying
    installations that require separate AT/FP plans and developed a
    timeline for providing assistance to the states and installations that
    require them.

    Major Exercises in the Continental United States (CONUS)
        ARNG units throughout the country trained as part of the combined
    arms team in several major fiscal year 2000 Continental United States
    (CONUS) exercises. More than 12,300 soldiers from 142 units trained on
    mission essential tasks through participation in exercises such as
    ROVING SANDS, GOLDEN COYOTE, COOPERATIVE SAFEGUARD, GRECIAN FIREBOLT,
    PURPLE DRAGON, GOLDEN CARGO and GLOBAL PATRIOT.

    Army National Guard (ARNG) State Mission Support
        Domestic mission operational tempo (OPTEMPO) during fiscal year
    2001 continues at the rapid pace set in fiscal year 2000. Through the
    end of October 2000, 17 states had conducted 25 Emergency Response
    Missions totaling more than 6,800 man-days of effort. This level of
    effort is expected to continue throughout fiscal year 2001 and into
    fiscal year 2002.
        In addition to responding to local emergencies, the ARNG routinely
    performs missions that allow units to assist communities while
    performing required training activities. Under the Innovative Readiness
    Training (IRT) Program, the ARNG provided in excess of 250,000 soldier
    man-days in fiscal year 2000 to improve schools, parks and recreation
    facilities, build and maintain roads, and administer immunizations and
    provide medical care. During fiscal year 2001, continued support at
    even greater levels is expected.

    Weapons of Mass Destruction Mission
        The National Guard is in the process of validating and fielding 32
    full-time Civil Support Teams (CSTs) as authorized by Congress. States
    that do not have these full-time CSTs available will have teams
    composed of part-time Guard personnel. These part-time CSTs will
    provide a partial response capability.
        CSTs have been given the mission of:
      --Assessing a chemical, biological, radiological or nuclear event in
            support of the local incident commander.
      --Advising civilian responders regarding appropriate actions.
      --Facilitating requests for assistance to expedite arrival of
            additional state and federal assets to help save lives, prevent
            human suffering and mitigate property damage.
        These teams will be called upon as a part of a state emergency
    response or will mobilize in a federal support role. Emergency
    responders will receive training through the National Guard's Distance
    Learning network.
        The Guard is also planning additional training and equipment
    fielding for other Guard units that will be used to respond in missions
    involving the reconnaissance of chemical, biological and radiological
    events and patient decontamination.
        Plans are currently underway to task organize existing National
    Guard units within each state to form a Joint State Task Force
    Headquarters for consequence management that develops additional
    capability to enhance this important civil support mission. The Joint
    State Task Force headquarters is responsible for developing the
    consequence management annex to their state's emergency response plan.
    In addition, the Joint State Task Force headquarters will act as the
    interagency coordinator within that state, responsible for conducting
    community readiness exercises to assess the state's emergency response
    plan.
        Another means to enhance preparedness within our communities is
    through the Guard's Distance Learning network. The network provides
    invaluable training opportunities to state and local emergency first
    responders in communities where training resources are limited.
    Additional resources are needed to more effectively manage and enhance
    the national and state terrorism response assets.

    Operational Support Airlift Agency (OSAA)
        The Operational Support Airlift Agency (OSAA) is a Department of
    the Army Field Operating Activity of the National Guard Bureau that
    provides management, oversight, and execution of The Army's Continental
    United States (CONUS) Operational Support Airlift (OSA) program with
    additional support to Hawaii, Alaska, Puerto Rico and the Virgin
    Islands. OSAA is the ARNG's proponent agency for fixed wing aviation
    issues, procedures, and resourcing. Activated in 1995, OSAA earned
    immediate recognition as one of The Army's first ever multi-component
    operational units merging assets and personnel from the Active
    Component (AC) and both Reserve Components for a 24-hour continuous
    operation.
        Headquartered at Fort Belvoir, Va., OSAA provides command, staff,
    and resourcing for fixed wing assets stationed in 69 locations
    throughout CONUS as well as eight separate locations Outside the
    Continental United States (OCONUS). The brigade level command known as
    OSAA, and battalion level Operational Support Airlift Command (OSACOM)
    commanders share a common staff for economy and efficiency. In order to
    provide the best mix of airlift support to widely scattered Department
    of Defense (DOD) elements, OSAA maintains a unique organizational
    network of six distinctly different fixed wing aircraft types dispersed
    across the several states and territories.
        Mission diversity is a hallmark of OSAA that underscores the
    significance of this program. Delivering assessment teams to storm-
    damaged states or providing aircrews and planes for OCONUS humanitarian
    relief is routine. Other recurring missions include paradrop support
    for special operations units or hauling large parts. These missions
    demonstrate Army fixed wing OSA capability and responsiveness to
    perform timely air movement of DOD passengers and cargo. On a daily
    basis, OSAA flies Army personnel and other DOD travelers on official
    business, subject to priority and cost-saving criteria.
        OSAA's airlift support is provided by a variety of fixed wing
    aircraft including C-12, C-23, and C-26 turboprop airplanes and UC-35,
    C-20, and C-37 turbojets. For optimum efficiency, the deliberate mix of
    personnel includes part-time Guard soldiers, state and federal level
    Active Guard and Reserve (AGR) officers, as well as AC aviators and
    Department of the Army civilians (DACs).
        Fiscal year 2000 was a banner year for OSAA's flying hour program.
    Never before in the agency's history has flying hour execution reached
    the performance levels of this single 12-month period. OSAA aircraft
    flew 60,261 hours, transported more than 1.6 million pounds of cargo,
    and carried 108,242 passengers in direct support of DOD missions. The
    heightened passenger levels alone represent an increase of
    approximately 20 percent over fiscal year 1999. Beneficiaries of this
    successful mission execution include both the DOD and the American
    taxpayer through cost avoidance totaling more than $50 million in
    related business transportation expenses.
        OSAA provides command oversight to the Fixed Wing Army National
    Guard Aviation Training Site (FWAATS) in Bridgeport, W.Va. The mission
    of FWAATS is to conduct individual aircrew training in modernized fixed
    wing aircraft operated by the ARNG. FWAATS performs formal academic
    training under the Total Army School System (TASS) and conducts
    individual aircrew training, instructor qualification, instrument
    examiner, standardization training, and flight engineer qualification
    courses. FWAATS routinely trains between 200 and 300 aircrew members
    per year, hosting aviators and flight engineers from across the
    country.
        OSAA is an ARNG command committed to providing safe and reliable
    fixed wing aviation service from the states for any contingency. By
    harnessing Reserve Component efficiency, OSAA proves the viability of
    multi-component operational mission support on a daily basis to any DOD
    requester. OSAA is a command uniquely structured to ensure the highest
    state of wartime readiness through the effective execution of its
    peacetime mission.

                               MANNING THE FORCE
                               FULL-TIME SUPPORT

        Full-Time Support (FTS) personnel are key contributors in achieving
    Army National Guard (ARNG) readiness objectives. Military Technician
    and Active Guard and Reserve (AGR) personnel are involved in every
    facet of the day-to-day operations, to include administration, payroll,
    supply, training, maintenance, recruiting and retention efforts in
    support of the ARNG. Achieving sufficient levels of FTS to enhance unit
    readiness and quality of life for our traditional part-time soldiers
    and their families remains a high priority.

    Validated Requirements
        During the Program Objective Memorandum (POM) 2002-07 cycle, The
    Army validated a need for 83,650 full-time support personnel to support
    a force structure of 388,000 spaces. This represented 41,321 AGR and
    42,329 Military Technician requirements. Requirements are determined
    through detailed analysis of workload and are calculated for the entire
    ARNG force structure. However, FTS requirements associated with
    emerging missions such as civil support and initiatives to support
    Active Component (AC) and Reserve Component (RC) integration are
    determined annually and are additive to the total requirements
    reflected above.

    Authorization vs. Validated Requirements
        The National Defense Authorization and Appropriation Acts provided
    an increase of 526 AGR and 771 military technician authorizations for
    fiscal year 2001 for an overall end strength of 22,974 AGRs and 24,728
    Military Technicians. Despite the increase in FTS, the fiscal year 2001
    authorized levels equate to only 57 percent of the validated
    requirement. This has had an impact on our ability to adequately staff
    local armories, thereby diminishing the ARNG community presence.
        In addition, Congress provided for an increase in the number of
    personnel serving in senior officer and enlisted grades (controlled
    grades) to support promoting fully qualified AGR soldiers who have been
    serving in higher grade positions, but whose career progression has
    been restricted due to senior grade caps. As the ARNG seeks additional
    full-time support authorizations, there is a need for a corresponding
    increase in controlled grades to provide career opportunities
    commensurate with the requirement for a career AGR program.

    Current FTS Manning Levels in the ``High Risk'' Category
        Due to funding shortfalls, The Army has applied a methodology based
    on deployment scenarios to arrive at a minimum acceptable level of
    full-time support. Falling below that level would result in
    unacceptable risk in meeting readiness goals as established in Army
    regulations and in the Defense Planning Guidance. This is referred to
    as the FTS ``Department of the Army (DA) high-risk'' requirement level.
    The methodology is the same for both of the Army's reserve components.
    For the ARNG, the ``high-risk'' requirements are 30,402 AGR and 29,319
    Military Technician personnel. Given that current authorization levels
    are significantly below the high-risk requirement level, The Army has
    developed an incremental growth plan to achieve the high-risk level
    over a 10-year period as reflected in the chart to the right. The
    Army's recognition that increased FTS is needed to enhance overall
    readiness of the RC is unprecedented.

    Recruiting and Retention Overview
        The ARNG's fiscal year 2000 end strength objectives included
    achieving a selected reserve strength of 350,000--38,308 commissioned
    and warrant officers and 311,692 non-commissioned officer and enlisted
    personnel. To attain this goal, enlisted gains were programmed at
    54,034, officer gains at 2,991 and enlisted extensions at 46,230.
    Enlisted losses were projected not to exceed 61,503.

    Enlisted Personnel Recruiting and Retention
        Enlisted personnel recruiting and retention were continuing success
    stories for the ARNG during fiscal year 2000. Enlisted accessions for
    the year exceeded the program objective of 54,034 by totaling 62,015,
    or 114.7 percent of the goal. Non-prior service (NPS) accessions and
    prior service (PS) accessions also exceeded program objectives. NPS
    accessions were 32,072, or 118.7 percent of the objective, and PS
    accessions were 29,943, or 110.8 percent of the objective. These
    statistics reflect an accession mix of 51.7 percent NPS enlistments and
    48.3 percent PS enlistments. The overall Army National Guard loss rate
    through the end of fiscal year 2000 was 19.9 percent versus an overall
    objective of 18 percent.

    Incentive Programs
        The Selected Reserve Incentive Programs (SRIP) for fiscal year 2000
    offered the following:
      --An $8,000 enlistment bonus for Non-Prior Service (NPS) enlistees
            into high priority units.
      --A $5,000 enlistment bonus for NPS enlistees into non-high priority
            units.
      --An $8,000 Civilian Acquired Skills Program (CASP) bonus for NPS
            enlistees.
      --An affiliation bonus for prior-service enlistees based on their
            remaining Military Service Obligation (MSO).
      --The Student Loan Repayment Program for NPS enlistees and current
            members of the ARNG with existing loans who reenlist or extend
            in a high priority unit.
      --A $2,500 three-year reenlistment/extension bonus.
      --A second three-year reenlistment/extension bonus of $2,000 for
            soldiers with less than 14 years total service upon completion
            of the first three-year reenlistment/extension bonus. To be
            eligible for two three-year reenlistment/extension bonuses, the
            contracts must be consecutive.
      --A $5,000 six-year reenlistment/extension bonus for members of high-
            priority units who have less than 14 years total service at the
            time of the reenlistment or extension and who have not received
            a previous reenlistment/extension bonus.
      --A $2,500 three-year prior service enlistment bonus for PS personnel
            who have completed their MSO, have less than 14 years total
            service and have received an honorable discharge.
      --A second three-year prior service bonus of $2,000 for soldiers
            having less than 14 years total service upon completion of the
            first three-year prior service enlistment bonus.
      --A $5,000 prior service enlistment bonus for a six-year reenlistment
            for PS personnel who have completed their MSO, have less than
            14 years total service, have received an honorable discharge
            and have not received a previous prior service enlistment
            bonus.

    Benefits Administration Reporting and Tracking System (BART)
        In January 2001, a PC-based software system that manages service
    member benefit programs was expected to be implemented in all of the
    states. Known as the Benefits Administration Reporting and Tracking
    System, or BART, this system contains reporting features designed to
    administer the following educational benefit programs: Tuition
    Assistance Program, Montgomery GI Bill Program, and Bonus Incentives
    Programs. In addition, BART monitors the regulatory compliance
    components of program budgets, life-to-date and year-to-date maximum
    benefits, and automatically calculates percentages or maximum rate
    limits through easy-to-use program modules.
        This system was developed as a result of the U.S. Army Auditing
    Agency audit conducted from April 1994 through April 1995. A recent
    Inspector General assessment also made the same recommendation. The
    BART system tracks program eligibility, payment schedules, programs
    obligations, flags files for follow-up requirements, and maintains
    incentive payment history at the social security number level of
    detail.

    Education Assistance
        The ARNG has traditionally used educational incentives as a
    recruiting and retention tool. Educational benefit programs are good
    for the ARNG as well as the individual soldier. Tuition assistance was
    provided to more than 22,000 part-time Guard soldiers in fiscal year
    2000. Soldiers were offered 75 percent tuition assistance for 15
    semester hours not to exceed $3,500 per soldier per fiscal year.
    Distance Learning (DL) and External Degree Tuition Assistance
        Distance Learning (DL) and external degree tuition assistance were
    available for soldiers and ARNG Department of the Army (DAC) employees
    in fiscal year 2000. These benefits were provided upon registration for
    traditional semester length courses that required 24 weeks or less for
    completion. Tuition reimbursement for courses longer than 24 weeks was
    also available. Enrollment in DL programs has increased threefold as a
    result of the up-front tuition assistance offered for the shorter
    courses. DL programs allow soldiers to pursue vocational,
    baccalaureate, graduate and doctoral studies without entering a
    traditional classroom. These programs will be managed by the Defense
    Activity for Nontraditional Education Support (DANTES) program starting
    in January 2001.

    Defense Activity for Non-traditional Education Support (DANTES)
        All 33 nationally recognized certification exams offered through
    the DANTES were funded through the ARNG Tuition Assistance program in
    fiscal year 2000. Previously, only the Automotive Service Excellence
    (ASE) Exam and the Food Protection Certification Program (FPCP) exam
    were funded. Other exams funded under this effort include the
    Educational Institute of the American Hotel and Motel Association (EIAH
    and MA) and the Institute for Certification of Computing Professionals.
    Soldiers are eligible to take certification exams once they complete
    Initial Active Duty for Training (IADT) and are awarded a Military
    Occupational Specialty (MOS).

    Servicemembers Opportunity Colleges (SOC)
        Working with the ARNG, the Servicemembers Opportunity Colleges
    (SOC) continued to provide college workshops to encourage increased
    enrollment of non-member accredited colleges and universities to join
    SOC in support of the local ARNG community with post-secondary
    education programs. SOC colleges limit their on-campus requirements to
    25 percent of required attendance, a prerequisite for many ARNG
    soldier-students who would otherwise be unable to attend. SOC also
    worked in the recruiting and retention arena along with strength
    maintenance non-commissioned officers to encourage young men and women
    to enlist.

    Officer Accessions and Retention, Fiscal Year 2000
        During the implementation of the Reserve Officers Promotion
    Management Act (ROPMA), time in grade (TIG) requirements for promotion
    to first lieutenant were changed from three years to two years. Second
    lieutenants with an excess of two years TIG were not grandfathered;
    therefore, instead of seven years time in service for consideration for
    promotion to captain, several year groups served eight. Corrective
    measures were taken to rectify this error, and the second phase of the
    program began in November 2000.
        The records of captains who were promoted by boards that met from
    November 1998 to February 1999 will be reviewed to determine if an
    adjustment to their dates of rank is required. Some captains may be
    eligible for as much as nine to 12 months of back pay with adjustment
    of their dates of rank.
        The total officer strength at the end of fiscal year 2000 was
    37,400. While officer accessions were up 11.8 percent over fiscal year
    1999 accessions, officer end strength was 908 officers short of the
    programmed objective. This shortfall was due to a higher than expected
    loss rate among ARNG officers. The ARNG is working vigorously to
    identify the reasons for these higher than projected losses by
    conducting telephonic and mail surveys with departing officers. Survey
    results to date reveal a variety of reasons: some officers wanted more
    time to spend with their families, some had conflicts balancing their
    civilian jobs with their military duties, some were unable to attend
    training needed to advance their careers because of lack of funding or
    training seat availability, and others cited personal reasons.
    Accelerated Officer Candidate School (OCS) Program
        The ARNG initiated an accelerated National Guard Bureau (NGB)
    Officer Candidate School (OCS) Program in 1996 that has proven very
    successful. This accelerated program cuts 11 months off the traditional
    OCS course duration--eight weeks full-time versus 13 months part-time.
    This is particularly beneficial to states experiencing large company-
    grade officer vacancies.
        The NGB has been programming about 80 students per year for the
    last five years. The class size projection doubled to 160 students in
    fiscal year 2001 due to forecasted training requirements submitted by
    the states.
        The shortage of company grade officers continues to be a challenge
    across The Army. In an attempt to decrease company grade officer
    losses, the ARNG submitted proposed legislation to the Assistant
    Secretary of the Army for Manpower and Reserve Affairs (ASA M&RA) under
    the Unified Legislation and Budgeting (ULB) process in April 2000 that
    will offer a student loan repayment program incentive for company grade
    officers. The ARNG is also exploring the feasibility of submitting
    legislation to offer potential bonuses for company grade officer
    continuation.
        In addition, Cadet Command authorized 800 Guaranteed Reserve Forces
    Duty contracts for the Army Reserve Components for fiscal year 2001.
    This is the first year that Cadet Command has established a separate
    mission for Reserve Component (RC) accessions. The ARNG will receive
    approximately 500 new accessions from this mission goal.
        The ARNG also supports the Deputy Chief of Staff for Personnel's
    (DCSPER's) initiative for Selective Retention Boards that will allow
    selected captains and majors to be retained so that they may reach 20
    years of active service. Further, the ARNG also supports the DCSPER's
    initiative to select captains for promotion who do not possess a
    baccalaureate degree or military education certification. The actual
    promotion to the next higher grade will become effective at such time
    as the individual provides proof of civilian or military education
    requirement completion.

    Warrant Officer Personnel Management
        The Army National Guard continues to address significant challenges
    in warrant officer personnel management. Technical warrant strength is
    down to 71.8 percent, while aviation warrants have fallen slightly
    below requirements to 94.3 percent. The challenge for the future lies
    in the introduction of the Warrant Officer Personnel Management System,
    which will mirror the transition to Officer Personnel Management System
    (OPMS) XXI.

    Enlisted Personnel Management
        The ARNG has continued with its personnel management reform as it
    pertains to enlisted soldiers. In December 1999, the ARNG became a
    participant in the Army's Development System XXI initiative.
    Interacting with Army proponents, the issues of force structure
    changes, training and strength maintenance as related to enlisted
    personnel management became topics of intense interest among Army
    leadership.
        Soldiers from the field requested that The Army leadership review
    the ARNG enlisted promotion system. As a result, minor changes will be
    incorporated within the next two years. The system remains virtually
    unchanged in its intent and process, but will place more emphasis on a
    soldier's potential to serve at a higher level of responsibility based
    on his or her performance.
        Key enlisted personnel management issues have been successfully
    staffed through both the Military Personnel Management Offices and the
    State Command Sergeants Major in an effort to meet soldier
    expectations. Additionally, the Army Human Resource Division has been
    actively involved with the functional review of various Army proponents
    and their current initiatives to consolidate enlisted MOS fields as
    directed by the Army Chief of Staff. The ARNG has been successful in
    making the proponents aware of the impacts their proposed changes or
    initiatives could have on the RC when considering wholesale changes
    within the AC.

                             ORGANIZING FOR SUCCESS

    The Army Transformation
        The U.S. Army is transforming based upon the emerging security
    challenges of the 21st century and the need to respond more rapidly
    across the full spectrum of operations. As an integral part of The
    Army, the Army National Guard (ARNG) will transform as well. One ARNG
    brigade is expected to begin transformation prior to 2008. The unit to
    transform is expected to be chosen by the Chief of Staff of the Army
    (CSA) in the fall of fiscal year 2001. The Director of the ARNG
    nominated two units to be the first ARNG interim brigade; the 56th
    Brigade of the 28th Infantry Division, Pennsylvania ARNG, and the 155th
    enhanced Separate Brigade (eSB), Mississippi ARNG.
        In the current plan the entire ARNG will transform to the objective
    force by fiscal year 2032. Before transformation is complete, the
    portion of the ARNG not yet transformed will remain part of the Legacy
    Force. The Legacy Force is the strategic hedge that provides essential
    capability to support the National Command Authority and warfighting
    CINCs throughout the Transformation activities.
        The Active Army will cascade the most modern equipment to the ARNG.
    Selected legacy formations in both the Active and Reserve Components
    will be recapitalized to enhance key armored and aviation systems, as
    well as improve light force lethality and survivability.

    Army National Guard Unit Structure
        The ARNG continues to structure its forces to provide for a
    compatible and inter-operable force that is fully capable of
    accomplishing state, national, and international missions in war and
    peace. To meet these requirements, the ARNG maintains a balanced mix of
    combat, combat support (CS), and combat service support (CSS) units.
    These units are structured to integrate seamlessly with Active
    Component units as needed.
        The ARNG force structure allowance was 388,000 in fiscal year 2000.
    The ARNG structure laydown is as follows: 15 enhanced Separate
    Brigades, eight divisions, and three strategic brigades (31st SAB, 92nd
    SIB, and the 207th Scout Group). The ARNG also maintains two Special
    Forces groups. The composition of the ARNG is 52 percent combat, 17
    percent CS, 22 percent CSS, and 9 percent table of distribution and
    allowances (TDA) units.
        The ARNG force structure continues evolving to best support the
    National Military Strategy (NMS). Ongoing ARNG initiatives will ensure
    the best mix of forces available to accomplish missions directed by the
    NMS. The current force structure must have a robust, fully funded
    modernization program to enable the smaller force to accomplish all of
    its missions. The ARNG force must remain trained, ready, and equipped
    to defend our national interests during the 21st century. It must also
    be ready to respond on short notice to the needs of local communities
    across the United States.
    Army National Guard Division Redesign Study (ADRS)
        On May 23, 1996, the Secretary of the Army (Sec Army) approved the
    Army National Guard Division Redesign Study (ADRS) plan to convert up
    to 12 ARNG combat brigades and support slice elements from two
    divisions into required CS/CSS structure. The plan converts up to
    48,000 spaces of ARNG combat force structure to CS/CSS beginning in
    fiscal year 2000 and continuing through fiscal year 2012. The first six
    brigades have been identified and will be under conversion through
    fiscal year 2009. Actions beyond those will be linked to the CSS
    Transformation analysis currently underway. Given The Army
    Transformation initiative in progress, efforts beyond ADRS Phase II
    will be linked to the requirements of Transformation.
        Two billion dollars exist in the POM to cover existing ADRS funding
    requirements: $1.9 billion for equipping and $100 million for training.
    The ARNG, working as The Army executive agent for ADRS has identified
    requirements in installations, environmental, manning and sustainment
    that can be supported out of the equipping funding.
        The AC/ARNG integrated division concept resulted from the ADRS, as
    an additional proposal to form two integrated divisions. Each
    integrated division consists of an AC headquarters and three ARNG eSBs.
    On Dec. 2, 1997, the Secretary of the Army approved establishing a
    heavy division headquarters at Fort Riley, Kan. with a forward element
    at Fort Jackson, S.C. and a light division headquarters at Fort Carson,
    Colo. They formally activated on Oct. 16, 1999. The division
    headquarters are currently non-deployable and tailored to provide
    training/readiness oversight and evaluation to assigned eSBs. The eSBs
    selected for the 24th ID Mechanized (--) are the 30th Mechanized
    Infantry Brigade (North Carolina), the 48th Mechanized Infantry Brigade
    (Georgia), and the 218th Mechanized Infantry Brigade (South Carolina).
    The eSBs that comprise the 7th ID (--) are the 39th Infantry Brigade
    (Arkansas), the 41st Infantry Brigade (Oregon), and the 45th Infantry
    Brigade (Oklahoma).
        Teaming is a program that pairs selected AC and ARNG units for
    mutual support of operational requirements. Partnered divisions conduct
    joint planning, training, and readiness assessments. The ARNG divisions
    will augment and assist AC divisions in global response. Teamed units
    are encouraged to seek mutually supporting operational training
    opportunities. Currently, teaming is limited to divisional units. The
    teamed divisions under III Corps are 1st CAV and 49th AD (Texas), 4th
    ID and 40th ID (California). Under XVIII Corps are 3rd ID and 28th ID
    (Pennsylvania), 10th ID and 29th ID (Virginia).

    Multi-component Initiative (Units formed from Active, Reserve and Guard
            personnel)
        The multi-component initiative blends authorized personnel from
    more than one Army component (AC, USAR, and/or ARNG) into a single
    documented unit. The objectives of the multi-component initiative are
    to enhance AC/RC integration while optimizing the unique capabilities
    of each component, thus improving the readiness and resource posture.
    The Secretary of the Army approved an overarching multi-component MTOE
    policy in June 1998. Total Army Analysis (TAA-05) selected 12 initial
    MTOE units with which to develop and test procedural options in fiscal
    year 1999/2000. Thirty-three additional units were subsequently added
    for fiscal year 1999/2000.

                              EQUIPPING THE GUARD

    Army National Guard Modernization and Transformation
        The aging AH-1 Cobra and UH-1 Huey ``legacy'' helicopters are only
    marginally supportable today insofar as economic maintenance is
    concerned. The ARNG Cobra and Huey fleets are rapidly becoming an
    expensive maintenance burden. Long-term modernization plans called for
    the UH-1 to be replaced by the UH-60L Blackhawk and the AH-1 to be
    replaced by the AH-64A/D Apache Longbow in the Aviation Modernization
    Plan.
        The Army transformation initiative announced by Army Chief of Staff
    General Eric K. Shinseki and briefed to Congress in fiscal year 2000
    proposed sweeping changes to aviation force structure. Current
    structure converts to an aviation Multi-Function Battalion (MFB). The
    MFB has a headquarters company, an attack company with AH-64 Apaches, a
    reconnaissance company with RAH-66 Commanches, a utility company with
    UH-60 Blackhawks and an Aviation Unit Maintenance (AVUM) company.
        Division aviation brigades will consist of a headquarters, two MFB
    battalions, a division aviation support battalion, a cavalry squadron
    (with three ground troops, an air cavalry troop with RAH-66s and an
    AVUM troop), and an Unmanned Aerial Vehicle (UAV) company.
    Restructuring makes all division aviation battalions and aviation
    brigades look the same. Similarly, corps aviation converts to a
    structure with an aviation combat brigade with three MFBs, an aviation
    combat support brigade with two UH-60 battalions, a CH-47 Chinook
    battalion and an Aviation Intermediate Maintenance (AVIM) battalion.
        The total number of aviation personnel is expected to increase
    slightly (about 2 percent), but the revised structure results in a
    reduction in headquarters elements. Under the initial Transformation
    guidance, the ARNG is expected to lose two brigades, six battalions and
    36 companies. The Transformation has an impact on ARNG aviation in
    every state, not only in personnel and aircraft, but also in facility
    construction and qualification training for aviators and maintainers.

    Accelerated Retirement of Legacy Aircraft
        Simultaneously with the restructuring is an Army initiative for
    accelerated retirement of legacy aircraft (AH-1, OH-58A/C and UH-1),
    which calls for divestiture of the AH-1s in fiscal year 2001 and the
    OH-58A/Cs and UH-1s in fiscal year 2004. Implementation within these
    time frames depends upon transferring older aircraft (AH-64s and UH-
    60s) from the Active Component (AC) to the ARNG. The ARNG has proposed
    limited retention of AH-1s, OH-58s and UH-1s to create a bridge that
    will permit retention of valuable aviation personnel skills pending
    acquisition of replacement aircraft.
        The retirement of the UH-1 with limited or no replacement utility
    aircraft will leave states without sufficient utility aircraft to
    execute state contingency missions such as disaster relief responding
    to floods and earthquakes, as well as fire fighting. Aircraft
    acquisition is a constraint to implementation. For example, the Force
    Development Division of the Office of the Deputy Chief of Staff for
    Operations (DAMO-FDV) estimates an Army requirement of 330 additional
    UH-60s at the end of the fiscal year 2002-07 Program Objective
    Memorandum (POM), but with current acquisition plans of 10 per year it
    will be the year 2040 before the requirement is filled. Meanwhile, the
    ARNG continues to coordinate the aviation force structure
    redistribution to accommodate the Army Aviation Transformation Plan.

    Major Fiscal Year 2002 Force Modernization and Future Force
            Modernization Plans
        The Army National Guard (ARNG) modernization strategy is to provide
    for a compatible and inter-operable force. This force will be capable
    of fulfilling state, national and international missions in war and
    peace. Resourcing this force with modernized equipment and training
    packages to operate this equipment is key to maintaining the quality
    force the nation expects from the ARNG.
        The modernization of field artillery units to M109A6 Paladin,
    Multiple Launch Rocket Systems (MLRS) and Highly Mobile Artillery
    Rocket Systems (HIMARS) are all significant initiatives. The ARNG has
    assumed the corps level air defense role with the activation of nine
    Avenger battalions. All nine corps Avenger battalions are fully fielded
    with the weapon system.
        Congress appropriated $95 million in fiscal year 1998 to procure
    M2A2ODS Bradley Infantry Fighting Vehicles (BIFV) for the ARNG. Follow
    on fiscal year 2003 Congressional appropriations are required to equip
    the Georgia ARNG. The eight heavy enhanced Separate Brigades (eSB) are
    currently equipped with M1A1 Abrams tanks. Initiatives are under way to
    upgrade the remaining armor from M1A1 to M1A1AH.
        By the end of fiscal year 2001, the ARNG will have 18 M109A6
    Paladin battalions. The ARNG divisional battalions still require
    Paladin for modernization. Due to a funding shortfall from fiscal year
    2000 and fiscal year 2001, the MLRS conversion program will be delayed
    for two years (from fiscal year 2001 to fiscal year 2003). The fielding
    of the Highly Mobile Artillery Rocket System (HIMARS) to the ARNG is
    tentatively scheduled to begin in fiscal year 2005.
        The ARNG anticipates fielding the M2A2ODS BIFV to the 218th eSB,
    South Carolina ARNG, through fiscal year 2002. This begins to address
    the need to provide the eSBs with upgraded BIFVs, and the further
    cascading of older Bradleys into ARNG divisions. These initiatives will
    move the ARNG along in its modernization strategy to ultimately have a
    pure fleet of BIFVs.
        The remaining eight corps Avenger battalions will be fielded with
    the Forward Area Air Defense Command, Control and Intelligence
    (FAADC\2\I) System and Sentinel radars from fiscal year 2001 through
    fiscal year 2003.
        The Army Battle Command System (ABCS) is The Army's architecture
    for the overall integration of the digital command and control system
    found at all echelons from theater level to the weapons platform.
    Currently, ARNG units assigned to III Corps will receive the required
    ABCS applications by fiscal year 2004. However, to make the ABCS
    applications inter-operable and functional, units will require a
    digital pipeline. The Enhanced Position Location Reporting System
    (EPLRS) is the current system that supports ABCS applications until the
    Joint Tactical Radio System (JTRS) is fielded to the ARNG. Funding in
    the current Program Objective Memorandum (POM) to support digitization
    of the eSB and ARNG divisions does not exist.
        Additional modernization support comes from the continued fielding
    of SINCGARS radios--a key component in interoperability with The Army.
    The fielding plan has a window of June 2000 through June 2004 for all
    15 eSBs, eight ARNG divisions and remaining units. Ten eSBs have been
    fielded with SINCGARS radios to date. The remaining five eSBs are
    currently receiving them. SINCGARS fielding to the eSBs should be
    completed in June 2001. The first three of the eight ARNG divisions
    will start fielding SINCGARS from March through August 2001, finishing
    early in 2002. In addition, echelons above division, field artillery
    brigades and air defense units, which support early deploying forces,
    are receiving SINCGARS SIP radios.
        The Javelin is currently being fielded to the Active Army as its
    medium weight manportable Infantry anti-armor weapon system. Javelin
    replaces the Dragon medium anti-tank weapon. The current budget fields
    the Javelin Command Launch Unit (CLU), as a replacement for Dragon, to
    100 percent of the ARNG eSBs and Special Forces (SF) Group
    requirements. Fielding to the ARNG eSBs and SF Groups will begin in
    fiscal year 2004 and is expected to be complete in fiscal year 2006.
    Fielding for funded ARNG division is planned from fiscal year 2006 to
    fiscal year 2008. However, this second phase of fielding has evolved to
    the point where more than three division equivalents and corps engineer
    battalions are currently unfunded. In addition, unit basic loads of
    missiles are also unfunded.
        The ARNG received more than 1,700 MK-19 Grenade Machine Guns in
    fiscal year 1999. Total requirement for the MK-19 is more than 4,000.
    By the second quarter of fiscal year 2003, the ARNG will receive
    another 2,653 weapons. The MK-19 is unfunded past the second quarter of
    fiscal year 2003.
        The ARNG started receiving the M240B Medium Machine Gun during the
    third quarter of fiscal year 2000. Fielding of the eSBs will begin in
    the second quarter of fiscal year 2001 and should be completed by the
    second quarter of fiscal year 2002. Remaining ARNG units down to Force
    Package 4 will receive the M240B beginning in the third quarter of
    fiscal year 2002 through the third quarter of fiscal year 2003.
        The M4 Carbine was fielded to ARNG units during the third quarter
    of fiscal year 2000 and will continue to the eSBs through the third
    quarter of fiscal year 2002. A total of 39,541 M4s going to ARNG units
    down to Force Package 4, beginning in the fourth quarter of fiscal year
    2002, are now unfunded because of Transformation.
        The ARNG has received several thousand M249 Squad Automatic Weapons
    (SAWs), and will receive 31,546 SAWs by the end of the third quarter of
    fiscal year 2003. This will fill 84 percent of requirements. Fielding
    of M16A4s to the ARNG begins in the first quarter of fiscal year 2003
    with 3,168 weapons. The fielding will continue through the fourth
    quarter of fiscal year 2003, with a final fielding of 23,849 M16A4s to
    the ARNG by the end of the fourth quarter of fiscal year 2006.
        The AN/PVS-14 Monocular fielding was completed in November 2000.
    Fielding of the AN/PVS-7D began in the third quarter of fiscal year
    2000 to the eSBs, and will continue through the end of fiscal year
    2002. Fielding to Guard divisions and remaining units will begin after
    2002.
        The final fielding of the M40 Protective Mask, M42 Protective Mask
    and M41 Protective Mask Test Set to the ARNG continued throughout
    fiscal year 2000. ARNG fielding will conclude by the fourth quarter of
    fiscal year 2001.
        The ARNG completed the fielding of 168 FMTVs to field artillery,
    transportation and quartermaster units in fiscal year 1999. The second
    fielding of FMTVs to the ARNG will start in fiscal year 2001 and
    conclude in fiscal year 2003.
        The ARNG is programmed to receive 1,034 M1078 Light Medium Tactical
    Vehicles (LMTVs) to modernize high priority units. The ARNG will
    receive the first of 380 LMTVs by the fourth quarter of fiscal year
    2001. The third fielding of FMTVs will start in fiscal year 2007 and
    conclude in fiscal year 2008. The ARNG will receive an additional 2,030
    FMTVs for fielding to First Digitized Corps ARNG units. The 2,030 FMTVs
    will consist of 1,200 LMTVs and 830 MTVs. Other Procurement Army (OPA1)
    is the source of funding for the second phase of FMTV fielding.
        During fiscal year 2001 and fiscal year 2002, 2-kilowatt Military
    Tactical Generators will be fielded to all ARNG units. Also during this
    time, the highest priority ARNG units will receive the 5-60-kilowatt
    Tactical Quiet Generators.

                                   READINESS

    Readiness--Personnel and Equipment
        The Army National Guard (ARNG) is committed to providing support
    for the National Military Strategy, Operations Other than War, and
    local domestic and humanitarian missions in all 50 states, three
    territories and the District of Columbia. Through a combination of AC
    equipment cascading, equipment procured and issued via the fiscal year
    Defense Plan, separate appropriations such as the National Guard
    Reserve Equipment Appropriation and our own initiatives, equipment on
    hand levels of fill remain steady throughout the ARNG.
        As The Army goes through a period of transformation, the
    modernization of ARNG units is a major concern due to our increased
    involvement in deployments to areas such as Southwest Asia (SWA),
    Bosnia, and Kosovo. The Commanders in Chief (CINCs) expect ARNG
    soldiers to be fully trained and equipped upon arrival in the area of
    operation, but this is not always successfully accomplished. In many
    cases, it has been necessary to request out-of-cycle fieldings to
    provide required equipment for various ARNG units selected for
    deployment. This impacts the entire equipping and fielding process.
        Our logistical challenges today center around four areas:
    modernization and interoperability; sustainment of the aging Tactical
    Wheel Vehicle (TWV) fleet; shortages of TWVs and the lack of military
    technicians. Interoperability issues resulting from the lack of
    modernized equipment continue to challenge the ARNG's ability to
    deploy, shoot, move and communicate.

    Outdated Equipment
        ARNG equipment such as the M1 Abrams Tank, M2/M3 Bradley Fighting
    Vehicles and various electronic devices and communication systems such
    as the Single Channel Ground and Airborne Radio System (SINCGARS) and
    Night Vision Devices are in short supply and/or several models or
    iterations behind the Active Component (AC). Recent deployments in
    support of Joint Chief of Staff (JCS) Exercises and humanitarian
    missions often compete for the same, limited equipment identified for
    other operations and missions.

    Sustainment of Aging Fleet
        Sustainment of the aging TWV fleet is another area of great
    concern. More than 25 percent of the ARNG's total TWV fleet has
    exceeded its normal service life. This fleet is aging faster than it
    can be modernized. Sustainment costs both in repair parts and
    maintenance hours continue to escalate. The Army has addressed this
    issue with the proposed start of various rebuild programs, but without
    resolution of TWV shortages, this issue will continue to manifest.
    Shortages of TWVs compound the sustainment issue. Modernized TWVs are
    needed now to fill critical shortages, and to displace and retire aged
    vehicles.

    Equipping Issues and Deployment
        Equipping issues are becoming more significant as our units are
    preparing for deployments that require modernized equipment in the area
    of operation. Units are training on equipment they are issued, some of
    which is a substitute for the more modernized equipment. For example,
    units are training with VRC12-series radios for missions in which
    SINCGARS radios are the standard. There is a major shortfall in
    Nuclear, Biological and Chemical (NBC) equipment to include
    reconnaissance and decontamination systems. We must ensure that our
    soldiers have the highest level of force protection by fielding them
    with modernized systems.

    Impact of Full-time Support (FTS) Personnel Shortage
        One of our greatest challenges today is the insufficient number of
    military maintenance technicians. The fielding and influx of complex
    weapon systems coupled with increased mission support requirements and
    deployments challenge the ARNG's sustainment abilities. Currently, the
    military maintenance technician authorized fill is approximately 56
    percent of fiscal year 2001 requirements. As a result, maintenance
    backlogs, specifically with auxiliary equipment, delayed services and
    maintenance of equipment in lower priority units, continues to
    escalate. Additionally, our unit commanders continually express
    concerns that the shortage of Full Time Support (FTS) has a negative
    impact on unit readiness. Lack of FTS has an adverse affect on the
    quality of life for our soldiers, which in turn impacts both
    recruitment and retention. Further, insufficient FTS is impacting our
    ability to maintain and sustain our equipment at the highest possible
    state of readiness.

    Tiered Resourcing
        During fiscal year 2001, the ARNG continues to use a tiered
    resourcing model to manage its overall readiness. By prioritizing its
    limited resources, our ``First to Deploy'' forces have the capability
    to meet the CINC's required arrival timelines into the theater of
    operation. This resourcing strategy ensures our early deploying units
    meet Defense Planning Guidance deployment criteria. Additionally, with
    resource tiering, our high priority units receive the resources
    necessary to meet operational readiness requirements; and lower
    priority units, like our eight combat divisions, are resourced to meet
    a baseline of minimal readiness goals. The impact of tiered resourcing
    on later deploying forces is severe and it should be noted that ARNG
    units identified as ``later deploying'' have already been deployed in
    large numbers.

    Missioning Army National Guard Combat Formations
        ``It's about readiness,'' said Chief of Staff of the Army (CSA)
    General Eric K. Shinseki, announcing a new concept called ``corps
    packaging'' in a Sept. 14, 2000 speech at the National Guard
    Association conference.
        The concept has all of the National Guard's eight combat divisions
    and 15 enhanced Separate Brigades (ESBs) matched with active component
    divisions at the corps level. A corps is the largest combat
    organization in the Army. Corps packaging will focus Guard training on
    specific potential wartime missions such as rear-area combat operations
    in a major conflict in the Persian Gulf, reinforcement of U.S. forces
    on the Korean peninsula or filling in for active-duty units in Germany
    that might be sent to fight elsewhere.
        ``A year ago, we committed to integrating the force, to determining
    the strength of each component, and to leveraging those
    contributions,'' Shinseki said. ``We have come a long way in active
    component/reserve component integration thanks to the leadership in all
    components--but we are not fully there yet. We will continue our work
    with the CINCs to mission our reserve component, especially our
    National Guard units, for appropriate tasks in their war plans.''
        The change does not make National Guard divisions a part of the
    Pentagon's official war plans, which are written by the commanders in
    chief, or CINCs, of combat commands. Shinseki said the next step is for
    the CINCs to designate Guard units for specific missions in their war
    plans.
        The CSA also approved all ARNG combat maneuver forces under one of
    the four Army corps. This step will greatly enhance mission focus. The
    Army also supported a change to the Joint Strategic Capabilities Plan
    (JSCP) that recommends the single apportionment of all 15 eSBs and the
    apportionment of six ARNG divisions to a combatant command. The
    Chairman, Joint Chiefs of Staff (CJCS) has directed support of the
    apportionment of the ARNG divisions.
        Based on Joint Strategic Planning System (JSPS) requirements, ARNG
    divisions perform a number of missions in support of CINC requirements.
    Generally contributing to one or more of five mission areas, ARNG
    combat formations reinforce. The potential missions associated with
    these areas include: Major Theater of War (MTW), MTW backfill, Small
    Scale Contingencies (SSC), Base Generating Force, Theater Engagement,
    Civil Support and Strategic Reserve.
        The MTW mission is the mission most recognized for ARNG combat
    formations. The mission can generally be broken into three areas: rear
    area operations, combat operations and post-hostility operations.
        ARNG divisions may also be used in forward deployed theaters to
    provide security and force protection for dependents and installations.
    ARNG divisions could be designated to backfill forces engaged in SSCs,
    allowing those formations to flow to an MTW.
        The range of missions within the SSC framework is extremely
    diverse. SSCs are projected to continue in the future at the tempo of
    the last 10 years.
        ARNG divisions may be required to provide capabilities at
    designated Warfighting Centers (WFCs). Providing for opposing forces
    (OPFOR) and observer/controllers (OCs) are missions well suited for
    them.

    Missioning Studies
        The Secretary of Defense directed study on Reserve Component
    Employment 2005 (RCE-05) concluded that an ARNG division can be ready
    to deploy for any combat mission in about 150 days.
        The Joint Staff (J7) has been analyzing CINC shortages in the
    pursuance of their MTW missions. This study substantiated the CINC's
    shortfalls in Combat, Combat Support and Combat Service Support units.
    The Army's ability to offset some of these critical shortfalls resides
    in the unmissioned ARNG divisions.
        The fiscal year 1998 Joint Strategic Capabilities Plan dual
    apportions the eSBs to both Warfighting CINCs and their respective
    contingency plans. The goal of The Army is to single apportion all 15
    eSBs and to package them with AC Corps. The ARNG continues to
    intensively manage these units through priority of resourcing,
    scheduled video teleconferences, state assistance visits and ongoing
    readiness analysis.

    The Army National Guard (ARNG) Medical Force in the 21st Century
        The ARNG Surgeon's office fosters an integrated medical readiness
    team that provides innovative leadership in a dynamic environment,
    ensuring that ARNG forces are ready and deployable for federal, state
    and community missions.
        A significant impact on ARNG medical readiness was the inception of
    the Medical Advisory Council (MedAC), comprised of the 50 state and
    three territory surgeons. The council provides advice, assistance and
    proposes actions to the ARNG chief surgeon on current and future
    medical issues affecting readiness, policy, plans, programs, resources,
    training and operations of ARNG units and soldiers. Within the first
    year of its charter, the council had proven itself an invaluable tool
    for promoting the medical readiness of the ARNG soldier.
        One of the council's early projects was the initiation of the ARNG
    Medical Readiness Campaign Plan 2000. The campaign plan was a
    coordinated effort between the ARNG Surgeon's Office and the MedAC to
    address and resolve ARNG medical readiness issues. Initiatives included
    developing a tracking system for Individual Medical Requirements (IMR),
    improving medical and dental support for annual training, redesigning
    the state medical Table of Distribution and Allowances (TDA), improving
    the ARNG Aviation Medicine Program, enhancing medical strength in ARNG
    force structure, and developing a strategy for the health care
    specialist (91W) transition.
        To ensure comprehensive tracking, the ARNG will use the Medical
    Protection System (MEDPROS) to monitor the IMR requirements for all
    ARNG soldiers. This will provide the ARNG senior leadership with a real
    time automated system capable of tracking individual medical readiness.
        An evolving state medical TDA redesign will heighten the focus of
    our ARNG medical personnel on the future medical readiness needs of the
    ARNG.
        Another initiative of the MedAC was to tackle the challenge of
    providing quality health care to ARNG soldiers by designating a state
    aviation medicine officer and a state annual training site support
    coordinator. These individuals serve as the liaison between the state
    surgeon and the aviation and training communities. These designations,
    seen as a milestone, ensure our soldiers are afforded the most
    comprehensive and quality medical and dental support during training.
        To meet the needs of tomorrow's battlefield, the MedAC sanctioned
    an aggressive training strategy to ensure that all ARNG combat medical
    specialists (91B) and practical nurses (91C) will meet the Army
    mandated transition to being Emergency Medical Technician (EMT)
    qualified (91W) by Oct. 1, 2009.
        To ensure ARNG soldiers are medically ready to deploy when called
    upon, the ARNG assisted with the implementation of the Federal
    Strategic Health Alliance Program (FEDS-HEAL) and the HOOAH 4 HEALTH
    (H4H) program. FEDS-HEAL is a coordinated effort between the ARNG, U.S.
    Army Reserve (USAR) and the Veterans Administration (VA). Program
    officials have a memorandum of understanding with the VA and the
    Federal Occupational Health (FOH) network to assist the ARNG in
    accomplishing IMR readiness requirements. Initiated as a multi-
    component effort, HOOAH 4 HEALTH is a web-based, self-directed health
    promotion and wellness program designed for the Reserve Components. The
    program focuses on body, mind, spirit, environment, prevention and
    stages of change.
        Today's ARNG Medical Team remains a value-based, soldier-focused
    organization. The ARNG Medical Team is committed to enhancing the
    readiness of The Army and the well-being of our soldiers and their
    families.

                              SUSTAINING THE FORCE

    Operational Tempo (OPTEMPO) Funding
        Resources for training are based on a model that applies costs of
    operating equipment systems to a training strategy calculated in miles
    or hours, depending on the system. Units expend these resources for
    soldier training support, repair parts, fuel and other related costs of
    training. Current ARNG separate brigades are trained to platoon level;
    divisions to individual, crew, and squad level; and CS/CSS units to
    unit level. The ARNG goal is to resource all combat units at the
    platoon level. Overall funding for OPTEMPO must increase by $86 million
    over the next five years to support this strategy; however, as more
    ARNG divisional units assume command and operational roles in Bosnia,
    Kosovo and elsewhere, they must train to higher levels.

    Asset Redistribution
        In order to mitigate aging equipment and material shortfalls, the
    ARNG executes a sophisticated program of redistributing items from
    excess in one unit to units in needs. The managers utilize two ARNG
    automated programs to support this effort with 90 percent of the
    transactions completed without item manager intervention. The ARNG has
    been able to avoid millions of dollars in unnecessary purchases by
    filling shortages in one state from excess in other states.

    Controlled Humidity Preservation (CHP)
        Another initiative undertaken by the ARNG involves the use of
    Controlled Humidity Preservation (CHP) techniques. This technology has
    resulted in an offset of unfinanced levels of maintenance support and
    reduced the effects of moisture-induced corrosion on ARNG equipment.
    The ARNG began implementation of its CHP program in 1994 to contend
    with declining materiel readiness caused by equipment exposed to the
    environment during periods of non-use. Since its initial
    implementation, the ARNG CHP program has stabilized equipment readiness
    rates in the face of increasingly scarce resources. By preserving
    operational equipment under humidity controlled conditions, CHP offsets
    a portion of the required maintenance manpower and OPTEMPO funding
    requirement; thus resulting in a cost avoidance against the unfunded
    requirements. The ARNG CHP program has validated a return on investment
    of better than seven to one on the original investment.
        In fiscal year 1998, the ARNG was designated as the lead agency for
    CHP implementation Army-wide. It is currently available in 35
    locations. Fielding plans include CHP for most ARNG states and
    territories by fiscal year 2008.

    Velocity Management
        Velocity Management (VM) is an Army process designed to improve
    logistics responsiveness both in garrison and when deployed. The
    program objective is to decrease reliance on stockpiled commodities and
    rely on automation, speed, and transportation to move logistics support
    into the hands of soldiers as rapidly as commercial activities.
    Implementation of VM has assured effective supply performance by
    finding and eliminating sources of delay and unreliability in The
    Army's logistics processes. States are using VM, resulting in reduced
    ARNG order/ship time from a program initiation high of 98 days to 35
    days, with at least 15 states posting 24 days or less every month.
    Repair part receipt processing times have decreased from a high of 42
    days to 15 days.

    Single Stock Fund (SSF) Initiative
        Single Stock Fund (SSF) is a Department of the Army (DA) business
    process engineering initiative to improve and streamline The Army's
    logistics and financial processes for classes of supply.
        The implementation of the SSF is progressing in four phases or
    milestones (MS), beginning in January 1998. Completion is scheduled for
    June 2002.
        MS-0, which was the preparation phase prior to implementation of
    MS-1 in fiscal year 2000, included a combined MS 1 & 2 demonstration,
    in which the two Kansas ARNG Centers of Excellence (COE) successfully
    participated in validating the ARNG's ability to repair and stock
    assets for the NMM program.
        MS-1 & 2, theater and corps/installation Authorized Stockage List
    (ASL) assets and Operations & Maintenance (O&M) stocks, above the
    division ASL, are to be incorporated (capitalized) under AMC's
    management. The Army's new credit policy goes into effect at this
    point, and 18 ARNG Integrated Sustainment Maintenance (ISM) COEs will
    become part of AMC's NMM program. The COEs' work will expand beyond
    repairing to include stocking and shipping repaired AWCF assets to
    worldwide customers. The schedule for implementation was Nov. 1, 2000
    (fiscal year 2001). At this point, each United States Property and
    Fiscal Office (USPFO) will begin operating an AWCF SARSS-1 and the ARNG
    will be fully integrated into the SSF.
        MS-3 is scheduled for implementation starting Oct. 1, 2001 (fiscal
    year 2002). In preparation for SSF implementation, the ARNG plans for
    two states to participate in the MS-3 implementation demonstration.
        To implement SSF, the ARNG will experience required cultural,
    procedural and systemic changes. Some of the ARNG processes currently
    under revision to accomplish SSF transition include direct funding and
    credit (greater credit to buy more and repair less); AWCF-SMA ASL
    ownership (greatly reducing the amount of ARNG capital invested); and
    CTASC reduction (reduction in cost and duplication of automation
    assets). The ARNG directorate staff continues to work closely with DA,
    AMC, other MACOMs and the states to facilitate a smooth transition to
    SSF.

    National Maintenance Management (NMM) in the ARNG
        The ARNG has participated with other Major Commands (MACOMs) in The
    Army's Integrated Sustainment Maintenance (ISM) program since its Proof
    of Principal (POP) in fiscal year 1993. In this program, AC
    installation General Support (GS) maintenance activities--named Centers
    of Excellence (COE)--of FORSCOM, TRADOC, USAR, and ARNG Combined
    Support Maintenance Shops (CSMS) and Maneuver Area Training Equipment
    Sites (MATES) with support (also known as COEs), competed for component
    repair work.
        The final fiscal year 2000 figures from the ARNG's participation in
    the ISM program are impressive. Thirty-eight states participated as
    customers during the fiscal year. Those states shipped 7,632 General
    Support Repairables Exchange (GSRX) components to other ARNG, USAR and
    AC COEs for repair. The COEs logged more than 40,000 hours in the
    repair of those components and returned 6,563 for customer use. Their
    work resulted in a cost avoidance of $20.7 million for their customer
    states as well as considerable productivity enhancement at customer
    shops, where mechanics were freed up to work off backlogged items and
    other readiness issues.
        The program's growth can be appreciated by comparing this year's
    cost avoidance of $20.7 million, with the $8.2 million realized in
    fiscal year 1998. As the program became institutionalized in fiscal
    year 2000, the ARNG conducted thousands of repairs on as many as 119
    different components throughout the year--a 48-item component increase
    over the previous year. Additionally, ARNG COEs performed ``Area'' work
    (not part of the Regional ISM program), for other ARNG customers,
    repairing 58 other types of components not part of the ISM program.
        As The Army entered into its first phase of the Single Stock Fund
    (SSF) program this year (specifically, restructuring), ISM as we knew
    it, changed to a program named National Maintenance Management (NMM).
    The NMM remains a ``Repair and Return to User'' service until AC
    Installation supply assets are capitalized during the first half of
    fiscal year 2001 as part of SSF transition. The NMM program will then
    change to one of repair for the supply system. Eighteen ARNG COEs will
    repair a total of 72 component lines during fiscal year 2001, while
    continuing to work for ARNG customer states and AC installations until
    they are capitalized. The ARNG continues to work closely with DA, Army
    Materiel Command and other Army MACOMs, to make this transition
    successful.

    Depot Maintenance
        The ARNG depot maintenance program is based on a ``repair and
    return to user'' premise. Unlike the Active Component (AC), the ARNG
    does not have a quantity of selected end items authorized for stockage
    to use as immediate replacements by units when critical equipment is
    returned to the depot for repair. This means ARNG equipment, necessary
    to meet deployable readiness goals, returned to the depot for repair is
    not replaced in the unit until the depot repairs the item.
        Requirements (items sent to be repaired) in fiscal year 2001 for
    the overall depot maintenance program increased by 18 percent. This
    requirement increase was attributable primarily to an increase in ARNG
    aviation modernization programs and increased test standards. Yet
    funding for the ARNG's depot maintenance requirement slightly decreased
    from 79 percent in fiscal year 2000 to 74 percent in fiscal year 2001.
    Depot maintenance programs for enhanced Separate Brigades (eSBs) have
    continued to be funded at 80 percent of requirements. However, funding
    for the ARNG divisional units has decreased from 78 percent in fiscal
    year 2000 to 70 percent in fiscal year 2001.
        Previous low levels of funding resulted in a backlog of
    unserviceable equipment that must be supported. A depot maintenance
    backlog decreases the ARNG's capability to meet assigned materiel
    readiness goals, decreases the quantities of serviceable equipment
    available to support ARNG training programs, and impairs the ARNG's
    capability to rapidly mobilize and deploy high priority units.
        Maintenance of adequate resource levels on an annual basis is
    essential to overall ARNG readiness. The ARNG depot maintenance program
    has received significantly increased funding in the last three Program
    Objective Memorandum (POM) cycles, but even this funding has not kept
    pace with the increased use of depot level maintenance by the ARNG.
    These resources will assist in AC/RC integration, compliment the
    readiness of units, and serve to decrease the ARNG backlog of
    unservicable equipment. Depot level maintenance of aging ARNG equipment
    is the key to obtaining the highest possible level of ARNG equipment
    readiness.

    Readiness Sustainment Maintenance Sites (RSMS)
        Five Readiness Sustainment Maintenance Sites (RSMS) have been
    established by the ARNG to repair trucks, trailers, and electronic
    equipment. Four sites specialize in refurbishing HMMWVs, five-ton cargo
    trucks, tractors, wreckers, HEMTTs, 10-ton tractors, trailers that are
    pulled by a fifth wheel, and bulldozers. The fifth site repairs night
    vision devices and generators.
        The decision to develop repair sites was based on past experience
    which showed the ARNG saved scarce funds by completing the work in-
    house and produced a quality product. A by-product of these programs
    demonstrated that they were excellent recruiting and retention tools
    for ARNG soldiers.
        RSMS sites are located in Kansas, Mississippi, Texas, Maine, and
    Oregon. All five sites performed work for the ARNG before being
    selected as an RSMS.

    Acquisition Career Management
        The ARNG Acquisition Career Management Branch (ACMB) was
    established in August 2000 to ensure that the ARNG has a trained and
    qualified workforce fully integrated into the Army Acquisition
    Workforce and Corps. The objective is to develop and manage the ARNG
    acquisition workforce so that it is capable of supporting the ARNG and
    the Active Component (AC) during peacetime, contingency operations and
    mobilizations. The goal is to become a full and equal partner with the
    Army Acquisition Workforce and Corps not later than fiscal year 2004.
        Phase I of the partnership program (fiscal year 2000 through fiscal
    year 2001) began with the establishment of the ARNG Acquisition Career
    Management Branch and the determination of an initial baseline for the
    ARNG Acquisition Position List (APL). The baseline results indicated
    that approximately two-thirds of the possible ARNG acquisition
    positions were not accounted for on the current APL. The ARNG ACMB
    devised a plan to document these positions and update the Acquisition
    Career Management Office (ACMO). An APL database has been established
    and will be completed not later than the end of fiscal year 2001.
        During Phase II (fiscal year 2002) of the program, the ARNG ACMB
    will obtain and manage Title 10 authorizations for ARNG acquisition
    positions.
        Phase III (fiscal year 2003 through fiscal year 2004) is the final
    portion of the program. During this time, the ARNG ACMB will conduct
    annual data-calls to identify both civilian and military positions that
    are ARNG acquisition positions for the Civilian Acquisition Priority
    List (CAPL) and Military Acquisition Priority List (MAPL). Both are
    currently consolidated on the APL.

                              RESOURCING THE FORCE

        The resourcing goal of the Army National Guard (ARNG) is to secure
    sufficient funding, enabling the organization to meet all statutory and
    critical requirements. The ARNG also strives to provide trained and
    deployable forces for The Army and Commanders in Chief (CINCs). Our
    intent is to achieve parity within each Force Package for all Army
    components.

    Funding Priorities
        The ARNG Force Support Package (FSP) units receive the highest
    funding priorities. Combat Support (CS) and Combat Service Support
    (CSS) units primarily comprise the ARNG's portion of the Force Support
    Packages. Consistent with the National Military Strategy, these units
    are doctrinally aligned to support the Major Theater War strategies.
    The precise purpose of the FSP is to provide the necessary CS and CSS
    units. These are found in Echelons Above Division (EAD) and in Echelons
    Above Corps (EAC) tailored to support 5 1/3 Continental United States
    (CONUS) divisions, one corps, one corps planning headquarters (HQ), one
    theater, and one theater planning HQ.

    Budget Appropriations
        The ARNG is funded in three appropriations: National Guard
    Personnel, Army (NGPA), Operations and Maintenance, Army National Guard
    (OMNG) and Military Construction, Army National Guard (MCNG). The
    fiscal year 2001 President's Budget, $6.9 billion, represents
    approximately 9.7 percent of The Army's $70.8 billion budget.
        The ARNG has requested an increase in funding in the fiscal year
    2002 budget which supports the ARNG's Transformation and teaming effort
    with the Active Component (AC), increased Operational Tempo (OPTEMPO)
    and Personnel Tempo (PERSTEMPO) requirements in the 21st century.

    Funding Contingency Operations
        The ARNG is a true stakeholder in The Army's transformation. We
    have been called upon to provide an increasing number of soldiers and
    units each year to support The Army's role in contingency operations.
    ARNG soldiers are primarily supporting missions in Bosnia, Kosovo and
    Southwest Asia. During fiscal year 2000, the ARNG deployed 2,932
    soldiers for Contingency Operations (CONOPS) missions. Projected
    deployment figures for fiscal year 2001 are expected to more than
    double, with an estimated 5,815 ARNG soldiers supporting these overseas
    missions.
        Funding for Contingency Operations is provided from Congress as
    part of the Department of Defense (DOD) Overseas Contingency Operation
    Transfer Fund (OCOTF). This fund is only to be used to finance
    incremental costs of contingency operations when operational costs
    (including personnel related costs) incurred by an activity would not
    have been incurred if the operation had not been executed.
        OCOTF funds are transferred directly to National Guard military pay
    appropriations (NGPA). These funds are subsequently distributed to the
    states for all incremental pre-mobilization, post-mobilization, and
    reconstitution activities necessary to prepare for and recover from
    deployed operations. While deployed, National Guard soldiers are
    mobilized in a federal status and paid from active duty military pay
    accounts.
        Incremental military pay funding is also required for the
    additional soldiers that must round out State Headquarters, State Area
    Commands (STARCs) and units in an Active Duty Special Work (ADSW)
    status to support the unit deployment. The majority of states deploying
    are only manned on a full time basis (between 40 percent to 60 percent)
    to support normal state training requirements.
        The states receive active duty Operations and Maintenance funds, on
    a reimbursement basis, from the Active Component Corps Force Provider
    for incremental operations costs and travel while preparing for and
    recovering from deployed operations.
        Incremental funding received in fiscal year 2000 and requested
    funding for fiscal year 2001 NGPA is shown below.

              OVERSEAS CONTINGENCY OPERATIONS TRANSFER FUND (OCOTF)
                                  [In millions]
    ------------------------------------------------------------------------
                                                                     Fiscal
                                                          Fiscal   year 2001
                                                        year 2000     \1\
    ------------------------------------------------------------------------
    Military Pay (National Guard Pay and Allowances)..        $14      $34.5
    ------------------------------------------------------------------------
    \1\ Estimated as of September 2000 based on known missions.

                            KNOWLEDGE INFRASTRUCTURE

        We are at the crossroads of a unique period in our history, the
    Department of Defense (DOD) has developed a new corporate vision
    designed to carry us well into the 21st century. Central to that
    vision, and in an attempt to provoke change, DOD seeks to take
    advantage of technological breakthroughs that rely on the total force,
    which includes the Army National Guard (ARNG). At the core of the
    Defense Reform Initiatives are principles which include streamlining
    the organization and exploiting information technology.
        The DOD will seek to further streamline its business processes and
    operations in the upcoming Quadrennial Defense Review (QDR). The Army
    has already undergone change resulting from implementing The Army
    Transformation Strategy. In both cases, information technology is the
    tool that enables DOD and The Army to conduct business more effectively
    and efficiently. By successfully applying information technology, we
    can become more effective and relevant in a period of diminishing
    resources.
        Consequently, the ARNG is shaping its organizational future by
    capitalizing on information technologies and solutions that will play a
    key role in meeting the challenges of The Army Transformation Strategy,
    the Quadrennial Defense Review, and the Defense Reform Initiatives. The
    Army National Guard has crafted a knowledge infrastructure campaign
    plan to support the orderly transition to a Distributive Learning
    network that will extend to major state facilities disbursed networks.
    The ARNG seeks to achieve its dual federal/state mission in the most
    effective, efficient and productive manner possible using Information
    Technology solutions wherever possible.
        Information plays a key role in our national defense. The
    information revolution is creating a parallel revolution in military
    affairs that will fundamentally change the way we fight.

    Joint Vision 2020
        Joint Vision 2020 examines the world and its concomitant emerging
    national security challenges--challenges that span the spectrum from
    humanitarian disasters to major theater wars. Joint Vision 2020
    recognizes that our military forces must possess seven key
    characteristics to meet these challenges in a way that provides our
    National Command Authorities a variety of strategic options. These
    characteristics are responsiveness, lethality, survivability,
    sustainability, deployability, agility and versatility.
        The Army Vision provides direction, focuses on the change process
    and moves us along the path to develop forces that can dominate any
    situation across the spectrum of operations. Embracing the central role
    of information technology through its knowledge infrastructure efforts,
    the ARNG is fully committed to taking advantage of opportunities
    provided by information age concepts and technologies.
        The ARNG has devoted considerable effort in the past two years to
    increase high-speed Internet access. Recently, the ARNG significantly
    increased the available bandwidth, or allowable data flow, to the
    national communications network (NIPRNET). Three of the seven ARNG
    Network (GuardNet) centralized distribution points or hub sites now
    have more than triple the amount of allowable data flow. The remaining
    four hub sites will be connected to the NIPRNET in the fall of 2001,
    thus resulting in improved Internet access. High-speed information
    access will make significant contributions to such areas as Distance
    Learning (DL), electronic publications and forms, training simulation
    and World Wide Web technology applications.
        The ARNG decentralized video teleconferencing to the state level in
    January 2001 by installing equipment that will allow states to have
    local control over their video teleconferencing. Video teleconferencing
    is currently centralized at the national level in Arlington, Va. States
    must work through the Video Operations Center at the ARNG Readiness
    Center to plan and conduct their local events.
        One other significant upgrade to the ARNG's knowledge
    infrastructure includes the addition of a Storage Area Network
    Solution, which provides a robust, flexible and scalable option for
    back-up and continuity of operations. Constant mirroring of data
    provides a means to rapidly regain full capability in the event of a
    major system failure.

    Data Sharing and Integration
        The Personnel Division of the ARNG recently installed an upgrade to
    the computer software that processes the new Officer Evaluation
    Reporting (OER) system. This improvement in computer software will
    allow the transfer of OER images directly to the Personnel Electronic
    Records Management System (PERMS) located in the ARNG Readiness Center.
    Once the national-level OER analyst processes an OER, the new computer
    system automatically transfers the image of the OER directly to PERMS.
        When fully functional, this new transfer process will eliminate the
    need for the state-level OER analyst to provide paper copies of OERs to
    PERMS. This will allow PERMS and OER analysts more time to perform
    analytical tasks. As a result, OERs are scanned once instead of twice,
    and paper copies will be a thing of the past. This endeavor supports
    the federal government's initiative to transform itself into an
    electronic or paperless organization, which is a more fiscally and
    environmentally sound form of government.
        Other major improvements over the year include:
      --Overhauling the database, which led to an overall decrease in the
            time it takes an analyst to examine and process an OER.
      --Automated monthly updating of OER personnel information from the
            Total Army Personnel DataBase (TAPDB).
      --An auxiliary program was created allowing OER national-level
            analysts to correct the more common OER errors themselves
            rather than taking it to the OER system programmer.
      --All OER personnel were issued the TAPDB program to allow them to
            instantly look up Guard personnel information rather than
            having to consult the registry or contact the soldier's state.

    National Officer Personnel Electronic Records Management system (PERMS)
        Electronic imaging of officer records continues to remain a high
    priority. Continuous improvements are being made to the system, to
    include an initiative that will allow the system to internally
    determine certain data fields for commonly used forms.
        The Networked Attached Storage (NAS) system is the most recent
    PERMS enhancement. This new release consists of new and modified
    software that uses NAS as the primary repository for PERMS documents
    versus optical platters (the equivalent of a giant CD-ROM.) Retrieval
    applications will be written to NAS, as well as to optical platters.
    The user's benefit of the NAS system is to provide faster document
    retrieval and to minimize performance degradation such as fuzzy or
    illegible documents.

    State Enlisted Personnel Electronic Records Management System (PERMS)
        Each state and territory has been provided the means to make
    electronic images of enlisted members' official military personnel
    files. The implementation by the states has been sporadic due to fiscal
    constraints. The Department of Defense has taken an interest and is
    trying to find funding to improve the functions of PERMS at the state
    level since many organizations, including the Veteran' s
    Administration, have a need to access enlisted records.
        Enlisted PERMS at the state level remains an issue of concern. The
    imagery systems purchased by the states do not interact with national
    PERMS. Until funding is procured to enhance and improve PERMS at the
    state level, enlisted records will continue to be difficult to access
    by any entity. The states continue to rely heavily on hard copy
    enlisted personnel records.

    Electronic e-orders
        The Federal Recognition Section, ARNG Division of Personnel, is
    responsible for producing special orders that extend or change federal
    recognition of an ARNG soldier's promotion, transfer, discharge, and
    changes in Military Occupational Specialty (MOS) or branch. About
    13,000 of these actions are processed each year. While the production
    process was partially automated, it still relied on a manual
    distribution process. These orders had to be copied and properly
    cleared to ensure that Privacy Act provisions were not violated, and
    finally distributed. This manual process was subject to human and
    distribution error due to the number of times the orders were handled
    before reaching their final destination.
        In July 2000, electronic orders made their debut at the ARNG.
    Electronic orders are images of the orders that are created at the time
    the paper copy of the order is produced. A unique electronic order is
    created for each individual officer listed on the order showing only
    his or her social security number. These electronic orders are then
    distributed to the Military Personnel Officers (MILPOs) of the 50
    states, three territories and the District of Columbia who have an
    officer on the order using an email distribution system. The MILPO
    simply clicks on the attachment to the email to view and print the
    electronic order. Electronic orders cut the time of distribution of
    orders from weeks to minutes.
        Improvements in the federal recognition database now allow
    electronic distribution of federal recognition orders rather than the
    need to copy and mail paper copies.

    Software Development
        Our software development effort continued expanding its use of
    structured engineering methodology during fiscal year 2000. This
    methodology utilizes industry standards for specifying, visualizing,
    constructing, and documenting the artifacts of software systems. It
    simplifies the complex process of software design by making a blueprint
    for construction. From these blueprints, reusable software components/
    modules can be constructed. This expansion enforces the use of business
    rules and data integrity, and is platform and database independent. In
    addition, work toward obtaining software Capability Maturity Model
    Level 11 was initiated. This will put in place an effective means for
    modeling, defining, and measuring the maturity of the software
    development process.
        The ARNG also began developing a single repository to store objects
    and components for reuse in future application development. An
    integrated process team is working on the standards and business rules
    for establishing the repository and regulating the processes for
    adding, deleting and modifying information contained in the repository.

    Communications--Plans and Operations
        During fiscal year 2000, the Network Operations Center (NOC)
    located at the ARNG Readiness Center fielded several key enterprise-
    wide systems to enhance security, facilitate central monitoring and
    improve Internet response times. Each state and territory received new
    routers designed to speed up the overall data traffic transmission via
    the GuardNet. These new routers are more robust and help to minimize
    the network errors that were experienced in the past.
        Additionally the Computer Emergency Response Team (CERT) procured
    and deployed a new Intrusion Detection System (IDS). Currently, three
    Defense Information Systems Agency (DISA) Point-of-Presence (POP) are
    fully configured and operational with the IDS. The CERT team also
    streamlined the Information Assurance Vulnerability Assessment Message
    (IAVA) reporting process, established two virtual private networks
    (VPNs) and set up the Central Clothing Distribution Facility (CCDF)
    firewall.
        The NOC also dramatically enhanced its ability to monitor and
    centrally manage GuardNet through its build-out project. This project
    included the procurement and implementation of several new powerful
    software tools that provide proactive monitoring of the network, reduce
    possible bottlenecks, and improve bandwidth capacity planning and
    trouble ticket tracking.
        Additionally, the NOC upgraded eight servers that enhanced
    capabilities in providing exchange and file server support. During this
    past fiscal year, two Storage Area Network (SAN) devices were purchased
    and deployed, which has greatly contributed to our flexibility in
    meeting the users' common storage area needs.

    Video Teleconferencing
        The ARNG Video Operations Center has undergone several upgrades
    during the last year to include an additional video conferencing
    bridge, which provides the ability to coordinate and facilitate 80 site
    conferences over GUARDNET XXI. We will continue to support interactive
    video network conferencing for Weapons of Mass Destruction, the Unit
    Clerk Course and the Personnel Sergeant's Course, involving 30 to 40
    sites for each event.
        The facility provided video conferencing capabilities for Texas
    ARNG soldiers during their deployment to Bosnia from April to October
    2000. This was the largest morale call conducted for the Texas ARNG
    soldiers and their families. It was a reoccurring event with six to
    eight conferences scheduled per month with eight-hour sessions. Other
    ARNG units--Indiana, Oregon, Washington and Oklahoma--have also
    provided video conferencing capabilities for morale calls during their
    deployment to Bosnia. This video conferencing service was a great
    morale booster for soldiers placed in a stressful and unfamiliar
    environment.

    Reserve Component Automation System (RCAS)
        The Reserve Component Automation System (RCAS) is an automated
    information system that provides The Army the capability to administer,
    manage and mobilize Army National Guard (ARNG) and Reserve forces more
    effectively. The RCAS provides an integrated capability that supports
    mobilization and improves day-to-day administration and management of
    Reserve and Guard forces. Fully deployed, RCAS will link approximately
    10,500 Guard and Reserve units at approximately 4,000 sites located in
    all 50 states, three territories and the District of Columbia.
        RCAS is being developed and fielded using an incremental,
    evolutionary acquisition strategy.
        Increment 1 was approved for fielding in September 1996 by the
    Office of the Secretary of Defense (OSD). This provided the program's
    infrastructure through wide area network (WAN) inter-connectivity, COTS
    office automation software, and classified capable and unclassified
    workstations. Fielding of Increment 1 goes through mid fiscal year
    2001, due to the funding profile.
        Increment 2 was approved for fielding in January 1998 by OSD. This
    introduced data servers and logistics applications. Release 2.1,
    fielded in September 1998, provided logistic ``smart'' forms, Army
    Training Requirements Resources System, Emergency Information System,
    COTS upgrades, software encryption (e-mail), Clipboard, and Program
    Automator (internal review).
        Increment 3 was approved for fielding in March 2000 by OSD. This
    added force authorization, security and training functionality.
        Increments 4/5 is in the final stages of operational testing and
    includes logistics, safety/occupational health, training and human
    resources applications.
        Increment 6 will add or enhance safety/occupational health,
    security, force authorization, and human resources applications with
    operational testing planned to begin in June 2001.
        Future increments will satisfy users' requirements in the order of
    priority established by the ARNG and USAR. The project is on schedule
    and experiencing favorable cost variance.
        More than 60 percent of the 60,065 planned function points have
    been delivered to date. Full fielding is on schedule with 53,367 out of
    more than 56,000 personal computers fielded (95 percent), 58 out of 94
    commands completed (62 percent), and 3,440 of 3,849 (89 percent) sites
    completed to date.
      --Reduced time to publish orders from 60 days to two days; reduced
            mailing and printing costs by 40 percent.
      --Mobilized units in Bosnia using e-mail to correspond with their
            home units and State Area Commands (STARC).
      --E-mail provided command and control of disaster operations during
            Midwest floods.
        An example of RCAS improvements--a total of 1,900 ARNG soldiers
    were issued orders in four days versus 30 days and were paid for their
    service in record time; seven days versus 30 days.
        RCAS teamed with the National Guard Distributive Training
    Technology Project (DTTP) to migrate ARNG State Area Commands to an
    Asynchronous Transfer Mode (ATM) backbone. The two programs are
    maximizing the synergistic benefits of this arrangement and realizing
    economies of scale associated with circuit cost and usage ratios.

                               TRAINING THE FORCE

    Army National Guard (ARNG) Support to the Combat Training Centers
        The ARNG participates in all of the Army's Combat Training Centers
    (CTC); the National Training Center (NTC), Fort Irwin, Calif.; the
    Joint Readiness Training Center (JRTC), Fort Polk, La.; the Combat
    Maneuver Training Center (CMTC), Hohenfels, Germany; and the Battle
    Command Training Program (BCTP), Fort Leavenworth, Kan. The Brigade
    Command and Battle Staff Training (BCBST) Program is a subset of BCTP.
    The Army CTC Program is divided into live simulation (NTC, JRTC, and
    CMTC) and constructive simulation (BCTP and BCBST). The ARNG CTC
    Program involves the scheduling of ARNG units to conduct training at
    the CTCs in the following capacities: Blue (Friendly) Force (BLUFOR)
    rotational units, Opposing Forces (OPFOR) augmentation units, and other
    types of support based on the needs of the CTCs.
        The National Training Center (NTC) is the Army's premier heavy
    maneuver CTC. As large as the state of Rhode Island, the fully
    instrumented NTC allows live brigade-level force-on-force exercises to
    be conducted several times each year.
        The ARNG continues to increase its training frequency at the NTC
    with more than 25,000 ARNG soldiers conducting BLUEFOR and OPFOR
    rotations in fiscal year 2000. The ARNG completes one brigade NTC
    rotation each year. Rotations are allocated to the eight mechanized
    infantry/armored enhanced Separate Brigades (eSBs), making the rotation
    schedule once every eight years for each brigade. Additionally, the
    ARNG conducts OPFOR Augmentation Unit (OAU) rotations in support of the
    11th Armored Cavalry Regiment, the NTC's world class OPFOR. Ten ARNG
    company-sized units deployed to the NTC in fiscal year 2000 to conduct
    OAU missions, eight in support of Active Component (AC) units.
        The 218th eSB, South Carolina ARNG, conducted the ARNG rotation in
    fiscal year 2000 and the 256th eSB, Louisiana ARNG, will deploy to NTC
    later this year.
        In addition to unit-based NTC rotations, the ARNG also receives and
    allocates eight NTC Leader Training Program (LTP) rotations annually.
    The LTPs are six days in length, and enhance staff coordination and
    combat decision-making skills. The eight LTPs are allocated to heavy
    brigades that attend NTC.
        The Joint Readiness Training Center (JRTC) is the light infantry
    equivalent of the Army's NTC. The JRTC hosts light infantry and special
    operations forces from all military components for rotations throughout
    the year. The ARNG conducts one brigade rotation at the JRTC every
    year. The rotations are allocated to the seven light infantry eSBs. The
    76th eSB, Indiana ARNG, conducted the fiscal year 2000 JRTC rotation
    and the 27th eSB, New York ARNG, is scheduled to deploy in August of
    2001.
        The ARNG receives and allocates three JRTC LTP rotations annually.
    As with the NTC, training opportunities exist for Combat Arms, Combat
    Support (CS) and Combat Service Support (CSS) units to augment BLUEFOR
    and OPFOR units and to provide installation support.
        The ARNG will participate in the vast majority of BCTP exercises in
    the future. ARNG units, including division headquarters, brigade and
    battalions, conducted BCTP rotations in support of AC units at
    unprecedented levels in fiscal year 2000. The 28th Infantry Division,
    Pennsylvania ARNG, participated in the V Corps BCTP Warfighter exercise
    in fiscal year 2000 with more than 500 soldiers deploying to Germany
    for the exercise.
        Fourteen ARNG brigades conducted BCBST rotations in fiscal year
    2000. The BCBST Program requires brigade staff personnel to deploy to
    the Leadership Development Center at Fort Leavenworth, Kan., to conduct
    a Warfighter seminar and hone mission planning skills. The brigade then
    conducts a Warfighter exercise at home station using Brigade Battle
    Staff simulation software exercising brigade battle staff skills.
        FORSCOM/ARNG/USAR Regulation 350-2 provides for increased ARNG
    participation at all CTCs and with our AC counterparts. Units can
    conduct rotations as either BLUEFOR or OPFOR during both AC and ARNG
    rotations at the NTC and JRTC. Operational deployments have created a
    greater reliance on the ARNG to support AC units in many training
    events. Participation of the ARNG in the myriad training events
    showcases the maturation of reserve component integration and the
    warfighting capabilities of the ARNG.
        The Chief of Staff of the Army's emerging corps packages and the
    ARNG's role in the Army Transformation process promises significantly
    greater opportunities for ARNG participation in Active Component CTC
    exercises world-wide.
    Distributed Learning
        Distributed Learning (DL) has emerged over the last few years at
    the forefront of training, education and information access. DL is the
    dominant trend in Army National Guard (ARNG) training, and it has the
    potential to improve readiness above historical averages. The
    communication technologies necessary to support DL are having a major
    impact throughout the ARNG because they bring greater access to
    information. Greater access to information will improve training and
    operations.
        A major objective towards improving readiness is to shift from
    traditional resident training to greater reliance on DL. Making more
    training locally available will reduce a significant obstacle: the
    limited time a soldier has available to accomplish training. Resident
    training will remain as the appropriate method for initial entry,
    leadership and equipment-intensive training, since these types of
    training are not suitable for DL.
        The primary goal of DL in the ARNG is to improve readiness by
    providing local access to training and education--anytime or anywhere.
    Improving command and control and providing shared use of ARNG DL
    facilities with local communities are also significant goals. The
    strategy to reach these goals is based on developing and synchronizing
    five essential components: hardware (network and classrooms),
    courseware, staff and faculty training, support services and business
    operations.
        Imperative to the success of DL is GuardNet XXI. This is a robust
    and dynamic telecommunication infrastructure that consolidates and
    upgrades voice, video and data requirements in one economical and
    highly efficient integrated network. GuardNet XXI connects the National
    Guard Bureau (NGB) with State Area Commands (STARCs). The National
    Guard Distributive Training Technology Project (DTTP) expands this
    network through the installation of DL capable classrooms at ARNG
    training sites, readiness centers and surrounding communities. As part
    of Army DL classroom requirements, DTTP has fielded 207 DL classrooms
    to date, with an end state approaching 400 classrooms by fiscal year
    2004. Emerging missions and requirements may expand the infrastructure
    beyond the current projections. Future programs will expand the
    delivery options to the soldier's location whether at home, in a
    vehicle, or deployed to another country.
        Traditional resident courses must be redesigned for delivery via
    DL. The Army Distance Learning program calls for the redesign of 525
    Duty Military Occupational Skill Qualification (DMOSQ) courses over a
    12-year period ending in fiscal year 2010. The Army Training and
    Doctrine Command (TRADOC) is redesigning more than 30 Army MOS
    producing courses per year, some of which became available during
    fiscal year 2000.
        In addition, the National Guard Professional Education Center (PEC)
    is redesigning 70 ARNG functional courses. Eight courses have already
    been redesigned and three have been conducted using DL methods. The
    ARNG also provides courseware development to improve individual
    sustainment, collective tasks, and emerging missions training. All
    courseware produced for ARNG complies with the modularity and re-
    usability guidance of the Office of the Secretary of Defense's Advanced
    Distributed Learning initiative (ADL).
        The ARNG DL initiative continues to expand its scope in compliance
    with congressional intent. The ARNG has participated in the development
    and conduct of several DL courses in the following soldier occupational
    specialties and career courses: 13F--Fire Support Specialist, 13M--
    Multiple Launch Rocket System (MLRS) Crewmember, 13P--MLRS Fire
    Direction Specialist, 19K Advanced Noncommissioned Officer Course,
    67T--UH-60 Helicopter Repairer course, 93C--Air Traffic Control
    Operator, 97L--Linguist/Interpreter, the Armor Captain's Career Course,
    and the First Sergeant Course.
        The ARNG functional courses such as Unit Clerk, Personnel Sergeant,
    Training and Mobilization Management, and Army Training and Resources
    Requirements System (ATRRS) courses have been conducted using ARNG DL
    assets. Information Operations training is also offered via DL.
    Approximately 300 office automation courses are available to ARNG
    soldiers and civilians via web-based training.
        Hundreds of non-military courses spanning a multitude of
    vocational, leisure, business, certification and general interest areas
    are prepared for ready access by users of the DL system.
        Staff and faculty must be trained to manage DL classrooms and to
    deliver training to remote locations by making effective use of new
    technology. The PEC is conducting a DL instructor training course. This
    course provides instruction on the use of DL classroom equipment, along
    with DL and adult learning theory. A course covering property and
    financial management, business plans, customer service and equipment
    operation is also available.
        Traditional student and instructor support services are required in
    the DL environment. The Army Training and Resources Requirements System
    (ATTRS) has been adapted to manage DL course enrollment and reporting
    for military students. The DTTP Integrated Information System (IIS) can
    manage any non-National Guard students using ARNG facilities under a
    shared use agreement. This system also accomplishes scheduling,
    metering, billing, and course repository functions. Employment of new
    training technologies and methodologies will necessitate education to
    raise awareness and involvement for commanders, trainers and soldiers.
    To facilitate this culture change, NGB is planning a series of DL
    orientation videos to illustrate the potential of DL and to provide an
    overview of roles and responsibilities.
        Since DL classroom facilities are designed for multi-use
    operations, the overall management and administration of the venues is
    particularly important. Guidance must be provided to the STARCs to
    assist them in fostering teaming relationships with other public,
    private, state and federal agencies aimed at capitalizing on resources,
    information and strategic partnerships. The shared use initiative
    promises significant collaboration between government and non-
    governmental organizations, and must have financial, contractual,
    marketing as well as consultative support resources.
        Appropriate business practices associated with classroom use by
    non-military organizations and individuals must become standard across
    the DL system. All of these imperatives are being addressed by the
    ARNG.
        DL is a strategic capability that will bring improvements in many
    functions such as training, operations, recruiting and retention, and
    the ability to add quality to our communities.
    Automated Requirements Model--Guard (ARM-G)
        ARM-G is a training requirements projection model designed to
    provide input to ATRRS. It supports the process that projects
    individual training requirements for ARNG soldiers for: professional
    development, in-service DMOS training, initial entry training and
    additional skill identifier training. The model also determines the
    geographic locations where the training should be conducted.
        Major improvements to the Army Funding Allocation Model (AFAM)/ARM-
    G Modules in fiscal year 2000 included:
      --Initial fielding of both the Regional Training Institute Readiness
            Module and the Training Analysis on Demand (TAOD).
      --Adding the ability for AFAM to read data on reservations directly
            from the Army Training and Resources Requirements System, mark
            the individual as selected for training, and provide cost
            estimates for the training required.
      --Identifying individuals attending training at PEC who are attending
            training as a technician.
        Planned upgrades to the AFAM/ARM-G Models in fiscal year 2002
    include:
      --Addition of the ability to make reservations directly in ATRRS
            based on selecting an individual for training in AFAM.
      --Addition of the ability for ARNG units to use TAOD to justify and
            provide inputs directly to National Guard Bureau in support of
            the Quarterly Army Program Review (QAPR) process.
      --Modification of ARM-G to provide training and individual training
            funding projections through the entire Program Objective
            Memorandum (POM) process as a basis for justification of funds.
      --Modification of the Regional Training Institute (RTI) Support Model
            to account for all funding requirements for an RTI. The model
            currently accounts only for the supplies and services piece.

    The Army School System (TASS) Transition
        During fiscal year 2000, the U.S. Army Training and Doctrine
    Command (TRADOC) progressed to approximately 60 percent TASS
    implementation. During fiscal year 2000, there were 3,459 ARNG classes
    conducted with 3,348 scheduled for fiscal year 2001. Important
    initiatives such as the Cross Component Resourcing Program are in the
    execution phase and appear on-track. This program allows financial
    reimbursement between the Reserve Components for training support
    furnished. Equipment constraints supporting various programs of
    instruction continue to impact TASS battalion's ability to teach
    specific courses. New equipment fielding, as part of The Army
    Transformation, compounds the issue.
        During fiscal year 2001, a TASS strategic plan, also tied to Army
    Transformation and TRADOC Transition, will be initiated. Examples of
    subject matters to move TASS transition forward include: promotion of
    mutual support between TASS battalions and proponent schools; a
    strategy to decrease cycle-time and increase availability of courses
    for soldier MOSQ; vigorous use of DL methodologies for course delivery,
    and the use of multi-component organizations to meet the diverse needs
    of each TASS region.
        The targeted TASS strategic end state is that the component of
    students and instructors will be immaterial, the quality of equipment
    and facilities are equal, and programs of instruction deliver the same
    tasks to the same standard such that the sources of training are
    indistinguishable. To this end the Commander, TRADOC, Director, ARNG
    and Chief, USAR have signed correspondence encouraging cross component
    cooperation.

    Information Operations Training Program
        In fiscal year 2000, the ARNG developed offensive and defensive
    Information Operations (IO) capabilities to support ARNG and Active
    Component (AC) commanders through an approved Department of the Army
    (DA) force structure. The ARNG IO capability includes IO teams, IO
    tactical staff sections and IO centers. Currently, the ARNG has three
    different types of IO teams: Field Support Teams, Vulnerability
    Assessment Teams and Computer Emergency Response Teams (CERTs). Seven
    ARNG Field Support Teams (FSTs) provide tailored offensive and
    defensive IO support through a supported command's staff structure and
    the military decision making process to build an information advantage
    for Army commanders over potential adversaries.
        Five ARNG Vulnerability Assessment Teams (VATs) provide direct IO
    support to Army units and organizations in garrison, during deployments
    or during exercises by conducting operational and technical assessments
    to identify information processing and information system
    vulnerabilities that potential adversaries could use to their
    advantage.
        ARNG CERTs, in conjunction with the Army Computer Emergency
    Response Team at Fort Belvoir, Va., provide in-depth defensive IO
    support for computer networks and information systems. ARNG CERTs also
    can identify threats, assess and protect the vulnerability of deployed
    computer networks against potential attacks and respond to computer
    incidents that attempt to limit operations by compromising, corrupting,
    or accessing information. ARNG tactical IO sections are assigned to
    each of the eight ARNG divisions and 15 ARNG brigades. ARNG tactical IO
    sections can operate as part of a corps, division or brigade staff to
    plan, synchronize and coordinate offensive and defensive IO to support
    the commander's overall intent.
        The ARNG also established three IO centers: the ARNG IO Training
    Development Center (IOTDC), the IO Command and Control Center and the
    IO Support Center. In fiscal year 2000, the Combined Arms Center at
    Fort Leavenworth, Kan. developed IO courses to develop the first Army-
    wide IO training course for all Army officers. The ARNG IOTDC developed
    the first and only DA course certified as satisfying the requirements
    for Information Assurance Level Three training. Additionally, the ARNG
    trained units to plan and conduct non-lethal, pro-active Information
    Operations for peace operations in Bosnia.
        By fiscal year 2002, the ARNG IO capabilities and assets will
    significantly contribute to the overall Army effort in several key
    areas. The ARNG will significantly increase the number of IO trained
    soldiers available to support the creation and protection of an
    information advantage that our battlefield leaders will need to fight
    and win. The ARNG IO capabilities will also contribute significantly to
    the civil support mission in the United States. ARNG defensive IO teams
    (VATs and CERTs) will identify information system vulnerabilities in
    each state, territory and ARNG unit that a potential adversary could
    exploit. The ARNG defensive IO capabilities will enhance the overall
    effort to avoid an ``electronic Pearl Harbor'' and preserve the
    information advantage held by the United States.

    Funding of New and Displaced Equipment Training in Fiscal Year 2000 and
            Fiscal Year 2002
        A total of $12.1 million was funded and distributed to the ARNG in
    support of new and displaced equipment fieldings. These funds supported
    a total of 27 system fieldings:
        SINCGARS ASIP (Digital Tactical Radio)
        AFATDS (Advanced Field Artillery Tactical Data System)
        FAADC\2\I (Forward Area Air Defense Command, Control and
    Intelligence)
        AN/PSG-9 FED (Forward Entry Device)
        CSWP (Crush Screen Wash Plant)
        M53500 5-60KW (Medium Smoke Generator)
        M56 (Motorized Smoke Generator)
        SENTINEL RADAR-AN/TPQ-64 (Air Defense Radar)
        UH-60L (Black Hawk Helicopter)
        M109A6 Paladin (155 Self-Propelled Artillery System)
        M2 BFV (Bradley Fighting Vehicle)
        M60 AVLB (Armored Vehicle Launched Bridge)
        M270 MLRS (Multiple Launch Rocket System)
        MK19 (Grenade Machine Gun)
        M240B (Medium Machine Gun)
        FMTV (Family of Medium Tactical Vehicles)
        AN/PVS-7D (Night Vision Goggles)
        M16A4 (Personal Weapon)
        M4 Carbine (Personal Weapon)
        M1A1 (Abrams Tank)
        PLS with Engineer Mission Modules (Palletized Load System)
        HETS (Heavy Equipment Transporter System)
        M915A3 (Tractor Trailer)
        ATLAS (All Terrain Lifting Articulated System)
        20-Ton Dump Truck
        CSSCS (Combat Service Support Control System)
        AN/TSQ-179 (Jstars Target Acquisition Subsystem)
        HYEX Type II (Hydraulic Excavator)
        In fiscal year 2002, validated new equipment training and displaced
    equipment training funding requirements totaled $10.8 million while
    critical requirements totaled $8.4 million. However, only $2 million of
    critical requirements are funded, leaving a $6.3 million Unfunded
    Requirement (UFR).
        The following systems and states are affected by the funding
    shortfall:

    ------------------------------------------------------------------------
                      System                           States Affected
    ------------------------------------------------------------------------
    Advanced Field Artillery Tactical Data      SD, TN, WI, CO, GA, KS, KY,
     System (AFTADS).                            MI
    Multiple Launch Rocket System (MLRS)......  AL, TX, CO
    SINCGARS Tactical Radio...................  VA, MD, MA, PA, WV, CA, NY,
                                                 IA, MN, WI, CO, IL, VT, NJ,
                                                 CT, DE, RI, TX
    Sentinel Radar............................  FL, OH
    Forward Area Air Defense Command and        NM, FL
     Control System (FAADC\2\I).
    Firefinder Radar..........................  FL, OH
    ------------------------------------------------------------------------

        The UFR will affect the preparation for the First Digitized Corps
    (FDC) exercise and the ability for the ARNG to demonstrate digitization
    capability and capacity. Without funds for required new equipment
    training and displaced equipment training, many states will not be able
    to receive critical equipment, having a significant impact on their
    readiness.

    Training Support XXI/Tiger XXI Initiative
        Congress mandated that at least 5,000 soldiers from the Active
    Component (AC) provide training support to the ARNG and USAR to reduce
    post-mobilization training time. Congress further mandated that the
    ARNG maximize use of Training Aids, Devices, Simulations, and
    Simulators (TADSS). While Training Support (TS) XXI focuses on lane and
    gunnery evaluations in the live environment, Training Investment in
    Guard Readiness (TIGER) XXI provides strategies, methodologies and
    infrastructure to enable units to train in the virtual and constructive
    environments.
        This infrastructure includes Commanders' Operations and Training
    Assistants (COTA) who can recommend strategies and methodologies for
    ``best use'' of TADSS and also technical support personnel who actually
    operate the various devices. These personnel work with unit commanders
    to coordinate TS XXI Observer-Controller/Trainer (OC/T) support for
    training in virtual maneuver and constructive battle staff training.
        TIGER XXI methodology follows a phased learning model tailored for
    the unique environment of ARNG units. There are four training pillars:
    individual, battle staff, small unit collective and logistics training.
    Each of these pillars has a systemic, progressive, and measurable
    methodology. By integrating live, virtual and constructive training
    devices and events with quality OC/T support, individuals and units are
    able to learn those tasks and processes needed for successful
    execution.

                             QUALITY INSTALLATIONS

    Installations Vision
        The installations vision for the Army National Guard (ARNG) is to
    capitalize on the geographical dispersion of our community-based
    installations and training sites to facilitate communications,
    operations, training and equipment sustainment. The ARNG is committed
    to providing state-of-the-art installations and training sites from
    which to deploy the force.
        To implement this vision, the ARNG has a comprehensive program
    involving education, real property development planning, computerized
    maintenance management, energy management, 21st century technologies,
    and sound leadership decisions.

    Planning Resource for Infrastructure Development and Evaluation (PRIDE)
            Software Implementation
        Planning Resource for Infrastructure Development and Evaluation
    (PRIDE) is the National Guard Bureau's (NGB) guide for moving its
    facility information systems forward from the 20th to the 21st century.
    Volunteers from the ARNG Installations Division and state action
    officers developed a system that provides a more robust information
    base for decision support to the ARNG infrastructure community. Phase 1
    of the PRIDE implementation focused on project management and inventory
    of the ARNG facilities. All states and entities were on line by the end
    of fiscal year 2000.
        In fiscal year 2002, training courses will be developed and
    conducted for the maintenance management and computer-aided design
    (CAD) integrator modules of the software. Training in these modules
    will complete implementation of the full functionality of the PRIDE
    software.

    Facilities Overview
        The ARNG operates 3,174 readiness centers in 2,679 communities in
    50 states, three territories and the District of Columbia. In addition,
    the ARNG federally supports the operation and maintenance of more than
    19,000 training, aviation and logistical facilities located throughout
    the nation. The sustainment of modern and well-maintained facilities is
    a key component of an efficient ARNG organization.
        Acquisition of land in Minnesota and Louisiana during fiscal year
    2000 has helped resolve shortfalls in training lands available to ARNG
    soldiers. These acquisitions have reduced the amount of time soldiers
    spend on the road traveling to alternate training sites, thus giving
    leaders more time to train their soldiers in the field. This, coupled
    with new training areas which can accommodate larger scale unit
    training, will result in enhanced readiness in units.
        A portion of the Twin Cities Army Ammunition Plant was reassigned
    to the Minnesota Army National Guard (MNARNG) during fiscal year 2000.
    Prior to this 1,245 acre acquisition, the MNARNG had a significant
    training area shortfall for Mechanized Infantry/Rifle units to conduct
    adequate maneuver training in the Twin Cities area. Existing local
    training sites limited training to squad and platoon-level activities.
    The additional land significantly expands training opportunities for
    leaders to conduct multiple-unit maneuvers during weekend drills and
    annual training.
        Louisiana Army National Guard (LAARNG) soldiers will also benefit
    from expanded training areas. Part of the Louisiana Army Ammunition
    Plant was reassigned to the ARNG in fiscal year 2000. The LAARNG had a
    significant training area shortfall for the 1083rd Transportation
    Company prior to this 12,896-acre acquisition. Consisting of 96 Heavy
    Equipment Transporter Systems (HETS), 40 support vehicles and 300
    soldiers, the unit was restricted on the types of training it could
    accomplish with the limited amount of land available. The additional
    acreage has helped to resolve the shortfall.

    Facility Planning Fiscal Year 2000/02
        As an Army partner, one of the ARNG's strategies is to follow a
    rigorous and disciplined process using Army standards to establish
    priorities for military construction requirements. One method of
    implementing that strategy is the Real Property Development Plan
    (RPDP). The initiative is a five-year program that began in fiscal year
    1997 and ends in fiscal year 2001. The State RPDP is a new concept in
    master planning designed to provide a comprehensive tool the states can
    use to focus and prioritize their installation resources. This plan
    will provide a method for assessing existing conditions of real
    property assets statewide and will help establish the strategic
    development plan for long-term management of facilities. RPDP was
    adopted by an additional 12 states in fiscal year 2000, bringing the
    total to 42. By the end of 2001, all 50 states, three territories and
    the District of Columbia will have begun their Real Property
    Development Plans. This planning tool is providing the states with a
    decision-making guide for long-range acquisition, utilization and
    development of real property.
        The ARNG refined its strategy in fiscal year 2000 by integrating
    our specific facility needs with the Standard Army Systems. This will
    give the Department of the Army (DA) a more accurate view of what type
    and how many facilities the ARNG needs to successfully complete its
    missions. The ARNG's plan is to complete incorporating our facility
    needs into the Standard Army Systems by the end of 2002.

    Military Construction (MILCON) during Fiscal Year 2000/Fiscal Year 2002
        The ARNG requested $16 million for military construction (MILCON)
    during fiscal year 2000. This request proposed spending $11.1 million
    for five projects, $0.8 million for unspecified minor construction and
    $4.1 million for planning and design. The ARNG received an
    appropriation of $237.4 million for an additional 17 projects at $194.3
    million, a total of $16.4 million in planning and design and $15.6
    million in unspecified minor construction. Congress also called for a
    general rescission on military construction funds for all services. The
    ARNG portion of the cut was $1.2 million from the fiscal year 2000
    appropriation.
        The budget request for fiscal year 2002 outlines spending $75.4
    million for military construction, Army National Guard (MCNG). This
    includes $61.8 million for nine major construction projects, $3.7
    million for unspecified minor construction and $9.8 million for
    planning and design. Of this amount, $13 million will be set aside for
    sustaining and stationing requirements in Phase I of the Army Division
    Redesign Study (ADRS).
        Although the ARNG received a proportional share of the limited
    MILCON dollars, MCNG's fiscal year 2002 unfinanced requirements are
    $542 million. This equates to 43 additional projects. Thirty-four of
    these are critical to the Army's Facility Strategy: 14 readiness
    centers, 10 military education facilities and 10 surface maintenance
    facilities. Only when this strategy is funded will the Army National
    Guard escape from its current unsatisfactory rating in infrastructure.
    This rating means that ARNG facilities are significantly impairing the
    mission performance of ARNG units, because its soldiers and civilians
    are working and training in substandard facilities. At the current rate
    of funding, it would take more than 300 years to revitalize existing
    facilities.

    Installations Status Report--Infrastructure (ISR I) Program
        The Army has developed a management system to track the conditions
    and costs associated with improvements to the infrastructure. This
    information is being used to greatly enhance The Army's ability to
    explain current funding levels, project operations and maintenance
    costs and predict future construction projects needed. The system
    allows The Army to get a better handle on cost projections, and enables
    Congress to justify increasing expenditures.
        The quantity and quality of ARNG facilities are determined by input
    from each state and entered into the Army model. In fiscal year 2000,
    the Army's Installation Status Report results measured a facility
    deficit of $20 billion for the ARNG. In addition, a $6.7 billion repair
    backlog resulting from years of underfunding was also identified.
        In fiscal year 2000, the ARNG in the states operated about 150
    million square feet, with a plant replacement value of $18.9 billion.
    The ARNG requires modern facilities that are estimated to cost $19
    billion to construct, according to the Army's Installation Status
    Report. Facilities sustainment for fiscal year 2000 was funded at about
    78 percent, which means facilities continue to deteriorate and the
    repair backlog continues to increase.

    Energy Conservation Investment Program (ECIP)
        The Energy Conservation Investment Program (ECIP) provides MILCON
    funding for maintenance and renewable energy projects totaling more
    than $500,000. These will enhance energy performance while also
    repairing facilities. The ARNG received its first ECIP project award
    for facility energy improvements in September 2000. The $704,000 award
    will be used for the Arkansas ARNG headquarters in Little Rock, Ark.
        The Department of the Army (DA) has approved two more ECIP projects
    for the ARNG, scheduled for fiscal year 2002. A facility energy
    improvements construction project totaling $790,000 is scheduled for
    Gowen Field, Idaho and a construction backup project is scheduled for
    Camp William, Utah. The Camp William project includes installation of a
    650 kilowatt wind turbine and other energy improvements at a cost of
    $752,000.

    Environmental Program
        The ARNG Environmental Program emphasizes responsible stewardship
    of the land and facilities managed by the ARNG and compliance with
    environmental laws and regulations. This is accomplished by promoting
    The Army's environmental goals through ARNG environmental compliance,
    conservation and restoration efforts nationwide.
        The ARNG environmental compliance program far exceeded expectations
    in fiscal year 2000 by not only reducing open enforcement actions, but
    also significantly decreasing our new enforcement actions over previous
    years. Through the assistance of an ARNG cooperative and responsive
    process action team, we reduced open enforcement actions to three.
    Through increased visibility by the ARNG leadership and state
    environmental program managers, the ARNG reduced new enforcement
    actions from 33 in 1999 to 11 in 2000, which represents a 200 percent
    improvement. These actions surpassed the Assistant Chief of Staff for
    Installations Management's (ACSIM's) goals for reduction of new and
    open enforcement actions.
        The ARNG Environmental Division identified an excessive number of
    storm water permits, which may have been issued erroneously, through
    increased scrutiny and analysis of the Environmental Quality Report. In
    many cases, these permits were issued to armories, which should have
    qualified for a national defense exemption. The Environmental Programs
    Division is providing guidance to ensure that environmental managers in
    the states do not obtain permits when they are not required by law to
    do so, and to terminate those permits deemed unnecessary. The reduction
    in the number of unnecessary permits will allow the environmental
    managers in the states to decrease the potential for violations, time
    and effort for permit management and reporting, as well as reduce the
    extra duties, training and responsibilities of facility and operations
    personnel that are required to support these permits.
        The ARNG developed an extensive and proactive Environmental
    Compliance Assessment System (ECAS) that identifies compliance
    enforcement action challenges prior to regulator enforcement and
    assists in lowering the number of new enforcement actions. The ECAS
    also identifies gaps in policy and guidance at the MACOM level. Through
    this process, we have cooperatively developed more responsible
    environmental policy to support the sustainment of the ARNG mission
    capabilities.
        An example of this cooperative development is the ARNG policy for
    use and storage of mobile fuel tankers. This policy is a combined
    effort of the logistical, installations and environmental policy
    managers to diminish the threat of fuel spills at ARNG facilities. The
    policy will decrease the potential for spills, be considerably more
    economical, as well as provide needed tactical fuel to accomplish unit
    training.
        The ARNG is working with The Army to develop guidance for
    environmental and explosives safety management on active and inactive
    ranges. This is a direct result of an Environmental Protection Agency
    (EPA) administrative order at the Massachusetts Military Reservation
    (MMR) for violation of the Safe Drinking Water Act. Cooperative efforts
    will ensure that ARNG soldiers receive realistic training while also
    complying with environmental regulations.
        The ARNG completed three Programmatic Environmental Assessments for
    the UH-60 Blackhawk, Paladin, and Multiple Launch Rocket System (MLRS).
    The programmatic means of addressing the National Environmental Policy
    Act (NEPA) requirements is a more efficient way to support state
    requirements. We are continuing to use programmatic NEPA documents to
    field major systems such as 50-ton rock crushers. The Army is
    developing a Programmatic Environmental Impact Statement for The Army
    Transformation, which the ARNG will supplement in support of the ARNG
    Transformation.
        The development and implementation of our 91 training area
    Integrated Natural Resources Management Plans (INRMP) and our state
    Integrated Cultural Resource Management Plans (ICRMP) will enhance ARNG
    stewardship of our training lands while enabling us to fully support
    the training mission. The result of this monumental effort is an
    increase in the number of endangered species and their habitat
    identified on our training lands. However, as we discover these
    environmentally sensitive areas we are also able to address how to
    manage the areas with a minimum of impact on the overall training
    mission.
        Native American issues are a major feature of ARNG's ICRMPs. Each
    installation works closely with federally recognized Indian tribes on a
    government to government basis. In addition, the ARNG is implementing
    initiatives with intertribal organizations such as the National
    Congress of American Indians and the United South and Eastern Tribes.
    As an aid to historic preservation and good stewardship, each of the 51
    ICRMPs provides standard procedures and other guidance for installation
    staff, who manage tens of thousands of archaeological sites and
    historic structures on our training lands. The ARNG provides cultural
    resources training on a regional basis and assists individual
    installations to provide local awareness training and public outreach.
    ARNG Cultural Resources teams are also developing maintenance and
    treatment plans for the ARNG's historical buildings, which will enhance
    both our stewardship and readiness capabilities.
        To assist in managing the environmental information that is
    gathered through these various initiatives, we have fielded and
    implemented Geographic Information System (GIS) capabilities to all 50
    states, three territories and the District of Columbia. ARNG program
    managers will also be able to access GIS technology at the headquarters
    level to advise and assist the training sites.

    Restoration
        The National Guard Bureau (NGB) is tasked to execute the Army's
    Installation Restoration Program for federally owned ARNG facilities.
    In addition, state-owned facilities are also encouraged to evaluate
    their facilities for past practice contamination. The ARNG restoration
    program is responsible for the inventory and data collection for all
    closed and transferred military ranges within the ARNG.
        During fiscal year 2000, the ARNG completed 20 site-specific
    preliminary assessments for environmental concerns and inspected many
    other sites. Environmental restoration projects conducted included the
    remedial action at the Seabee compound and the bio-remediation of JP4
    and solvent contaminated soils at Los Alamitos, Calif. and the flagging
    of unexploded ordnance and bio-remediation of trinitortoluene (TNT)
    contaminated soils and groundwater at Camp Navajo, Ariz. At Camp
    Crowder, Mo., we completed a drainage improvement project to reduce
    infiltration of contamination from the engine test area pit. The engine
    test area was listed on the National Priorities List as part of the
    Pools Prairie Superfund Site in fiscal year 2000.
        The ARNG is continuing to deal with potential funding issues
    involving state owned or privately owned ranges. Many closed or
    transferred ARNG ranges are state owned or privately owned but are
    supported with federal funding due to their contribution to The Army's
    mission. This situation may prevent Environmental Restoration, Army
    (ER,A) funding based on The Army's final policy determination. If
    precluded from receipt of ER,A funding, cleanup requirements must be
    funded from ARNG operations and maintenance funds. The Army Corps of
    Engineers policy also precludes use of formerly used defense site
    funding for transferred ranges on property that was not under
    Department of Defense (DOD) control during the range usage. For
    example, funds were denied in a North Helena Valley, Mont. project
    because the munitions fired were federally procured and associated
    training was in support of the federal mission. The denial resulted
    because the training occurred on privately owned land.
        For fiscal year 2002, the ARNG will continue to work toward the
    closure of additional restoration sites, continued evaluation of state
    owned property, and the closure of all installation restoration program
    sites at Camp Navajo with the exception of the open burn/open
    detonation area. In fiscal year 2002, implementation of a cost sharing
    plan for the Massachusetts Military Reservation Installation
    Restoration Program will begin. This cost sharing plan will result in a
    significant cost reduction for the Army ER,A budget, as well as
    streamline management of this ARNG program.
        The Environmental Division continues to provide leadership, policy
    and resources to the states, territories and the District of Columbia
    to allow ARNG units to train effectively to meet their national defense
    mission while ensuring compliance with environmental regulations and
    stewardship of our natural resources.

                                QUALITY OF LIFE

        The military today is being utilized in a much different way than
    it was just 10 years ago. Our military is a million members smaller
    than it was in 1990. Without the reserve components, our military could
    not accomplish its missions. As a result of the dramatic changes in our
    utilization, we have to develop our programs that address the changing
    needs of our members, their families, and their employers. Those
    programs are essential to help soldiers maintain a balance among three
    facets in their lives--family commitments, work and military
    requirements--to ensure readiness and maintain unit strength.

    Employer Support to the Guard and Reserve (ESGR)
        The mission of the Employer Support of the Guard and Reserve (ESGR)
    is to obtain employer and community support to ensure the availability
    and readiness of Reserve forces. This support is especially essential
    today since the Operational Tempo (OPTEMPO) of The Army is now 20 times
    higher than it was during the Cold War. For example, on any given day,
    35,000 National Guard and Reserve troops are serving on active duty in
    77 countries throughout the world. Today more than half--54 percent--of
    today's military forces are in the National Guard or Reserve forces.
        There are several other reasons that the mission of ESGR is so
    important to our National Guard and Reserve forces. Today, there are
    fewer and fewer people in society who have any kind of military
    background. For example, an astounding 94 percent of people between the
    ages of 18-65 have no military experience. Little wonder that as a
    result, there is a lack of employer appreciation for the skills and
    attributes of employees in the Guard or Reserve.
        To counteract this enormous knowledge gap, ESGR has developed a
    number of programs to educate employers about the duties their citizen
    soldiers must live up to and the hardships they must endure as members
    of the military. Programs like ``Boss Lift'' are working not only to
    educate but also to inspire.
        One Chief Executive Officer (CEO) traveled to Bosnia to visit an
    employee who was serving on a deployment. ``At the time, I knew what
    our corporate needs were, but I didn't have the knowledge base, or the
    understanding of what the military mission was,'' said the CEO. ``I got
    that in Bosnia.'' He put his thoughts on paper when he wrote a letter
    after the trip to Col. Tony Harriman, the commander of the 3rd Armored
    Cavalry Regiment. ``What you and all the troops are providing to the
    world with your presence in Bosnia will have an effect on the world for
    generations to come,'' he wrote.
        ESGR has also developed programs to reward and recognize employers
    who take the time to gain understanding about their citizen soldiers
    and who support their employees in fulfilling their military duties.
    Standardization of Deployment Rotations
        In March of 2000, The Army committed to standardizing the length of
    time soldiers spend on certain deployments, regardless if they are
    members of the active or reserve components. The action applies to
    tours in support of Operations Other Than War (OOTW) and Small Scale
    Contingencies (SSC).
        Under the new, unifying measure, units will be employed for a
    maximum of 179 days performing their assigned mission in the area of
    operations. Normal pre-employment training, either in or outside of the
    United States, does not count toward that 179-day figure.
        The action applies to all units employed in support of an OOTW or
    SSC, whether they perform their duty in Germany, Hungary or Kosovo.
    Also, in cases such as Southwest Asia, where the tours have been
    averaging 120 days, this does not mean those tours will lengthen in
    order to extend them to 179 days. Reserve deployments in the Balkans
    previously averaged 210 to 230 days, including transition time, while
    active-duty soldiers spent, on average, 179-210 days.

    Pay and Benefits
        Nearly 1.4 million members of the National Guard and Reserve will
    benefit significantly from the $309.9 billion Fiscal Year 2001 National
    Defense Authorization Act (NDAA). Starting Jan. 1, Guard and Reserve
    members will see a 3.7 percent increase in drill and annual training
    pay, and numerous other incentives and benefits that the Department of
    Defense believes will keep them in uniform longer and attract more
    young people to join the force.
        National Guard and Reserve members can now receive credit for up to
    90 points each year for inactive duty training, completion of
    correspondence courses and membership in the Guard or Reserve. This is
    a 15-point-per-year increase over the previous limit. It will also
    allow Guard and Reserve members who perform additional drills and
    complete additional study through correspondence courses to receive
    credit for their extra effort, which will be used to calculate their
    Reserve retired pay. Also included are improvements in special pays and
    benefits.

    National Guard Family Readiness Program
        The recent name change from Family Support to Family Readiness
    Program more accurately reflects the importance of organized family
    groups to the readiness of individual soldiers and their units. We
    enlist soldiers but ``reenlist families''. Their understanding of the
    Guard is critical to unit retention. Family Readiness groups
    communicate the obligations of service members and help families
    determine what they need to be prepared for training and deployments.
        The National Guard Family Readiness Program is an extensive
    infrastructure and national network that links 2,679 communities
    nationwide. The full-time State Family Readiness Program coordinators
    work with military points of contact and volunteers at every
    organizational level. They promote family member volunteerism, family
    readiness groups and facilitate family readiness training throughout
    the National Guard.
        During periods of mobilization and as situations dictate,
    approximately 3,000 ARNG strength maintenance personnel assist Family
    Programs in Family Assistance Center operations throughout the country.
    They and members of the Family Readiness Program network provide basic
    family readiness training and counseling in preparation for the
    deployment of military family members. They provide information for
    referrals and follow-up services, emergency assistance, crisis
    intervention, reunion planning and activities and youth outreach
    programs for children of National Guard members.
        Video teleconferencing (VTC) for soldiers and their families during
    the 49th Armored Division's rotation in Bosnia is just one example of
    how families can get together and use technology to reach across six
    time zones and 5,000 miles to their service members. These
    teleconferences, in addition to email capabilities and telephone
    access, served to assure participants of their soldier's well-being but
    also helped to educate family members. ``I think for the first time I
    realized where he was and what he was doing, and the sacrifices that
    our soldiers make for this country,'' said a mother-in-law after
    sitting in on a VTC from Bosnia. ``I appreciate what he's doing and
    what everyone is doing so much.''
        Family Readiness Groups work for all services. A key Army National
    Guard quality of life goal is to provide assistance to all military
    families, regardless of branch or component, who find themselves beyond
    the support capability of active duty military facilities or their home
    units.
        In 2001, the ARNG will come a full partner in the Army Morale,
    Welfare and Recreation program. This will provide ARNG soldiers with
    added recreational and social opportunities previously available only
    at active installations.

    Medical Programs
        TRICARE Prime Remote was implemented Oct. 1, 1999. It offers the
    TRICARE Prime benefit through managed care support contractors for
    active duty service members with duty assignments in remote locations.
    In four of the 13 TRICARE regions, TRICARE Prime Remote provides the
    remote benefit to active duty family members as well. The fiscal year
    2001 budget request includes provisions for expanding the remote
    benefit to active duty families nationwide. This is especially helpful
    for families of mobilized Guard members who do not have easy access to
    military medical facilities.
        Dental benefits expanded to include Reserve and National Guard
    families as beneficiaries for the new TRICARE Dental Program (TDP)
    beginning Feb. 1, 2001 under Department of Defense policy guidelines.
    This will significantly expand the number of Reserve forces personnel
    eligible for TDP. One important new feature will allow Reserve and
    National Guard members called to active duty in support of contingency
    operations to sign their family members up for the TDP by excluding
    them from the mandatory enrollment period. The new policy guidelines
    will significantly improve the readiness of Reserve force families and
    be a tremendous benefit to National Guard and Reserve personnel.
        Other improvements to TRICARE benefits, including changes to
    retiree medical and dental programs, pharmacy benefits, and outreach
    efforts such as internet web site for information and phone in
    assistance for billing questions all add up to better service for all
    military members and their families.

        Senator Stevens. Senator Weaver.

    STATEMENT OF MAJOR GENERAL PAUL A. WEAVER, JR.,
                DIRECTOR, AIR NATIONAL GUARD, DEPARTMENT OF
                THE AIR FORCE

        General Weaver. Mr. Chairman, I am so honored to be with
    you here this morning, as I get ready to come to a close of a
    35-year military career. I am also honored to have two of my
    children here this morning to prove to them that I actually do
    go to work and to be here. This is their civics lesson for the
    day, and they got a day off from school.
        Senator Stevens. Introduce us to them.
        General Weaver. Behind me are our daughters, Kathy Lee's
    and our daughters, MacKenzie and Jenna.
        Senator Stevens. Thank you very much, General.
        General Weaver. They will not forgive me for that.
        Senator Stevens. Oh yes, they will.
        General Weaver. Thank you, Mr. Chairman, sir. Mr. Chairman
    and distinguished Senators, on behalf of over 106,000 proud
    women and men of the Air National Guard, I would like to thank
    you for the opportunity, the great opportunity to appear before
    this committee. Over the last decade, with the generous support
    of this body, the Air National Guard has significantly changed
    in capability and focus as our nation's most relevant, most
    ready, and accessible Reserve component in the Department of
    Defense today.

                                OPERATIONS TEMPO

        The Air National Guard operations tempo is a full 1,000
    percent greater than 1990 figures. Our support to all Air Force
    contingency operations over the last decade has increased from
    24 to 34 percent of the total force aircraft employed.
        Today the number of active duty days per Air National Guard
    member has increased greatly, all based on the exceptional
    volunteerism of our dedicated citizen airmen, and without
    reliance on a presidential Reserve call-up.

                         EXPEDITIONARY AEROSPACE FORCE

        In cycle 1, to give you an example of the Expeditionary
    Aerospace Force deployments, the Air National Guard contributed
    25,000 of our people towards the total force requirement. Over
    the last 15 months, the Air National Guard contributed 42
    percent of the C-130 intratheater lift, 22 percent of our KC-
    135 steady state air refueling the Expeditionary Aerospace
    Force (EAF) requirements, and 35 of the Air National Guard's 37
    combat-coded units were aligned during cycle 1 rotations. Never
    in the history of our Air National Guard have we done that.
        The Air National Guard contributions continue. The total
    force will even be greater in EAF cycle 2, when every combat-
    coded Air National Guard fighter unit is aligned to
    participate, including eight Air Guard precision-guided
    munitions, or PGM-equipped units. In other words, Mr. Chairman,
    every 30 months, half of the Air National Guard is deployed
    doing real-world work in conjunction with our total force
    brethren.

                                 MODERNIZATION

        With the fielding of the Air National Guard's number 1
    combat Air Force modernization priority, precision-guided
    munitions targeting pods, the Air National Guard was able to
    provide 100 percent of the strike and air superiority fighters
    in the EAF-9 alone. We are more relevant to the fight than ever
    before in our history, and I thank this body for making that
    happen.

                                      F-16

        We still need about 96 more pods to fill our requirements
    for our Air National Guard Block 25's, 30's, and 32 F-16's, to
    give them the same capability as our Air Force's Block 40 and
    42 F-16's, but our fighters certainly do not get the job done
    and get home safely without the efforts of our stalwart tanker
    community. Increasingly, our Air National Guard modernization
    focus has shifted to necessary improvements in our KC-135
    fleet. We strongly support the acceleration of the purchase of
    the ``D'' model conversion kits and the production of a follow-
    on tanker.

                                     KC-135

        We need to seriously look at expediting the KC-X, or the
    KC, commercial off-the-shelf (COTS) derivative. We are adding
    to this tanker community with the Sioux City, Iowa, conversion
    from F-16's to KC-135's, and have begun to accelerate our
    planning efforts to assure the necessary planning projects are
    funded in a timely manner.

                                      C-17

        In addition, we are striving to move the C-17 conversion
    forward at Jackson, Mississippi, replacing the aging and
    retiring C-141's. We are laying the groundwork for the
    necessary infrastructure and support requirements, and continue
    to work for the bed-down in fiscal year 2004. We strongly
    support the addition of five C-17's to support the much-needed
    airlift requirements of our military forces.

                                   RETENTION

        This unprecedented contribution of our Air National Guard
    has occurred at a time when we have reduced our end-strength
    numbers to 1984 levels. That means we are asking our men and
    women to do more with less, and they are stepping up soundly to
    the task, but I am not surprised, nor should we be. Our Air
    National Guard retention has traditionally been the highest,
    the highest of any component of any service in the Department
    of Defense, and that is where it remains today, at well over 90
    percent.
        With your help, we have succeeded in our efforts to offer
    aviator continuation pay to eligible AGR pilots who agree to
    stay with us for 3 years or more. During the last year, we had
    a better than 90 percent take rate. We are now looking for
    appropriate incentive and bonuses for our Traditional Guard air
    crew and our enlisted air crew members who deserve full 30-day
    compensation for their extensive participation levels.
        While incentives, pay structures, and bonuses help us to
    retain our valuable people, they are also significantly
    enhancing our recruiting ability. With your assistance, just
    last year alone, for advertising funds, we were able to
    implement our first-ever targeted media advertising campaign,
    to include TV, radio, and billboard ads and regional and
    national periodicals, and I am sure you have seen them on some
    of our more popular sports events. Complemented by the 65
    additional recruiter authorizations that you were able to give
    and fund for us, we were able to gain accessions in areas
    previously untapped.

                                 FAMILY SUPPORT

        Last year's focus on the Year of the Family, coupled with a
    sustained EAF rotations, brought to the forefront the need for
    full-time, dedicated family readiness and support. The Air
    Force currently allocates through their Family Support Center
    and operating budgets of about $125 per member. The Air Force
    Reserve, an honorable $58 per member. Last year, the Air
    National Guard took $750,000 out of hide to provide $7 per
    member allocation, using additional duty staff or unpaid,
    overburdened family member unit volunteers.
        This is clearly not enough. The Air National Guard proposes
    supporting a full-time contract family readiness coordinator,
    much like the Air Force Reserve, and we truly need your
    assistance to jump-start this worthy effort. This past January,
    we began to focus on critical enablers and silent partners, the
    employers of our National Guard men and women.
        The year 2001 has been designated the Year of the Employer
    Reconnecting with America. During the year, we are partnering
    with the National Committee for Employer Support of the Guard
    and Reserve to ensure our members and employers remain
    satisfied with our shared people and their dedicated commitment
    to continued military service.

                               PREPARED STATEMENT

        Mr. Chairman, we are confident that the men and women of
    our great Air National Guard will meet the challenges set
    before us, and I thank you on behalf of all of them. We are
    strong and relevant today because of you. All of you and the
    proud men and women of the Air National Guard have made it so.
        Thank you, sir.
        [The statement follows:]

            PREPARED STATEMENT OF MAJOR GENERAL PAUL A. WEAVER, JR.

        Mr. Chairman and members of the committee. Thank you for the
    opportunity to appear before this committee--on behalf of the 108,000
    proud men and women of the Air National Guard--to share the successes
    and challenges facing us over the next year and beyond. This new
    century has generated for many, including the Air National Guard, a
    time and opportunity to contemplate, plan and prepare for the future
    needs of our nation, state's, and community's defense requirements.
    Over 217 years ago, a citizen soldier and our first Commander in
    Chief--George Washington, led a group of politicians, warriors,
    strategists and citizens as they debated the design of our nation's
    necessary military establishment.
        Today, our nation contemplates fundamental changes or shifts in the
    way we continue to ``ensure domestic tranquillity'' and ``provide for
    the common defense'' through a variety of national defense reviews.
        There are many similarities in context between the national defense
    debates of Washington's time and--like it or not--the hand we've been
    dealt for our future security environment. That hand demands today, as
    it did then, a strong focus on expeditionary operations and increased
    reliance on the citizen-warrior to support a dramatically downsized
    active component and a world characterized by multiple small scale
    contingencies and transnational threats.
        With only six percent of the nation's population under 60 who have
    military experience, Guard warriors are increasingly the military man
    or woman in uniform that most American's see. In fact, these proud Air
    Guard men and women are more and more the military presence seen abroad
    in support of CINC and service requirements. Daily, they are
    ``shaping'' strategic environments while demonstrating to others the
    vital role an individual citizen plays in our country's military
    defense.
        It's people like Maj. Ray Lynott of the 144th Fighter Wing in
    Fresno, who flew the F-117 in the Persian Gulf nearly a decade ago
    while on active duty. Today, he conducts air-superiority patrols over
    southern Iraq as a member of the California Air National Guard. Over a
    cup of coffee or a backyard barbecue, Maj. Lynott and 108,000 other Air
    Guard warriors bring the value of Aerospace power to Hometown America.
    Like Ray, they tell America that, ``Yes, it is in fact still a war
    zone'' and ``There's a lot of people--active-duty, Guard and Reserve--
    who are going up there on a daily basis risking their lives.''
        It's people like TSgt. David Yates of the Alabama Air National
    Guard who prepares and secures the munitions that our pilots' carry.
    It's people like Lt. Col. Steve Cray, a commercial and Air Guard pilot
    and CMSgt. Tim Brisson, the superintendent of aircraft maintenance of
    the Vermont Air National Guard, who not only deploy daily to dangerous
    places abroad in support of Expeditionary Aerospace Force (EAF)
    operations--but do it in critical Commander and maintenance chief
    leadership positions.
        The Air National Guard is represented in all 54 states and
    territories by 88 Flying Wings; 579 Mission Support Units, with over
    108,000 proud and skilled people--68 percent of whom are Traditional
    Guard volunteers--flying nearly 1,200 aircraft. We are significantly
    represented in nearly all Air Force mission areas contributing over 34
    percent of the Air Force operational mission for as little as 7.2
    percent of the budget.
        Over the last decade, the Air National Guard has significantly
    changed--in both relevance and accessibility--but most significantly--
    in skill, professionalism and volunteer participation. Since 1990-1991
    Desert Storm/Desert Shield, the Air National Guard contributions to
    sustained operations have increased 1,000 percent. We are no longer a
    ``force in reserve'', but are around the world partnering with our
    Active and Reserve components as the finest example of Total Force
    integration. ANG support to all USAF contingency operations over the
    last decade has increased from 24 to 34 percent of the Total Force
    aircraft employed. The number of Active Duty days per ANG member (above
    the 39 day obligation) has increased on the average from 5 to 16 (320
    percent increase)--all based on the volunteerism of our dedicated
    citizen airmen.
        In addition to our critical warfighting capabilities, America
    depends on the Air National Guard to do other vital missions like New
    York's 109th Airlift Wing's Antarctica support to the National Science
    Foundation. The 109th was recently selected as one of five winners of
    the Air Force Chief of Staff Team Excellence Award as well as the
    winner of top international honors at the Royal International Air
    Tattoo 2000.
        These men and women are the diverse face of humanitarian responses
    to natural disasters both in our own borders and throughout foreign
    lands--bringing food, water, relief to people or places in need--
    ``responding'' to a call for help and intervention. Air Guard warriors
    like TSgt. Chris Whitcomb from North Carolina's 145th Airlift Wing
    fought the worst fires this year in over 50 years across 5.6 million
    acres of America--roughly the size of Massachusetts. This year our
    nation entered the highest state of fire alert--fire preparedness level
    five. TSgt. Whitcomb, a decorated Gulf War veteran says he gets ``more
    of a feeling of accomplishment directly protecting U.S. citizens and
    their property from the wildfires.''
        But we're not just fighting the fires from dangerous tree top
    levels. Air National Guard and Forest Service fire fighters, RED HORSE
    and Prime BEEF engineers--from many units like Montana's 120th Fighter
    Wing--were on the ground hard at work--in life-threatening positions,
    while they were fed and supported by Nevada's 152nd Services Flight led
    by SMSgt. Tom Kurkowski--a 17 year veteran with Desert Storm
    experience. Over the last 6 months, our three C-130 Modular Airborne
    Fire Fighting Systems, or MAFFs, flew over 870 sorties for nearly 980
    hours; made 841 airdrops to disperse over 2.3 million gallons of
    retardant across 19 states. We recently assisted the United States
    Forest Service with the acquisition process to purchase eight upgraded
    Airborne Fire Fighting Systems (AFFS) to enhance our effectiveness
    fighting this nation's forest fires.
        Additionally, it is our inherent obligations to not only protect,
    but to also defend. Homeland security entails the protection and
    defense of our territory, population, institutions, and infrastructure
    from external attacks and intrusions. Rapidly advancing technological
    capabilities will give large and small nation states the ability to
    threaten or directly attack the United States with asymmetric means
    such as weapons of mass destruction, cyber weapons, and terrorism.
    Traditional means of defense often fail against these unconventional
    threats. Homeland security will require us to engage, support and
    cooperate with all levels of government and the private sector in new
    and innovative ways.
        Our contributions don't stop at America's borders. During the next
    year alone, these same Air National Guard C-130 MAFFs units--like
    Wyoming's 153rd Airlift Wing--will supply ready aircraft and crews to
    fulfill Aerospace Expeditionary Force (AEF) combat delivery
    requirements in Operations Coronet Oak and Southern Watch. They define
    ``full-spectrum'' Aerospace Expeditionary Forces--responding to
    community, state and National Command Authority needs from fighting
    fires in America to supporting combat fighting operations around the
    world.
        These Air National Guard men and women are the trained, skilled,
    and ``prepared'' citizen warriors, like Texas' 147 Fighter Wing's Maj.
    Mike ``Bones'' McCoy. Mike put his civilian job as an airline pilot on
    hold for two weeks to fly combat missions in a military campaign. Maj.
    McCoy shows the Hussein's and Milosevich's of the world what a
    galvanized nation of American citizens trained in the military art of
    war--can and will do to keep the world safe from aggressors and
    tyranny.
        It's a lesson our leaders learned in Korea and the lesson we must
    insure our leaders know and understand today and remember in the
    future. This past year we commemorated the 50th Anniversary of the
    Korean War, where over 45,000 Air Guardsmen, 80 percent of the force
    were mobilized to fight a war they were ill equipped and resourced to
    fly. During this critical call by our nation, the Air National Guard
    reached the ``Turning Point'' to become increasingly effective and
    relevant forever. I know most of you know the history, but none of us
    should ever forget the lesson. We must be resourced. We must be
    modernized. We must be appropriately trained. We must be ready.
        The Air National Guard is the most relevant, ready, and accessible
    reserve component in the Department of Defense today. Since the end of
    the Cold War, these forces have been increasingly deployed in support
    of the full range of operations. In cycle one of the AEF, the Air
    National Guard deployed 25,000 of its people--nearly 24 percent--almost
    2,500 per AEF. We contributed almost 20 percent of the Total Force
    aviation package and 7 percent of the Expeditionary Combat Support or
    ECS requirements. The Air National Guard contributed 42 percent of the
    C-130 intra-theatre lift and 22 percent of the KC-135 steady state air
    refueling AEF requirement. Of the Air Guard's 38 combat-coded fighter
    units, all 6 A-10 units, all 6 F-15 units, all 4 F-16 Block 40 units,
    the 1 F-16 Block 50 unit, and 17 of 21 General purpose F-16 units were
    aligned during Cycle 1 rotations. Air National Guard contributions to
    the Total Force will be even more robust in EAF Cycle 2, when every
    combat-coded ANG fighter unit is aligned to participate, including
    eight Air Guard Precision Guided Munitions or PGM equipped units. In
    Cycle 2, a total of 22 ANG F-15 and F-16 units will fly the air
    superiority mission.
        Yes we are busy. Our people are volunteering above Desert Storm
    Peak levels with nearly 75 percent of our total workdays supporting
    CINC and Service requirements around the world. Our men and women are
    proud of their contributions. We've reduced our support to ``good
    deal'' exercises and now do ``real world'' missions that reduce the
    TEMPO requirements on our active component by at least 10-15 percent in
    almost every major mission area. Lt. Col. Steve Kopp can attest to
    that. He flies with Tulsa's 138th Fighter Wing, which has been deployed
    to fly missions over Iraq four times since 1996. The 138th is scheduled
    for another mission there this summer.
        With the fielding of the ANG's number one CAF modernization
    priority--Precision Guided Munitions (PGM) capability--Targeting Pods--
    the ANG was able to provide 100 percent of the strike and air
    superiority fighters in AEF 9. We are more relevant to the fight than
    ever before in our history.
        Additionally, our KC-135 fleet is tasked for the sole support of
    Airborne Warning and Control System (AWACS) aircraft at NATO Air Base
    Geilenkirchen. This entails an annual 850 flying hours and offloading
    over 6 million pounds of fuel during a 44-week year. Air National Guard
    units deploy two aircraft with sufficient flight, maintenance, and
    support personnel and equipment to sustain these operations.
        This unprecedented contribution by your Air National Guard has
    occurred all at a time when we have reduced our endstrength numbers to
    1984 levels. The bottom line: In 30 months--or two complete cycles of
    the AEF--nearly half the Air National Guard will know first hand what
    it means to be an expeditionary Aerospace Force. These same warriors
    will take this experience and knowledge back to their communities,
    families, employers and local and state political leaders. They will
    help the Air Force and the nation immeasurably in building
    understanding and support for a strong and ready Aerospace Force. I
    routinely visit these men and women in theater when they deploy. They
    consistently tell me what Airman Aaron Bachstein of Indiana's 181st
    Fighter Wing said on the eve of their AEF deployment to Turkey, ``I
    knew the deployments were more involved, but that's part of the
    package. The additional responsibility is part of the attraction. I can
    see where the Guard is picking up regular Air Force missions. It's
    exciting.''
        In the last year, the Air National Guard filled more than just
    ``positions.'' We brought skills, experience and training to the
    theater that exponentially increased Air Force AEF warfighting
    capability. BrigGen. Scott ``Zapper'' Mayes of the Alabama Air National
    Guard was dodging anti-aircraft fire over Hanoi before most of the
    active-duty pilots in AEF 9 were born. The pilots under his command
    have an average of 2,000 hours flying in the F-16. With an Air National
    Guard base close to a commercial hub, ``Scotty'' has pilots waiting to
    ``morph into warriors.'' As the Aerospace mission becomes more
    sophisticated, our remarkable Air National Guard experience and
    maturity provides more solutions to a growing total force problem.
        We can train others well because we are trained well ourselves.
    It's new mission areas like Tyndall's Associate Unit where the Florida
    Air National Guard trains the Total Force pilot to fly the F-15. Using
    a mix of 18 Traditional Guard and 16 Full-time instructor pilots, we
    provide what Col. Charlie Campbell, the Squadron Commander, calls a
    ``stabilized, highly proficient instructor cadre with great continuity
    and leadership.'' His perspective is backed by the former 325th Fighter
    Wing Commander, Brig. Gen. Buchanan, who stated, ``Our partnership with
    the Guard is a good way to strike a balance that allows us to take
    advantage of the ANG's resident F-15 experience while trying to bridge
    our current pilot gap.'' We're expanding this sort of partnership and
    capability to many other training initiatives. This year, we filled
    nearly 700 ``extra'' technical training slots--over and above the
    Trained Personnel Requirements (TPR). We insured almost an entire
    additional ANG wing's worth of better trained warriors. This year, so
    far, we've increased this technical training number to well over 1,000,
    and increased Basic Military Training allocation by well over 900. This
    brings in serious new combat capability to the AEF requirements. We
    exceeded our TPR allocations in critical career fields like mechanics
    and fire protection. Once again, we provided the Total Force solution
    to an identified AEF shortfall.
        The Air National Guard received 186 undergraduate pilot training
    slots in fiscal year 2001, up 13 from the previous year. The projected
    pilot shortage for most of the next decade makes it imperative to
    increase the pipeline flow to help sustain the Guard's combat
    readiness--especially as we assimilate more non-prior service
    individuals as a function of our overall recruiting effort.
        We continue to pursue efforts to establish follow-on training bases
    for the KC-135E and C-130 pilots to offset training capacity
    shortfalls. Additional ANG F-16 pilot training units are being
    established at Kelly AFB, Texas, and Springfield, Ohio. The recently
    converted F-15 school at Kingsley Field, Oregon is still expanding
    student production. The Air Control Squadron in Phoenix, Arizona is
    converting to a schoolhouse unit to train Guard and Active Duty
    personnel.
        From 14 control towers and 11 air traffic control radar facilities
    around the country, our air traffic control personnel controlled over 1
    million aircraft, placing the Air National Guard as the third busiest
    of the nine Major Commands in the Air Force and ensuring our ability to
    train and remain combat ready to perform this function during any
    contingency.
        Ancillary training requirements have been competing with our
    capability to prepare for and deliver our combat mission. We canvassed
    our units to identify the pressure points and just released a new
    requirement list that significantly reduces the numbers considered
    absolutely essential to our Expeditionary Aerospace Force culture. This
    has resulted in a reduction from 530 previous requirements to 69
    current ones--of which 53 apply to the Air National Guard. This gives
    our men and women more effective time to focus on mission and weapon
    system specific training.
        In addition, we are pushing for increased utilization of Distance
    Learning methods for training requirements that reduce the burdens of
    time, travel and expense for our people--and compete with AEF
    commitments. The Air National Guard Warrior Network now reaches more
    than 202 sites throughout the nation and broadcasts training from 3
    major training centers. In addition, the Air Force and Air Force
    Reserve now share the same satellite system. This gives us expanded
    access to mutual training programs. In addition, we were primary
    members on the DOD compensation Integrated Process Team which
    recommended methods of payment to our people who conduct Distance
    Learning training away from their respective units. We can now operate
    smarter and better for our dedicated people. Our expeditionary
    requirements demand new approaches.
        These warriors are doing the jobs they've trained a lifetime to do
    and they are doing them with great attention to safety. Command
    emphasis and leadership has made the difference. Over the last decade
    the Air National Guard has become the model for safety. We are starting
    the new millennium on a very positive note for flight, ground, and
    weapons safety programs.
        Despite the increased OPTEMPO, PERSTEMPO, and the first cycle of
    the Expeditionary Air Force, we have accomplished another outstanding
    safety year. The Air National Guard ended fiscal year 2000 with a rate
    of 0.89 flight mishaps per 100,000 flying hours. Fiscal year 2000 ties
    the record established in fiscal year 1998 as our best year ever for
    Class A flight mishaps.
        For the world's most effective, engaged, and employed reserve
    component, our Air National Guard capability in the future hinges on
    effective weapon system modernization and recapitalization--along side
    our Active Component. We need to ensure that our people are armed with
    the best and safest equipment our active component operates. Of the
    seven major weapon systems the Air Force operates, the ANG has--on
    average--the oldest systems in every one--except the C-130. Our
    readiness continues to be strained due in large part to aging aircraft,
    lack of spare parts, and increasing workloads associated with both. Our
    Air National Guard modernization efforts and roadmaps continue to push
    the envelope for all airframes. We are still focused on our Combat
    Quadrangle and AEF support with priorities given to precision strike,
    information dominance and battlespace awareness through Data Link/
    combat ID, 24-hour operations and enhanced survivability. Our ``medium
    look''--extended to 2010--focuses on structural integrity and engines
    and keeping our airframes lethal. Our ``long look''--out to 2015--
    projects the future missions and their impact on an expected decreasing
    force structure with a focus on seamless forces and capabilities across
    the Total Force--and our ANG preparations for this future.
        Your support and funding have enabled us to make some major in-
    roads this year and set the foundation for continued improvements. Let
    me bring you up to date on some of these now.
        The ingenuity of Air National Guard has made positive, mission
    impacting strides for our total force. Recently, our unit in Tulsa,
    Oklahoma conceptualized, assisted in the development and testing, and
    fielded a down-sized Low Altitude Navigation and Targeting Infrared for
    Night (LANTIRN) pod test station. The previous legacy test station used
    in the Air Force, LANTIRN Mobile Support Shelter (LMSS), is currently
    considered too large to be moved effectively to support contingencies
    due to the airlift it consumes. The new downsized test station fielded
    by the Air National Guard gives the Air Force an optimum deployment
    LANTIRN support capability that is otherwise not available.
        Thanks to your support, the ANG F-16 pre-block 40 fleet now
    possesses full front line combat capability. Your continued support is
    vital to our efforts to continue these critical programs and remain a
    fully relevant Total Force partner. Our Block 25/30/32 jets are capable
    of employing Precision Guided Munitions (PGM) by means of a self-
    designated laser targeting pod. Our next group of pods are due for
    delivery in the March 2001 through February 2002 time frame, which
    combined with prior purchases will give us a total of 64 pods in our
    fleet. We still need 96 more pods to fill our one for one requirement.
    Until then, by sharing existing pods, the Air Guard will fully train
    nearly 22 F-16 pilots by 2003 and will fully equip all units by 2006.
        In the last six months, all of our Block 25/30/32 jets were wired
    for the Global Positioning System (GPS) giving us precise navigation
    and target acquisition capability. At the same time our Night Vision
    Imaging System (NVIS) was completely installed on our F-16's giving us
    24-hour combat capability. Combined with installation of the
    Situational Awareness Data Link (SADL) we have significantly improved
    our F-16 Fleet--thanks to your significant support. Our focus now is on
    full support for ``Falcon Star''--a structure modification program that
    significantly extends the service life of this airplane. When we add a
    new capability--the Theatre Airborne Reconnaissance System or TARS--our
    F-16's become increasingly viable as both a weapons delivery system as
    well as an information exploitation platform. For those of you who may
    not be familiar with the TARS capability, let me take a few minutes to
    highlight its features. TARS will return the manned tactical
    reconnaissance mission to the Air Force. In keeping with the modern
    battlefield's need for a responsive kill-chain, TARS improves the Air
    Force's ability to find, identify, and engage mobile/relocatable
    targets. Our current capability includes two electro-optical sensors
    for day, under the weather reconnaissance. We are working closely with
    our industry partners on an improvement package to add synthetic
    aperture radar (SAR), a datalink, and the high bandwidth necessary to
    make this system an all-weather, day or night sensor. We will
    demonstrate the ability to gather and relay critical information
    through the datalink to the Air Operations Center (AOC) this summer. If
    successful, the result will be bombs on target within single digit
    minutes.
        With a focus on Precision Guided Munitions capability, combined
    with Falcon Star engine and structure modifications and TARS, the Air
    National Guard F-16 block 25/30/32 community will provide the bridge to
    the next generation of power-projection precision combat systems.
        But our fighters don't get to the fight or get home safely without
    the efforts of our stalwart Tanker fleet. Increasingly, our Air Guard
    modernization focus has shifted to necessary improvements in our KC-135
    fleet and we need to accelerate the R model conversion kits. Over the
    last year, with the assistance of our Adjutants Generals, we developed
    a consolidated plan that includes the purchase of 100 R conversion kits
    at a rate of 16 per year. This would fix two full squadrons a year over
    the next six years. Up until now, the Air National Guard was at the
    front of this push. There has recently been a significant increase in
    support for expediting the ``E to R to X'' conversion. With the Pacer
    Crag upgrade completed this time next year and the Global Air Traffic
    Management (GATM) kits buy beginning the same time, we are well on our
    way to serious improvements in our Air Guard tanker assets. With our
    anticipated addition of Situation Awareness Data Link (SADL) the Air
    National Guard, once again leads the way for issues that directly
    effect future expeditionary operations. With nearly half the entire air
    refueling mission, the Air National Guard must not let tanker
    modernization issues be ignored.
        Our F-15s led the Air Superiority role in AEF 9 in Southwest Asia
    while continuing their air sovereignty alert requirements at home.
    Thank you for the support you have given this valuable weapon system as
    we struggle to remain viable versus ever more capable threats. The
    $26.4 million you added for the Bolt-On-Launcher (BOL) for advanced
    infrared countermeasures and the $17.5 million added to complete
    installation of the Fighter Data Link (FDL) ensures the Guard F-15s are
    able to face the threats being faced during their AEF rotations. I am
    still concerned with the long-term reliability and sustainability
    issues associated with this aging aircraft. We need to study the future
    of this community and consider the implications of Air Force F-22
    purchases. Our current plan is to realize the benefits of Air Force F-
    15 flow downs. The current Air Force F-22 program anticipates the ANG
    in an associate role and we are hopeful that in the future there will
    be a unit-equipped role.
        The focus over the last year for our A-10's has been to insure
    precision engagement capability that includes SADL, Targeting Pod
    integration, DC power, digital stores management system and a 1760 bus.
    Last October, we began the Air Guard installation of the new
    countermeasures management system at Bradley Air National Guard Base in
    Connecticut, which will be complete in two years. By doing this
    ourselves we save the Air National Guard nearly $3 million. In
    addition, the A-10 has received some additional support this year--
    coming off their significant contributions to Operation Allied Force.
        However, in some circles, the A-10 is still perceived as a ``cash
    cow'' and reprogramming could jeopardize our initiatives to upgrade
    these systems. We are looking at more commercial off-the-shelf (COTS)
    engine solutions to save money and still improve the capabilities of
    this first-called, most-used ``hog.''
        Our Kansas and Georgia Air National Guard B-1's made history on
    October 13th this year when they became the first Guard aircraft to
    successfully drop America's newest smart bomb in the Utah Test Range.
    These Air National Guard B-1s scored direct hits on their targets using
    2,000 pound Joint Direct Attack Munitions (JDAM). This is the same
    smart bomb used with devastating effects by B-2s in Kosovo. The 8 Air
    Guard B-1Bs--which can carry 24 JDAM versus the B-2's 16 and the B-52's
    12--now possess more precision striking power than all the allied
    forces delivered on the first night of Operation Desert Storm. On hand
    to witness this historic event was General Richard Myers--the Vice
    Chairman of the Joint Chiefs of Staff. At the completion of the flight,
    General Myers said, ``I am extremely pleased I had the opportunity
    today to participate in the first live JDAM mission flown by the Kansas
    Air National Guard in a 184th Bomb Wing B-1B aircraft. This mission
    once again demonstrates the ability of our reserve forces to perform to
    the highest standards.'' In addition to the new use of laptop computers
    connected to hand held global positioning systems that give our B-1s
    better threat avoidance, this new capability increases the
    effectiveness of our B-1s by more than 2,000 percent. We still have
    issues to work like the lack of independent and expensive Readiness
    Spares Parts (RSP) kits--though we have achieved success in
    establishing the requirement over the last year. The addition of Beyond
    the Line of Sight (BLOS) Data Link--a 2 way link that provides near
    real time target and threat information, as well as Defensive system
    upgrades and Airborne Video Tape recorder answers a growing call for
    long range strike capability.
        We still require the C-130 cockpit armor as mandated by USCENTCOM,
    to make significant improvements in the survivability of our fleet
    while supporting AEF taskings. With increasing reliance on our tactical
    lift workhorse we need defensive countermeasures systems and
    battlespace situational awareness capabilities that allow us to operate
    in hostile conditions and to counter the prolific Infrared (IR)
    threats. We continue our work to bring the full complement of C-130J
    aircraft to Air National Guard Units in Maryland, Pennsylvania, Rhode
    Island and California. In addition, our Air National Guard unit in
    Harrisburg, Pennsylvania is converting from their EC-130Es to the EC-
    130Js cross-decking the special mission equipment that makes this one
    of a kind psychological warfare mission possible. We are progressing in
    this ``revolutionary'' program working with all stakeholders to iron
    out the bugs that come with any new weapon systems. Our biggest Total
    Force issue remains the C-130 Avionics Modernization Program
    development. We expect contract award very soon, hopefully by the end
    of May. This $4 billion program will modify the C-130 fleet through
    2013 making it viable well into this century.
        We are striving to move the C-17 conversion forward at Jackson,
    Mississippi--replacing the aging and retiring C-141s. We are laying the
    groundwork for the necessary infrastructure and support requirements,
    however we harbor serious concerns regarding the associated funding. We
    continue to work for the bed-down in fiscal year 2004. With the current
    focus on strategic airlift shortfalls, many would hope for an increase
    in C-17 fleet-wide numbers.
        The C-5 Avionics Modernization Program (AMP) is the first of a two-
    phased comprehensive modernization for the C-5. This program redesigns
    the architecture of the avionics system, installs All-Weather Flight
    Control System (AWFCS), Traffic Alert and Collision Avoidance System
    (TCAS), Terrain Awareness and Warning System (TAWS) and makes the C-5
    Global Air Traffic Management (GATM) compliant. The AWFCS replaces low
    reliability Line Replaceable Units (LRUs) in the automatic flight
    control system and replaces aging mechanical instruments in the engine
    and flight systems. A GATM capability, which encompasses
    communications, navigation, and surveillance (CNS) requirements, will
    be concurrently incorporated into the aircraft to maintain worldwide
    airspace access well into the 21st Century.
        The Reliability Enhancement and Reengining Program (RERP) is the
    second of the two-phased modernization of the C-5 that improves
    reliability, maintainability, and availability. This effort centers
    around replacing TF39 engines with more reliable, commercial off the
    shelf (COTS) turbofan engine. This program also upgrades numerous other
    systems including: flight controls, electronics, hydraulics, landing
    gear, fuel system, airframe, fire suppression system, and
    pressurization/air conditioning system.
        The 201st Airlift Squadron District of Columbia Air National Guard
    provides worldwide air transportation for Congressional Members/
    Delegations (CODEL), the Executive Branch, Department of Defense (DOD)
    officials, high-ranking United States and foreign dignitaries and HQ
    USAF inspection team travel. The 201st currently uses the C-22B fleet
    to meet team travel and CODEL missions but due to age and cost to
    upgrade, they are scheduled for retirement starting in October of 2001.
    The currently utilized C-22B is a 1964 model Boeing 727-100 aircraft.
    Congress recognized the need for a replacement aircraft and provided
    funding to purchase the first C-40C in fiscal year 2001.
        The readiness levels of the Air National Guard depend on modern
    equipment availability. Adequate funding levels for Guard and Reserve
    equipment are becoming increasingly critical. Reserve components are
    being called on to perform a greater share of day-to-day missions, as
    well as to relieve the high operational tempo for active duty forces.
    Compatible equipment is essential to reduced logistics costs and to
    enable active, Guard and Reserve units to train together. The equipment
    readiness goal is to ensure the Reserve Components have compatible
    equipment to enable mission accomplishment side-by-side with active
    forces and coalition partners.
        A high state of readiness also depends on a robust infrastructure.
    Facilities in the Guard today run the gamut between those needing
    considerable work and those which have won design and construction
    awards. As a direct result of Congressional support nearly 50 percent
    of the Air National Guard facilities are adequate, and we thank you for
    that. Our working environment becomes our Quality of Life sustainment.
    We know that given the funding, we can produce right-sized, efficient,
    quality work places for our airmen. However, there are three barriers
    that stand in our way--an aging infrastructure, funding constraints,
    and the impact of new mission conversions, which consume available
    funding before current requirements can be addressed.
        The recently published Installations Readiness Report for 2000
    shows that of the six categories that apply to the Air National Guard,
    four were rated C-4. This indicates major deficiencies that preclude
    satisfactory mission accomplishment. Our backlog of maintenance and
    repair projects currently exceeds $1.5 billion.
        The challenge of maintaining facilities and readiness has also
    provided opportunities to excel. We have undertaken several initiatives
    within the Guard to get the most out of every dollar. We continue to
    pursue joint projects at every opportunity, have improved our execution
    strategies, and aggressively manage our funds to provide for
    reprogramming actions.
        It is because of the exceptional people in our units that we
    continue to overcome these challenges. While we've put more on our
    members plates, we've done it smartly and with attention to bonuses,
    grade relief, grade enhancements and employer and family support.
        Our current economic and recruiting climate has caused us to be
    more aggressive in our approach to recruit and retain quality members
    to support mission requirements. Our recruiting successes are a direct
    result of additional resources and initiatives, and heavy involvement
    by Adjutants General, Commanders and the members themselves. One of the
    major challenges facing our recruiters today is the shrinking pool of
    active duty accessions resulting in an increased reliance on non-prior
    service recruits. This increases the need for formal school training
    allocations. As a counter to that, we have requested additional
    recruiter authorizations. We will utilize these positions at every
    active duty Air Force Base. With an in-service recruiter at each
    location, the Air National Guard will offer the newly separated
    individuals a chance to remain in uniform while increasing the Guard's
    experience base and decreasing the shortfalls.
        We take great pride in the fact that our retention figures for the
    past five years averages in the 90 plus percentile. Additional future
    recruiting and retention programs include enhanced high school presence
    by use of greatly expanded internet exposure, establishing retention
    focus groups across the five regions to identify root causes for
    staying or leaving, and maximizing current incentive programs.
        The Air National Guard Incentive Program is designed as a monetary
    motivator to support critical manning requirements in units with skills
    that are severely or chronically undermanned. For critical skills, we
    offer maximum incentives and have increased the number of career field
    specialties eligible for bonus payments. We've succeeded in our efforts
    to offer Aviator Continuation Pay (ACP) to eligible Active Guard and
    Reserve (AGR) pilots who agree to stay with us for three years at
    $15,000 per year, or five years at $25,000 per year. In light of our
    increased operational tempo, we are actively pursing staff options to
    provide incentive programs for our traditional guardsmen.
        Control Grade Relief at the unit level would provide the additional
    boost required supporting our full-time AGR force. We had over 350
    deserving people awaiting promotions. Thanks to your efforts, we
    achieved success this fiscal year. The plan increases both officers and
    enlisted personnel and--through a domino affect--should help to
    alleviate the pressing problem. Through all these efforts, we made a
    difference for an Air National Guard force of seasoned warriors who
    deserve no less and are committed to more.
        As the Air National Guard has become a total ``expeditionary''
    aerospace partner, we are finding an increasing need for viable and
    sustainable external support for our members. Our readiness, retention,
    and volunteerism depend on our families' sense of belonging and
    participation, and on our employers' education and support.
        Last year's focus on the ``Year of the Family'', coupled with the
    sustained AEF rotations, brought to the forefront the need for a formal
    family support program. We have many outstanding volunteers who give
    consistently and unselfishly like Mrs. Cindy Whitney, the spouse of a
    Maine Air National Guard member and first Air National Guard recipient
    of the National Military Family Association, ``Very Important Patriot''
    Award. Mrs. Whitney supports our families at home while their loved
    ones are deployed with the Aerospace Expeditionary Force (AEF) cycle.
    However, when we researched how Air Force and Air Force Reserve Command
    handled this requirement, we found some very interesting and telling
    information. The Air Force currently allocates through their Family
    Support Center staff and operating budgets alone, $125 per member; Air
    Force Reserve Command--programmed in the Air Force POM since Desert
    Storm--spends $58 per member with an expected increase to $70. The Air
    National Guard last year took $750,000 out-of-hide to provide a $7 per
    member allocation using additional duty staff or unpaid, overburdened
    volunteers. This is clearly not enough. The Air National Guard intends
    to make available a fulltime contract family readiness coordinator at
    each unit. This full-time dedicated contract capability will give the
    wings and states the help they need to support our nearly 350,000
    family members. This action does not change any part of the existing
    National Guard Bureau Family Program structure except to add dedicated
    capability to the wing levels.
        Under the great leadership of Maj. Gen. Paul Sullivan of Ohio,
    we've brought together an Integrated Process Team (IPT) to develop
    childcare alternatives based on demographic needs at the unit level.
    This IPT has moved forward at breakneck speed. This past January, the
    Air Force sent out a letter to all their child care centers permitting
    children of National Guard members to participate when space is
    available. This includes the extended hour program that can be used for
    drill weekends. All Department of Defense child care facilities are
    being asked to do the same.
        Phase 2 is a pilot program that will establish civilian child care
    for our Guard members at units not co-located with an active duty base.
    This subsidy will be based on the Guard member's total family income.
    The pilot will test both full-time and drill weekend child care. The
    pilot sites include Air National Guard bases in New York, South Dakota,
    Wisconsin, Idaho, West Virginia, Missouri, Iowa, Minnesota, Vermont,
    Arizona, Ohio, Mississippi, and Arkansas.
        This past January, we began to focus on critical enablers and
    partners--the employers of our National Guard men and women. The year
    2001 has been designated ``Year of the Employer''. Over the last 10
    years, employer awareness, understanding, and support have become vital
    to our ability to meet our requirements. We must continue to strengthen
    our relationships to solidify our readiness and relevancy. If our
    employers aren't happy, our Guard men and women aren't happy. We need
    to make it easy and valuable for both to participate. If we don't, we
    lose a fundamental Air National Guard core competency--protection of
    our citizen-airman and soldier heritage.
        During the year, we will partner with the National Committee for
    Employer Support of the Guard and Reserve (NCESGR) to ensure our
    employers remain satisfied with our ``shared'' people and their
    dedicated commitment to continued military service. At the same time,
    we have an opportunity to increase the visibility of the military in
    the communities to help the Total Force bridge the growing civil-
    military gap. In our effort to educate America's employers, we educate
    a large community of leaders on the mission and values of military
    service.
        We've already taken large steps toward this goal. We've made
    participation for today's employers easier by our Aerospace
    Expeditionary Force (AEF) predictability and stability. We've ensured a
    dedicated rotator to get our men and women to and from an AEF location.
    We've identified employer support in our Strategic Plan. We've taken
    the lead to establish a Reserve Component Airline Symposium where we
    meet with the nation's airline industry's chief pilots. These are but a
    few of the initiatives taking hold as we focus on the ``silent
    partner'' behind all of our men and women. The importance of the family
    and employers can best be summed up in the words of 13 year old
    Jennifer Causey, the daughter of a Wyoming Air National Guard member
    who wrote, ``I think Guard families matter because productive members
    raise new generations of productive and proud Guard members. They know
    what to do and the level of commitment it takes. They know all the hard
    work that the Guard member goes through, not only on the job in their
    civilian occupation but also at the Guard and in their relationships at
    home. They also know the pride and integrity it instills to be able to
    serve your country in a dual role as a military member and civilian
    community member. I think if you are a Guard member, you should have a
    lot of self-respect. You have earned it.''
        Mr. Chairman, we in the Air National Guard are proud to serve this
    great nation as Citizen-Airmen. Building the strongest possible Air
    National Guard is our most important objective. Our people, readiness
    modernization programs and infrastructure supported through your
    Congressional actions are necessary to help maintain the Air National
    Guard as the best reserve force.
        Mr. Chairman, we count on your support to continue meeting our
    mission requirements. We are confident that the men and women of the
    Air National Guard will meet the challenges set before us. I thank you
    for allowing me this opportunity to give you the Air National Guard
    posture.

        Senator Stevens. Thank you, gentlemen. We will see if we
    can put that last item in the supplemental so we can do it on
    your watch.

                                   RECRUITING

        I am still worried about this recruitment problem. Let me
    ask you just generally, do you really have the assets and the
    funds to recruit properly now, General Davis?
        General Davis. Well, sir, in both the Army Guard and the
    Air Guard I would defer to my two specialists in the Army and
    Air Guard, but in general we do not have enough money, I do not
    think, to provide all of the advertising we would like to have.
        Senator Stevens. What about active duty personnel. You said
    you wanted active duty. Do you need it there, too, in
    recruiting?
        General Davis. Yes, sir. You have to have so many contacts
    in order to get enough contacts to bring in the number of
    people we need and require to make sure we make our end
    strength. For example, the Air Guard was on end strength last
    year. The problem was, they increased by 1,300 people, so we
    need about 100 additional accessions per month, net.
        Senator Stevens. I thought with the Montgomery money that
    you would be doing better.
        General Davis. We are, sir, and that has helped enormously.
    One of the reasons we have the retention rate we have is
    because of the Montgomery GI bill and, as you are aware, sir,
    many of the States have additional programs that are State-
    funded to allow for tuition offsets or whatever.
        Senator Stevens. That all folds into the Reserve Officers
    Training Corps (ROTC), does it not?
        General Davis. No, sir, it is not a part of ROTC. If you
    join the National Guard in Ohio, as an example, you get a 100-
    percent tuition abatement if you go to a state school in Ohio,
    and one of the problems we have had with the Guard in spots is
    that if a state adjacent to yours offers it and you do not, the
    kids from your state are going to go next door and join the
    Guard, but that is independent of the relationship with the
    ROTC.
        We do have in the Army Guard a simultaneous membership
    program, where you can belong to the ROTC and the Army Guard.
    General Schultz can address that. But generally speaking we
    need enough recruiters, both Army Guard and Air Guard, just to
    make those contacts. You have got to have so many contacts with
    people who are potential candidates or recruits in order to
    get, and narrow it down to where you can find that quality
    candidate that you actually come out and swear in and join and
    go to school and qualify and return to the unit, so we do need
    additional recruiters in both the Army Guard and the Air Guard,
    and additional funds for recruiting and advertising.
        General Schultz. If I could, Mr. Chairman.
        Senator Stevens. General Schultz, I was just going to ask
    you, I am told by our staff that you are short more than 5,000
    company grade officers and 1,500 warrant officers.
        General Schultz. Correct.
        Senator Stevens. Why is that not tied in to ROTC?
        General Schultz. It is tied into ROTC. What we are missing
    today is accession through ROTC. In the past couple of years,
    the Guard and Reserve have had fewer than 200 members arrive in
    our units from the ROTC program, which is simply not enough for
    normal activity and normal turnover, plus the Officer Candidate
    School (OCS) graduations, plus those coming off of active duty,
    just simply fall short of our total requirements.
        So while I tell you that our enlisted strength is in pretty
    good shape, we are short commissioned officers at the company
    grade level. The majority of the reasons are, as I look at why
    officers are leaving today, just resignation, other interests,
    other priorities, and so we are looking now at incentive
    programs to keep the officers in. Today, that is not possible.
        Senator Stevens. Well, have you done exit surveys? Is it
    the long-term deployments?
        General Schultz. The schedule and pace of things, is one of
    the reasons they leave. Long-term deployments overseas is
    another. What we found about deployments overseas is, the
    turnover in those units is not much different than any other
    unit, so it is not just the overseas part. It is the schedule
    that we ask units to be a part of during our normal training
    cycles that I think is a piece of the problem, and some of this
    we are dealing with inside the Army.
        Senator Stevens. What are you going to do about the
    shortage of officers?
        General Schultz. Well, one, we are working with the Deputy
    Chief of Staff of personnel, increasing the ROTC graduate flow
    into the Guard units. That is step number 1.
        The other is, we are encouraging the Adjutant General's
    through the State OCS programs to increase the students in
    those programs and in those categories we are simply not
    producing enough graduates in OCS today, Senator. We had 800
    officers graduate last year, and that is just not enough for a
    force the size of ours.
        General Davis. We have some disincentives, too, sir, when
    young kids are in a tuition offset program, or a tuition
    payback, if they are still on student loans, if they go to OCS,
    the program automatically stops the payback on their loans, the
    student repayment of loans, and so we have got some glitches
    within the system, and we are working all of those out, and
    some of the specifics of that, but that is one major inhibitor,
    sir.
        Senator Stevens. Is that an administrative problem, or a
    legislative problem? Beyond that, do you not have some money to
    help pay off student loans on the basis of recruitment?
        General Davis. We do in terms of bonuses, sir, but not
    otherwise.
        General Schultz. We have money for our incentive
    requirements, but when you ask how much money do you really
    need, we move money around internally to cover our soldier
    incentive based programs, and so we do have enough money, but
    that is after we reprogram internally.
        Senator Stevens. But if you pick up people who did not get
    money during their college years, under Montgomery, or
    assistance, and they are going to enlist, you ought to be able
    to pay some of their student loan money, the debt that they
    incurred as they put themselves through college.
        General Schultz. And we do, we have programs that qualify.
        Senator Stevens. Are they equal? Can you give them enough
    of a payback?
        General Schultz. I will take that, Senator, for the record,
    and give you some detail on that. I do not have all those
    numbers with me right here.
        [The information follows:]

                         STUDENT LOAN REPAYMENT PROGRAM

        The Student Loan Repayment Program (SLRP) is governed by
    Title 10, United States Code, Chapter 1609, Section 16301. The
    program is for enlisted members of the Reserve Components and
    there are certain eligibility requirements that must be met to
    receive these benefits.
        Individual soldiers must complete one year of total
    service. Soldiers must also complete Initial Active Duty for
    Training. The loan must be at least one year old and the amount
    can be no greater than $10,000. The SLRP pays $500 or 15
    percent, whichever is greater, of the original balance once a
    year on the anniversary date of enlistment. Payments are
    limited to $1,500 per year.
        A soldier attending OCS who is eligible for SLRP retains
    eligibility up to the date of commissioning. Once the soldier
    accepts a commission SLRP is terminated. A soldier attending
    OCS may take advantage of the Tuition Assistance Program at
    $3,500 per year. Tuition Assistance is available to officers
    and is not terminated when a soldier accepts a commission.

        Senator Stevens. Well, I think we gave the General Service
    people, the Federal Government the right to pay up to $5,000 a
    year for what, 5 years or something?
        General Davis. We have that, sir, but when a young soldier
    enrolls in Officer Candidate School he loses that tuition
    repayment.
        Senator Stevens. Well, again, tell us, is that your
    regulation or our law?
        General Davis. I think it is the law, as I understand it.
        Senator Stevens. We can change it in the supplement, if
    that is the case.
        General Davis. We will work with your staff on that, sir.
        Senator Stevens. You talk about jump-starting. It seems to
    me you need to jump-start the program. You cannot get that far
    behind on your warrant officers and your young officers and
    catch up. There ought to be some concentrated attempt to get
    those people in. We are now paying some of our staff debt for
    college loans in order to retain our people, and you are going
    to have to do the same to attract them.
        General Davis. Yes, sir, we agree.
        Senator Stevens. Gentlemen, I have to go chair the other
    committee. Will you finish this up, please?
        Senator Inouye. Thank you very much.

                                     MORALE

        Following up on the questioning, we have many problems, as
    I noted with the first panel. Added to that, I note that
    between 1945 and 1990, that is 45 years, the Guard and Reserves
    were involuntarily activated four times, Korea, Cuba, Vietnam,
    and Berlin. In the last 10 years you have had five activations:
    the Persian Gulf War, Iraq, Haiti, Bosnia, and Kosovo. How is
    the morale?
        General Davis. Well, in general the morale is pretty good.
    It is excellent, as you go visit the young people over in
    Bosnia, and you visit the folks in Kosovo and Southwest Asia,
    both when they are there as well as when they come back home.
    They feel good about what they did. They joined the Guard to do
    a mission, and they are doing a mission.
        I would say to you in the Air Guard we do most of what we
    do in those missions, at least the last few we have done, with
    the exception of Allied Force. In the Air Guard we are able to
    do that with volunteers, not under the presidential Reserve
    callup. In the Army Guard, we are using presidential Reserve
    call-up, and originally it was 9 months, and that created some
    real consternation, and some difficulty for us.
        In working with the active Army both here at the
    headquarters with General Shinseki and his staff, as well as
    the forces Command down in Atlanta with General Hendricks and
    his staff, we have been able to get that reduced to 179 days
    in-country. Now, having said that, it ends up being over 200
    days, because there is a train-up time, and there is a
    demobilization time on the back end.
        But the discussions that have taken place, and we are
    working on a program now to send some military police over this
    fall, and they are going to look at 90 days. You will have a
    group that will stay as kind of a key cadre, that will stay for
    the entire 179 days, but some of the individual soldiers will
    be there for 9 months.
        Now, this is the kind of program that we have run in
    Central and South America, in our construction programs, road
    construction programs and vertical programs for years, sir,
    where we have a duration cell we call it, or a duration cadre.
    They are there for 4 to 6 months, and we rotate units in and
    out, and they provide the command and control structure, and
    the leadership and management structure for that.
        So we are looking at some of those options. General Schultz
    may want to comment a little further.
        General Schultz. Senator, in terms of morale in the Army
    Guard today, we are exceeding our retention objectives, which
    would mean the number of soldiers which we had planned to have
    extend, so using that as just one indicator, I think we are
    pretty healthy.
        I am concerned about turnover though, soldiers that leave
    for other reasons, employment, family, perhaps maybe the
    schedule of our activities, perhaps we plan for about 18
    percent of our units to turn over every year, and we are at
    18.5 right now, which means we are just a little bit higher
    than we had programmed, but if I take you back to last year, we
    ended the year at 19.6 turnover, which means that those
    soldiers just leaving our unit for whatever set of reasons, now
    that meant for us we had to enlist almost 7,000 more soldiers
    than we had planned for.
        Now, if I could just take that for a second into our
    discussion we had with the previous panel, what that means is,
    we had more nonprior service members than we had planned to
    send to the Training and Doctrine Command, so that means we do
    not have school seats in the right places or money in the right
    places, but overall we are making progress with our attrition
    and the question on morale, sir, and I think we are in good
    shape today.
        Senator Inouye. How about the Air Guard?

                         EXPEDITIONARY AEROSPACE FORCE

        General Weaver. Mr. Chairman, if I could show you the
    retention rate as I stated earlier, well over 90 percent in the
    Air National Guard, if you look at all the units across the
    board, the EAF has been a godsend to the Guard and Reserve for
    us. It has allowed us a foot in the door. In fact, the door is
    wide open to us in the Reserve component in our Air Force to do
    the real-world stuff that we have been trained for many years
    to do.
        The aviation is not just the pilots now, it is the support
    personnel that are standing up and going for 2 weeks at a time
    in the Air National Guard and the Air National Guard under our
    concept of deploying, and when they are coming back, if you
    could only talk to them as much as we do, the basic comment is,
    we regret that we could not stay longer.
        They are doing what they have been trained to do. The
    morale in those units now is higher than it ever has been, and
    so it truly has been a tremendous success story, the EAF and
    our Air Force, led by our Chief of Staff and then Secretary
    Peters, who instituted the EAF.

                                   RECRUITING

        If I could go back, where we can save money is, as we have
    gone in with a request this year for additional recruiters,
    something the Air National Guard that we have not done before
    is to recruit on active duty installations. That is not to say
    to recruit people off of active duty, but to be there to inform
    people who are making a decision whether to stay in or not.
        We prefer them to stay in, but if they do opt to get out,
    we would like to have them consider the Guard and Reserve, and
    so we have begun recruiting on active duty installations,
    something we had not done before, and the paid recruiting
    campaigns that we have started last year with your help, we had
    not done that before, so when I first came in the Guard after 8
    years on active duty it was about a 90-10 split, about 90
    percent active duty in the Guard, versus 10 percent home-grown.
        Now, that figure is about 60-40, 60 percent from active
    duty. We can save more money in training by recruiting on
    active duty installations for those people getting out than we
    could by setting up expensive training schools. The Air Force
    has stood up to the requirement of our additional nonprior
    service and their training programs as well.

                               PAY AND ALLOWANCES

        There is one other part of that, and the pilot part of it,
    and I have discussed this with many of the staff members, and
    that is to increase our bonus, or our Aviation Career Incentive
    Pay (ACIP), for our air crew members across the board. Our
    Active Guard and Reserve men and women who are flying, we have
    given them the partial pilot bonus, the one-thirtieth rate, but
    I think we need to stand up as an organization and provide our
    ACIP, that is, a full month flying pay for our air crew members
    same as active duty pilots.
        We lose about 215 pilots a year out of the Air National
    Guard. They just do not go to the Reserves, do not go anywhere
    else. If you consider, each pilot, we put about $6 million
    worth of training. That is about $1.2 billion loss. If I retain
    six pilots because of giving them a full ACIP, I will have paid
    for that loss over and over again. I think it is something we
    really seriously need to consider.

                     INCREASED OPERATIONAL TEMPO (OPTEMPO)

        Senator Inouye. What is the employer reaction to your
    increased OPTEMPO?
        General Davis. Well, sir, it has happened in a couple of
    instances where we have had, and we are aware of, where the
    employers have not treated the people very well when they
    returned. We have a system for that through the support,
    National Committee for Employer Support of the Guard and
    Reserve, and we have ombudsmen who handle these things.
        One of the issues they are most concerned about, generally
    speaking, they are concerned about the increased level of
    activity, but their concern manifests itself a little
    differently in a very small company. We are finding
    particularly those companies, those smaller than 25 people, if
    one or two members of the Guard are called, they really get
    concerned. It is a high percentage of their workforce, and they
    are concerned about that.
        It can take a very key member of a firm that is, say, 10
    people, because you do not have a lot of duplication or
    replacement people, and so there is a lot of concern at that
    level, but we have been working with the U.S. Chamber, and we
    have done some surveys, and we think that if we can give the
    unit enough time, so they know when they are going to go--we
    have been able to do that in both the Army Guard and the Air
    Guard, and one of the things, that has brought both designating
    the rotations to Bosnia and Kosovo far enough ahead of time,
    identifying the units, which General Schultz has been able to
    do in the Army Guard, the Air Expeditionary Force, where we
    know now what the rotation schedule is and when the unit is in
    the queue.
        That has really helped. That information passed back to the
    employer, has really helped dampen a lot of the early criticism
    we had. It was almost as if somebody came up and walked in the
    door and said, oh, by the way, I will be going tomorrow for 9
    months, and some of them did not--the Guardsmen on our side of
    it did not communicate as well with the employers as they
    could.
        There are some employers who are concerned about it. We
    hear anecdotally that some folks are not hiring people because
    they are in the Guard or in the Reserve. That is against the
    law, we all know, but some folks may attempt to do that, but it
    is not pervasive, as best as we can determine. If we can tell
    the folks ahead of time when they will be gone, most of our
    employers are working well with us.
        As General Weaver said, we have designated the year 2001 as
    the Year of the Employer, and we have got a lot of additional
    things we are doing this year. Every year is a Year of the
    Employer in the sense that we try to work with the employees.
    We have got some very specific efforts we undertake each year
    to keep the employers better informed and make them know more
    about what we do, to educate them on the mission.
        Last year we had a trip to Europe, sir, and we were taking
    over some civic leaders so they could see what the Guardsmen do
    when they deploy forward, and one gentleman had written a
    letter and said, I do not know why the Guard is doing that. The
    Guard ought to be here at home, doing the missions here at
    home. We have got no business being overseas.
        So we had mailed the letters out a little before that, and
    so my exec said, why don't we send him a letter. He went with
    us. On the third day he was there he wanted to become part of
    our Speaker's Bureau, sir. He just did not understand. He was
    saying why we should not be over there, we ought to be here,
    because he thought we ought to just do things like hurricanes
    and floods and that kind of thing, and respond, but our young
    people join partly because of the adventure.
        They want to go overseas. They want to do some of those
    things. They get a good sense of service. If they join to
    become a mechanic, they want to be a mechanic. If we put them
    busy doing mechanic's work, or doing infantryman work, they
    will hang around and they will stay. If we do not do that with
    them, then we have difficulty retaining them, and so interest
    and training in those kinds of things become very key.
        The employers, if we can educate them, and we can spend a
    lot of money and a lot of time working with them to take them
    on BOSSLIFT and to educate them about what we are all about,
    and outreach to them, I think we are doing a lot better job
    with that, and we are not hearing the hue and cry that we
    initially heard about employers.
        So we are not seeing a mass effort by employers, or even a
    significant effort by employers who say, you cannot take our
    employees, but the smaller employee, there are some issues
    there, and I think the first panel you talked to, they
    discussed some issues and incentives for the employers, some
    recognition programs, that kind of a thing.
        I think something like that is along the lines we need to
    address the issue. There is a problem there, sir, and we have
    to make sure we are addressing it. We do not think it is at a
    level that it is not manageable, though, at this point, sir.
        Senator Inouye. Thank you very much.
        Senator Cochran.

                              DEPLOYMENT EXPENSES

        Senator Cochran. Mr. Chairman, thank you. In September
    there will be over 500 soldiers with the Mississippi National
    Guard deployed to Bosnia as a part of the peacekeeping effort
    there, and I have received a copy of the training schedule that
    these soldiers will follow, and I think the first training
    experience, designed to equip them with the knowledge and
    experience that they need to do their job in Bosnia, starts
    later this month at Camp Shelby, Mississippi, and I hope to be
    able to visit them and wish them well as they undertake this
    mission.
        My question to you is, we are probably going to have a
    supplemental appropriations bill for defense needs. Are the
    funds that you have in your budgets now adequate to take care
    of the specialized training and the deployment expenses
    required of these troops and these units so that we can be
    assured that they will be fully and adequately trained and be
    able to do their job, and be able to come home safe and sound?
        General Schultz. We have already received one personnel
    reimbursement in contingency operations (CONOPS) this year. We
    anticipate one before the close of the year. The operations and
    maintenance side is an issue that I have had a couple of
    discussions about, and that is that we expect States to take
    money from their current budgets and invest early in some of
    their training activity with an understanding that we are going
    to find money for them later in the year.
        Now, there is some risk in that, as you know, so in the
    case of personnel, we have money in the right places for the
    unit's requirements to train up. In the case of operations, I
    have a couple of examples where the corps commanders, in
    talking with some of the units they are going to join in the
    Balkans have not, in all cases, approved training activities,
    so I am working some individual issues, and if you would like,
    I will provide detailed account of what that means to us.
        What I am saying to you today is that the investment
    Mississippi has made in the training rotation now for this
    unit, I will find the resource so they do not pay a penalty for
    being part of the mission set that we did not properly
    resource, so that is an obligation that I carried to fix a
    piece of an issue down there with regard to an operations fund
    redistribution.
        General Davis. Senator, I am certain you are aware, when
    that was the National Training Center, the superb job they did
    out there at the time as a result of the kind of training we
    got in preparation for that. A lot of that training will be
    residual in the sense that it will hold over because these
    soldiers will have been through a really dynamic training
    environment out at the National Training Center at Fort Irwin,
    and they will not have to train nearly as hard in terms of the
    basic skills.
        Now, proficiency, yes, they will have to get up to speed on
    proficiency and that kind of thing, and they will do that with
    great regularity as they walk through this. We call it the Road
    to Bosnia, these milestones they go through, and the training
    chart you saw that takes you through the different training
    events.
        Senator Cochran. Well, we are very proud that they are
    going, and we know the employers have been briefed, and we are
    hopeful that that can all be a model for deployments in the
    years ahead. We are proud of those who are serving from our
    state.

                                C-17 CONVERSION

        One other thing we are very proud of in Mississippi is that
    the Mississippi Air National Guard in Jackson will be the first
    unit in the Nation to convert from the C-141 transport aircraft
    to the modern C-17. You mentioned that, General Weaver, in your
    opening statement, and we appreciate the attention that is
    being given to preparing for that transition.
        We know there are some infrastructure requirements, and we
    are worried a little bit about the pace of that, whether the
    funding is being made available and enough work is being done
    so that when that date comes, the people will be trained to fly
    the aircraft and to maintain them, and will have the facilities
    to do that and we will not have to wake up one morning and say,
    well, they are not ready, we are going to postpone this. Can
    you tell us something of your impression of the timetable, and
    are we meeting the targets? Do we need additional funds in this
    bill to help do that?
        General Weaver. Right up front, sir, this needs to be a
    template for all of our C-17 conversions, which I know we will
    have more than just Jackson following and stepping up to the C-
    17 requirement. It is an outstanding aircraft. We are pleased
    and honored to have that in the Air National Guard, and
    especially at Jackson as we look at Air National Guard
    installations for a beddown location, so that is why the
    importance of this being a template right there at Jackson.
        We have got some financial concerns. This is the first time
    in our history that we have undertaken a conversion, not of
    this size, but of this nature. That is, a brand-new aircraft
    coming right off the line, right into an Air National Guard
    unit. We have done it with F-16's, but not one of this nature,
    of a large aircraft, so there were unexpected and unforeseen
    challenges we in the total force have uncovered between now and
    the time that we want to get Jackson fully stood up.
        The O&M part I am not as concerned with as I am about the
    military construction requirements, to have everything in place
    for the arrival of these first C-17's, so I do believe that
    yes, we will need some additional help, but I believe that on
    the O&M side, as far as the training, I believe we can work
    that within the Air Force community itself, but on the military
    construction side, we will need some help, sir.

                       MILITARY CONSTRUCTION REQUIREMENTS

        Senator Cochran. Well, I hope you will provide for the
    record what you need specifically and what your needs are
    exactly. I have some notes that indicate some of the
    possibilities, but it would be really helpful.
        General Weaver. I will submit that for the record.
        [The information follows:]

                       Military Construction Requirements

        The first project supporting this beddown was an fiscal year 2000
    Congressional add. The remaining program is phased over fiscal year
    2001-04 to keep the existing C-141 mission operational until the C-17s
    are ready. The additional projects are as follows:

                                                 [Dollars in thousands]
    ----------------------------------------------------------------------------------------------------------------
              Fiscal Year                              Project Title                        Cost         Status
    ----------------------------------------------------------------------------------------------------------------
    2000..........................  C-17 Flight Simulator Facility.....................     $3,600  Construction
    2001..........................  C-17 Corrosion Control/Maintenance Hangar..........     12,200  Design
    2002..........................  C-17 Facility Conversion...........................     16,500  FYDP
    2003..........................  C-17 Fuel Cell Hangar and Shop Upgrades............     25,000  FYDP
    2004..........................  C-17 Maintenance Training Facility.................      4,100  FYDP \1\
                                    C-17 Short Field Runway (Camp Shelby)..............      9,000  ( \2\ )
                                    C-17 Upgrade Corrosion Control Facility............      5,700  ( \3\ )
    ----------------------------------------------------------------------------------------------------------------
    \1\ This project is late to need. $15 million in equipment was appropriated in fiscal year 2001 for a fiscal
      year 2003 delivery. The supporting facility should be funded in fiscal year 2002 to be ready when equipment
      arrives.
    \2\ The shortfield runway is required in fiscal year 2004, but is not shown in that year of the Future Years
      Defense Plan (FYDP) due to the limitations associated with the fiscal year 2001 Senate Armed Services
      Committee (SASC) language that reduced the ANG FYDP size.
    \3\ Discussions are underway for development of a regional aircraft paint facility (corrosion control). This
      total force capability requires additional construction which is currently unfunded. The project could be
      executed as early as fiscal year 2002 if funds were available.

        A related project that supports maximum utilization of this new C-
    17 aircraft is an Expeditionary Forces Center, $7.5 million. This
    deployment complex is currently programmed in fiscal year 2008 and
    would support the outload of troops and equipment from Jackson,
    Mississippi (MS).

                               FULL-TIME MANNING

        Senator Cochran. I understand also that there is, I think
    we made a statement, or heard a comment about the full-time
    support of units to people back at the armories. I think
    General Schultz mentioned this. There is a shortfall in the
    support manning in the Army National Guard. Is this true as
    well in the Air National Guard?
        General Weaver. Not to the extent as in the Army, sir, but
    we do have a shortage of full-time personnel. What we were able
    to do, what Secretary Peters at that time and General Ryan
    allowed us to do in the Air National Guard is reengineer our
    Air National Guard to where we had units that were not wartime-
    tasked, that were not as required by our scenario, to
    reengineer those units into units where we really need them,
    whether it be on the flying line or air crew members. We were
    able to increase our duration, because of this reengineering
    effort.
        We are presently working with the Air Force, an increase in
    full-time manpower through the future years defense plan
    (FYDP), bringing them in at a rate we are able to deal with in
    the total operating authority (TOA) of our Air Force, and so it
    is not as critical as I know of in the Army Guard, but as we
    step up to these additional taskings, such as the C-17, where
    it is required, where we will have an operations tempo equal to
    that of the active duty force, we will be looking for full-time
    increases.

                     C-17 AIRCRAFT AT JACKSON, MISSISSIPPI

        Senator Cochran. One observation about a recent report. I
    understand General Robertson, Commander of the Air Mobility
    Command, and former Secretary of the Air Force, Peters, were on
    a trip recently suggesting that it would be better to have
    eight C-17 aircraft located in Jackson rather than six.
        General Weaver. Sir, I probably would not say this if I
    were not retiring, but I would say eight is what we have found
    to be economically correct, but I would venture to say that
    additional aircraft would also be beneficial as well, if we in
    our concept will be operating these aircraft at the same pace
    as the active duty force.

                              MANNING REQUIREMENTS

        Senator Cochran. General Schultz, the exact manning
    requirements, I am told, in Mississippi have a shortfall of
    over 1,600, which is 40 percent full-time, talking about full-
    time support personnel. That is a big problem, it sounds to me.
        General Schultz. It is. We have across the Guard today, of
    our Active Guard and Reserve soldiers, 51 percent staffing of
    our requirements. The military technicians are a little higher
    than that.
        Of course, when you look across the country it rolls up to
    a fairly significant number, so we have agreed with the Army
    staff over time to begin replacing those requirements. If you
    look at why we are in this condition today, over the last 10
    years we have just simply lost full-time staffing over the
    years, save the last two, where the Congress came in and said,
    this is not right, we are going to help you recover, and so we
    have begun to recover but not nearly so fast as we would hope,
    and certainly when you hear from the states, units in the
    states, they are the ones suffering, clearly, on a day-to-day
    basis.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Inouye. Senator Leahy.
        Senator Leahy. Thank you, Mr. Chairman. To add to Senator
    Cochran's question, we love it when someone who is retiring
    testifies, because sometimes they get very candid, and I tend
    to agree with you on that. I suspect Senator Cochran does, too.
    This year I became co-chairman of the Senate National Guard
    Caucus, and I am going to be working with my fellow chair,
    Senator Bond, on some of these issues.
        I would have been here the whole meeting but we have been
    having an issue of nominations to the Department of Justice,
    and we are holding a hearing upstairs, and I know Senator Hatch
    was probably terribly disappointed when I had to come down
    here.

                                HEALTH INSURANCE

        But I did have some questions. General Davis, you and I
    have chatted before, but not on this particular issue. I am
    worried about health insurance for members of the Selected
    Reserve. I am told thousands of members of the Selected Reserve
    do not have health insurance, and I have heard about members--
    and this is anecdotal, but I think it happens all over the
    country--members of the Reserve components staying back from a
    deployment because they have failed their health screening.
        Now, you have got an obvious issue, that of readiness, but
    I think there is also one of fairness. If the Selected Reserve
    is serving side-by-side with the active duty, it is very, very
    troubling to me if we are unable to guarantee health coverage
    of everybody defending the Nation. As Senator Inouye and others
    have brought out, we seem to be deploying a lot more these
    days. When we got these reports I just assumed everybody had
    health coverage, and I am wondering if there are programs such
    as TRICARE that we could extend to the Reserve. What do we do
    about these shortfalls in health insurance?
        General Davis. Well, I might just start by making a
    statement. In one of our States they did a survey and they
    found a significant number of people, 30 percent, I believe,
    did not have health insurance.
        What happened apparently a few years ago was, many
    companies decided that they would either get pay raises or
    increases in benefits, sustain the benefits, and a number of
    people opted to take the money, presumably to buy their own
    insurance and give up the benefit, but we have a large number
    of people who do not have any insurance at all, and in this
    particular State, his survey, he worked it where a number of
    people who responded said they would almost give up their drill
    pay, their weekend drill, for health insurance. It is very,
    very expensive in some areas, and certainly if you buy it on an
    individual basis. I used to be in the health insurance business
    a number of years ago, sir.
        But it is something that I think we do need to cure. It
    manifests itself a couple of different ways, as we were
    talking, Senator Cochran was talking about. The training
    schedule for these people, there are breaks in the--they are on
    duty for 4 days, and then they are off-duty, then they are on-
    duty again for another period of time maybe 2 weeks later, or 3
    weeks later.
        The difficulty is, if something happens to them physically
    during that time, or medically, they are not covered. If it
    happens during a duty period, they are covered, but during the
    days when they are not, they are not covered.
        Our laws historically have been written to cover the
    Reserves primarily for a major mobilization of 30 days or more,
    or whatever. Many of the laws cover you if you are on 30 days
    or more, or more than 30 days, I believe, and so if you are on
    less than that you do not get full coverage for your family and
    everything else, so there are some inequities, particularly in
    terms of how we are utilizing the National Guard and the
    Reserve in today's environment.
        My caveat would be, Senator, there is a bill that goes
    along with that, and none of us knows exactly what it is.
        Senator Leahy. Is that being looked at, though, I mean,
    some of the possible options in here?
        General Davis. We are trying to work with a number of
    staffers, I believe. General Smith of Ohio is an individual
    case in point, and I know he is working with a number of--two
    or three members, I believe, at least one I know for sure and I
    think two others, and their staff, to look at what the cost
    might be for that. No numbers are available. The Adjutants
    General as a group have adopted that as a posture, and I think
    we will see some more activity like that.
        Senator Leahy. It is troublesome to me, and I know there is
    a lot of cost involved, but we either have them really
    available or not, and this may be part of it.

                               AIRCRAFT UPGRADES

        Another area, General Weaver, the Air Guard flies over 500
    F-16's, and most of them are either Block 25 or 30 versions.
    They look great and all of that, but they are getting old, and
    I am concerned that some of the operation costs keep going up,
    the mission-capable rates go down, and so you are kind of in a
    lose-lose situation. I am wondering what additional plans the
    Air Guard has to upgrade the F-16.
        General Weaver. We could put F-22's at all of our----
        Senator Leahy. Actually, I had not thought of that. It
    depends upon where they get assigned.
        General Weaver. Thanks to this body here, what is called as
    the Guard and Reserve Equipment Account (GREA), what we have
    been able to do with what you have assisted us in doing in the
    Guard and Reserve Equipment Account, we took the entire F-16
    fleet, Block 25's, 30's, and 32's, and made them combat-
    capable. We did the Cupid mod. We are doubling their life.
    These F-16's in the Air National Guard are as capable as the
    active duty's Block 40's and 42's, thanks to this committee for
    all of that support in the Guard and Reserve Equipment Account.
        It was only even just 4 short years ago where we had all of
    those F-16's, all 500 plus, and we could not go to war with
    them because we did not have the capability, and you all made
    that happen, and I cannot thank you enough, nor can those air
    crew members who fly them, especially when they are in Northern
    Watch and Southern Watch, and our active duty counterparts see
    these aircraft with all that we have on them, not only the
    Cupid mod, but all the PGM, the lightning pods on them, and as
    we look forward to the advanced targeting pad (ATP) pod as
    well, the situational awareness data link (SADL).
        These are full-up F-16's, and extremely well-maintained,
    and so my take on the future of our Block 25's, 30's, and 32's,
    the health of our fleet is good.
        Could we use more? Absolutely. We are looking at attrition
    Reserve total force problem in some of our blocks, and we own
    some of those blocks, so yes, I would encourage future buys for
    our Air Force of F-16's. From my perspective that would trickle
    down additional aircraft for the Air National Guard and Air
    Force Reserve.
        But sir, what you have been able to do for our F-16 fleet
    is nothing short of outstanding.
        Senator Leahy. I do not want to risk sounding at all
    parochial, not that anybody on this committee is ever asked a
    parochial question, but we do have F-16's in Vermont. I have
    checked them out personally, Mr. Chairman. I flew in one. That
    was before the Army, General Schultz talked me into a moment of
    weakness last year, or actually about 3 months before the
    Golden Knights were coming to Vermont.
        They were coming to Vermont to do something with the
    Vermont National Guard, and somebody called me up and said, by
    the way, they have this program called a tandem jump, and you
    can jump with them, you do not really have to know much of
    anything, which is the first clue, how they get volunteers, and
    they said, why don't you jump with them, and I said OK, I would
    be glad to do it, thank you very much.
        It is fine 3 months out, but it comes to about 30 minutes
    out from it, and I am wondering about this, but a very good
    man, a young sergeant, Marc Hoque, in the Army, a former
    marine--our son, who is a former marine, also named Mark, made
    me feel confident. We spent about 20 minutes strapping
    ourselves together, double-checking, we go up a couple of
    miles, look out the door, and I said, does that look like the
    fairground we are supposed to land on? I go, yep. Nervous--
    Nope--and out we went, had a great time.
        We land, and he says, here, I'll unhook you. He goes snap,
    snap, and I said, that's it? That is all it took, just two
    quick snaps like that and you could have dropped me on the way
    down. He said, well, no, sir, I would not have done that, that
    would be a bad career move.
        I said, your career or mine?
        But at any rate, I cannot wait to do it again. My staff can
    wait. I cannot.
        But the serious question, General Schultz, we have UH-60
    Blackhawks up in Vermont, and there is a vast improvement. Over
    the old UH-1 Hueys. I know how hard they work to maintain them,
    but I got frightened just seeing our men and women flying them,
    because of what might happen. The Blackhawks are much, much
    better, of course. Everybody in Vermont was thrilled. My 3-
    year-old grandson even recognizes them by the silhouette when
    they fly by our home. He will say, ``that is a Blackhawk.''
        But a lot of the Guard units are still flying the old Hueys
    and Cobras. I am worried about the safety of them, but I also
    worry about the Guards ability to carry out its State mission.
    As you know, one of the great things about the Guard is that
    when something happens in your State, a rescue mission, a
    natural disaster, something like that, the Governor is on the
    phone immediately to the Adjutant General saying, ``we need
    help.'' It looks to me like about 300 Blackhawks short around
    the country.
        I am wondering what is happening. Are we planning to add
    more? Are we working on adding more? How do you retain the
    mechanics? How do you keep the training? How do you get young
    pilots to stay in and spend their time doing that?
        General Schultz. The short answer is, Senator, we have a
    need for Blackhawks in the Guard. We have Legacy aircraft. You
    mentioned both of them. That would be the Cobra and the Huey.
    We have 94 Hueys that fly in the Army Guard today. That is out
    of 400-plus air frames. The safety flight message on the rotor
    mast assembly is primarily the reason.
        In our current plan, we are working right now on how to
    literally field the aviation modernization plan, and the Chief
    of Staff should make a decision very shortly on the
    implementation of that mod plan, and as we talk about this
    modernization plan, I just simply offer that we have seven
    States with no modern aircraft.
        No modern aircraft means Hueys and that generation of
    systems, and so it is our idea, (1) to accelerate the fielding
    of Blackhawks, and we can use your help in that regard, and our
    other idea is that every State and territory would have modern
    systems. For us that would be at least the Blackhawk or the CH-
    47.
        So we will retire the Cobras over time, we will retire the
    Hueys in the next couple of years, but as we retire the Hueys,
    one of the obligations that I carry is to have aircraft,
    literally, systems for the crews to maintain and the pilots to
    fly, and we come up short on that today.
        So there will be a period, while we talk about moving some
    Blackhawks from active units, there will be a period where we
    have to rebuild those air frames to get them ready for
    redistribution to Guard units, and of course a part of our
    master plan is that we buy more Blackhawks than we currently
    have in the Army budget, and so we can use your assistance with
    that plan, but over time, it is the idea that we modernize the
    fleet, and accelerating the distribution is in our interest, I
    think.

                                COMPUTER ATTACKS

        Senator Leahy. I will put my other questions in the record,
    except for one. General Davis, we have an information
    operations unit in Vermont. I feel one real threat we face,
    both on the civilian side and on the military side, are
    computer attacks, and oftentimes we do not know where they are
    coming from, but we know how devastating they can be.
        I think the Guard is the perfect organization to have this
    mission because, as you know, it has helped us in my State. We
    have had a number of high tech companies, International
    Business Machines (IBM) and others who have helped us retain
    some of these people. The Guard members are getting the basic
    Guard salary, and, more importantly, a real sense of
    patriotism. I am wondering if we will have a formal training
    apparatus to train both the Reservists and active duty to carry
    out this information mission? Just think where we were 50 years
    ago. We would not have had to think of something like this, but
    today it is a major one.
        General Davis. Well, sir, we have in both the Army Guard
    and the Air Guard units that we have stood up in this
    information operation area. In response to that, the fact that
    we have young people who work in civilian jobs, many of them,
    and they work in much higher tech areas than we have available
    in the United States military--as a result of that, we have
    been able to tap into some of those talents.
        In the Army we are working with the Land Information
    Warfare Agency down at Fort Belvoir, and in the Air Guard we
    are working with the Air Force Intelligence Agency, and I would
    like to ask General Schultz if he would comment on the Army,
    what we are doing there, and General Weaver, if he could
    comment on the specifics of some of the things we are doing in
    the Air Guard.
        General Schultz. We have in each State developed a small
    team, computer emergency response teams. We have today trained
    921 members within the Army Guard, Active and Reserve. A number
    of them have trained at one of your schools, Center of
    Excellence, by the way, and so what we are saying is, there is
    a capability--I think reinforcing your point, there is a
    capability inside the Guard today that clearly is perfectly
    suited for the risk that we might have as we rely more and more
    on networks and technology and so on, so we are working this
    initiative, and the Army has today just simply outlined our
    role as one of the leaders.
        Senator Leahy. Well, the President was up recently at the
    meeting of the hemisphere leaders held in Quebec City. I know
    we are very active in Burlington with the Guard in monitoring
    all of the various Internet sites to look out for hackers,
    which I find very interesting. You are going to be able to
    attract some of the people in the next generation, the people
    who really want to stay there.
        Mr. Chairman, you have been more than indulgent with me in
    allowing me to go way beyond my time. I appreciate it. I will
    submit the rest for the record. I think the witnesses will find
    that over the years this has not been the most unfriendly
    committee that you come to, but I also appreciate your help,
    and I feel honored to be with Kit Bond on the Guard Caucus.
    Thank you.
        Senator Inouye. Thank you very much.
        Senator Bond was unable to be here today, and asked that
    his statement be placed in the record.
        [The statement follows:]

               PREPARED STATEMENT OF SENATOR CHRISTOPHER S. BOND

        Mr. Chairman: Thank you for holding today's hearing and
    inviting the Guard and Reserve Chiefs to testify. Those of us
    who work defense issues have known for some time that the
    increased operations tempo of our Active forces has had an
    equal if not greater impact on our Guard and Reserve Forces.
        As co-chair of the Senate Guard Caucus and a former two-
    time governor who had to rely on the ability of Missouri's
    National Guard to respond at a moments notice to a state
    emergency I am extremely concerned about the current state of
    readiness within our Guard and Reserve forces.
        No matter where we look we seem to find alarming statistics
    denoting a serious decline in the state of readiness of our
    forces. For today's hearing I could have asked a myriad number
    of questions dealing with a broad range of issues; from the
    serious backlog in Military Construction projects for all the
    Guard and Reserve components; to the severe shortage of full-
    time manning for the Guard; to the lack of adequate basic
    equipment such as SINCGAR radio sets that enable our ground
    forces to talk with secure voice capability to one another; to
    the dismal state of affairs with Army Aviation Modernization;
    to the troubling state of our KC-135E tanker forces which are
    vital for supporting extended operations such as we see in the
    Pacific region; to the need for C-40 modernized air logistics
    assets for the Navy and Naval Reserve. The list goes on and on
    and on.
        I intend to do my best to support the Administration and
    the Secretary of Defense as he prepares to outline the findings
    of his strategic assessment. It's important to note that
    whatever plan is developed the reliance of our Active forces on
    the Guard and the Reserve is at an all time high and it's
    inconceivable that we can continue to ask so much of our Guard
    and Reserve forces while at the same time we are not adequately
    resourcing these components to do the job they've been given.
    It is a sad state of affairs. We ask our citizen-Soldiers,
    Airmen, Marines, and Sailors to contribute in both the civilian
    and the military sector and when we inadequately resource them
    for the military missions they've been given we put them at
    much greater risk.
        In peacetime especially it is ludicrous to put our most
    precious resources, the men and women who serve in both our
    Active and Reserve components, at undue risk but after what
    I've seen this is exactly what we're doing and something has to
    be done about it. Let me give you just one example of why I'm
    troubled. Colonel Michael Ledbetter, currently serves as the
    State of Missouri Aviation Officer. In this position he
    oversees all Army Guard aviation operations and training. In
    his words the state of Missouri's Army Guard aviation fleet is
    the worst he has seen in over 30 years of operation dating back
    to the 1968 time-frame when he served in Vietnam.
        In Missouri we have almost 200 pilots tasked with
    performing both state and federal missions and I'm told they
    have five attack helicopters, five utility helicopters, and
    three operational observation helicopters for use, but that out
    of this fleet on any given day we might get a total of only 7
    aircraft up for flight. The condition of our fleet has been
    plagued with flight groundings and safety of use messages
    limiting operations for the past 24 months. With every safety
    of use message comes a set of inspections and more aircraft
    failing those inspections. The bottom line is we're working
    with an outmoded and aging fleet and the prospects for
    replacement aircraft are grim. This situation not only impacts
    readiness but safety as well. This is not satisfactory.
        Mr. Chairman, this is just an example of the declining
    state of readiness of our Guard and Reserve forces. Our men and
    women deserve better and I'm going to do all I can to ensure
    they're given adequate resources to do their job.
        I want to thank the Guard and Reserve Chiefs for testifying
    today. Please extend to the men and women you serve with my
    most heartfelt thanks for their devotion to duty. You have my
    utmost respect and admiration.

        Senator Inouye. Gentlemen, as you know, three subcommittees
    are presently meeting, and as a result we have had several
    requests from Members wishing to submit questions, so you will
    be receiving questions from us for your response.
        We have a problem before us. The best information advises
    us that DOD will be submitting their supplemental request about
    the end of this month, hopefully, and the strategic review
    should end sometime in June. It may take 30 to 45 days to come
    up with numbers, and if that is the case, we will be receiving
    the budget request at the end of July. In August we are in
    recess. In September, we have to act on the budget.
        My concern is that in that mad rush the Reserves and the
    Guard may be left out. Therefore, I believe I speak for this
    committee. Will you please provide us first your wish list for
    what is necessary to make you compatible? Of course, all the
    services are now going through this transformation, or
    modernization program, and if you are going to serving us the
    way you have, then you have to have compatible equipment and
    communications.
        Second, and most importantly on the supplemental, obviously
    you have a shortfall not just in personnel, but because of the
    frequent contingency deployments, you are bound to have
    shortfalls in other areas.
        We would like to have that in our hands if we can at the
    earliest, because otherwise you are going to be caught in the
    mesh of all the other supplemental requests. If you have other
    matters you would like to bring to our attention, please take
    advantage of us, otherwise you are going to be lost.
        [The information follows:]
                          Equipment and Communication
        Please see attached.

                                                                        ANG FISCAL YEAR 2002 AIRCRAFT MODERNIZATION REQUIREMENTS
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Units in Fiscal      Fiscal Year
                                           Aircraft Modernization Requirements          Year 2002/Total         2002         Fiscal Year              Contractor               States Affected by
                                                                                            Required         Requirement     2002 Total                                            Procurement
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    A-10 PE #27131................  A-10 Re-Engine..................................  Prgm Start Funds...      $8,000,000  ..............  TBD--G.E.; P&W; RR.............  CT, ID, MA, MD, MI, PA
                                    A-10 Precision Engagement Program...............  Prgm Start Funds...      17,000,000  ..............  Lockheed Martin, Owego, NY.....
                                    A-10 ALR 69 Antenna Optimization................  51 of 102 reqd.....       1,650,000  ..............  Marconi USA, Lansdale, NY......
                                    A-10 Helmet Mounted Cueing System (HMCS)........  Prgm Start Funds...       5,000,000  ..............  Vision Systems Intl, San Jose,
                                                                                                                                            CA.
                                                                                                                              $31,650,000
    B-1 PE #51628.................  B-1B Beyond Line of Sight (BLOS) Data Link......  9 of 18 reqd.......      22,500,000  ..............  Boeing, St. Louis, MO..........  GA, KS
                                    B-1 Defensive Systems Upgrades..................  18 of 18 reqd......       6,600,000  ..............  Boeing/Raytheon, St. Louis, MO.
                                    B-1B AVTR (Airborne Video Tape Recorder)........  18 of 18 reqd......       2,000,000  ..............  Boeing/L3 Comm, St. Louis, MO..
                                                                                                                               31,100,000
    C-130 PE #54332...............  C-130 Armor.....................................  168 of 168 reqd....      25,200,000  ..............  LAST Armor, Waltham, MA........  AK, AR, CA, DE, HI, ID,
                                    C-130H2 APN-241 Radar...........................  101 of 101 reqd....      54,500,000  ..............  Northrop Grumman, Linthicum, MD   IL, IN, MD, MI, MO, NC,
                                    C-130H2 NVIS (Night Vision Imaging System) Light- 104 of 104 reqd....      13,500,000  ..............  EER Systems, Chantilly, VA.....   NV, NY, OH, OK, PA, PR,
                                       ing.                                                                                                                                  RI, TN, WV, WY
                                    C-130 Situational Awareness Data Link--SADL.....  wire 220/equip 110.       6,000,000  ..............  Raytheon, Fullerton, CA........
                                    EC-130J Wideband Satellite Connectivity (WSC)     6 of 6 reqd........       6,000,000  ..............  Boeing, Seattle, WA............  PA
                                     Sys-  tem.
                                                                                                                              105,200,000
    F-15 PE #27130................  F-15 AIFF (Advanced Identity Friend/Foe)........  126 of 126 reqd....      25,160,000  ..............  TBD--BAE; Raytheon; Litton.....  OR, FL, LA, MA, MO, HI
                                    F-15 Aircraft Video Recording System (AVRS).....  126 of 126 reqd....       5,800,000  ..............  Vision Systems Intl, San Jose,
                                                                                                                                            CA.
                                    F-15 Tactical Electronic Warfare Systems (TEWS)-- Prgm Start Funds...      14,500,000  ..............  TBD--Orbital; L3 Comm; Litton;
                                     3600 RDT&E.                                                                                            TEAC.
                                                                                                                               45,460,000
    F-16 (Blk 25/30) PE #27133....  Targeting Pods..................................  26 of 81 reqd......      40,000,000  ..............  Northrop-Grumman, Rolling        AL, AR, AZ, CA, CO, IA,
                                                                                                                                            Meadows, IL.                     IL, IN, MD, MI, MN, MT
                                                                                                                                                                             ND, NJ, NY, OH, SD, TX,
                                                                                                                                                                             VA, VT, WA
                                    F-16 Color Displays.............................  202 of 365 reqd....      25,000,000  ..............  Honeywell, Albuquerque, NM.....
                                    F-16 Advanced Central Interface Unit--ACIU......  213 of 365 reqd....       8,000,000  ..............  EFW, Ft Worth, TX..............
                                    F-16 Heads Up Display Electronics Unit--HUD EU..  214 of 365 reqd....      12,000,000  ..............  BAE Systems, Ft. Worth, TX.....
                                    F-16 ALR-69 Antenna Optimization................  180 of 180 reqd....       8,300,000  ..............  Lockheed Martin, Ft. Worth, TX.
                                    F-16 Pylon Integrated Dispenser System (PIDS)     81 of 342 reqd.....       5,000,000  ..............  Lockheed Martin/Terma
                                     Universal.                                                                                             Elektroniks, Ft. Worth, TX.
                                    F-16 Helmet Mounted Cueing System (HMCS)........  Prgm Start Funds...       5,000,000  ..............  Vision Systems Intl, San Jose,
                                                                                                                                            CA.
                                    F-16 AIFF (Advanced Identify Friend/Foe)........  Prgm Start Funds...       2,500,000  ..............  BAE Systems, Greenlawn, NY.....
                                                                                                                              105,800,000
    F-16 Blk 42 PE #27133.........  F-16 Block 42 Re-Engine.........................  23 of 49 reqd......      98,000,000  ..............  Pratt & Whitney, West Palm       IA, OH, OK
                                                                                                                                            Beach, FL.
                                                                                                                               98,000,000
    HH-60-1 PE #53114.............  HH-60G ALR-69...................................  20 of 20 reqd......      10,000,000  ..............  WR-ALC, Robins , GA............  AK, CA, NY
                                    HH-60 Situational Awareness Data Link--SADL.....  18 of 18 reqd......         900,000  ..............  Raytheon, Fullerton, CA........
                                                                                                                               10,900,000
    KC-135 PE #41218..............  KC-135E to R Conversions........................  16 of 88 reqd......     352,000,000  ..............  Boeing & G.E., Wichita, KS.....  AZ, CA, IL, KS, ME, MI,
                                                                                                                           ..............                                    NJ, PA, TN, UT, WA
                                    KC-135 Situation Awareness Data Link--SADL......  wire 224/equip 112.       6,100,000  ..............  Raytheon, Fullerton, CA........  NY, OH, PA, TN, UT, WA,
                                                                                                                                                                             WI
                                                                                                                              358,100,000
    SAOC PE #64754................  Joint Tactical Information Distribution System    5 of 5 reqd........       2,500,000  ..............  BAE Systems/Rockwell, Cedar      FL, NY, WA, HI, PR
                                     (JTIDS).                                                                                               Rapids, IA.
                                                                                                                                2,500,000
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                                            NEW ACQUISITIONS
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Units                                                                           States Affected by
                                              Aircraft Modernization Requirements             Required     Unit Cost     Program Cost               Contractor                     Procurement
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    C-17..........................  Replaces aging/retiring C-141s.........................        TBD    $184,000,000             TBD  Boeing, Long Beach, CA............  AK, CA, MS, HI
    F-16C.........................  Equips the AF with new jets; ANG gets trickle-down.....         18      31,444,000    $565,992,000  TBD...............................  SC, plus 2 states TBD
    C-40C.........................  Supports Congressional, DOD, Air Force missions........          3      69,000,000     207,000,000  Boeing, Seattle, WA...............  DC
    C-130J........................  Completes conversion of 143AW, RI and 146th AW, CA.....         15      70,000,000   1,050,000,000  Lockheed Martin, Marietta, GA.....  CA, RI
    EC-130J.......................  Completes conversion of 193rd SOW, Harrisburg, PA......          3      93,000,000     279,000,000  Lockheed Martin, Marietta, GA.....  PA
    C-37 Aircraft.................  Supports Congressional, DOD, USAF missions.............          2      46,000,000      92,000,000  Gulfstream Aerospace, Savannah, GA  DC
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                                       FISCAL YEAR 2000 UNFUNDED REQUIREMENTS LIST
    ----------------------------------------------------------------------------------------------------------------
                                                                                                     APOM
                                        Units                                  Ttl New              Fiscal     ANG
            NEW ACQUISITIONS          Required    Unit Cost   Program Cost   Acquisition   AF POM    Year   Critical
                                                                                Cost                 2001     List
    ----------------------------------------------------------------------------------------------------------------
    F-16............................       TBD   $27,000,000           TBD  ............      Yes       No        No
    C-130J-30 Stretch...............         5    58,400,000  $292,000,000  ............      Yes       No        No
    EC-130J.........................         2    90,000,000   180,000,000  ............      Yes       No        No
    C-22 Replacement................         3    56,500,000   169,500,000  ............       No       No        No
    C-38 A/C 3&4....................         2    15,000,000    30,000,000  $671,500,000       No       No        No
    ----------------------------------------------------------------------------------------------------------------

                                         FISCAL YEAR 2000 UNFUNDED REQUIREMENTS
    ----------------------------------------------------------------------------------------------------------------
                                                                                                     APOM
      SUSTAINMENT & SUPPORTABILITY      Units                                Ttl Support            Fiscal     ANG
                  ITEMS               Required    Unit Cost   Program Cost    & Sustain    AF POM    Year   Critical
                                                                                Cost                 2001     List
    ----------------------------------------------------------------------------------------------------------------
    Mobile Air Fire Fighting System          5    $2,000,000   $10,000,000  ............       No       No        No
     (MAFFS)........................
    C-141 8.33 MHZ Radios...........         6       200,000     1,200,000  ............       No       No       Yes
    HC-130 Floor Armor..............         6       125,000       750,000  ............       No       No        No
    C-130 Floor Armor...............        12       110,000     1,320,000  ............       No       No        No
    LC-130 Upgrade..................         4     1,250,000     5,000,000  ............       No       No        No
    Tactical Air Control Party              15       552,000     8,280,000  $472,050,000      Yes      Yes        No
     (TACP)/Air Support Ops Squadron
    ----------------------------------------------------------------------------------------------------------------
    Upgrades F-100PW-100 Engine Cores to -220E. Completes F-16s (27; completes F-15 A/B (270 with spares. This
      program improves performance, reliability, and corrects the #1 safety issue in F-16's.

        The following is the Air Force Reserve Command's list of unfunded
    miscellaneous operational equipment for fiscal year 2002 (as of: 24 May
    2001).

                                          AIR FORCE RESERVE COMMAND (AFRC) FISCAL YEAR 2002 EQUIPMENT REQUIREMENTS LIST
                                                                      [Dollars in millions]
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Priority                                                                      Fiscal year 2002 Req'd Qty/                           Remaining
       No.               Requirements                Total Required Qty/Cost                  Cost                Remaining Qty Req'd      Cost    Unit Cost
    --------------------------------------------------------------------------------------------------------------------------------------------------------
          1C-141 Life Extension/Replacement     45 ac/932....................  None.........................  45 ac.................   $932        $20.711
          2C-130 Js                             4 ac/$290.8..................  2 ac/$145.4..................  2 ac..................    145.4       72.7
          3KC-135 R Engine Kits                 16 kits/$432.................  2 kits/$54...................  14 kits...............    378         27
          4F-16 D Model SADL Installation       10 kits/$0.3.................  5 kits/$0.15.................  5 kits................      0.150      0.03
          5F-16 Color Displays                  72 units/$15.................  23 units/$4.8................  49 units..............     10.2        0.208
          6Tactical Radios (SCOPE SHIELD II )   82 sets/$8.5.................  41 sets/$4.25................  41 sets...............      4.25       0.104
          7F-16 Helmet Mounted Cueing System    80 sets/$20.6................  None.........................  80 sets...............     20.6        0.258
            (HMCS)
          8Survival Radios (PRC 112, GPS-       30 units/$0.6................  30 units/$0.6................  None..................  ( \1\ )        0.02
            Capable)
          9F-16 Pylon Integr Dispens Sys        50 mods/$3.0.................  50 mods/$3.0.................  None..................  ( \1\ )        0.06
            Universal Upgrade
         10B-52 Bomber Enhanced Tactical        8 sets/$2.0..................  None.........................  8 sets................      2.0        0.25
            Interface
         11KC-135 Auxiliary Power Unit Boost    16 units/$0.32...............  16 units/$0.32...............  None..................  ( \1\ )        0.02
            Pump
         12HH-60/C-130/KC-135 Carry-on SADL     67 kits/$3.685...............  None.........................  67 kits...............      3.685      0.055
         13C-130 Spray Paint Booth              1 booth/$0.565...............  1 booth/$0.565...............  None..................  ( \1\ )        0.565
         14Motor Vehicles For Med UTC's (Multi- 44 veh/$2.42.................  34 Veh/$1.87.................  10 veh................      0.550      0.055
            Yr)
         15Snow Removal Vehicles                7 veh/$1.2...................  7 veh/$1.2...................  None..................  ( \1\ )        0.171
         16Land Mobile Radios (Multi-Yr)        10.5 bases/$7.83.............  5.5 bases/$4.08..............  5 bases...............      3.75       0.746
         17Intrusion Detection System (Multi-   10 bases/$4.125..............  5 bases/$2.063...............  5 bases...............      2.063      0.413
            Yr)
         18Hydrant Fueling Trucks               9 trucks/$1.4................  9 trucks/$1.4................  None..................  ( \1\ )        0.156
         19Next Generation Nvg's                100 sets/$1.5................  None.........................  100 sets..............      1.5        0.015
         20Truck Tractors                       10 trucks/$0.770.............  10 trucks/$0.77..............  None..................  ( \1\ )        0.077
         21Utility Truck (44)          5 trucks/$0.152..............  5 trucks/$0.152..............  None..................  ( \1\ )        0.03
         22Flightline Video Surveillance        6 systems/$1.01..............  3 systems/$0.505.............  3 systems.............      0.505      0.168
            System
         23F-16 Advanced Central Interface      72 kits/$6.6.................  72 kits/$6.6.................  None..................  ( \1\ )        0.092
            Unit--Upgrades
         24C-5A Re-Engine Kits                  32 kits/$1,176...............  None.........................  32 kits...............  1,176         36.75
    --------------------------------------------------------------------------------------------------------------------------------------------------------
           Total Cost Required: $2,912.4 million.
           Total Cost Required for Fiscal Year 2002: $231.8 million.

         AFRC UNFUNDED MISCELLANEOUS EQUIPMENT LIST (FISCAL YEAR 2002)

    Priority #1
        Description.--Currently the AFRC C-141 fleet is due for retirement
    in fiscal year 2006. Because of this, many operational deficiencies are
    not being addressed. Upgrades such as the 8.33 kHz radios are required
    to meet DOD's mandated Global Air Navigation System/Global Air Traffic
    Management requirements. The issue becomes how can the AFRC C-141 fleet
    continue to support strategic lift requirements globally. The AF has to
    address the issue of either extending the life for C-141 or provide an
    alternative replacement mission.
        Impact to Readiness.--Currently there is no follow-on mission
    planned for AFRC C-141 fleet. AFRC will not be able to fully meet its
    role in the AEF concept.
        State/Base.--Ohio, Wright-Patterson AFB; Maryland, Andrews AFB;
    California, March ARB.

    Priority #2
        Description.--Procures 4 additional C-130J's to complete the
    conversion of the 403rd Airlift Wing at Keesler AFB, MS. In order for
    the unit to be operational it needs a total of 8 aircraft. The 403rd
    currently has 4 aircraft on the ramp and needs 4 more to complete. AFRC
    originally had the additional 4 C-130J's supported by the AF however
    the AMC road map is presently being updated and may move aircraft
    further into the future.
        Impact to Readiness.--The lack of assets will translate to
    inadequate training and ineffective operational capability.
        State/Base.--Mississippi, Keesler AFB.

    Priority #3
        Description.--Replaces all ``E'' model engines with ``R'' model
    engines; provides larger flight control surfaces, improved landing gear
    and brakes. Includes kits and installation. Total AFRC requirement is
    16 kits for 16 aircraft at approximately $27 million each kit.
        Impact to Readiness.--Current ``E'' model engines are old, are
    limited because noise abatement fines. They are more expensive to
    operate and do not offer fleet commonality for theater or AEF
    deployment.
        State/Base.--Michigan, Selfridge ANGB; California, Beal AFB.

    Priority #4
        Description.--Provides the internal wiring and data link radios for
    use by F-16 D aircraft, the training version, for battlefield
    situational awareness. Recent real-world and peacetime incidents of
    fratricide have proven the need for a battlefield identification
    system. SADL will provide the AFRC F-16 fleet with a capability to work
    with other USAF units as well as U.S. Army units in close combat while
    minimizing the potential for fratricide. This will tie into the Army's
    Digital Battlefield.
        Impact to Readiness.--Increased situational awareness increases
    both mission continuity and survivability while reducing incidents of
    fratricide during real-time operations and brings a true combined arms
    capability to the combat arena.
        State/Base.--Texas, Carswell Ft. Worth; Utah, Hill AFB; Florida,
    Homestead ARS; Arizona, Luke AFB.

    Priority #5
        Description.--Current AF Reserve F-16 Block-30 aircraft use
    monochrome (black and white) displays. Hi-definition color Multi-
    Function Displays will enable the F-16 to capture more precise,
    informative pictures thus improving interpretation, advancing
    situational awareness, and increasing visual accuracy for target
    recognition with electro-optical weapons and targeting systems.
        Impact to Readiness.--Existing F-16 Block 30's displays are black
    and white, old, and spare parts are unsupportable. Current displays
    will not be able to handle planned/future upgrades to the aircraft.
        Other.--ACC has determined the displays to be a Critical Viability
    Issue and unfunded program for ARC (AFRC/ANG) aircraft. AF Form 1067
    (Modification Proposal) has been approved by ACC. At present, the ARC
    is working a ``fair-share'' upgrade study which leverages a greater
    number of aircraft to obtain lower prices for this upgrade (contractor
    not yet determined).
        State/Base.--Texas, Carswell Ft. Worth; Utah, Hill AFB; Florida,
    Homestead ARS; Arizona, Luke AFB.

    Priority #6
        Description.--This will replace the older and unsupportable Scope
    Shield I (SSI) tactical field radio sets for all AFRC Force Protection
    units. Scope Shield II (SSII) radios have proven capability of
    providing adequate and necessary secured communication links during
    training exercises and contingency operations.
        Impact to Readiness.--With the exception of a very limited number
    of units, the AF reserve force structure retains the old, out-dated,
    ineffective equipment, and non-interoperable radios.
        Other.--Headquarters Air Force Civil Engineer Support Agency
    (AFCESA) identified Scope Shield II tactical radio equipment as the
    replacement for the antiquated Scope Shield I tactical radio sets
    within all CE units. Because of the cost for outfitting all CE units a
    decision was made to only fund acquisition for active duty CE Unit Type
    Codes (UTCs). Sufficient POM funding is not available for Air Force
    Reserve and Air National Guard units. Operational Requirements Document
    99-27.
        State/Base.--Massachusetts, Westover ARB; Oregon, Portland IAP;
    Georgia, Dobbins AFB, Robins AFB; Wisconsin, Gen Mitchell IAP; Texas,
    Carswell Ft. Worth ARB, Kelly AFB; Florida, Homestead AFB, Eglin AFB,
    Patrick AFB; California, March AFB; Indiana, Grissom ARB; Minnesota,
    Minn-St. Paul ARS.

    Priority #7
        Description.--A Helmet Mounted Cueing System (HMCS) will provide
    the F-16 pilots an integrated capability with the combining of data
    from the multi-functional displays, instrumentation, and other on-board
    avionics. It will significantly improve Air to Air and Air to Ground
    mission effectiveness by providing Heads Up Display (HUD) information
    and spatial cueing directly onto an aircrew helmet visor.
        Impact to Readiness.--HMCS is leading-edge technology and a
    necessity for threat awareness and defensive reactions. It maintains
    parity with the active duty fighter force.
        Other.--The HMCS is not fully operational. Final testing is
    expected in fiscal year 2002.
        State/Base.--Texas, Carswell Ft. Worth; Utah, Hill AFB; Florida,
    Homestead ARS; Arizona, Luke AFB.

    Priority #8
        Description.--This requirement is for a training package of 30 PRC-
    112B/C survival radios for 10th Air Force fighter, rescue and special
    operations units. The PRC-112B (sometimes referred to as the Hook 112)
    has become the standard survival radio in Operations Northern and
    Southern Watch (ONW and OSW). These radios offer a great increase in
    capability over PRC-90 and early PRC-112 radios. Among the capability
    of these radios is an internal Global Positioning System (GPS) receiver
    and the ability to communicate with rescue forces via secure data burst
    transmission. These radios will be evenly distributed among AFRC
    fighter bases.
        Impact to Readiness.--Rescue is all about identifying and
    retrieving personnel. It is crucial to locate, identify, and recover
    during the ``golden hour'', that first hour a survivor is on the ground
    and when the member is most susceptible to capture. With this SR,
    golden-hour search and rescue is now reachable.
        State/Base.--Hill AFB, Utah; Homestead AFB, FL, Carswell Ft. Worth,
    TX; Luke AFB, AZ; Whiteman AFB, MO; Barksdale AFB, LA; New Orleans ARB,
    LA.

    Priority #9
        Description.--PIDS universal upgrade is a modification to the PIDS
    that allows the aircraft to be in compliance with Military Standard
    1760 for electronics bus. MIL STD 1760 interface is necessary to
    support ``Smart Weapons'' integration. The term ``Smart Weapons'' is
    used to describe a range of weapons that use the Global Positioning
    System (GPS) for trajectory guidance.
        Impact to Readiness.--This requirement is a necessity for
    participation and deployment with Aerospace Expeditionary Forces. This
    will be a future qualifier and is an ACC unfunded survivability issue.
        State/Base.--Texas, Carswell Ft. Worth; Utah, Hill AFB; Florida,
    Homestead ARS; Arizona, Luke AFB.

    Priority #10
        Description.--Provides moving map capability and Real Time
    Information in the Cockpit (RTIC) to all crew stations on the B-52. The
    BETI system consists of personal computer (PC) based, computer display
    screens, one mounted at each aircrew station ((Aircraft Commander (AC),
    Pilot, Navigator (Nav), Radar Nav (RN), and Electronic Warfare Officer
    (EWO)).
        Impact to Readiness.--The BETI system will provide the B-52 aircrew
    with enhanced tactical awareness via moving map displays, near Real
    Time Intelligence in the Cockpit (RTIC) threat updates and displays,
    and Line of Sight (LOS) and Beyond LOS (BLOS) data transfer capability.
    This program is presently under development at ACC and may appear as an
    fiscal year 2004 POM initiative for active aircraft.
        State/Base.--Louisiana, Barksdale AFB.

    Priority #11
        Description.--Replaces un-supportable boost pump on the KC-135E
    model tankers with same boost pump used on the KC-135R's. The E-model
    fuel boost pump impeller fails, leaks internally and is not designed
    for continuous operation. The modification includes pump, brackets,
    wiring, trial install, kit-proofing, support, and technical order
    updates/engineering changes. This is a Guard/Reserve effort.
        Impact to Readiness.--Improves mission readiness rate at a lower
    maintenance cost. It will also bring commonality to the entire KC-135
    fleet.
        State/Base.--Michigan, Selfridge ANGB; California, Beal AFB.

    Priority #12
        Description.--Current operations across the spectrum of operations
    have proven the need for a battlefield identification system. The
    Situation Awareness Data Link (SADL) will provide the AFRC tactical
    airlift (C-130, KC-135 aircraft and HH-60G helicopter) and Combat
    Search and Rescue (CSAR) aircraft with a capability to work with other
    USAF units as well as similarly equipped Army and Marine units in
    close-in Joint combat scenarios. It provides tactical data link
    capability as a carry-on PC-based system. This modification concept
    will link SADL data directly to aircraft navigator table (where
    applicable). It will provide air-to-ground interface for airdrop or
    personnel recovery coordination en-route. Provides air-to-air tactical
    picture and escort situation to aircrew.
        Impact to Readiness.--Incorporation of SADL into AFRC aircraft will
    reduce the possibility of other aircraft or ground units shooting down
    a SADL equipped aircraft. This also enhances mission survivability due
    to the ability to pass ``live'' information between aircraft.
        State/Base.--Michigan, Selfridge ANGB; California, Beal AFB;
    Florida, Patrick AFB.

    Priority #13
        Description.--Procures Environmental Protection Agency (EPA)
    compliant paint spray booth for the 403 AW and replaces the out-dated
    aircraft spray booth. The new booth will serve both WC and C-130H/J
    aircraft. This is a side-down draft, pressurized, dry filter aircraft
    parts/support equipment paint spray booth insert.
        Impact to Readiness.--The coating system must provide the specified
    survivability enhancement for the life of the airframe. As the flat
    camouflage coatings used on our weapon systems age they loose their
    hiding and corrosion prevention capability. Another major concern is
    meeting environmental standards. The present system may fail to meet
    several EPA clean air regulations making the AFR liable to fines that
    can exceed the cost of replacing the booth.
        State/Base.--Louisiana/Keesler AFB.

    Priority #14
        Description.--The High Mobility Multipurpose Vehicles are DOD
    standard light personnel transport/carrier (also known as the Humvees)
    M1097A2 vehicles. These are needed to replace the existing M1008
    vehicles, which are no longer manufactured. The M1097A2 truck will
    transport equipment and personnel to the battlefield in support of
    medical wartime tasking. Due to DOD-wide use these vehicles are
    adaptable, interchanged, or shared with other agencies, components, or
    agencies for a wide variety of additional tasking.
        Impact to Readiness.--These vehicles are essential for continued
    medical support operations. Current vehicles are prone to breakdown and
    maintenance time has doubled due to lack of parts.
        State/Base.--Florida, MacDill AFB.

    Priority #15
        Description.--Snow plow and removal vehicles are needed at northern
    tier AFRC bases. The lack of these vehicles have reduced the base Civil
    Engineering squadron ability to perform runway and taxi way snow
    removal and cleanup effectively and timely. The full compliment of the
    necessary snow vehicles will improve aircraft launch and recovery
    operations during winter months.
        Impact to Readiness.--At northern bases where snow accumulation has
    reached 2 to 3 feet within hours, runways are shutdown if the snow is
    not properly and completely removed and operational support/training is
    delayed.
        State/Base.--Washington, McChord AFB; Oregon, Portland IAP;
    Minnesota, Minn-St. Paul ARS; Wisconsin, Gen. Mitchell IAP ARS;
    Michigan, Selfridge ANGB; New York, Niagara Falls IAP ARS.

    Priority #16
        Description.--This requirement consists of the procurement and
    installation of trunked LMR Systems at all AF Reserve Bases (.5 or half
    systems are used to address AFRC tenant base structure). Currently,
    operating radio networks in six AFRC bases are experiencing problems
    including lack of coverage, degraded service, and limited frequencies,
    trunked LMRs provide an integrated system that complies with National
    Telecommunications and Information Administration (NTIA) regulation for
    narrow band operations.
        Impact to Readiness.--Many AFRC bases are experiencing problems
    such as, degraded signal, transmission drop-offs, and frequency
    limitation. Effective 1 Jan 2005, NTIA requires all LMR networks to go
    to narrow-band, thus driving an upgrade of all LMR equipment and
    infrastructure.
        State/Base.--Massachusetts, Westover ARB \1\; Oregon, Portland IAP;
    Georgia, Dobbins AFB \1\; Wisconsin, Gen Mitchell IAP \1\; Texas,
    Carswell Ft. Worth ARB; Florida, Homestead AFB \1\; California, March
    AFB \1\; Indiana, Grissom ARB \1\; Minnesota, Minn-St. Paul ARS.
    ---------------------------------------------------------------------------
        \1\ Indicates desired fiscal year 2002 installation.
    ---------------------------------------------------------------------------

    Priority #17
        Description.--This is a highly reliable integrated security system
    capable of intrusion detection, alarm reporting, and situation
    assessment. It integrates sensors, data communication devices, and
    power supplies into a relocatable (movable) system designed to enhance
    flight line security.
        Impact to Readiness.--Due to AFRC's installations being minimally
    manned for security, the use of this system is important to Force
    Protection efforts, and is a significant force multiplier.
        State/Base.--Minnesota, Minn-St. Paul ARS \1\; Texas, Carswell ARS
    \1\; Louisiana, New Orleans ARS \1\; Massachusetts, Westover ARB \1\;
    Wisconsin, Gen Mitchell ARS \1\; Ohio, Youngstown-Warren ARS; New York,
    Niagara-Falls IAP, ARS; California, March ARB; Florida, Homestead ARS;
    Georgia, Dobbins ARB.

    Priority #18
        Description.--These vehicles are required to transfer aircraft fuel
    directly from an under ground hydrant system onto KC-135 and C-5
    aircraft. Mission readiness at AFRC bases assigned KC-135 and C-5
    aircraft depends on the operation of hydrant trucks. The pumping
    capability of the hydrant is 1,200 gallons per minute where as the
    existing R11 pumps only 600 gallons per minute. The funding level of
    new procurement through the vehicle priority buy system has been
    consistently under funded.
        Impact to Readiness.--Without the double capacity hydrant trucks
    AFRC fuels management effort is doubled when servicing KC-135, and C-5
    aircraft or servicing transient wide body aircraft.
        State/Base.--California, March ARB; Minnesota, Minn-St. Paul ARS;
    Ohio, Youngstown-Warren ARS; New York, Niagara-Falls IAP, ARS;
    Massachusetts, Westover ARB; Florida, Homestead ARS; Texas, Carswell
    ARS; Louisiana, New Orleans ARS; Georgia, Dobbins ARB.

    Priority #19
        Description.--These NVGs are a major leap in NVG technology, and
    offer significant capability, and safety increases over presently
    fielded NVGs. This purchase will provide enough NVGs to allow all
    applicable AFRC units to train and develop tactics to this increased
    capability. This quantity will also be enough to equip and deploy 2
    AFRC units. This purchase offers a cost-effective compromise as opposed
    to replacing all NVGs presently being used. This will allow future
    incremental buys taking advantage of product improvement and refinement
    after initial production. Panoramics offer a wider field of view than
    current NVGs, and low bloom technology offers a significant increase in
    capability in urban areas, a DOD high priority environment. Non
    ejection compatibly, limited field of view and NVG blooming are
    currently the 3 most severely limiting factors in NVG operations. These
    NVGs will be used in special operations, rescue and fighter units.
        State/Base.--Hill AFB, Utah; Homestead AFB, FL; Carswell Ft. Worth,
    TX; Luke AFB, AZ; Whiteman AFB, MO; Barksdale AFB, LA; New Orleans ARB,
    LA.

    Priority #20
        Description.--Tractors are required to transport recovered cargo
    loads after airdrop support operations. These tractors are considered
    multipurpose and can be used in a wide variety of scenarios while
    providing the necessary capability for which they are intended.
        Impact to Readiness.--Increased AFRC taskings around the world
    demand more assets to be available for support.
        State/Base.--California, March ARB; Minnesota, Minn-St. Paul ARS;
    Ohio, Youngstown-Warren ARS; New York, Niagara-Falls IAP, ARS;
    Massachusetts, Westover ARB; Florida, Homestead ARS; Texas, Carswell
    ARS; Louisiana, New Orleans ARS; Georgia, Dobbins ARB; Pennsylvania,
    Pittsburgh IAP ARS.

    Priority #21
        Description.--These 44 utility vehicles are required to
    transport drop zone management and cargo recovery teams to and from the
    drop zones. One way distance to many drop zones can exceed 100 miles.
    These utility vehicles have the capability to travel at any time over
    any land surface in and around drop zones to set up runway markers and
    locate recoverable airdropped loads.
        Impact to Readiness.--Fewer airdrops are performed per flying
    training mission because of the amount of time it takes to recover
    airdrop training loads.
        State/Base.--Minnesota, Minn-St. Paul ARS; Ohio, Youngstown-Warren
    ARS; New York, Niagara-Falls IAP, ARS; Massachusetts, Westover ARB;
    Pennsylvania, Pittsburgh IAP ARS.

    Priority #22
        Description.--The Flightline VSS is part of the AFRC Flightline
    Threat Reduction Program. AFRC installations are minimally manned due
    to shortage in manning. Manpower authorizations at each location allow
    for only 1 one-person mobile patrol per control point. The Flightline
    VSS acts as a force multiplier without additional manpower.
    Additionally the Flightline VSS allows commanders to observe
    maintenance operations in progress and security situations, in near
    real-time, via command post remote monitors.
        Impact to Readiness.--The expanding role of AFRC in the total force
    makes it imperative that strong emphasis be placed on security of
    priority resources while adding a greater margin on safety.
        State/Base.--Wisconsin, Gen Mitchell ARS \1\; Minnesota, Minn-St.
    Paul ARS \1\; Texas, Carswell ARS \1\; Massachusetts, Westover ARB;
    Ohio, Youngstown-Warren ARS; California, March ARB.

    Priority #23
        Description.--The ACIU provides weapons interface, communication
    and data processing for the Block 25/30/32 F-16. Capabilities of the
    existing ACIU cannot accommodate the integration of new generation
    ``Smart Weapons'' and prevent the full potential of the aircraft.
    Future capabilities planned for integration on the F-16 will be limited
    or impossible under constraints imposed by the current ACIU. The total
    cost of the program is $6.65 million. This includes $4 million for Non-
    recurring engineering (NRE). The total quantity required is 72 units.
        Impact to Readiness.--Existing ACIU processor speed and memory
    capacity cannot handle any additional capabilities. In addition, its
    failure rate is very high, Mean Time Between Failure (MTBF) is 400
    hours. The upgraded device is anticipated to have a 2,000 hour MTBF.
        State/Base.--Texas, Carswell Ft. Worth; Utah, Hill AFB; Florida,
    Homestead ARS; Arizona, Luke AFB.

    Priority #24
        Description.--The RERP program is required to replace the current
    T-39 engine and upgrades airframe and systems components. This is a
    much needed modernization requirement for the C-5A, whose age is well
    above 30 years old. This effort will improve the C-5A reliability and
    maintainability by focusing on replacing the less reliable T-39 engine
    with a more reliable, commercial-off-the-shelf, turbo fan engine. This
    program also will upgrade numerous other subsystems including flight
    controls, electrical, hydraulics, landing gear, fuel system, and
    airframes.
        Impact to Readiness.--This mod will significantly improve readiness
    and increase operational worthiness times while, reducing down time for
    maintenance and personnel cost.
        State/Base.--Massachusetts, Westover ARB; Texas, Lackland AFB.

                                  DEPLOYMENTS

    ANG fiscal year 2001 supplemental requirements

                            [In millions of dollars]

    ANG Family Program. Implemented in fiscal year 2001, this funding
        breathes life into a totally ignored piece of the ANG's
        worldwide commitment. While active Air Force and Air Force
        Reserve programs reflect $60-$125 per person for family
        support during contingency deployments, the ANG's family
        program operated on a volunteer basis.........................   5.0
    Flying Hour Program Increased Cost. Fully funds anticipated flying
        hour program for fiscal year 2001. Increases caused by aging
        aircraft and hard-to-get parts. Without additional funding,
        ANG aircraft will be grounded on/about 1 Sep..................  93.0
    Utility Cost Increases. West cost utility cost increases plus
        inordinately harsh winter elsewhere has driven utility costs
        skyward. Additional funding required to offset increased costs  16.3
    Civilian Payroll. Part 1 is Special Salary Rates for technician
        pilots and Information Technology personnel. Part 2 is to
        restore 25 percent program reduction for failed PMEL out-
        sourcing effort. Eighty-three technicians were marked for out-
        sourcing. Decision reversed. Fiscal year 2001 impact only.....   6.0
    Depot Maintenance Activity Group (DMAG) Surcharge. Fiscal year
        2000 shortfall in working capital fund requires surcharge in
        fiscal year 2001 to balance accounts. ANG share is $10.0......  10.0
    Depot Purchased Equipment Maintenance Backlog. ANG's current
        backlog includes one C-5 aircraft, two KC-135 aircraft and
        eight engines. All of this backlog could be executed if
        funding was available.........................................  18.6
    Real Property Maintenance. The ANG backlog on facility maintenance
        now approaches $1 billion. At this point in the fiscal year,
        executing much more than $50 million will be a difficult task.
        This amount of additional funding should also maintain the
        current backlog...............................................  50.2
                                                                      ______
          Total....................................................... 199.9

        The Air Force Reserve has been presented with numerous funding
    challenges due to high tempo of operations. Following are some of the
    shortfalls we are currently experiencing:

    ----------------------------------------------------------------------------------------------------------------
                                   Amount
    ----------------------------------------------------------------------------------------------------------------
    DPEM \1\ ....................   $39.0  O&M.........  Total validated requirement for AFR DPEM in fiscal year
                                                          2002 is $354.1 million. Current funding--$287.16 million,
                                                          equates to 83.3 percent of validated requirement 92-94
                                                          percent of requirement is historic level of funding
                                                          required. Additional $39 million would bring AFRC funding
                                                          up to 92 percent. Will have to defer PDM on up to 10
                                                          aircraft of various types and delay induction of as many
                                                          as 20 engines into depot overhaul
    IADT, Proj 725...............     4.0  RPA.........  Initial Duty for Training activity. Allows accession of
                                                          additional 400 NPS individuals. Major Reserve initiative
                                                          to regain end strength. Programmed funding of $13.8
                                                          million
    Annual Tour, Proj 721........     8.0  RPA.........  Unit annual tour funding. Increased participation and costs
                                                          that exceed planning factors drive this bill. Programmed
                                                          funding of $484.6 million
    Annual Tour, Proj 722........     6.0  RPA.........  Individual Mobilization Augmentee annual tour funding.
                                                          Increased participation and costs that exceed planning
                                                          factors drive this bill. Programmed funding of $92.8
                                                          million
    Bonus Incentives Programs,       31.0  RPA.........  Funds needed for further incentives to support recruitment
     Project 739.                                         and retention. Most AFR bonus programs currently funded at
                                                          less than 100 percent
    Facility Projects \2\........    97.0  O&M.........  Represents 2 percent of Plant Replacement Value of AFR
                                                          facilities. Requirement is direct result of years of under
                                                          funding. MILCON, and Reserve assumption of ownership of
                                                          former AD bases. Attempts to halt slide in readiness.
                                                          Funds critical infrastructure and facility requirements at
                                                          tenant and host locations
    Planning & Design............    10.0  O&M.........  Requirement is driven by (1) limited in-house staff, (2)
                                                          Increased design requirements
    Recruiting & Advertising.....    21.6  O&M.........  Past congressional adds have allowed the program to operate
                                                          at a $12 million funding level. This fiscal year's budget
                                                          is closer to the original baseline of $6 million. A viable
                                                          national presence and program cannot be maintained at the
                                                          current level of funding. Funds national television, radio
                                                          and print advertising to support 35 main operating
                                                          locations, Internet advertising campaign, and new leased
                                                          offices scheduled to open this fiscal year
    KC-135 R Engine Kits.........    54.0  Investment..  Requirement driven by proposed weapon system conversion and
                                                          Congressional attention. Funds the conversion of two E-
                                                          model aircraft to R-model configuration
    ----------------------------------------------------------------------------------------------------------------
    \1\ Represents 92 percent of total requirement.
    \2\ Represents 2 percent of Plant Replacement Value.

                                  [In millions]

                                                                      Amount

    RESERVE PERSONNEL APPROPRIATION--APPN 3700:
        Annual Tour, Proj 721.........................................  $8.0
        Annual Tour, Proj 722.........................................   6.0
        IADT, Proj 725................................................   4.0
        Special Tour, Project 727.....................................  21.1
        Bonus Incentives Programs, Project 739........................  31.0
        ROTC, Proj 783................................................  11.8
                                                                      ______
          Total.......................................................  81.9
                            =================================================================
                            ________________________________________________
    OPERATIONS & MAINTENANCE APPROPRIATION--APPN 3740:
        DPEM \1\......................................................  39.0
        Sustaining Engineering........................................   5.0
        Recruiting & Advertising......................................  21.6
        Facility Projects.............................................  97.0
        Planning & Design.............................................  10.0
        Information Technology........................................  18.5
        Nuclear Biological Chemical Equipment.........................   3.9
        RED HORSE.....................................................    .5
        DMAG Surcharge................................................   8.0
        Mass Transit Subsidy..........................................    .5
                                                                      ______
          Total....................................................... 204.0
                            =================================================================
                            ________________________________________________
    MILITARY CONSTRUCTION APPROPRIATION--APPN 3730:
        Judgment Fund Payment.........................................  11.9
        Fuel Cell Maintenance Facility................................   7.3
        Consolidated Training Center..................................   6.1
        New Fire Station..............................................   7.0
        Consolidated Lodging Facility.................................  13.3
        Services Complex..............................................  12.2
        Squadron Operations Facility..................................   4.2
        Aerial Port Training Facility.................................   1.9
        Consolidated Lodging Facility.................................  15.4
        Airfield Project..............................................  15.0
        Fitness Center................................................   2.5
        Construct VQ to Replace VAQ...................................   9.0
        Maintenance Hangar............................................   9.2
        Planning & Design.............................................   6.7
                                                                      ______
          Total....................................................... 121.9
                            =================================================================
                            ________________________________________________
    INVESTMENT APPROPRIATIONS--APPNs 3010, 3080:
        C-130Js....................................................... 145.4
        KC-135 R Engine Kits..........................................  54.0
        F-16 D Model SADL Installation................................    .2
        F-16 Color Display............................................   4.8
        Tactical Radios...............................................   4.3
        Survival Radios...............................................    .6
        F-16 Pylon Integrated Dispenser Upgrade.......................   3.0
        KC-135 Auxiliary Power Unit Boost Pump........................    .3
        C-130 Spray Paint Booth.......................................    .6
        Motor Vehicles for Med UTCs...................................   1.9
        Snow Removal Vehicles.........................................   1.2
        Land Mobile Radios............................................   4.1
        Intrusion Detection System....................................   2.1
        Hydrant Fueling Trucks........................................   1.4
        Truck Tractors................................................    .8
        Utility Truck (44)...................................    .2
        Flightline Video Surveillance System..........................    .5
        F-16 Advanced Central Interface Upgrades......................   6.6
                                                                      ______
          Total \1\ .................................................. 232.0

    \1\ Total different from sum due to rounding.
    ---------------------------------------------------------------------------
                                reserve affairs
        Personnel.--There are no current personnel shortfalls.
        Operations and Maintenance Shortfalls.--The Marine Corps Reserve
    has shortfalls in O&MMCR for utilities, equipment and vehicle
    maintenance, and flight hours (O&MNR).
    Utilities: $2.3 million
        Utility costs have risen by an unprojected 40 percent at all of the
    185 MARFORRES sites during fiscal year 2001, leaving MARFORRES
    critically short of funding. These are ``must pay'' costs. Meeting the
    ``must pay'' requirements from within existing appropriations will
    impact Real Property Maintenance and Operating Forces funding.
    Replenishment, replacement, and maintenance of some equipment would
    have to be deferred to future years, creating a bow wave in these
    accounts.
    Maint of Equipment: $5.0 million
        Repair costs for maintenance of armored vehicles, trucks,
    howitzers, and other ground equipment are rising. Maintenance of
    Equipment and Vehicles includes Critical Low Density Repairables (CLD)
    supporting radar and communication assets; Depot Level Repairables
    (DLR) supporting repair parts for such equipment as tanks, trucks,
    AAVS, HMMWVs; and other maintenance of equipment. When CLD and DLR
    equipment fails, the equipment is deadlined, training is impaired and
    readiness impacted. The Marine Corps is also reaching or exceeding the
    service life of many major ground weapon systems. Additional funding
    for Maintenance of Aging equipment is required to cover rising repair
    costs for Reserve Component organic and intermediate level maintenance
    for tanks, AAVs, LAVs, trucks, howitzers, and other ground equipment.
    Flight Hours at current cost per hour: $3.7 million
        The fiscal year 2001 Flying Hour Program does not provide adequate
    funding to achieve the desired Primary Mission Readiness. The potential
    decrease in Mission Capable/Full Mission Capable rates and 6-8 month
    recovery time for the re-qualification of aircrews are a major
    readiness concern.
        Equipment Shortfalls.--F/A-18A Engineering Change Proposal (ECP)
    583.
    5 Reserve Aircraft upgrades: $20.5 million
        The primary factor driving the F/A-18A upgrade is the mitigation of
    the current F/A18C/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 current difference in capability between the F/
    A-18A and F/A-18C is significant in several areas including weapons
    employment, communications, and sensors. ECP-583 rectifies these
    deficiencies. ECP-583 provides the war fighting CINC with enhanced
    battlefield aircraft superiority and sustainment. ECP-583 will ensure
    seamless precision strike commonality between the reserve F/A-18As and
    the active F/A-18A/C/D USMC squadrons by providing the necessary
    modernization required to support the Marine Corps Total Force.
    Operational and logistical commonality with the F/A-18C will be a large
    benefit of the upgrade. Acceleration of the avionics upgrade minimizes
    obsolescence and multi-configuration component management, which
    reduces the logistics footprint, and training for pilots and
    maintenance. Of the 76 F/A18As 44 have been funded and contracted for
    retrofit. The current year Total Force shortfall is 10 aircraft
    upgrades at $41 million.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Inouye. And General Schultz, congratulations on
    this posture statement for fiscal year 2002. I hope that all of
    my colleagues will look over this. It is good reading.
    Congratulations. I wish to thank all of you for appearing
    before the committee 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 Major General Thomas J. Plewes

                   Questions Submitted by Senator Ted Stevens

                            FISCAL YEAR 2001 FUNDING

        Question. Please describe in detail your fiscal year 2001 funding
    challenges, and the impact of those challenges on your ability to carry
    out your mission.
        Answer. The Army Reserve is currently faced with significant
    statutory Reserve Personnel, Army (RPA) funding shortfalls in fiscal
    year 2001 for weekend drill (Inactive Duty Training) and full-time
    soldier requirements ($82 million).
        The Inactive Duty Training (IDT) account, which pays our soldiers
    to drill, is currently short $52 million. IDT funding for fiscal year
    2001 was based upon historical participation rates and strength levels.
    Successes in recruiting, retention, and drill weekend participation are
    in direct contrast to the model that developed the Critical
    Requirements. More so, the Army Reserve was funded at levels markedly
    lower than the Critical Requirement levels documented by the Army's and
    the Army Reserve's models. On 1 October 2000, our end strength was
    206,892; the authorized strength was, and is 205,300. This over
    strength was a direct result of our support to the Army's Recruiting
    Goal at the end of fiscal year 2000. Current average end strength for
    fiscal year 2001 as of 31 May 2001 is 205,924. Of more significance,
    the average funded strength is only 202,736. The impact of this
    resource shortfall--if additional funds are not provided, then we will
    have to cancel part or all of the September 2001 weekend drill to
    preclude a violation of the Anti- Deficiency Act [31 U.S.C.
    1341(a)(1)(A)]. Additionally, the Active Guard, Reserve (AGR) pay and
    allowance account is short $30 million. This shortfall is the result of
    under costing when the budget was built.
        Several measures have been taken to cover a large part of the
    projected fiscal year 2001 shortfall--without these actions the
    shortfall would be much larger. First, the AGR strength has been held
    well below the authorized level, with most AGR accessions being delayed
    until the 4th quarter (a projected $9 million savings). Second, an AGR
    PCS policy has been implemented that lengthens time-on-station from 3-4
    years, to 5 years (a projected $6 million savings). Third, a 1,200 non-
    prior service accession reduction has been requested and approved (a
    projected $6 million savings). Additionally, steps were taken to lower
    our assigned strength closer to our authorization.
        The Army Reserve is also faced with a significant Operations and
    Maintenance, Army Reserve (OMAR) shortfall of $65.5 million. The impact
    of not receiving additional funds will be a decrease in readiness. A
    civilian pay shortfall of $12.5 million is the highest priority. A
    utility bill of $15 million is the result of increased natural gas and
    electricity costs. A Base Operations shortfall of $8 million is
    required to fund key support services. Finally, $30 million is required
    for critical facility repair and maintenance.

                             OVERUSING THE RESERVES

        Question. I am concerned that we are at the fine line of over using
    the Reserves. While you want to be relevant, this over reliance
    stretches your force, and strains families and employers. How would you
    address this concern?
        Answer. The Army Reserve has pockets of stress; however, it is far
    from wearing out or straining our soldiers to the breaking point. The
    Army Reserve mission as directed by Congress is ``To provide trained
    units and qualified persons available for active duty in the Armed
    Forces, in time of war or national emergency and at such other times as
    the national security requires . . .'' and continues to be valid. The
    Army Reserve is a full partner in Army operations and has never failed
    to meet a deployment requirement. Since the end of the Gulf War in
    1991, the Army Reserve has participated in one of the busiest phases of
    its history. Army Reserve soldiers have taken part in humanitarian and
    peacekeeping operations in Iraq, in Haiti, in Somalia, in Central
    America, in East Timor, in Bosnia, in Kosovo and even in our own
    country at Fort Dix, New Jersey, during Operation Provide Refuge. The
    Army Reserve is the Army's essential support force. Without the Army
    Reserve, the Army would have difficulty performing its worldwide
    missions. Thus, unlike its earlier ``for emergency use only'' history,
    today's Army Reserve is used every day. Wherever the Army is today, so
    is the Army Reserve. Its area of operations is global. The reason is
    clear: Many critical types of support units and capabilities are either
    exclusively or primarily in the Army Reserve. It has most of the Army's
    civil affairs, psychological operations, medical and transportation
    units.
        As vital as are Army Reserve units, 1,600 units located in 1,100
    Army Reserve Centers all across America, the individual men and women
    of the Army Reserve are even more important. These dedicated citizen-
    soldiers carry their civilian-acquired skills and expertise with them
    to meet the needs of the Army and the nation, and then return home with
    even greater skills and expertise to make their communities better. In
    short, there is no more important investment than our investment in
    people; it is an imperative. Our readiness, capabilities,
    accessibility, and recruiting and retention rates all support this role
    in the National Military Strategy. The Army Reserve continues to
    maintain its level of readiness at an all time high and is meeting its
    end strength, recruiting and retention goals. The Army Reserve is
    accessible and capable of meeting its wartime and peacetime missions
    and is a prudent, cost effective force. The Army Reserve provides 20
    percent of the Army's warfighting capability for 6 percent of the Army
    budget.

                FISCAL YEAR 2001 RECRUITING AND RETENTION STATUS

        Question. Please address your recruiting and retention status. What
    challenges do you find manning your force, and what initiatives do you
    have in place? Is there legislative authority you need that you don't
    have?
        Answer. The Army Reserve fiscal year 2001 end strength objective is
    205,300 soldiers. To meet this objective, we established the following
    enlisted accession and transition goals: United States Army Recruiting
    Command (USAREC)--34,910; Department of the Army Personnel Command
    (PERSCOM)--3,188; and the Army Reserve's retention and transition
    assets--5,000 soldiers. Through May 31, 2001, the enlisted accession
    and transition accomplishment totaled 28,183--a shortfall of 265 (0.9
    percent) from the year-to-date planned achievement. Goal accomplishment
    is as follows: USAREC--24,088; PERSCOM--2,419; and Army Reserve
    assets--1,676. USAREC accesses both non-prior service and prior service
    personnel while PERSCOM and Army Reserve assets transition soldiers
    from the active component and Individual Ready Reserve (IRR),
    respectively, to the Selected Reserve.
        Since the introduction of the Commander's Retention Program at the
    end of fiscal year 1997, the Army Reserve has reduced enlisted
    attrition by nearly 7 percentage points. The enlisted Troop Program
    Unit attrition rate in fiscal year 2000 was 30.8 percent. In fiscal
    year 2001, our retention efforts bore fruit earlier this year with a
    1,200 non-prior service recruit mission reduction to USAREC. However,
    persistent pressure from increased job market competition that is
    intensified by a still robust economy makes it difficult to maintain
    this degree of improved retention. Consequently, funding delays and
    projected program shortages threaten our goal of continuing to reduce
    attrition.
        The same environmental pressures that make non-prior service
    recruiting and retention difficult affects prior service accessions.
    Since the end of the defense drawdown we have seen a corresponding
    decrease in the available prior service market as reflected in the IRR.
    This has meant greater training costs, due to the increased reliance on
    the non-prior service market, and an overall loss of the knowledge that
    comes when NCO leadership fails to transition to the Army Reserve.
    Consequently, the Army Reserve's future ability to recruit and retain
    quality soldiers will be critically dependent on increases in selected
    compensation and education incentives, such as the enlistment and
    reenlistment bonuses, Montgomery GI Bill enhancements, tuition
    assistance, student loan repayment programs, employer support
    enhancements and family support programs. Again, real growth in
    recruiting, retention, and training dollars will need to occur.
        Additionally, the young people of today need to be made aware of
    the unique opportunities available in the different military
    components. The best way to get this message out is to advertise
    through the mass media. Special attention needs to be placed on the
    recruiting budget, especially for advertising, to meet the requirements
    of all service components in the next several years. Funding our
    critical advertising needs is imperative if we are to be honestly
    expected to meet our recruiting goals.
        In 1999, Congress directed the Secretary of the Army to conduct a
    review of the manner, process, and organization used by the Army to
    recruit new members for the Army Reserve. The review assessed why the
    Army was not meeting recruiting objectives for the Army Reserve and
    recommended corrective measures the Secretary could take. Based on
    study recommendations, the Assistant Secretary of the Army for Manpower
    and Reserve Affairs approved the transfer of selected personnel
    management functions that assist in manning the force, from the United
    States Army Recruiting Command to the Army Reserve.
        The transfer of additional personnel life cycle management
    functions to the Army Reserve combined with the Commander's Retention
    Program, AGR Recruiter Hire Program and the Warrant Officer Transition
    Program formed the basis for the new Army Reserve Retention Transition
    Program. This program empowers Commanders with the resources to
    implement a full service approach to personnel readiness by
    decentralizing manning efforts and placing them at Army Reserve
    Centers. The Commanders' primary tool is a force of trained senior Non
    Commissioned Officers (NCO) who hold a newly created Military
    Occupational Specialty (MOS) 79V--Retention Transition NCO (RTNCO).
    This specialty combines the tenets of retention with a full spectrum
    approach to retaining soldiers while providing professional growth
    opportunities. These non-commissioned officers (NCOs) provide career
    opportunities to soldiers within the Warrant Officer Program, AGR
    Recruiter Program and TPU Program while concurrently assisting
    commanders with unit retention and reenlistment. The net result of this
    process should be improved personnel readiness and soldier support in
    units.

                           ADDITIONAL ARMY RESERVISTS

        Question. The Congress authorized and appropriated 300 additional
    full time Army Reservists last year. Could you tell us how that has
    been implemented, and the impact?
        Answer. The fiscal year 2001 National Defense Authorization Act
    added 300 more AGRs and 650 more military technicians to the Army
    Reserve's strength. MG (P) Thomas J. Plewes, the current Chief, Army
    Reserve, said, the reason for this increase was because ``we are
    getting our messages across--we can recruit and retain the quality
    soldiers we must have; more full-time support means better readiness;
    and our soldiers are accomplishing all the missions with honor and
    distinction.''
        The CAR's highest priority is to increase FTS levels in Army
    Reserve units. Although there are requirements for additional AGRs at
    both unit-level and above unit-level, the CAR's priority is to support
    unit-level requirements. The fiscal year 2001 increase of 300 AGR
    authorizations went to units and to support Army Reserve recruiting.
    These authorizations are necessary to reduce the readiness shortfalls
    currently existing in the Army Reserve and to improve recruiting and
    retention initiatives.
        One of the greatest challenges facing the Army Reserve today is an
    insufficient number of FTS authorizations to support the over 1,900
    Army Reserve troop program units. Current FTS authorizations are
    approximately 60 percent of what is required to support the reserve
    structure.
        In fiscal year 2000, the Army identified ``high risk'' thresholds
    for FTS for both the Army Reserve and the Army National Guard. The HQDA
    high-risk FTS requirements are based on the minimum essential levels to
    prepare and maintain units to meet deployment standards identified in
    the Defense Planning Guidance. The Army Reserve high-risk threshold for
    AGRs and MILTECHs is 16,079 and 8,990, respectively. Current
    authorization levels are well below this threshold. The Army
    established a ramp that, with Congressional support, would achieve the
    high-risk FTS thresholds by fiscal year 2012. The ramp for the Army
    Reserve requests Congressional support for an increase of 300 AGRs and
    250 MILTECHs per year.
        AC Title XI Reduction.--The Army has indicated that they intend to
    reduce the number of Title XI AC soldiers supporting the Army Reserve
    by 251 in fiscal year 2002 and fiscal year 2003. The current approved
    FTS ramp does not factor in the affect of this reduction. An additional
    AGR increase will be necessary to compensate for the loss of AC
    soldiers. Otherwise, an AGR increase may have to be ``diverted'' to
    compensate for the loss of these AC soldiers.
        The Army Reserve is requesting that Congress support increases to
    MILTECH and AGR authorizations at the rate of 250 and 300 per year,
    respectively, until the Army Reserve reaches the HQDA-validated
    critical levels. These increases are necessary to improve Army Reserve
    unit readiness.

                 CURRENT RATE OF MILITARY CONSTRUCTION FUNDING

        Question. Please comment on how long, at the current rate of MILCON
    funding, it will take to replace the plant replacement value of your
    assets and your current backlog and annual requirement in real property
    maintenance.
        Answer. The Army Reserve's current Plant Replacement Value is $6.5
    billion. The current average rate of MILCON funding throughout this POM
    (2003-07) is $57.5 million. It would take the Army Reserve 113 years to
    replace all of its assets at the current level of funding.
        The current Real Property Maintenance backlog is $1.6 billion. The
    Army Reserve has an average annual requirement across the POM (2003-07)
    of $184 million.

                 UNDERFUND RESERVE FORCES MILITARY CONSTRUCTION

        Question. I am concerned that the Department of Defense and your
    services under-fund reserve forces military construction because they
    know the Congress will add funding for these projects. Can you comment
    on whether your ability to ensure your requirements is adequately
    addressed through the future years defense plan and other budgetary
    processes have improved?
        Answer. The Department of Defense and the Department of the Army
    have for the past several years been working very hard on the Whole
    Barracks Renewal Program, Infrastructure Replacement, Strategic
    Mobility, and on the RCI. A large portion of the Army's construction
    dollars goes toward those ``must-fund'' programs. The Army Reserve has
    a small role in those programs and therefore receives minimal funding
    in support of those programs. The remaining available funding for all
    components is divided based on a percentage of their requirements. The
    Army Reserve receives its fair share of the funds remaining after the
    ``must-fund'' programs are funded. That funding represents
    approximately 27 percent of the Army Reserve's annual military
    construction requirement.
        The funding provided by the Department of the Army has provided the
    Army Reserve with a funding level that allows limited construction of
    new facilities and partial modernization of selected existing
    facilities. The Army Reserve tries to maximize the available funding to
    address the worst facilities and thus improve overall readiness.

                            RESERVE FORCES EQUIPMENT

        Question. I remain concerned about reserve forces equipment
    compatibility with the active components as we modernize our forces.
    Can you please comment on how we ensure that your respective reserve
    force remains relevant and deployable?
        Answer. Sir, I share your concern about equipment compatibility. In
    today's fast-paced environment of technological developments, equipment
    modernization is an integral part of equipment compatibility. We have
    determined that the Army Reserve requires approximately $400 million,
    in fiscal year 2000 constant dollars, annually to maintain the current
    posture of equipment compatibility with the Army.
        Unfortunately, the Army has not had adequate research, development
    and acquisition (RDA) funding to sustain the Army Reserves posture. In
    fiscal year 2001, the Army Reserve received $302 million for equipment
    procurement. Only $172 million of this funding came from the Army
    through the P1-R process. The remaining funding came directly from
    Congress via the NGREA program or direct Congressional adds. At this
    funding level, the equipment compatibility gap between the Army and the
    Army Reserve continues to widen. Without the funding from Congress, the
    gap would widen exponentially. Fiscal year 2001 reflects the highest
    funding level for Army Reserve equipment procurement since fiscal year
    1994.
        The Army Reserve as an essential provider of training and support
    operations has a particularly tough time equipping our force. More than
    66 percent of the Army's combat support (CS) structure and 72 percent
    of the Army's combat service support (CSS) structure is in the reserve
    components. Our unique structure does not allow for the density of
    equipment items commonly found in combat formations. Additionally,
    since much of our force structure resides only in the reserve
    component, cascading equipment for the Army is not often an option for
    equipping our force.
        For approximately 6 percent of the Army's Total Obligation
    authority the Army Reserve provides 20 percent of the Army's structure.
    Ideally, the Army should be funded adequately in RDA to allow
    approximately $400 million worth of equipment to (steady state) be
    procured on behalf of the Army Reserve in the Army's procurement
    program (P1-R).

                          TOUR LENGTHS TO THE BALKANS

        Question. We were in Kosovo this past February and I was reminded
    again of the great contributions made by the reserves in support of our
    national military strategy. I understand that Army Reserve forces
    mobilized for duty in the Balkans typically serve deployed tours of 179
    days. Combined with other required training, the combined length is
    typically 220-250 days for your soldiers. I believe this puts a
    tremendous strain on the units and the individuals who support these
    missions. Has the Army Reserve and the Army considered shortening tour
    lengths to the Balkans?
        Answer. The Army Reserve is being called on to participate in more
    and more missions (from the traditional major theater wars to
    peacekeeping operations, to homeland defense). This increase in mission
    participation however, has not resulted in an increased strain on units
    and/or individuals. As such, the Army Reserve has not considered
    shortening tour lengths to the Balkans, or any other mission.
        The vast majority of units deploying to support CINC requirements
    are derivative units. That is to say, it was not a previously existing
    unit, rather one made up mostly of volunteers, usually from existing
    units, of specific rank and skills.
        On an individual basis, Reservists on temporary tours of active
    duty (TTAD), contingency operations temporary tours of active duty
    (COTTAD), or active duty for special work (ADSW) fill the majority of
    the CINC requirements. Individuals in any of these statuses also do so
    voluntarily.
        The Army is currently developing a more formalized policy
    concerning repeated use of Reservists, other than during a Presidential
    Reserve Call-up. The Army Reserve will work with the Army to employ the
    optimum tour lengths, which will take into consideration our soldiers'
    employers, their families, appropriate veterans benefits, and mission
    accomplishment.
                                     ______

               Question Submitted by Senator Christopher S. Bond

                  NATIONAL GUARD AND RESERVE EQUIPMENT ACCOUNT

        Question. It is my understanding that the percentage of funding the
    Active components devote to their respective Reserve components varies
    from Service to Service. Can each of the Reserve Chiefs (Air Force
    Reserve, Marine Corps Reserve, Naval Reserve, Army Reserve) recount for
    me the impact, be it negative or positive, of DOD's decision to reduce
    the size of the National Guard Reserve Equipment? Are your respective
    Active components providing adequate resources for you to perform your
    mission?
        Answer. Reduction in the amount of the National Guard and Reserve
    Equipment Appropriation (NGREA) as a source of funding to upgrade and
    modernize Reserve Component (RC) equipment was based on the premise
    that RC requirements would be included in the Army Procurement Process.
    Increasing offsets in Procurement Program (P-1R) have not kept pace
    with the reduction in NGREA funding. The result is jeopardized
    readiness and delayed modernization. Although equipment projections
    listed in the P-1R have increased, it is vital to Army Reserve
    readiness and transformation that these projections become reality.
    Although the Army Reserve can perform its wartime missions, current
    capabilities are limited by older, less capable equipment. With the
    significant role that the Army Reserve has in support of the AC, we
    cannot afford the continued degradation of mission essential equipment.
    It is essential that the procurement program keep up with Army Reserve
    needs to adequately maintain the readiness and transformation posture
    of the Army.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                   EQUIPMENT MAINTENANCE AND STORAGE PROGRAM

        Question. I understand that the Army Reserve recently completed a
    detailed analysis of its equipment maintenance and storage program and
    that you are presently implementing key elements of the program. Can
    you detail the results of the study and tell me about your concept for
    strategic storage of equipment? I understand that your program takes
    advantage of technology that inhibits equipment damage resulting from
    moisture-induced corrosion. Has the Government Accounting Office or any
    other government audit agency looked at the return on investment from
    such a program?
        Answer. The Army Reserve did, in fact, complete a detailed analysis
    recently that examined critical issues involving maintenance and
    storage of equipment. This extensive study was designed to look at
    where Army Reserve logistics is and to gain a better understanding of
    how best to move the largest combat service support element of the Army
    forward into the 21st Century. The results and findings of the study,
    which looked specifically at the 77th Regional Support Command in New
    York and New Jersey, are contained in a report of over 1,000 pages. The
    results provided scientific recommendations on how the Army Reserve can
    best implement better business practices, outsource some logistics
    services while leveraging our core competencies, redesign and modernize
    our Equipment Concentration Sites and Area Maintenance Support
    Activities, leverage automation technology, and establish Strategic
    Storage Sites.
        One of the key elements in the redesign of our Equipment
    Concentration Sites and the establishment of Strategic Storage Sites is
    the use of Controlled Humidity Preservation technology. Implementing
    this technology in equipment storage facilities has tremendous
    potential for reducing the cost to maintain the equipment and improving
    our ability to be a strategically responsive and ready force. The study
    completed on the 77th Regional Support Command demonstrated that the
    use of Controlled Humidity Preservation is a viable initiative that can
    be implemented throughout the Army Reserve. The Government Accounting
    Office looked at the use of Controlled Humidity Preservation and
    determined that CHP shelters normally pay for themselves, using the
    principle of ``cost-avoidance'', within the first year, and Army units
    can receive as much as a 9:1 return on investment. (GAO/NSIAD-97-206,
    Sept. 1997).
        Our concept for strategic storage is essentially oriented towards
    supporting the Army Transformation and achieving strategic
    responsiveness. We have implemented a complex methodology to identify
    equipment assets required for unit training readiness and those assets
    needed only to support wartime authorizations. The concept involves
    placing wartime only assets into Controlled Humidity Preservation
    facilities strategically located near major seaports and metropolitan
    areas. This allows our units to maintain their training readiness while
    reducing the ``fort to port'' time for roughly 37 percent (or $2.5
    billion) of Army Reserve equipment, thus greatly improving our
    strategic responsiveness.

                          ARMY RESERVE UNIT READINESS

        Question. The Army is supporting an increase in Full-time Support
    (Active Guard/Reserve and Military Technicians) to improve Army Reserve
    unit readiness. What is the annual requirement to support this
    increase?
        Answer. The critical FTS levels for the Army Reserve are 16,079
    AGRs and 8,990 Miltechs. The National Defense Authorization Act for
    Fiscal Year 2001 provided an increase in USAR FTS endstrength and
    funding to support 300 AGRs and 650 Miltechs. This increase has been
    sustained throughout all years. The revised FTS endstrength of 13,106
    AGRs and 7,094 Miltechs continues to be below the accepted level of
    resourcing. Note the difference of the two between fiscal year 2001 and
    fiscal year 2002 in the cumulative ramp was authorized to sustain
    Information Operations.
        The Army, in coordination with the Army Reserve, continues the
    challenge of resourcing an additional 2,973 AGRs and 1,896 Miltechs.
    The ramp called for an annual increase in Army Reserve AGRs and
    MILTECHs of 300 and 250.

                                            ANNUAL FTS RESOURCING REQUIREMENT
    ----------------------------------------------------------------------------------------------------------------
                                                        Start                       Fiscal year--
                                                        point  -----------------------------------------------------
                                                       (fiscal
                                                         year     2002     2003     2004     2005     2006     2007
                                                        2001)
    ----------------------------------------------------------------------------------------------------------------
    AGR:
        Cumulative Ramp..............................   13,106   13,408   13,708   14,008   14,308   14,608   14,908
        Net Increase in Manpower.....................      300      300      300      300      300      300      300
        Funding Requirement..........................  .......     $9.9    $31.4    $54.4    $78.9   $104.7   $132.3
    MILTECH:
        Cumulative Ramp..............................    7,094    7,344    7,594    7,844    8,094    8,344    8,594
        Net Increase in Manpower.....................      650      250      250      250      250      250      250
        Funding Requirement..........................  .......     $7.8    $21.4    $36.9    $53.1    $70.2    $85.0
    ----------------------------------------------------------------------------------------------------------------
    Note: The above Ramp and Title XI cost figures are based on a 3.9 percent raise and will need to be increased
      based on the actual fiscal year 2002 pay raise.

        The Army will reduce the number of Title XI AC soldiers in the Army
    Reserve by 251 as early as fiscal year 2002. The current FTS ramp does
    not account for this reduction. The Army Reserve will require
    additional AGR positions to compensate for the loss of these AC
    soldiers. While the Army Reserve has made every effort to minimize the
    effects of the reduction, it nevertheless represents a high risk to
    overall readiness.

                                    ARMY RESERVE TITLE XI OFFSET RESOURCE REQUIREMENT
    ----------------------------------------------------------------------------------------------------------------
                                                        Start                       Fiscal year--
                                                        point  -----------------------------------------------------
                           AGR                         (fiscal
                                                         year     2002     2003     2004     2005     2006     2007
                                                        2001)
    ----------------------------------------------------------------------------------------------------------------
    Net Increase in Manpower.........................  .......      251      251      251      251      251      251
    Funding Requirement..............................  .......     $8.3    $17.5    $18.2    $18.9    $19.5    $20.1
    ----------------------------------------------------------------------------------------------------------------
    Note: The above Ramp and Title XI cost figures are based on a 3.9 percent raise and will need to be increased
      based on the actual fiscal year 2002 pay raise.

        Achieving the full high-risk threshold of FTS is a top priority for
    the Army Reserve. The FTS ramp was developed to ease the Army's
    resourcing requirement associated with the increase of manpower.
    However, it is the Army Reserve's opinion that unit readiness and
    equipment maintenance continue to be at risk if resourcing of the
    manpower is not fully achieved until fiscal year 2012. The goal of the
    Army Reserve is to acquire and fund the critical shortfall of FTS
    soonest and minimize the degradation of readiness.

                   REPAIR AND CONSTRUCTION OF RESERVE CENTERS

        Question. We have been through a period when recruiting for all
    Services has been very challenging and we could end up there again. On
    Main Street, the most prominent symbols of the military are our Reserve
    and National Guard centers. Many of these centers are over 50 years old
    and in need of repair or replacement. What can this Committee do to
    support the repair and construction of Reserve centers to make them a
    source of pride for our Reserve soldiers and their communities?
        Answer. The Army Reserve recognizes the need to project a positive
    image on Main Street, USA. We are well aware that in many cases our
    soldiers and our facilities are the main source of public relations
    that we have in many communities across the United States. This is why
    we feel that it is important that we continually project a positive
    image at all times.
        We are looking at our Military Construction program as a means of
    promoting that positive image. The goal of our MILCON program is to
    provide state-of-the-art facilities that are a source of pride for the
    soldiers and the community as well. To achieve that goal, we have
    embarked on an aggressive program that includes new construction, major
    rehabilitation and full facility revitalization. The Army Reserve
    appreciates the funding provided to us by your Committee in the form of
    Congressional Adds and other appropriations. We will continue to work
    hard in designing and constructing facilities that will well represent
    the U.S. Army on Main Street, USA.

                 CURRENT EQUIPMENT REQUIREMENTS AND SHORTFALLS

        Question. The Army Reserve is an invaluable part of today's Army.
    In the last ten years, they have deployed soldiers and equipment around
    the world in support of our nation. In fact, The Army cannot perform
    its mission without the combat support and combat service support
    capability of the Army Reserve. Unfortunately, the Army Reserve has not
    always been funded at a level equal to its requirements. Over the past
    several years, Congress has been successful in appropriating funds
    above the President's Budget request which allows the Army Reserve to
    purchase mission essential equipment. For the record, would you please
    provide to this Committee a list of your current equipment requirements
    and shortfalls?
        Answer. Modernization is the lynchpin to the Army's transformation
    plan. Particularly important is modernizing units in the Counter Attack
    Corps and early deploying CS/CSS units that support the CSA's stretch
    goal of deploying and sustaining 5 divisions in 30 days. It is crucial
    that those Legacy systems that provide Focused Logistics in the force
    and remain in the Objective Force are modernized concurrently with the
    supported force. The Army Reserve receives approximately 6 percent of
    the Army's total procurement dollars, while providing 45 percent of the
    CSS and 30 percent of the CS structure to the warfight. This shortfall
    in CS/CSS equipment procurement results in significant equipment un-
    financed requirements and greatly impacts the Army Reserve's ability to
    support the Army's CS/CSS Transformation Strategy.
        Currently Army Reserve unit mission capabilities are limited by old
    and outdated equipment. Some critical equipment is past its economic
    useful life and not deployable for wartime or contingency operations. A
    compilation of key Army Reserve requirements and shortfalls is
    attached. This is a snapshot of the requirement and as such is not a
    definitive source but rather a ``magnitude of order'' guide to overall
    Army Reserve requirements for the most important systems.

    ------------------------------------------------------------------------
                                                         2002
    PRIORITY                NOMENCLATURE                 REQ      2002 COST
    ------------------------------------------------------------------------
          1Black Hawk Helicopter (UH60L)                  16  $179,104,000
          2FMTV, 2.5T Truck                               66     8,411,370
          3FMTV, 5T Truck                                 78    12,480,000
          4High Mobility Multipurpose Wheeled            600    38,700,000
            Vehicle (HMMWV)
          5Super High Frequency Triband Advanced          20    37,000,000
            Range
          6Tactical Fire Fighting Truck (TFFT)            20    10,000,000
          7Chinook Helicopter (CH-47)                      1    32,000,000
          8All Terrain Lifter Army System (ATLAS)         60     6,011,940
          9Rough Terrain Cargo Handler (RTCH)             16     8,400,000
         10Heavy Dry Support Bridge                        2    10,000,000
         11High Frequency Radio (AN/PRC 138B)          1,003    35,084,940
         12Armored Security Vehicle (ASV)                 15     9,799,995
         13Modular Causeway System                         5     7,500,000
         14Line Haul Tractor (M915A3)                     78    10,530,000
         15Fuel System Supply Point (FSSP)               132     2,961,420
         16Improved Ribbon Bridge (Ramp R10527)            2    11,200,000
         17Airborne/Air Assault Scraper                   36     5,940,000
         18Water Distribution System                      24     3,960,000
         19Common Bridge Transport                        56    17,192,000
         20Wolverine                                       4    25,600,000
         21Hercules                                        2     4,000,000
         22Yard Tractor (M878A2)                          21     2,387,700
         23Coyote (M56)                                   24     5,833,800
         24Combat Automated Service Support-Medical       10     2,049,250
         25Medical Components                            244     3,499,936
         26Tent, Surgical                                 40     1,080,000
         27Shelter, Tactical, Expandable, Two side        50     4,950,000
         28Armored Combat Earthmover (ACE)                36    39,600,000
         29Generator Set, TRL MTD 60KW                    21       504,000
         30Generator Set, Diesel, Tactical Quite         322     2,206,022
            Generator
        30a    5-60KW                                .......  ............
        30b    30/60KW                               .......  ............
        30c    100 & 200KW                           .......  ............
         31Engineering Mission Modules (EMM)         .......  ............
        31aTruck                                          24     6,936,000
        31bPLS Trailer                                    24     1,320,000
        31cBituminous Module                              13       611,000
        31dMobile Concrete Mixer                          11     1,298,000
        31eDump Module                                    46     3,496,000
         32Container Assembly Refrigeration 9K BTU        45     2,624,670
         33AVLB, Hydraulic & Electric Modifications       24     2,640,000
         34JAVELIN                                        27    12,998,286
         35Global Positioning System                     315       419,265
         36Night Vision Device (AN/PVS-7)                964     2,649,072
         37Crushing Screening and Washing Plant            2     4,000,000
            (CSWP)
         38Light Equipment Transport Truck, M916          25     4,425,000
            Series
         39Welding Shop, Trailer Mounted                  38     1,520,000
         40Sanitation Center, Field Feeding              100     1,273,500
         41Modern Burner Unit                            979     2,643,300
         42Grizzly                                         4    23,200,000
                                                    ------------------------
                 Total                               .......   267,933,156
    ------------------------------------------------------------------------

                                     ______

               Questions Submitted to Rear Admiral John Totushek

                   Questions Submitted by Senator Ted Stevens

        Question. Please describe in detail your fiscal year 2001 funding
    challenges, and the impact of those challenges on your ability to carry
    out your mission.
        Answer. In fiscal year 2001, we are addressing challenges in the
    Operations and Maintenance, Navy Reserve (OMNR) appropriation in the
    areas of Real Property Maintenance (RPM), Flying Hour Program (FHP),
    Information Technology (IT), and Base Operation Support (BOS).
        In RPM, the Naval Reserve started the year with a $66.8 million
    budget, which reflected a $5 million Congressional increase. Whereas
    this funding level has brought the Naval Reserve's RPM account in line
    with both the Active Navy and civilian industry standards, the Critical
    Backlog of Maintenance And Repair (CBMAR) for the Naval Reserve is
    still expected to reach $132.0 million by the end of fiscal year 2001.
    Managing the CBMAR remains a high priority, as it directly impacts the
    quality of life for the men and women of the Naval Reserve.
        In the FHP, the Naval Reserve has experienced two challenges. The
    first has been an increase in the cost per hour (CPH) between what was
    budgeted and what is being executed. The second challenge has been the
    increased cost of a new contract for the F-5 program contract
    maintenance, a $2.5 million shortfall. In order to remain within
    budget, these shortfalls have been addressed by reducing flight hours.
        In IT, the OMNR appropriation has been dealing with a shortfall of
    $30.2 million. Addressing this shortfall is critical to sustain IT
    systems that support both Active and Reserve manpower management
    requirements. The IT shortfall has been addressed by a combination of
    redirection of funds from other areas of the OMNR appropriation, most
    notably RPM, to the IT account and other separate reprogramming
    actions. A request for $7.7 million in supplemental relief to restore
    the RPM account is included in the Department's fiscal year 2001
    Supplemental request.
        In BOS, the increased cost of energy experienced across the country
    has resulted in a utility shortfall of $5.5 million. Similar to RPM,
    the Department has requested relief in the fiscal year 2001
    Supplemental.
        Question. I am concerned that we are at a fine line of over using
    the Reserves. While you want to be relevant, this over reliance
    stretches your force, and strains families and employers. How would you
    address this concern?
        Answer. Senator, there are two major factors contributing to the
    over utilization of Naval Reserve members. The first is Funeral Honors
    details which mainly impacts our Full Time Support personnel. While it
    is our great honor to provide this service for our veterans, this
    support has become, at some Reserve centers, a full time job. With
    limited Full Time Support staff, many centers are ``one'' deep, which
    impacts the Reserve Center's ability to perform their primary mission
    of supporting the Selected Reserve community and their families.
        The second is the peacetime contributory support needs of the
    Regular Navy and the willingness of our Selected Reservists to respond
    to those needs. Performing peacetime contributory support provides some
    outstanding training for our reservists, however it does not always
    enhance and blend with mobilization billet. An increased reliance on
    reservists to meet active duty shortfalls contributes to excess use of
    reservists. To ease the resulting stress on reservists, their employers
    and their families the Naval Reserve is doing the following:
      --Educating reservists to carefully evaluate family, employer and
            Naval Reserve priorities prior to volunteering for active duty
            in excess of what is normally required.
      --Educating our members and emphasizing the important role of the
            Employer Support of the Guard and Reserve (ESGR) and mandating
            training on the rights and responsibilities of reservists and
            employers under the Uniform Services Employment and
            Reemployment Rights Act.
      --Allowing Naval Reservists to flex drill, which allows them the
            ability to meet the mission of the Navy while minimizing
            negative impact on employers.
      --Preparing and issuing a family oriented Naval Reserve Handbook to
            educate and inform families and bring them into the formal
            decision making process.
      --Working with Family Support Centers to improve and expand the
            support they provide to Reserve members and their families.
      --In addition, the Naval Reserve has a highly organized and efficient
            Ombudsman program in place. The Naval Reserve Ombudsmen are
            highly trained professional volunteers that work with our
            families and provide the following services:
        --Pre-deployment Briefings.--Assisting the families in
                understanding the elements that are involved in
                mobilization or deployment.
        --Spouses' Days.--Ombudsman conduct workshops that acquaint Reserve
                Family members with assets at their disposal that can be
                used in case of a deployment. These workshops also often
                include personnel who assist families in developing Powers
                of Attorneys and wills and in obtaining ID Cards.
        Reserve Ombudsman are also networked through the Reserve Ombudsman
    On-line site and can partner other Ombudsman in different locations to
    better assist families through on-line conferencing.
        Question. Please address your recruiting and retention status. What
    challenges do you find manning your force, and what initiatives do you
    have in place? Is there legislative authority you need that you don't
    have?
        Answer. Naval Reserve recruiting is doing very well in meeting goal
    and quality of individuals being brought into the Naval Reserve.
    Selected Reserve retention for fiscal year 2001 is 96.5 percent.
    Retention has remained high throughout the years for the Naval Reserve,
    however attrition is the real issue. Attrition has decreased from 35
    percent in previous years to approximately 25 percent in fiscal year
    2001.
        The majority of the Naval Reserve personnel are prior service
    veterans. The challenge is to find these personnel in sufficient
    numbers to meet our recruiting goals since the number of personnel
    leaving the active service is declining.
        Some initiatives underway to alleviate these shortfalls are:
      --Increased the recruitment of Non-prior service personnel and
            additionally we have initiated a Non-Prior Service (NPS) basic
            test program with Active Duty. This program affords active Navy
            Delayed Entry Program attrites the opportunity to attend boot
            camp and Corpsman ``A'' school prior to assignment to a Naval
            Hospital Reserve unit.
      --We have increased recruiter manning from 622 Enlisted and 67
            Officers to 692 Enlisted and 77 Officers.
      --We are expanding the Fleet Concentration Area Recruiting concept to
            all USN shore activities. Fleet Concentration Area Recruiting
            in San Diego, Bangor, Norfolk/Virginia Beach, Jacksonville/
            Mayport/Kings Bay have been successful, with a dramatic
            increase from 2.0 to 5.6 accessions per recruiter per month.
      --Proposed changes to the Naval Reserve Career Recruiting Force
            governing instruction to allow long-term hometown recruiting as
            a career option for enlisted recruiters.
      --Ongoing cooperative efforts with active Navy Recruiting Command in
            advertising, leads/referrals, market analysis, and special
            events.
      --A professional advertising campaign and demographic research
            contract will allow us to target and reach our accession
            sources more effectively. Coordinated marketing in all media
            utilizing an adequate $8 million advertising budget and a
            national recruitment marketing firm will increase Naval Reserve
            awareness while instilling pride in those currently serving.
        There is no legislative authority currently needed for fiscal year
    2001.
        Question. After the attack on the U.S.S. Cole, I understand some of
    your forces deployed to the Persian Gulf for anti-terrorism and force
    protection missions. Are those forces still on station? How is the
    mission going?
        Answer. Senator, Naval Reservists from Naval Coastal Warfare Group
    Two deployed in December 2000 to provide force protection and harbor
    security in a Persian Gulf port. The principle mission of this force is
    security for the logistics task force and the Military Sealift (MSC)
    ships. Recently, this mission requirement was extended to the end of
    this fiscal year. Forces on station have rotated every three months,
    and will continue to do so. Additionally, Naval Reservists from Naval
    Coastal Warfare Group One units will relieve the U.S. Coast Guard
    Reserve Port Security Unit providing similar services in another
    Persian Gulf port later this month. Naval Reserve participation will
    increase from approximately 75 personnel to over 120 members.
        This mission has been a success and the Central Command has praised
    the performance of our personnel.
        Question. How are you doing with pilot retention? Are Reserve pilot
    pays and bonuses properly structured to retain your experienced pilots?
        Answer. Senator, we are doing extremely well with pilot retention.
    We are retaining our pilots and have all of our requirements filled.
    Evidence suggests that reserve pilot pays, such as ACIP (Aviation
    Career Incentive Pay) and ACCP (Aviation Career Continuation Pay), are
    accomplishing their designed mission. Additionally, the command bonus
    is having the desired effect and contributing to our high retention
    rate.
        Question. I am concerned that the Department of Defense and your
    services under-fund reserve forces military construction because they
    know the Congress will add funding for these projects. Can you comment
    on whether your ability to ensure your requirements are adequately
    addressed through the future years defense plan and other budgetary
    processes has improved.
        Answer. The Naval Reserve Military Construction (MCNR) program has
    historically been budgeted at approximately 3 percent of the Active
    Navy Military Construction (MCON) program. That level of funding is
    inadequate to address large projects in a single program year. These
    large projects must be phased and supported in multiple years of the
    future years defense plan (FYDP) and sometimes displaces execution of
    smaller budgeted projects.
        Question. I remain concerned about reserve forces equipment
    compatibility with the active components as we modernize our forces.
    Can you please comment on how we ensure that your respective Reserve
    force remains relevant and deployable?
        Answer. In the Naval Reserve, equipment modernization priorities
    are more related to equipment capability than compatibility. For the
    most part, Naval Reserve equipment is compatible with Active Component
    equipment. However, Naval Reserve equipment modernization requirements
    far exceed funding available for modernization. Naval Reserve equipment
    requirements compete among Navy requirements during budget formulation.
    Although Naval Reserve equipment modernization requirements are vetted,
    they have not been fully funded due to higher priority Active Component
    requirements and scarce procurement funding available.
                                     ______

               Question Submitted by Senator Christopher S. Bond

                    NATIONAL GUARD RESERVE EQUIPMENT ACCOUNT

        Question. It is my understanding that the percentage of funding the
    Active components devote to their respective Reserve components varies
    from service to service.
        Can each of the Reserve Chiefs (Air Force Reserve, Marine Corps
    Reserve, Naval Reserve, Army Reserve) recount for me the impact, be it
    negative or positive, of DOD's decision to reduce the size of the
    National Guard Reserve Equipment (Appropriation)? Are your respective
    Active components providing adequate resources for you to perform your
    mission?
        Answer. It was not DOD's decision to reduce the size of the
    National Guard and Reserve Equipment Appropriation (NGREA), however,
    the amount of NGREA funding the Naval Reserve receives has declined
    from $202 million in fiscal year 1997 to $5 million in fiscal year
    2001. With Navy's overall procurement requirements far exceeding
    funding available, the Navy's ability to fund the equipment
    modernization requirements of the Naval Reserve has not kept pace with
    the dramatic reduction in the NGREA over the past five years. The net
    reduction in procurement funding available to the Naval Reserve is
    negatively impacting equipment modernization and thereby Naval Reserve
    capability.
                                     ______

               Questions Submitted to General Dennis M. McCarthy

                   Questions Submitted by Senator Ted Stevens

        Question. Please describe in detail your fiscal year 2001 funding
    challenges, and the impact of those challenges on your ability to carry
    out your mission.
        Answer. The Marine Corps Reserve has funding challenges in
    operations and maintenance accounts and equipment procurement accounts.
        1. Operations and Maintenance Challenges. The Marine Corps Reserve
    has shortfalls in O&MMCR for facilities (utilities, base operations,
    maintenance of real property), equipment and vehicle maintenance, and
    flight hours (O&MNR).
         a. Facilities: There is an unprojected 40 percent utility cost
    increase, 40 percent cost escalation for base operations support (BOS),
    and continued escalation in the backlog of maintenance and repair of
    real property.

                            [In millions of dollars]

            Commodity area                                            Amount

    Utilities.........................................................   2.3
    Base Ops..........................................................   3.2
    Maint of Real Property............................................   2.0
                                                                      ______
          Total.......................................................   7.5

        (1) Utility costs have risen by an unprojected 40 percent at all of
    the 185 MARFORRES sites during fiscal year 2001, leaving MARFORRES
    critically short of funding.
        (2) The cost of Base Operations Support (BOS) has also escalated by
    40 percent during fiscal year 2001. These are ``must pay'' costs such
    as leases and permits, and our fair share of payment for BOS functions
    that our I-I's are not manned to provide: ground maintenance, HVAC,
    refuse service, pest control and custodial services. Many interservice
    support agreements have increased for centers where we are tenants. We
    have also faced absorption of entire training center operating costs in
    cases where the host service has relocated. Other BOS shortfalls
    include: GME/GSA vehicle lease program: GSA funding has been reduced at
    the same time that we have experienced increased vehicle usage and
    mileage to support funeral honors.
        Environmental: MFR requires hazardous material waste and storage
    facilities at 33 sites to be in compliance with federal and state
    regulations. Several sites are awaiting remediation work due to on-site
    contamination and lead paint and asbestos removal. These costs have
    shown a steady increase and are now 30-40 percent above budget
    projections. Meeting the ``must pay'' requirements from within existing
    appropriations will impact Maintenance of Real Property (MRP) and
    Operating Forces funding. Replenishment, replacement, and maintenance
    of some equipment would have to be deferred to future years, creating a
    bow wave in these accounts.
        (3) Several MARFORRES facilities are in deteriorated condition,
    posing health and safety risks to the Marines. The fiscal year 2000
    Commanding Officer's Readiness Report (CORRS) identified 65 percent of
    the Marine Corps owned facilities (24 sites) as inadequate. The backlog
    of maintenance and repair has escalated from $1.2 million in fiscal
    year 1995 to well over $12 million in fiscal year 2001, due to the
    combined effects of years of under funding MRP and insufficient MCNR
    funding for revitalization.
        b. Equipment and Vehicle Maintenance: Rising repair costs for
    maintenance of armored vehicles, trucks, howitzers, and other ground
    equipment.

                            [In millions of dollars]

            Commodity area                                            Amount

    Maint of Equipment................................................   5.0

        Maintenance of Equipment and Vehicles includes Critical Low Density
    Repairables (CLD) supporting radar and communication assets; Depot
    Level Repairables (DLR) supporting repair parts for such equipment as
    tanks, trucks, AAVS, HMMWVs; and other maintenance of equipment. While
    not ``must pays'' per se, when CLD and DLR equipment fails, the
    equipment is deadlined, training is impaired and readiness impacted.
    The Marine Corps is also reaching or exceeding the service life of many
    major ground weapon systems. Additional funding for Maintenance of
    Aging equipment is required to cover rising repair costs for Reserve
    Component organic and intermediate level maintenance for tanks, AAVs,
    LAVs, trucks, howitzers, and other ground equipment.
        2. Equipment Procurement Challenges
        a. F/A-18A Engineering Change Proposal (ECP) 583 Requirement: $60.6
    million.
        Of 76 F/A-18As, 44 have been funded and contracted for retrofit.
    The 32 remaining unfunded upgrades include 26 Reserve aircraft. 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 current difference in capability between the F/A-
    18A and F/A-18C is significant in several areas including weapons
    employment, communications, and sensors. ECP-583 rectifies these
    deficiencies. ECP-583 provides the war fighting CINC with enhanced
    battlefield aircraft superiority and sustainment. ECP-583 will ensure
    seamless precision strike commonality between the reserve F/A-18As and
    the active F/A-18A/C/D USMC squadrons by providing the necessary
    modernization required to support the Marine Corps Total Force.
    Operational and logistical commonality with the F/A-18C will be a large
    benefit of the upgrade. Acceleration of the avionics upgrade minimizes
    obsolescence and multi-configuration component management, which
    reduces the logistics footprint, and training for pilots and
    maintenance.
        Question. I am concerned that we are at the fine line of over using
    the Reserves. While you want to be relevant, this over reliance
    stretches your force, and strains families and employers. How would you
    address this concern?
        Answer. Marines and their families are the most important asset we
    have. The Marine Corps recognizes the need to provide predictability
    and adequate notice to aid Marines, their families, and employers in
    planning for and accommodating periods of extended active duty. To
    date, the Marine Corps Reserve has not noted any negative impact on the
    force, on families, or on employers resulting from increased OPTEMPO.
    New Reserve missions like Guantanamo Bay and UNITAS provide
    predictability for the Marine, the family and the employer.
        An increase in attrition would be the most important indicator of
    overuse or strain on families and employers. The Marine Corps Reserve
    has met its goal of keeping overall attrition between 25 percent and 30
    percent in fiscal year 1999, fiscal year 2000 and to date in fiscal
    year 2001. Because participation above 48 drills and 15 days Annual
    Training is voluntary, there is anecdotal evidence that increased
    OPTEMPO for meaningful training and real world opportunities may
    actually have a positive affect on retention.
        The Marine Corps Reserve instituted an Exit Survey that is
    administered to Marines as they leave their unit. The survey
    transitioned to a web-based form in January and is currently being
    tested by Marine Forces Reserve. The response to the prior manual
    survey, although limited, offered no indication that increased OPTEMPO
    or PERSTEMPO was a contributing factor in a Marine's decision to
    discontinue active participation in the reserves.
        Additionally, the Marine Corps Reserve, through the Marine Corps
    Total Force System (MCTFS), began tracking PERSTEMPO on the
    congressionally mandated start date of 1 October 2000.
        Question. Please address your recruiting and retention status. What
    challenges do you find manning your force, and what initiatives do you
    have in place? Is there legislative authority you need that you don't
    have?
        Answer. The Marine Corps Reserve continues to attain monthly
    recruiting missions in fiscal year 2001. Our biggest challenge is to
    find officers whose military occupational specialties match unit
    requirements within a reasonable commuting distance. The Marine Corps
    Reserve recruits over 99 percent of its officers from our prior service
    Individual Ready Reserve (IRR) population. This pool decreased during
    fiscal year 1999 and fiscal year 2000, presenting more difficulty for
    our recruiters. This fiscal year, that trend has been reversed and the
    IRR officer population has started to increase. Transitional Recruiters
    at major bases and stations are actively targeting Marines before they
    leave active service, emphasizing the benefits and opportunities of
    Reserve service. Additionally, we are exploring ways to improve our
    communication with current, former, and retired Marines by developing
    an expanded transition assistance program that will enhance
    connectivity and affiliation opportunities for Marines after they leave
    active service.
        Regarding legislation, under current law, Montgomery GI Bill-
    Selected Reserve (MGIB-SR) benefit eligibility requires a six-year
    drilling obligation followed by two years of availability for
    mobilization as a member of the Individual Ready Reserve. Reducing the
    drilling obligation period for MGIB-SR eligibility from six years to
    four years would allow us to more effectively match the benefit to the
    education patterns and lifestyle changes that occur after college
    graduation. A four-year drilling commitment commensurate with four
    years of college would remove the drilling obligation as our Marines
    establish themselves in their civilian careers. This would then be
    followed by a four-year ``inactive Reserve'' commitment during which
    they would remain available for mobilization should the need arise.
    Because the services control the number of contracts offering MGIB-SR
    eligibility, this change can be absorbed within existing
    appropriations, making it a no cost option. While the Marine Corps
    Reserve continues to meet its recruiting challenges, legislative
    authority to provide this benefit for a four-year drilling obligation
    would provide an innovative tool that would enable us to more
    adequately address evolving recruiting challenges and achieve future
    success.
        Question. How are you doing with pilot retention? Are reserve pilot
    pays and bonuses properly structured to retain your experienced pilots?
        Answer. The Marine Corps Reserve experienced a pilot attrition rate
    of 25.53 percent for fiscal year 2000. The overall Selected Marine
    Corps Reserve officer attrition rate for fiscal year 2000 was 21.97
    percent. When compared to the overall officer attrition, the Marine
    Corps Reserve pilot attrition was 3.56 percentage points higher.
    Seventy-two percent of pilot losses resulted from transfers to the
    Individual Ready Reserve. Exit survey data indicates that conflicts
    with civilian jobs is the primary reason for ending affiliation.
    Although pilot attrition was slightly higher than overall officer
    attrition, we do not view this as a significant trend. The current
    participation-based structure of Reserve component aviator pay and
    allowances is fair and equitable. Historically, participation by our
    experienced pilots has been motivated by a desire to continue applying
    the critical skills earned on active duty as a member of the Marine
    Corps Reserve.
        Question. I understand you have recently picked up some missions
    from the active Marine Corps. Please tell us more about that.
        Answer. Marine Forces Reserve is currently involved in two long-
    term operations to help alleviate active duty OPTEMPO. During March
    2001, a reserve platoon made up of volunteers from 2d Battalion, 23d
    Marines deployed to Guantanamo Bay, Cuba for 120 days. The reinforced
    platoon is supporting the ongoing Guantanamo Bay security mission
    effectively replacing an active duty platoon commitment. With 25 days
    workup and 5 days stand-down, the platoon will be on active duty for a
    total of 150 days. Initially planned for odd-year rotations, Marine
    Forces Reserve is studying the feasibility of conducting the security
    mission every year.
        Marine Forces Reserve will also carry out the fiscal year 2002
    UNITAS deployment to South America. Volunteers for this company-size
    deployment are currently being identified to fill this six-month
    commitment. After one year of drills and annual training focusing on
    mission preparation, Marines will spend one month of full-time
    preparation at Camp LeJeune, North Carolina beginning in May 2002. In
    June 2002, the Marines will deploy to South America for 4\1/2\ months.
    There will also be a post-deployment stand-down period of half a month.
        Question. Last year we added 58 full time reservists for the Marine
    Corps Reserve. How has that benefited your force?
        Answer. The 4 officers and 54 enlisted Active Reserve end strength
    increase was actually a rescission of the QDR reduction. The authority
    you provided allowed us to retain 58 Marines we had been scheduled to
    lose. The Marine Corps Reserve has assigned these 58 additional
    personnel to small Marine Corps Reserve sites throughout the
    continental United States. Small staffs of active duty Marines largely
    administer the Marine Corps Reserve. These staffs provide for the day-
    to-day operations, training and administration of the Reserve. They
    have also historically provided community outreach through such means
    as color guards, Toys for Tots, military funeral honors details, and
    presentations to local organizations. Each staff is comprised not only
    of administrative and logistics personnel, but with Marines qualified
    to provide continuous training and equipment maintenance. A small site
    typically includes approximately eight active duty Marines that provide
    for the daily operations of company size (120-180 personnel) units. The
    reserve force has benefited by an increased active duty presence that
    can better manage the increasing operational tempo, heightened
    readiness requirements and community outreach missions. These
    additional personnel have increased numerous sites to the threshold
    requirement of eight Marines and have kept staffing to previously
    validated personnel requirements at other sites.
        Question. I am concerned that the Department of Defense and your
    services under-fund reserve forces military construction because they
    know that Congress will add funding for these projects. Can you comment
    on whether your ability to ensure your requirements is adequately
    addressed through the future years defense plan and other budgetary
    processes have improved?
        Answer. The Commandant has stated that readiness of the operating
    forces is the Marine Corps' highest priority, and that readiness rests
    on four pillars: (1) Marines and their families, (2) ``legacy
    systems'', (3) infrastructure, and (4) modernization. The challenge for
    the Marine Corps is to maintain the strength of each, while achieving a
    balance in the application of its resources. Within the parameters of
    this fiscal challenge, the ability of the Marine Corps to ensure
    adequate funding levels for reserve military construction through the
    Future Years Defense Plan and the budget process has improved over the
    past 4 years. The average level of funding for Marine Corps reserve
    military construction, prior to Congressional adds, for the years
    fiscal year 1993-fiscal year 1997 is $1.2 million. The average level of
    funding for Marine Corps reserve military construction, also prior to
    Congressional adds, for the years fiscal year 1998-fiscal year 2001 is
    $4.8 million, a significant improvement. (These numbers do not include
    funding for planning and design.) The Marine Corps will continue to
    carefully weigh the many priorities involved in maintaining its
    emphasis on operational readiness, and will provide a level of funding
    for reserve military construction that addresses the most critical
    requirements and is consistent with the best interests of the Marine
    Corps.
        Question. I remain concerned about reserve forces equipment
    compatibility with the active components as we modernize our forces.
    Can you please comment on how we ensure that your respective reserve
    force remains relevant and deployable?
        Answer. As part of our Total Force Policy, Marine Corps
    modernization plans are accomplished as part of our single acquisition
    objective process, wherein all initial quantities and planned
    sustainability requirements for both the Active and Reserve component
    are considered. This single acquisition strategy ensures the Reserve
    receives the same equipment as the Active Component. Marine Forces
    Reserve (MARFORRES) units are fully integrated into the active forces
    for mission accomplishment across the complex spectrum of conflict.
        MARFORRES is ready today, but its readiness has come at the expense
    of investment in modernization and infrastructure. Reserve Marines are
    working hard to maintain and improve equipment readiness. The key to
    sustain the relevancy and deploy ability of the Marine Corps Reserve in
    the long term is to continue to replace current legacy systems. The
    funding level must be sufficient to accelerate the pace of Marine Corps
    modernization in order to shorten the period of increased Total Force
    expense for sustainment of the aging ``legacy'' systems. The Marine
    Corps, with the help of Congress through the National Guard and Reserve
    Equipment Appropriation and other congressional adds, is currently
    upgrading the Reserve's 48 F/A-18A's with Engineering Change Proposal
    583 (ECP 583)(22 of 48 upgrades are funded) and 21 CH-53E's with
    Helicopter Night Vision System (HNVS) kits (10 of 21 upgrades are
    funded). In fiscal year 2008, the Marine Corps, plans to field High
    Mobility Artillery Rocket Systems (HIMARS) to the Reserve. In the
    future, the Marine Corps plans to transition to the MV-22 helicopter
    and the Advanced Amphibious Assault Vehicle (AAAV). During this
    transition period, a mixed fleet of helicopters and amphibious vehicles
    will exist for several years in the Active and Reserve units. The
    Marine Corps is dedicated to planning to assure a coordinated delivery
    of the aircraft and vehicles while maintaining a high state of
    readiness across the Active and Reserve units.
        Question. Describe your plan to upgrade your fleet of F/A-18A
    aircraft and rotary wing aircraft. Do you have the resources you need?
        Answer. Marine aviation possesses limited resources across the
    board to invest in modernization and recapitalization of aircraft. The
    Marine Corps includes both active and reserve requirements in
    determining funding priorities. Our plan is to mirror the reserve with
    the active component. Current upgrades to accomplish this goal are as
    follows:
        F/A-18A.--The current program objective is to upgrade 76 F/A-18As
    with Engineering Change Proposal 583 (ECP-583); 28 active and 48
    reserve F/A-18As. This upgrade will increase the capability of the F/A-
    18A to a level compatible with the F/A-18C lot XVII, an aircraft eight
    years newer. This increase in capability will help mitigate strike
    master plan shortfalls and increase operational flexibility across the
    spectrum of conflict by increasing interoperability of F/A-18 assets.
    Current program funding upgrades 44 F/A-18As, 22 active and 22 reserve
    through fiscal year 2003. This program currently requires $246.5
    million to complete.
        CH-46E.--Based on the current transition plan and introduction of
    the MV-22,the remaining Marine Corps CH-46s are scheduled to receive
    the Engine Reliability and Improvement Program (ERIP). This program's
    current requirement is fully funded and, thanks to Congressional
    support, we were able to start it one year early (in this fiscal year).
    Current estimate is that this program will be complete in fiscal year
    2007. As the restructuring of the MV-22 program becomes more
    definitive, Marine Aviation will have to examine how many more ERIP
    kits to procure to ensure the CH-46 remains operationally effective
    until replaced by the MV-22.
        The UH-1N and AH-1W will continue to provide the combat assault
    support and attack helicopter requirements for the Marine Corps through
    2014. The key operational and safety modifications for the aircraft
    include communication and navigation upgrades that provide aircrew with
    precision navigation and modernized communication equipment (radio
    suite); fielding of a modernized electronic warfare suite to enhance
    aircraft survivability against Surface-to-Air Missiles; aircraft safety
    upgrades to increase system reliability and operational effectiveness;
    and enhancements to the day/night war fighting capability through the
    UH-1N Navigational thermal Imaging System (NTIS).
        The goal of the current operational safety improvement programs is
    to eliminate safety hazards, remedy obsolescence and maintain
    significant operational capability until the fielding of the
    replacement aircraft--the UH-1Y and AH-1Z. The H-1 Upgrade Program is a
    key Marine Corps modernization effort designed to resolve existing
    safety deficiencies and significantly enhance the operational
    effectiveness of both the UH-1N and the AH-1W. Aircraft agility,
    airspeed, range, and mission payload are only a few of the significant
    improvements included in the Upgrades Program. Additionally, the
    commonality gained between the UH-1Y and AH-1Z (projected to be 85
    percent) will significantly reduce life-cycle costs and logistical
    footprint, while increasing the maintainability and deploy ability of
    both aircraft.
        This program extends the service life and increases the operational
    capabilities of both aircraft through improvements in crew and
    passenger survivability, payload, power available, endurance, range,
    airspeed, maneuverability and supportability. Both aircraft include a
    fully integrated cockpit upgrade to reduce cockpit workload and improve
    mission effectiveness.
        CH-53E.--Upgrades to the CH-53E include the procurement of Forward
    Looking Infrared Helicopter Night Vision System (HNVS) ``A'' and ``B''
    Kits. 20 HNVS ``A'' Kits remain to be procured (11 of those are in the
    Reserves) and 105 HNVS ``B'' Kits (10 in the Reserves) remain to
    fulfill this upgrade requirement.
                                     ______

               Question Submitted by Senator Christopher S. Bond

        Question. It is my understanding that the percentage of funding the
    Active components devote to their respective Reserve components varies
    from Service to Service.
        Can each of the Reserve Chiefs (Air Force Reserve, Marine Corps
    Reserve, Naval Reserve, Army Reserve) recount for me the impact, be it
    negative or positive, of DOD's decision to reduce the size of the
    National Guard Reserve Equipment? Are your respective Active components
    providing adequate resources for you to perform your mission?
        Answer. The Marine Corps Reserve is represented fully in the Marine
    Corps resourcing process and receives an equitable share of available
    funding. As part of our Total Force Policy, Marine Corps equipment
    procurement is accomplished through our single acquisition objective
    process, wherein all requirements, to include sustainability
    requirements for both the Active and Reserve component, are considered
    and resourced. This single acquisition strategy ensures the Reserve
    Component receives the same equipment as the Active Component.
                                     ______

          Questions Submitted to Major General James E. Sherrard, III

                   Questions Submitted by Senator Ted Stevens

                            FISCAL YEAR 2001 FUNDING

        Question. Please describe in detail your fiscal year 2001 funding
    challenges, and the impact of those challenges on your ability to carry
    out your mission.
        Answer. Our top funding challenges are initiatives to improve
    recruiting and retention of Reserve personnel, an aging fleet and a
    decreased modernization budget.
        Recruiting and Retention.--The Reserve achieved 86 percent of its
    fiscal year 2000 recruiting goal--we fell short by 1,502. Although
    below our accession goal, the Reserve achieved 98.1 percent overall end
    strength and filled over 98 percent of our wartime-tasked positions;
    accessions were highest since fiscal year 1995. We are experiencing the
    challenges of a robust economy, higher college enrollment, a lower
    propensity to enlist and a shrinking pool of potential prior service
    accessions. The Reserve exceeded its retention goal of 82 percent in
    fiscal year 2000 with an overall retention rate of 88 percent.
    Retention rates are healthy for the enlisted force and support
    officers; however, we are concerned about the retention of pilots,
    navigators and non-rated operators. Current Air Force Reserve Command
    (AFRC) pilot inventory has leveled out at approximately 3,440, while
    the requirement is 3,667. Level and retention of full-time personnel is
    a concern due to the high personnel tempo (PERSTEMPO).
        Aging fleet.--The following shows the age of the AFRC fleet, by
    aircraft:

    C-5A..............................................................  32.0
    C-141C............................................................  35.0
    KC-135E...........................................................  42.0
    KC-135R...........................................................  39.5
    C-130E............................................................  37.5
    C-130H............................................................  11.1
    C-130J............................................................   5.0
    WC-130H...........................................................  35.5
    WC-130J...........................................................   3.0
    B-52H.............................................................  39.5
    A/OA-10...........................................................  21.0
    F-16C/D...........................................................  14.0
    HC-130N...........................................................  31.0
    HC-130P...........................................................  35.4
    HH-60G............................................................  10.5
    C-130E............................................................  37.0

        An aging fleet leads to increased Operations and Maintenance (O&M)
    spending for maintenance.
        Decreased modernization budget.--With an aging fleet and no new
    systems projected, we are attempting to modify older aircraft (KC-135,
    C-5A, F-16 and A-10), but investment funding for modifications remains
    severely constrained. No follow-on mission for our C-141 unit-equipped
    squadrons. Reengining of our last two KC-135 units.
        Judgement Fund.--An additional challenge we are facing is the $11.9
    million owed to the U.S. Treasury's Judgement Fund. As you know, this
    bill must be paid out of Military Construction (MILCON) monies. If we
    are forced to pay this must-pay bill, our fiscal year 2002 MILCON
    budget will be severely impacted, if not decimated.

                                    RESERVES

        Question. I am concerned that we are at the fine line of over using
    the Reserves. While you want to be relevant, this over reliance
    stretches your force, and strains families and employers. How would you
    address this concern?
        Answer. We, too, are concerned about the effect the high tempo has
    on our Reservists, their families, and their civilian employers. Today,
    the average Air Force Reservist performs 90 duty days, far above the
    required ``one-weekend-a-month, two-weeks-per-year'' of years past.
        The high tempo has also had an impact on our ability to conduct
    training. Personnel who deploy/use annual tour to support taskings
    outside the unit are getting valuable experience; however, they are not
    taking care of some of the recurring training requirements which would
    have been addressed during their annual tour had they performed their
    duty at home station. We must then ask our personnel to give additional
    time to ``catch up'' on the training requirements, which were not part
    of the deployment scenario. This places a burden on many traditional
    Reservists, who are attempting to balance the demands of their reserve
    duty with those of their civilian job and family.
        We are working to find ways to alleviate the stress caused by
    increasing time away from home station. One way is participation in the
    Expeditionary Aerospace Force, which has already given us greater
    predictability in scheduling time away from home and work. We are
    constantly working with civilian employers to keep the lines of
    communication open and we support current legislation offering tax
    incentives to employers who employ reservists. Additionally, we are
    working with the active force to validate all current training events
    for relevancy as well as looking for optional modes to deliver the
    training.

                        RECRUITING AND RETENTION STATUS

        Question. Please address your recruiting and retention status. What
    challenges do you find manning your force, and what initiatives do you
    have in place? Is there legislative authority you need that you don't
    have?
        Answer. The Reserve achieved 86 percent of its fiscal year 2000
    recruiting goal--we fell short by 1,502. Although below our accession
    goal, the Reserve achieved 98.1 percent overall end strength and filled
    over 98 percent of our wartime-tasked positions; accessions were
    highest since fiscal year 1995. We are experiencing the challenges of a
    robust economy, higher college enrollment, a lower propensity to enlist
    and a shrinking pool of potential prior service accessions. With
    assistance from Congress, we are increasing our recruiting force by 50
    in fiscal year 2001. As of April 2001, we are tracking at 104 percent
    of our recruiting goal. The Reserve exceeded its retention goal of 82
    percent in fiscal year 2000 with an overall retention rate of 88
    percent. Retention rates are healthy for the enlisted force and support
    officers; however, we are concerned about the retention of pilots,
    navigators and non-rated operators. Current Air Force Reserve Command
    (AFRC) pilot inventory has leveled out at approximately 3,440, while
    the requirement is 3,667.
        Current Recruiting and Retention Initiatives include: Active Guard/
    Reserve (AGR) Aviator Continuation Pay (ACP); Reinstatement of full-
    time unit Career Advisors; Special salary rate for Air Reserve
    Technician pilots; Montgomery GI Bill (MGIB) kicker; Tuition
    assistance; Prior Service and Nonprior Service enlistment bonuses for
    critical skills.
        Future Initiatives: Elimination of 1/30th rule for Aviation Career
    Incentive Pay (ACIP) and Career; Enlisted Flyer Incentive Pay (CEFIP);
    Basic Allowance for Housing (BAH) disparity for single Reservists;
    Elimination of disparities between BAH I and BAH II; Extend time limit
    on use of MGIB beyond 10 years; Adjust 14-year cutoff of bonuses to
    incentivize beyond 20 years; Increase prior service enlistment bonus
    from $5,000 to $8,000 to provide same authority as non-prior service
    bonus.

                                 RESERVE PILOTS

        Question. How are you doing with pilot retention? Are reserve pilot
    pays and bonuses properly structured to retain your experienced pilots?
        Answer. Retention of pilots is of great concern. Historical trends
    have been toward retention of pilots until retirement. Recent
    indicators reveal an increase in number of Air Reserve Technicians
    (ARTs) who are leaving early. The Reserve has instituted a special
    salary rate for technician pilots. Major airlines hiring, high TEMPO
    and perceptions of better civilian pay and working conditions are
    reasons for leaving. Active Guard and Reserve (AGR) pilots are
    currently receiving aviation continuation pay like their active duty
    counterparts.
        The following slide illustrates the retention rates for the Reserve
    pilot force:

                             RESERVE PILOT RETENTION
                          [AFRC Pilot Retention Rates]
    ------------------------------------------------------------------------
                                                     Percent
                                   -----------------------------------------
                                                  Fiscal year--
                                   -----------------------------------------
                                     1996    1997    1998     1999     2000
    ------------------------------------------------------------------------
    Pilots total (AFRC)...........    93.9    90.0    89.3     89.9     87.7
    Pilots (ARTs) (ART pilots         86.1    83.8    85.5     84.4     80.2
     retained as ARTs)............
    Unit AGR......................  ......  ......  ......    100      100
    ------------------------------------------------------------------------
    Approximately 12 percent of AFRC ART pilot force moves to Traditional
      Reserve yearly. Number of pilots transitioning from TR to ART nearly
      compensates for ART to TR transition.
    Major Airlines hiring, high OPTEMPO and perceptions of better civilian
      pay and working conditions are reasons being given for leaving prior
      to reaching MSD.

                         AEROSPACE EXPEDITIONARY FORCE

        Question. Please describe how the Air Force's transition to the
    aerospace expeditionary force, or AEF, will impact the Air Force
    Reserve.
        Answer. The Air Force Reserve is an active and enthusiastic
    participant in the Expeditionary Aerospace Force (EAF). The EAF brings
    predictability and stability, better incorporates the total force,
    provides a reconsitution period and provides the tools to better manage
    the force. During EAF Cycle 1, AFRC deployed 14,249 personnel and
    during Cycle 2, 12,425 personnel. All personnel are volunteers and may
    rotate on a 15 day in country schedule. We believe this is a win-win
    situation for the Reservist (it allows them to use their wartime
    skills), their employers and the family.

                                 RESERVE MILCON

        Question. I am concerned that the Department of Defense and your
    services under-fund reserve forces military construction because they
    know the Congress will add funding for these projects. Can you both
    comment on whether your ability to ensure your requirements are
    adequately addressed through the future years defense plan and other
    budgetary processes has improved?
        Answer. Overall, funding for the Air Force Military Construction
    (MILCON) program has decreased significantly. In addition, aging
    infrastructure continues to require additional repair and replacement,
    further stressing the Air Force MILCON budget.
        Air Force Reserve Command (AFRC) requirements are included in the
    total Air Force program for initial development. The Air Force then
    validates and scores each project according to the MAJCOM priority, the
    type of project and mission impact.
        Because of limited resources and other must-pay bills, AFRC is
    awarded only one or two projects per year. To illustrate, in fiscal
    year 2001, the Air Force submitted $595.5 million in MILCON priorities,
    including $14.9 million (2.5 percent) for AFRC. The additional $21.7
    million in the Reserve MILCON budget came from Congressional adds,
    which we greatly appreciate.
        An additional challenge we are facing is the $11.9 million owed to
    the U.S Treasury's Judgement Fund. As you know, this bill must be paid
    out of MILCON monies. If we are forced to pay this must-pay bill, our
    fiscal year 2002 MILCON budget will be severely impacted, if not
    decimated.
        The following is a current list of approved Air Force Reserve
    military construction projects:

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
    Fiscal
     Year           State/Base                           Project                             Type               PA
    ----------------------------------------------------------------------------------------------------------------
     2002AL: Maxwell AFB             Maintenance Hangar........................  Current Mission.........    9,276
     2002IN: Grissom ARB             ADAL Maint Hangar.........................  Current Mission.........    5,700
     2002MO: Whiteman AFB            Squadron Operations Facility..............  Current Mission.........    3,350
     2002NY: Niagara Falls ARS       Visiting Quarters Phase I.................  Current Mission.........    8,300
     2002PA: Willow Grove ARS        Joint Wing Headquarters...................  Current Mission.........    5,700
                                                                                                          ----------
               Fiscal Year 2002      ..........................................  ........................   32,326
                Total
                                                                                                          ==========
     2003AL: Maxwell AFB             Logistics Complex.........................  Current Mission.........    5,000
     2003CO: Peterson AFB            Fuel Systems Maintenance Dock.............  Current Mission.........    7,350
     2003DE: Dover AFB               Wing Headquarters Facility................  Current Mission.........    3,300
     2003MA: Westover ARB            Security Forces Operations................  Current Mission.........    3,900
     2003MN: Minn-St Paul ARS        Hangar Complex............................  Current Mission.........   15,197
     2003NC: Seymour Johnson AFB     Civil Engineer Maintenance Facility.......  Current Mission.........    2,000
                                                                                                          ----------
               Fiscal Year 2003      ..........................................  ........................   36,747
                Total
                                                                                                          ==========
     2004CA: Travis AFB              Squadron Ops/Aircraft Gen Squad...........  Current Mission.........    9,736
     2004FL: Homestead ARS           Services Training Facility................  Current Mission.........    6,000
     2004GA: Dobbins ARB             Construct South Cobb Entrance.............  Current Mission.........    3,200
     2004MA: Westover ARB            Base Operations...........................  Current Mission.........    2,132
     2004MI: Gen Mitchell ARS        ADAL Composite Training Facility..........  Current Mission.........    2,300
     2004MN: Minn-St Paul ARS        Aircraft Maintenance Shop Complex.........  Current Mission.........    6,200
                                                                                                          ----------
               Fiscal Year 2004      ..........................................  ........................   29,568
                Total
                                                                                                          ==========
     2005MN: Minn-St Paul ARS        Consolidated Training Facility............  Current Mission.........    3,121
     2005NJ: McGuire AFB             ADAL Wing HQ Facility.....................  Current Mission.........    3,550
     2005PA: Pittsburgh ARS          Renovate Lodging Facility B-216...........  Current Mission.........    3,016
     2005PA: Pittsburgh ARS          Consolidated Lodging Facility.............  Current Mission.........   18,200
                                                                                                          ----------
               Fiscal Year 2005      ..........................................  ........................   27,887
                Total
                                                                                                          ==========
     2006IN: Grissom ARB             Services Complex--Phase 3.................  Current Mission.........   12,773
     2006OH: Youngstown ARS          Consolidated Mission Support Facility.....  Current Mission.........    9,410
     2006PA: Willow Grove ARS        Avionics Shop.............................  Current Mission.........    2,500
                                                                                                          ----------
               Fiscal Year 2006      ..........................................  ........................   24,683
                Total
                                                                                                          ==========
     2007FL: Eglin AFB (Duke Fld)    Civil Engineer Training Facility..........  Current Mission.........    3,200
     2007GA: Dobbins ARB             Training Center...........................  Current Mission.........    4,200
     2007IL: Scott AFB               Wing HQ Facility..........................  Current Mission.........    3,700
     2007MA: Westover ARB            Vehicle Maintence Facility................  Current Mission.........    5,191
     2007NJ: McGuire AFB             Airlift Control Flight Facility...........  Current Mission.........    2,000
                                                                                                          ----------
               Fiscal Year 2007      ..........................................  ........................   18,291
                Total
    ----------------------------------------------------------------------------------------------------------------

                     RESERVE FORCES EQUIPMENT COMPATIBILITY

        Question. I remain concerned about reserve forces equipment
    compatibility with the active components as we modernize our forces.
    Can you please comment on how we ensure that your respective reserve
    force remains relevant and deployable?
        Answer. Like our active duty counterparts, Air Force Reserve
    Command (AFRC) is operating an aging fleet. This aging fleet leads to
    increased Operations and Maintenance spending for maintenance. Like our
    active duty counterparts, Air Force Reserve Command (AFRC) is operating
    an aging fleet. This aging fleet leads to increased Operations and
    Maintenance spending for maintenance. This, compounded with a decreased
    modernization budget for new equipment and modification of old
    equipment, will lead to additional challenges in the near future.
        AFRC is responsible for providing the war-fighting Commander in
    Chief (CINC) with the most capable forces possible. We need to continue
    a robust aircraft modernization program. Primarily due to funding
    constraints, our gaining Major Commands (GMAJCOMs) have been unable to
    adequately meet both Reserve and active requirements. Congress has
    traditionally provided AFRC with additional National Guard and Reserve
    Equipment Account (NGREA) monies to augment these equipment upgrades
    that our GMAJCOMs have been unable to provide. Unfortunately, NGREA
    funds have decreased from a high of $50 million to the current level of
    $5 million. Our combat aircraft are fast becoming dated and in need of
    modernization. NGREA has, in the past, permitted AFRC to have a solid
    modernization program. Without NGREA, it is safe to say that the
    Reserve would not have a force with the capability it has today.
        Without NGREA, key Reserve modernization programs are falling below
    the current funding line.

                                ROTATION POLICY

        Question. I understand the Air Guard has shifted to a 90-day
    rotation policy to reduce perstempo. Does the Air Force Reserve have a
    similar policy and if so, how is this working?
        Answer. The Air Force Reserve is an active and enthusiastic
    participant in the Expeditionary Aerospace Force (EAF). The Aerospace
    Expeditionary Force rotates equipment and personnel on a 90-day
    rotation. When tasked, Air Force Reserve Command (AFRC) policy requires
    members to serve in country a minimum of 15 days, and tours in excess
    of this 15 days must be accomplished by volunteers. This rotation of
    personnel means the maximum required commitment of members to serve is
    19 days, including travel time. We have used this rotation schedule
    throughout EAF Cycles 1 and 2 with great success. During EAF Cycle 1
    the AFRC deployed 14,249 personnel and during Cycle 2, 12,425
    personnel. We believe this is a win-win situation for the Reservist,
    their employers and the family.
                                     ______

               Questions Submitted by Senator Christopher S. Bond

                    NATIONAL GUARD RESERVE EQUIPMENT ACCOUNT

        Question. It is my understanding that the percentage of funding the
    Active components devote to their respective Reserve components varies
    from Service to Service.
        Can each of the Reserve Chiefs (Air Force Reserve, Marine Corps
    Reserve, Naval Reserve, Army Reserve) recount for me the impact, be it
    negative or positive, of DOD's decision to reduce the size of the
    National Guard Reserve Equipment? Are your respective Active components
    providing adequate resources for you to perform your mission?
        Answer. Like our gaining major commands (GMAJCOMs), Air Force
    Reserve Command (AFRC) is responsible for providing the war-fighting
    CINC with the most capable forces possible. We need to continue a
    robust aircraft modernization program. Primarily due to funding
    constraints, our GMAJCOMs have been unable to adequately meet both
    Reserve and active requirements. Congress has traditionally provided
    AFRC with additional National Guard and Reserve Equipment Account
    (NGREA) monies to augment these equipment upgrades that our GMAJCOMs
    have been unable to provide. Unfortunately, NGREA funds have decreased
    from a high of $50 million to the current level of $5 million. Our
    combat aircraft are fast becoming dated and in need of modernization.
    NGREA has, in the past, permitted AFRC to have a solid modernization
    program. Without NGREA, it is safe to say that the Reserve would not
    have a force with the capability it has today.
        Without NGREA, key Reserve modernization programs are falling below
    the current funding line.
                                     ______

           Questions Submitted to Lieutenant General Russell C. Davis

                   Questions Submitted by Senator Ted Stevens

                   SUPPORT OF OUR NATIONAL MILITARY STRATEGY

        Question. During this year, the National Guard will deploy more
    personnel throughout the world in support of our national military
    strategy than anytime in our nation's history. What are your major
    challenges in sustaining that level of support throughout the remaining
    months of the fiscal year?
        Answer. For the Army National Guard, short term ``surge'' manpower
    capability in the form of ``Active Duty for Special Work'' (ADSW) to
    coordinate the reception, staging onward movement and integration of
    National Guard troop rotations overseas is critical to achieve the
    maximum readiness value from the training dollars already invested.
    Full time manning to adequately plan for and coordinate the execution
    of Overseas Mission Support. Current manning levels are inadequate and
    cause needless confusion, additional staff work and overburdens the
    remaining staff members.
        For the Air National Guard, there are three major readiness
    challenges we are currently facing. The first challenge is three-level
    school availability. The ANG has experienced a shortage of 3-level
    technical schools during the past two years, due in part to the
    unforeseen increase in non-prior service accessions. This shortfall has
    created difficulty in achieving 3- and 5-level manning goals. This
    shortage further affects deployments, as most career fields require a
    5-level for overseas support.
        The second challenge is manpower shortages. The ANG recently
    accomplished a complete review of both our full-time and traditional
    guard manpower requirements needed to support the AEF now and well into
    the future. The results of this effort validated a requirement of 2,048
    additional full time manpower resources. Historically the ANG has been
    resourced as a Respond (Cold War) force with limited full time manpower
    to operate and maintain facilities, repair aircraft/equipment, and
    train the drilling force. Now with a formalized AEF construct and
    increasing support requirements, the ANG must begin to be resourced
    properly for both training and increased Optempo. Thus far we have
    funded 1,151 of our requirement through internal ANG offsets and
    through funding and support received from the Air Force during the POM
    process, leaving an unfunded requirements of 897 full-time positions.
    Increased Optempo and aging aircraft and weapon systems are driving
    increased maintenance workloads to ensure aircraft and systems are
    available for training and deployment. Our review also identified
    shortfalls in infrastructure and communications, additional air traffic
    control and combat communications operators, additional full time
    aircrew and crew compliment adjustments in the airlift and air
    refueling mission areas. We are continuing our efforts to obtain the
    balance of the funding and end strength required.
        The third challenge is depot quality and timeliness. This continues
    to be the top issue for Logistics. Constantly shifting schedules and
    consistently unreliable output dates and products from the depots have
    caused disruptions and difficulty in meeting other scheduled
    maintenance. This has been an enormous problem for the KC-135 and C-5
    fleets. Twenty nine percent of the ANG KC-135 fleet is in depot status.
    Less than half of the ANG C-5 fleet is available for unit missions. In
    additional to lack of availability, depot quality is a serious concern
    for most aircraft types. Of particular concern are recent incidents of
    F-100-PW-220 engines with tooling found inside depot-produced Low
    Pressure Turbine Modules and perhaps other components in our single-
    engine F-16s. This is extremely serious, as the ANG has experienced
    two-engine related Class A mishaps since August within our F-16 fleet.
    Assessments of our field LGs indicate there could have been more had
    not Jet Engine Intermediate Maintenance personnel identified engine
    abnormalities during ground operations.

                      DIFFICULTIES IN SUPPORT OF MISSIONS

        Question. From a National Guard perspective, what is the
    difficulties in supporting such a broad spectrum of federal and state
    missions and civil support matters?
        Answer. With the present Army National Guard force structure we are
    meeting our primary and secondary missions for the federal or ``DOD
    community'' and governors of the states and territories. Any reduction
    in the existing force structure will have a direct impact on meeting
    the broad spectrum of missions, especially the missions in support of
    Military Support to Civil Authorities (MSCA) operations requiring
    unique capabilities only found in the military are removed due to force
    structure reduction. This impacts the states as well as surrounding
    states that utilize those capabilities. At this time the greatest
    impact on the National Guard is the lack of authority for the Title 32
    AGR and Technician personnel to support Non-DOD Federal (i.e. Wild land
    Fire Fighting) and state (i.e. State Active Duty (SAD) missions in
    their full-time federal status. As it exists in Congressional
    Appropriations Language, Title 32 Active Guard Reserve (AGR) personnel
    are prohibited the authority to perform federal or state duty during
    Disasters Man-made or Natural reduces the National Guards within the
    state or across state lines as directed by the Governors of the States
    and Territories. This has grave implications since most key leadership
    positions within the National Guard units are usually filled by full-
    time members, who are most likely, the most skilled in their military
    roles and functions within the unit. This decreases the response and
    skill-base required to respond in a timely manner to the ever-
    increasing requirement to support not just the strict war-fighting
    missions but also the ``domestic disaster response and homeland
    security'' missions that are continuing to be an increasing integral
    part of the National Security Plan.
        For the Air National Guard, PERSTEMPO is the primary difficulty.
    The AEF has become the primary driver for ANG manning levels, however
    there are still numerous deployments that are still required to sustain
    the war-fighting capability. The ANG has looked to re-engineering to
    put the fulltime and traditional manpower in the AEF-driven high-
    PERSTEMPO jobs. For the most part, re-engineering will fix most of the
    shortfalls but there are still some problem areas. Most notably is the
    Low Density/High Demand manpower shortfalls within the Combat Rescue
    units. The three ANG Rescue units do not have enough Primary Authorized
    Aircraft or manpower to sustain the current level of participation
    without relief. Their AEF commitment may need to be reduced. ANG Ranges
    and Combat Readiness Training Centers are currently funded at 78
    percent of authorized strength and are not able to support many of the
    requirements of their customers. This has impacted directly on the
    ability to support both daily training capability for AEF preparation
    and deployments for AEF spinup. There has been an increased emphasis on
    night operations over the last several years, but daytime requirements
    remain. This has forced ANG Ranges to operate on a two shift schedule
    with no additional manning.
        These are just two examples of our personnel being tasked beyond
    their availability. While state missions and civil support matters are
    not a daily concern, personnel must be available to meet their state
    commitment whenever needed. The historical State mission many times
    becomes Federal when a FEMA emergency declaration is made.

                              RECRUITING RESOURCES

        Question. As the number of active duty personnel transitioning to
    the National Guard has decreased, your recruiting requirements have
    increased. Does the National Guard bureau have the recruiting resources
    it needs?
        Answer. The Army National Guard does not have the resources
    necessary to carry out its recruiting and retention mission. In order
    to maintain our end strength mission of 350,000 soldiers in support of
    the National Military Strategy, the Army National Guard requires
    additional funding in Advertising, Recruiter Support, and Incentives.
    We are also experiencing a manpower shortage within our full-time
    recruiting force.
        Additional advertising funding is necessary for the Army National
    Guard (ARNG) to penetrate markets previously neglected or overlooked.
    The goal is to improve the quality of the ARNG force within Test Score
    Category (TSC) I-IIIA personnel to meet the Total Army Quality Goal of
    67 percent; and 90 percent Tier I (high school degree graduates and
    above). Simultaneously, our goal is to increase the diversity of the
    force to more accurately reflect the general population. We currently
    have an unfinanced requirement (UFR) for recruiter support of $18.384
    million for fiscal year 2002. This includes efforts to recruit and
    retain officer, warrant officer, and enlisted personnel in the ARNG.
    Other programs will target leaders at the Company and Battalion levels
    to decrease attrition and increase retention of soldiers. Also, under
    development are special programs directed at diversity. This is a
    priority for the ARNG.
        GSA vehicles support currently has a UFR of $5.478 million. The
    increased cost of GSA vehicles is a result of higher fuel costs and the
    increased travel requirements related to the increased recruiting and
    retention mission.
        The incentive (bonuses) UFR for fiscal year 2002 is $20.051
    million. The UFR is the result of an increase in the number of non-
    prior service (NPS) enlistment's needed to meet the end strength goal.
    The bonuses are needed to attract quality applicants to the ARNG while
    competing against other services and the civilian sector. A residual
    effect of an increase in NPS enlistments is anniversary payments for
    the member.
        We are experiencing a shortfall in full-time manning due to the
    ``cap'' on the ARNGs Active Guard Reserve (AGR) force. Unlike other
    services, for the ARNG to plus-up recruiting, it would come at the
    expense of full-time unit personnel. This movement of AGR personnel
    would adversely impact unit readiness. Hence, this option is not in the
    best interest of the organization. In lieu of that, we have been
    effectively utilizing Active Duty for Special Work (ADSW) personnel to
    augment the full-time recruiting and retention force. These ADSW
    personnel are current ARNG members hired as temporary help.
        We have additional concerns addressing our shortage of company
    grade officers in the ARNG. While we are working with Cadet Command to
    increase the number of second lieutenant accessions through the Reserve
    Officer Training Corps (ROTC), an obstacle we face in commissioning
    enlisted soldiers as lieutenants through our Officer Candidate Schools
    is the automatic loss of the Student Loan Repayment Program (SLRP).
    Section 16301 of 10 United States Code makes SLRP contingent on
    enlisted service, and therefore, any initiative to authorize repayments
    for service in a commissioning program or as an officer would require a
    statutory amendment.
        Last year, the Air National Guard Recruiting and Retention Branch
    was authorized an additional sixty-five positions to be distributed
    over a three year time frame. Many of these positions will be placed on
    active Air Force installations to try and capture the departing airmen.

                          GUARD MILITARY CONSTRUCTION

        Question. I am concerned that the department under-funds guard
    military construction because they know the Congress will add funding
    for these projects. Has your ability to ensure your requirements are
    adequately addressed through the future years defense plan and other
    budgetary processes improved?
        Answer. The Army is severely underfunded for its MILCON, and its
    Sustainment, Revitalization, and Modernization of existing real
    property. The Army has a valid process for determining ARNG
    requirements. Nevertheless, in fiscal year 2001, $59 million was
    programmed for ARNG MILCON, which is less than ten per cent of the
    requirement, and ARNG received $224 million for sustainment,
    revitalization and modernization, which is about 50 per cent of the
    sustainment requirement of the Army's Installation Status Report (ISR).
        In previous years, the AF would fund a portion of our MILCON
    projects, and the ANG would present an unfunded priority list that
    would partially be funded by Congressional adds. Together, the AF funds
    and the Congressional adds would equal our historic funded position.
    That is no longer a viable process. It was degraded by language in the
    fiscal year 2001 Authorization Bill that constrained us to strictly a
    funded FYDP. The ANG maintains that the funded portion of the FYDP does
    not adequately represent our requirements. As this was an fiscal year
    2001 change, it is too soon to predict the success of adequate funding
    through the FYDP and other budgetary processes.

                                GUARD EQUIPMENT

        Question. I remain concerned about guard equipment compatibility
    with the active components as we modernize our forces. How do we ensure
    that the guard remains relevant and deployable?
        Answer. The Army's ability to execute full spectrum operations in
    support of the National Military Strategy, Joint Strategic Capabilities
    Plan and the war fighting Commander in Chiefs is largely contingent on
    bridging the interoperability gap between analog and digitally equipped
    units as we transform. The Army must identify and resource the minimum
    essential digital capabilities required to maintain command, control
    and situational awareness across the entire force. Less modernized
    units must be fully capable, sustainable and interoperable.
        The ANG always seeks to acquire and maintain the most capable and
    effective aircraft fleet possible. This desire is unfortunately
    sometimes constrained by fiscal and operational realities imposed upon
    us from external sources. However, there is an on-going list of
    aircraft modernization requirements to ensure the ANG is able to
    continue to meet its commitments. That list is continually being worked
    and funded whenever possible. The Air National Guard is a full and
    equal partner in every phase of the Air Force Corporate Budget Process.
    We have representation on every panel as well as the Air Force Group,
    Air Force Board, and the Air Force Council.
        Funding appropriated within the National Guard and Reserve
    Equipment Account enables the National Guard to procure items which are
    critical in nature. Both Army and Air National Guard components
    appreciate the flexibility inherent in the NGREA.

                               TOUR LENGTH POLICY

        Question. With the shift to putting the Army Guard in the regular
    Bosnia rotation, has the National Guard Bureau and the Joint Chiefs of
    Staff considered reducing the tour length policy in this area?
        Answer. The Army National Guard has been following the Chief of
    Staff, Army rotational policy guidance of 179 days in theater for
    Balkan operations. The Army along with the Army National Guard has
    discussed shorter rotations such as 120 days or 90 days for the
    Balkans. The Army National Guard currently deploys units on shorter
    rotations to South West Asia and has reduced rotational lengths for
    lawyers, medical and aviation personnel. Discussion continues between
    both staffs on the feasibility for shorter Balkan rotations and the
    potential impacts on units, families, employers, and communities.
    Funding is also a consideration, such as added transportation
    requirements for personnel and equipment and training site usage. As
    the Guard takes on more of a role in the Balkans, it will continue to
    work towards better rotational solutions that will reduce Personnel
    Tempo (PERTEMPO) and OPTEMPO (Operational Tempo) for all components of
    the Army.
                                     ______

               Questions Submitted by Senator Christopher S. Bond

                               FULL-TIME MANNING

        Question. General Davis, it's evident that the operations tempo of
    recent years has placed an increased burden on not only our active
    forces but our Guard and Reserve forces as well. It is reported that
    again this year one of the top priorities for the National Guard is the
    need to increase the number of full-time personnel. I understand many
    Army National Guard units stand at on 38 percent of their required
    manning, down from 50 percent just 12 years ago. What are your full-
    time manning requirements and how does this shortage impact readiness
    and the ability of the Guard to perform its state and federal missions?
        Answer. The Army has validated a full-time support manpower
    requirement of 41,321 Active Guard Reserve (AGR) and 42,329 Military
    Technician personnel for the Army National Guard. Based on Army
    personnel readiness metrics and mobilization deployment scenarios,
    there is a minimum acceptable level of manning necessary to maintain
    required levels of readiness. For the Army National Guard (ARNG) this
    minimal level of support equates to 30,402 AGR and 29,329 Military
    Technician personnel, or approximately 71 percent of the full-time
    support requirement.
        Currently, ARNG full-time support levels are well below that 71
    percent level. The fiscal year 2001 Appropriations and Authorizations
    Acts provided funds and authorizations for end strengths of 22,974 AGR
    and 24,728 Military Technician personnel, for an overall level of
    approximately 57 percent of requirements.
        However, we resource units using a first-to-fight, first-resourced
    methodology. Prior to fiscal year 1996, the ARNG was able to resource
    all its units at a minimum of 50 percent with our highest priority
    units manned between 70-75 percent of full-time support requirements.
    Due to competing priorities for limited resources, our later deploying
    units today are resourced at only 38 percent of their full-time support
    requirements while our highest priority units are resources only at
    approximately 65 percent.
        Full-time support personnel are critical enablers in ensuring ARNG
    readiness. They provide; administrative, payroll, supply, training,
    maintenance and recruiting support at unit level. With a work force
    manned well below the level needed to maintain minimum required
    readiness levels, the impact is an erosion of readiness to complete
    both the federal and state ARNG missions. Many unit level commanders
    have attributed a decline in readiness to inadequate levels of full-
    time support.

                        ARMY AVIATION MODERNIZATION PLAN

        Question. General Davis, over the last 10 months we've heard
    alarming reports about the health of our Army National Guard Aviation
    resources. I understand there is a massive shortage of utility, attack
    and reconnaissance aircraft due to the retirement of legacy aircraft
    and the lack of replacements over the upcoming years. Many aircraft in
    the Army Guard have been grounded because of safety issues and this
    severely affects the Guard's ability to perform both state and federal
    missions.
        I have a letter from the National Governors Association citing a
    shortage of more than 300 UH-60 Black Hawk helicopters that also states
    that more than 600 of the Guard's UH-1 Huey helicopters (75 percent)
    are usually not working due to mechanical failures. It's almost
    unbelievable that the Army's modernization plan calls for only 10
    helicopters per year to be procured through fiscal year 2007. If my
    math is correct this will add up to 60 aircraft over 6 years and with a
    requirement for upwards of 300 aircraft it will take more than 20 years
    to resolve the shortfall. And this does not begin to address our attack
    helicopter needs.
        How is the current state of affairs in Army Guard aviation
    impacting readiness, retention, and safety, and your ability to meet
    state and federal mission requirements? And are you getting any signals
    from Army or the Department of Defense that this situation is going to
    get the type of priority necessary to turn this sad state of affairs
    around?
        Answer. Please allow me to refer this question to General Schultz
    for a more detailed explanation.
        General Schultz. The full details of the revised 2001 Army Aviation
    Modernization Plan (AAMP) are not yet approved by the Chief of Staff
    Army (CSA) nor released to the ARNG. However it is certain that there
    will be continuing significant short and long term impacts on our ARNG
    aviation units and their parent States.
        In the short term the repeated grounding of the Army National Guard
    (ARNG) Vietnam-era AH-1 and UH-1 aircraft, combined with the pending
    full retirement of both fleets (AH-1 in fiscal year 2001 and UH-1 in
    fiscal year 2004), severely limits both our unit and individual aviator
    readiness. In addition, units with these older aircraft are no longer
    deployable to meet Federal contingency requirements, and also have a
    rapidly declining ability to respond to State emergencies.
        In the long term the Army's current procurement and cascade rates
    (active to ARNG) of modernized aircraft are not adequate to make up the
    differential. The current Army buy of new UH-60 utility helicopters is
    10 per year, at which rate will take well over twenty years to bring
    ARNG aviation units back to near full fill. Also these slow procurement
    rates will not be mitigated to any significant degree by movement of
    UH-60's from the active Army to the ARNG, with present Army planning
    moving only about 6 UH-60 aircraft between now and the end of fiscal
    year 2007. The Army has repeatedly stated it's desire to accelerate the
    procurement of UH-60 helicopters for the ARNG, but does not currently
    have sufficient resource allocations to accomplish this.

                    NATIONAL GUARD RESERVE EQUIPMENT ACCOUNT

        Question. The National Guard Reserve Equipment Account, designed to
    supplement Guard and Reserve shortfalls in annual funding is gradually
    being eliminated. I understand this initiative was dependent upon the
    Active component providing a greater share of annual appropriations to
    the respective Guard and Reserve components. In your view, has the
    gradual elimination of NGREA funding worked out as planned? Is the
    Active component providing you adequate resources for you to perform
    your wartime mission?
        Answer. For the Army National Guard, the decline in NGREA funds has
    not been completely offset by an increase in the P1R. The P1R continues
    to reflect the Army's requirements and while it has benefited several
    programs such as ADRS, other programs are not sufficiently funded. The
    ARNG Top 25 list of unfunded equipment requirements reflects some of
    the validated requirements that are not adequately funded by the P1R.
        The NGREA benefits the ARNG by providing discretionary funds to
    procurement to support the ARNG priorities versus the P1R, which is
    developed, based on the Army's priorities. NGREA provides the
    capability for short-term readiness solutions. NGREA funds must
    increase annually because of inflation costs to maintain the current
    rate of procurement.
        Over the POM 02-07 $1.5 billion are devoted to ADRS Phase I & II
    equipment procurement. ADRS only supports new activations/conversions
    of CS and CSS units. Overall other programs have decreased and only
    ADRS is fully funded.
        Army fielding programs do not always completely include the ARNG
    requirements. There are many examples of Army procurement not even
    addressing the ARNG (M88A2, Wolverine, M1A2, M2A3, M3A3, etc.) The
    Hydraulic Excavator or HYEX (fiscal year 2001) is an example where
    NGREA funds had to be used to complete the ARNG requirement. If these
    funds had not been available the ARNG would have been left with a
    shortfall of 7 systems with no new procurement planned after the Army
    procurement closed in fiscal year 2002 and no potential to fill these
    with cascaded equipment for 10 to 15 years. Most program shortfalls are
    too expensive to address with the current marginal NGREA funding.
        The Army decision to delay procurement of FMTVs for the ARNG to
    fill other requirements has delayed significantly the ARNG's ability to
    eliminate obsolete trucks. Currently the fleet is aging faster than it
    can be replaced. Recapitilization will have minimal benefit towards
    this problem.
        The current P1R slight upward trend over the last few years has not
    off set the void left by the low procurement of the nineties. The
    current POM is focused on Army priorities, which have marginal effect
    on the ARNG's older equipment. The anticipated cascade of modern
    equipment has not materialized. Funding for programs like Limited
    Division XXI are expiring before the program is complete. Over the last
    couple of years NGREA funds have been used to fill shortages in MTVs,
    HEMTTs, SINCGARS radios, simulators, and night vision devices that will
    have an immediate positive impact on readiness. Without these funds or
    other congressional adds these shortfalls could not have been filled
    for many years. Realistically the P1R is still inadequate as reflected
    in the UFRs generated in each POM year. Without an increase in NGREA
    funds the current readiness rates will decline due to equipment
    shortages, which impact capability, training and retention.
        For the Air National Guard, although the ``big ticket'' items, such
    as aircraft and major weapons systems, have migrated to the AF
    procurement appropriation, the NGREA account has been instrumental in
    our efforts to modernize ANG aircraft and keep us fully relevant to
    today's Total Force Military. Using NGREA, we have focused on four key
    areas: precision strike, 24 hour operations, information dominance, and
    enhanced threat survivability. Using NGREA and existing AF funding we
    designed an F-16 modification program called Combat Upgrade Program
    Integration Details (CUPID) that dramatically increased the combat
    capability of the entire CAF F-16 Block 25/30 fleet and saved over $100
    million in the process. CUPID coupled with another GREA success
    program, the Litening II targeting pod, has allowed our F-16 units to
    perform the full spectrum of day and night combat operations including
    Precision Guided Munitions. The Situation Awareness Data Link (SADL)
    another of many fine examples of NGREA successes. We were also able to
    field Fighter Data Link on the ANG F-15 fleet using NGREA funding which
    allows passing information between aircraft and aircraft to ground
    without talking. FDL is the true F-15 force multiplier and, again,
    using NGREA we are able to maintain full combat capability in the ANG
    F-15 fleet. In the area of 24 hour operations, the ANG has led the way
    in fielding Night Vision Imaging Systems across the CAF A-10, F-15 and
    F-16 fleet. These NVIS systems are now the AF standard yet were
    initially fielded using NGREA funding. We have made great strides in
    modernizing our 40+ year old KC-135E tankers through the ongoing KC-
    135E to R reengining program. We have also begun to field C-130 Cockpit
    Armor to allow our C-130 units full protection of the aircrew during in
    theater rotations. The flexibility NGREA funding gives us has allowed
    the ANG to field commercial off the shelf solutions faster and cheaper
    than otherwise able. These combat enhancements have been invaluable in
    our efforts to modernize our fleet and support global taskings.

                             MILITARY CONSTRUCTION

        Question. The current state of Army National Guard Military
    Construction (MILCON) and Real Property Operations and Maintenance
    (RPOM) activities suffers from an alarming backlog of over 1,300
    unfunded MILCON projects representing a cost of $6 billion and an RPOM
    sustainment requirement of $565 million. These deficiencies must
    certainly have a devastating effect on Army National Guard training and
    readiness. How is the Guard dealing with this alarming set of
    statistics and what is the impact on recruiting, retention and the
    ability of the Guard to perform their state and federal missions?
        Answer. I agree that we have a challenge. Shortages in MILCON/RPOM
    funding have prevented the Guard from revitalizing its facilities in a
    timely manner. Who wants to join an outfit where the unit practices for
    all sorts of contingencies in undersized, 1950s era facilities that
    have never been maintained, and look like junk? Although the Army
    National Guard is still a trained and ready force, overtime, ill-
    maintained facilities hamper training and adversely effect retention.
    Soldier morale is negatively impacted by operational requirements that
    are more difficult to meet, and take a significantly longer time to
    accomplish in undersized, over aged facilities that impede operations
    rather than facilitating them. For example, after training, soldiers
    are often forced to wash down their vehicles with a garden hose. Since
    this takes so long, training must be curtailed earlier in the
    afternoon, but soldiers still do not get home until late at night.
    Since this impacts the family, the spouse discourages the soldier from
    staying in the Guard.
        To improve the condition of all the facilities, the Army has
    developed an Army Facilities Strategy that includes the Army National
    Guard. If funded, the Army Facilities Strategy will improve one third
    of the readiness centers, all of ARNG's surface maintenance facilities,
    all organizational equipment parking, and all of ARNG's training
    classrooms over the next ten years. This is a major undertaking that
    will significantly improve the condition of ARNG facilities, if funded.
    Implementing the Army National Guard Division Redesign Study will
    modernize facilities for the conversion of 12 brigades to Army Combat
    Support Military Construction effects Guard training and readiness and
    Combat Service Support missions. These programs will have a direct,
    positive impact on ARNG training and operational capabilities.

                   COMMUNICATIONS EQUIPMENT (SINCGARS RADIOS)

        Question. The Adjutant General of the State of Missouri, Major
    General Havens, wrote me last month strongly urging me to do all I can
    to secure funding for additional SINCGARS radio sets, which as you know
    are essential for enabling ground forces to communicate with each
    other. He noted that the ability of Missouri soldiers to communicate is
    constrained by obsolete equipment. Units from Missouri which are part
    of the 35th Infantry Division are scheduled to deploy to Bosnia for a
    Stabilization Force rotation in 2003.
        I'm told the shortage of SINCGARS radio sets is not just a Missouri
    problem and that other Army National Guard Divisions are still
    operating with Vietnam-era, VRC-12 radio sets which operate without
    secure voice and data capability. How does this shortage of SINCGARS
    radios impact the Guards ability to perform their required mission?on
    recruiting, retention and the ability of the Guard to perform their
    state and federal missions?
        Answer. The continued use of the VRC-12 series radio when
    interacting with active component units will bring communications
    operations ``down to the lowest common denominator of capability.''
    Single Channel Ground Airborne Radio System (SINCGARS) equipped units
    (transmitting to the VRC-12) will have to switch off the frequency
    hopping mode, use single channel, and accept a level of risk where
    jamming and or listening in by enemy electronic warfare capabilities is
    likely.
        SINCGARS is an important part of modernization that is long overdue
    in the communications realm of the Total Army. Ongoing cascading will
    complete the fielding of the three ARNG divisions through 2002, with
    the remaining five divisions (27,667) currently scheduled for fielding
    through fiscal year 2004.
        SINCGARS features digital data capability, integrated
    communications security (COMSEC), an enhanced waveform that improves
    the performance of voice and data, less weight, smaller size, and less
    cost to sustain. All of these highly advanced capabilities are now
    needed to redress the obsolescence problem of the VRC-12 series radios.
    The VRC-12 radio only operates one channel at a time, typically stays
    on single channel up to 24 hours, and operators must conduct a manual
    frequency and COMSEC change. This affords an enemy equipped with Warsaw
    Pact era electronic warfare hardware an excellent chance of finding the
    signal, jamming, or listening in and collecting intelligence data that
    could be used against U.S. forces.
        The most significant improvement SINCGARS has over the VRC-12
    series radio is the ability to frequency hop (FH). In this mode the
    SINCGARS literally hops over 2,320 frequencies at 100 hops per second
    and allows virtual jamming-free transmissions. With SINCGARS it is
    virtually impossible for an enemy to match the hopping effect, and
    clearly listen in on message traffic. Even attempts to jam large blocks
    of frequencies are ineffectual, as the quick hopping over 2,320
    frequencies (twice the number of VRC series radios) will ensure units
    have plenty of open frequencies for their radios to transmit over.
        If fielding beyond the enhanced separate brigades and the first
    three divisions is not funded the five remaining divisions and a number
    of non-divisional units will be unable to execute required missions,
    deployments, and or other interactions with active component units.
    Units retaining VRC-12 series radios will continue to perform state
    missions not requiring the advanced capabilities of SINCGARS radios.
    However, VRC-12 equipped units will continue to be plagued with high
    maintenance costs and lack of repair parts as well as remaining a
    challenge to equip for deployment.
                                     ______

                 Questions Submitted by Senator Robert C. Byrd

                                  HART-RUDMAN

        Question. The Hart-Rudman Report, page xiv, states; ``We urge in
    particular that the National Guard be given homeland security as a
    primary mission, as the U.S. Constitution itself ordains.''
        Major General Allen Tackett and other Adjutants General believe
    that Homeland Security should be one of the missions of the National
    Guard, but not the only mission. The Guard should still maintain its
    warfighting missions.
        General Davis, do you agree with the Hart-Rudman recommendation?
        Answer. I agree with the Hart-Rudman recommendation that homeland
    security be a primary mission of the National Guard. Not surprisingly,
    the National Guard is best equipped to handle the Homeland Security
    Mission. For 364 years, the National Guard has been the first line of
    defense for both state and nation. As demonstrated throughout history,
    the National Guard has proven its ability to perform both domestic and
    warfighting missions. We should maintain our warfighting mission and
    the Adjutants General of the several states and territories agree with
    that position. We also support President Bush's vision for an expanded
    National Guard role in the homeland security mission.

                               HOMELAND SECURITY

        Question. What additional resources would the National Guard Bureau
    require in order to fulfill the broader mission of Homeland Security,
    and in particular, please comment on the National Training Center for
    Homeland Security (NTC-HLS) being developed at Camp Dawson, West
    Virginia? (General Davis has been briefed on the concept of the NTC-HLS
    and the Memorial Tunnel, the Robert C. Byrd Regional Training
    Institute, and proposed Integrated Special Operations Training Facility
    (ISOTF).)
        Answer. The Chief, National Guard Bureau has completed the
    congressionally directed Feasibility Study which reviews and highlights
    the capabilities of both Camp Gruber, OK and Camp Dawson WV as a WMD
    and counterdrug training center for the military and to the state and
    local first responder community. The study discusses the proposal and
    capability of each of the facilities mentioned particularly regarding
    Camp Dawson. Collective and individual institutional training for the
    WMD CST members has been and continues to be conducted at Fort Leonard
    Wood, MO. The National Guards Civil Support Teams and their members
    also attend WMD type training concurrently with first responders at
    various locations. Additional locations used for more focused technical
    training within their states and areas of responsibility of WMD CSTs
    are:
      --Dugway Proving Grounds, Utah (Collective--Bio emphasis)
      --Aberdeen Proving Grounds, Aberdeen MD, (Mobile Analytical
            Laboratory (MALS))
      --Center for National Response, WV (confined space)
      --FEMA National Fire Academy, Emittsburg, MD (HAZMAT & Emergency
            Preparedness)
      --DoJ Center for Domestic Preparedness, Anniston, AL (Civil Domestic
            Terrorism)
      --Energetic Materials Research & Testing, NM (explosives)
      --National Center for Bio-Med Research & Training, LA (bio)
      --National Exercise, Test & Training Center, NV (explosive, nuclear/
            rad)
      --National Emergency Response & Rescue Training Center, TX (emerg &
            rescue)
        As you can see, there are a variety of locations that WMD training
    is currently being conducted. Using this ``menu'' of training areas,
    leverage existing expertise from the nations ``experts'' and
    significantly enhances the capabilities of the CSTs.
        Question. Do you concur with the recommendation to the Senate Armed
    Services Committee from General Peter Pace, Commander of the U.S.
    Southern Command, that the illicit drugs flooding American should be
    considered a weapon of mass destruction? Should counterdrug efforts be
    included as a part of Homeland Security?
        Answer. Illicit drugs flooding America can have the same or similar
    impact as a weapon of mass destruction. To explain this, the answer can
    be divided into three question-and-answer responses.
        Do illegal drugs cause ``mass destruction'' on a society?--The
    answer is ``they could be.'' One destructive effect is financial. The
    Office of National Drug Control Policy spent over $17 billion for both
    1999 and 2000 fighting the drug problem, and will spend an estimated
    $18 billion for 2001. This does not include the tax dollars spent on
    drug-induced crime such as murder while influenced by drugs, or drug
    related health costs such as emergency room visits. Nor does this
    reflect the amount of money lost in the illegal money transactions by
    narco-traffickers. In addition, drug addicts often are homeless and
    consume a disproportional amount of public services.
        The social effect is obvious. Criminals whose offenses are drug
    related (beyond just being in possession of drugs) fill many of our
    jails, as crime under the influence of drugs can result in murder and
    other assault crimes. Meanwhile, increased drug addiction brings an
    increase in property crime. A 1998 Bureau of Justice statistics study
    found that 33 percent of state and 22 percent of federal prisoners said
    they committed their current offense while under the influence of
    drugs, and about one in six of both state and federal inmates said they
    committed their offense to get money for drugs.\1\ In addition, major
    criminal organizations can produce more revenues from trafficking
    illegal drugs than from most any other criminal activity, giving them
    tremendous influence and power, but without bringing significant
    attention to themselves. Finally, physical damage to the individual
    from illegal drugs can be significant and have long-term effects. This
    decreases the capability of our ``white collar'' and ``blue collar''
    work force, affecting our entire future.
    ---------------------------------------------------------------------------
        \1\ Mumola, Christopher, ``Substance Abuse and Treatment, State and
    Federal Prisoners, 1997'' (NCJ-172871), Bureau of Justice Statistics, 5
    January 1999.
    ---------------------------------------------------------------------------
        Are drugs currently being used as a weapon of mass destruction
    against the United States?--In the big picture, the current answer
    appears to be ``no.'' Currently, ``money'' still seems to be the
    motivating factor for the huge influx of drugs into the United States.
    Yet, even if the drug flow is not currently intended as a weapon, its
    devastating effects (``mass destruction'') are the same.
        Can illegal drugs be effectively used as a weapon of mass
    destruction?--The answer is ``yes.'' Illegal drugs can be used as
    effectively as an ``indirect'' strategy, as military theorist and
    author B. H. Liddell Hart would call it. The greatest example of this
    occurred in China. Britain forced China to open itself to opium trade
    throughout the late 18th to early 20th centuries. During this time
    opium use resulted in a greatly weakened China, and allowed for the
    West and other countries to exploit China for many of its resources,
    especially silver--the currency of the opium trade. Japan employed
    illegal drugs as a strategy against China during the formers occupation
    of Manchuria prior to World War II. The Japanese and Chinese had been
    enemies for centuries. Aware of the social destruction that drugs
    cause, as well as the devastating role that opium had played in China's
    history, the Japanese distributed opium, heroin and cocaine along the
    Chinese coast when they took control of Manchuria in 1931, earning
    Japan $300 million per year (the equivalent of 3.488 billion in 2001).
    The strategy not only helped finance Japan's war machine, but the
    Japanese planners thought that it would make the subsequent occupation
    of China much easier because drug-consumption would reduce the combat
    effectiveness of Chinese troops. It took the iron fist of Communism to
    finally pull China out of its drug-ridden circumstances.
        History has shown that drug trafficking, as a strategy of nation
    against nation, is a proven and viable weapon. Drugs' slow, degrading
    effects can damage any country. While some countries are very
    susceptible to drug abuse--making them more vulnerable to a drug
    trafficking strategy--other countries are well suited to trafficking
    drugs. It is no surprise that the United States is definitely one of
    the drug-vulnerable nations, but what many do not realize is that China
    is perhaps the most capable of putting a drug trafficking strategy into
    practice.

                           HOMELAND SECURITY MISSION

        Question. What increases in National Guard Force Structure would
    you recommend to meet the Homeland Security Mission?
        Answer. The full answer to this question depends on what programs
    are included within the mission. The National Guard presently performs
    several missions which, in my judgement, should be included under
    homeland security. Those missions include the counterdrug program,
    aerial defense of the continental United States, domestic support to
    civil authorities and the weapons of mass destruction program to name a
    few.
        The weapons of mass destruction program presents the most pressing
    need for force structure changes. Presently, only 32 teams are
    authorized. The National Guard supports the Congressional intent to
    provide a WMD CST capability in each of the states and territories. To
    do so would require 23 additional teams, with a total of 506 full-time
    soldiers and airmen and associated equipment. Additional manpower is
    also needed at the National Guard Bureau to properly perform the
    recently assigned responsibilities as WMD program manager. Additional
    force structure will also be required if the National Guard is assigned
    responsibility for the National Missile Defense program.

                              COUNTERDRUG MISSION

        Question. As it relates to the Counterdrug mission, what additional
    resources are needed to maintain and increase the capabilities of the
    National Guard-funded state counterdrug programs such as the one in
    West Virginia? (The West Virginia program requires $3.5 million to
    execute an effective program, yet the fiscal year 2002 National Guard
    Budget for state plans funding declines to $1.34 million for fiscal
    year 2002, a cut of more than fifty percent.)
        Answer. Based on historical program execution, and realized and
    projected DOD pay and allowance increases (8.7 percent in last two
    years, similar raises projected for fiscal year 2002), the program
    would need an additional $40.7 million in fiscal year 2002 to conduct
    operations at current fiscal year 2000-2001 levels of effort. Resource
    requirements are based on valid support requests from law enforcement
    agencies for counterdrug operations, as provided by each of the 54
    states and territories. This amount would maintain the program below
    the 4,000 maximum personnel limit authorized by Congress. To increase
    the capabilities of state counterdrug programs beyond current levels of
    effort, additional resources beyond $40.7 million would be needed.

                       NATIONAL GUARD COUNTERDRUG PROGRAM

        Question. It is my understanding from my discussions with MG Allen
    Tackett, the West Virginia Adjutant General that the unique aspect of
    the National Guard Counterdrug program as opposed to other DOD
    involvement is that it focuses on three areas: supply reduction, a high
    emphasis on demand reduction, and substance abuse programs for Guard
    personnel. What is your assessment of the program?
        Answer. The National Guard Counterdrug (NG CD) program is unique to
    other DOD programs in the arena of counterdrug efforts. First, the
    National Guard (NG) provides counterdrug support under the auspices of
    Title 32 U.S.C., which puts them under authority of their state's
    governor. This enables the NG to provide a wider range of services than
    is possible for Title 10 (active component) forces within the
    continental United States. NG personnel work for their state governor
    to support state and local law enforcement agencies (LEAs), as well as
    federal LEAs to interdict drug trafficking. This support can include
    investigative case and analyst support, linguists, communications,
    engineer, cargo inspection, logistics and transportation support,
    training for LEAs, and air and surface observation of illegal drug
    activities. (A 2000 survey of NG supported LEAs showed a remarkably
    high satisfaction rate in all categories.) The NG also supports federal
    LEAs outside the United Sates via air intelligence and reconnaissance
    operations. In addition, the NG CD program is a fulltime program,
    thereby permitting NG personnel to become specialized in counterdrug
    interdiction--who go through special training to prepare for
    counterdrug operations within the United States. Finally, most
    interdiction missions provide NG personnel with military training (in
    the above-mentioned skills) that enhances, or is in addition to, their
    Military Occupation Specialty (MOS)/Air Force Specialty Code (AFSC)
    wartime training conducted at their units during monthly drills and
    Annual Training. This, in turn, provides the NG with better soldiers
    and airmen. However, the active component units, who may receive some
    wartime training through temporary counterdrug assignments, are usually
    deterred from wartime training and preparation while conducting these
    types of missions.
        The NG CD Drug Demand Reduction (DDR) program is one of the
    greatest assets of the NG CD program. This NG program provides fulltime
    support to community based anti-drug organizations, and is a leading
    edge ``force multiplier'' focusing on assisting schools, parents, and
    other anti-drug coalitions. As a permanent member of every community
    across America, and as a partner of the Community Anti-Drug Coalitions
    of America (CADCA), the NG serves as a powerful catalyst for state and
    community-based mentoring programs, parenting groups, speakers bureaus,
    Adopt-A-School, Red Ribbon, and PRIDE projects. The active component
    does not offer a program of this type. NG personnel become trained in
    DDR skills, and go out in their own communities to work with their own
    people in lowering drug demand--a vital role in the counterdrug effort.
    Many NG state programs even provide camps and schools for high-risk
    youth to build confidence, skills, and an anti-drug attitude within
    these young people. NG substance abuse programs use the same drug
    testing programs and procedures as the active components.
        Question. Again from my discussions with MG Tackett, he believes
    that the National Guard Counterdrug program can play a key role in the
    broader scope of Homeland Security if given the opportunity and
    resources and that the missions are complimentary. Do you concur with
    this assessment?
        Answer. The answer is ``yes.'' The National Guard Counterdrug (NG
    CD) program has skills that could assist in the counterproliferation of
    Weapons of Mass Destruction (WMD) such as small nuclear devices, and
    chemical and biological agents. The current skills of the NG CD program
    could allow it to assist in WMD interdiction efforts with minimal
    additional training (such as WMD identification).
        The NG CD program has a well-established relationship and a very
    good track record toward assisting Law Enforcement Agencies (LEAs) in
    interdicting illegal drug smuggling. NG CD skill sets used to support
    LEAs in drug interdiction could also be used to assist LEAs and other
    federal agencies in interdicting WMD materials at, or within American
    borders. Such NG CD skills include investigative case and analyst
    support, linguists, communications, engineer, cargo inspection,
    logistics and transportation support, training for LEAs, and air and
    surface observation. Currently, most American efforts against possible
    WMD attack are ``response'' oriented.
        The threat of WMD materials being smuggled into or produced within
    the United States is very feasible. Prior to the millennium
    celebration, an Algerian terrorist was caught smuggling explosives into
    the United States at Port Angeles, Washington, with his most likely
    target being the Space Needle in Seattle. Had this terrorist--who just
    as well could have had WMD materials--simply solicited the help of drug
    traffickers to get his explosives into the United States, the
    infiltration part of the operation would most likely have been a
    success. Major drug lords may not want their market damaged by
    terrorists, but low-level traffickers are looking for money, and may
    not be quite as concerned about their market. A high financial reward
    may be all that is required to get top quality traffickers to smuggle
    weapons for terrorists. The fact that drug traffickers and terrorists
    can and do work side-by-side (usually for mutual financial benefits)
    also indicates that the Homeland Security organizations that counter
    both terrorism and illegal drug trafficking should have close working
    ties.

                     FIRST AND EMERGENCY RESPONDER TRAINING

        Question. NGB has initiated a study concerning delivering First and
    Emergency Responder training to the county level across America as a
    part of the NTC-HLS. When will that study be completed?
        Answer. As directed by Senate Appropriation Report 106-298, pg. 34,
    the Chief, National Guard Bureau conducted a feasibility study and has
    prepared a response that satisfies the language in law. The Homeland
    Defense Initiative Feasibility Study for Camp Gruber, Oklahoma and Camp
    Dawson, West Virginia was not required to nor does it address
    feasibility of delivering first and emergency responder training to the
    county level. The proposal to train emergency and first responders as
    embedded within the above question represents a significant departure
    from traditional DOD responsibilities.
        Question. Do you agree that the National Guard Bureau be provided
    an Other Procurement Line Item to establish the NTC-HLS and the program
    be integrated into the Future Years Defense Budget?
        Answer. Provision of an Other Procurement Line Item would provide
    enhanced Congressional visibility and would streamline the operation of
    the program. It is equally important that Homeland Security be
    integrated in the FYDP. I support these actions because they would
    ensure the continuity of funding that is critical to continuing
    operations. Neither action would detract from our ability to continue
    to utilize other facilities for specialized training.

                  NATIONAL GUARD FORCE STRUCTURE AND EQUIPMENT

        Question. If the new national defense strategy calls for cuts in
    the National Guard force structure, how do you plan to make cuts, and
    will these cuts be based on readiness levels or made across-the-board?
        Answer. The Army National Guard uses a process called Total Guard
    Analysis (TGA) XXI to redistribute force structure due to changes in
    the National Military Strategy/Quadrennial Defense Review or resulting
    from the Total Army Analysis (TAA) process.
        TGA is an objective and unified National Guard Bureau (NGB) effort
    to fairly allocate force structure within the States' capabilities,
    while maintaining a balanced and ready force for federal and domestic
    missions. TGA is the method that all the Adjutants General agree upon
    to redistribute force structure.
        TGA is a two-step process. Step one utilizes objective, measurable
    personnel readiness data to produce an ``Order of Readiness'' list
    (ORL). Step two involves analysis by NGB's TGA team. Factors used by
    the team include: the ORL, the percentage of units in a given state by
    type, the number of headquarters units in a state that provide command
    and control for other units, the number of units that can be used for
    either federal wartime or domestic support missions, and the projected
    demographic changes in a state (population shifts). The outcome of Step
    2 is a list of units with low readiness levels and states who are
    candidates for consideration of growth or re-distribution of force
    structure. The leadership of the ARNG to make decisions on any
    necessary force structure cuts uses this list.
        The National Security Strategy will define objectives and
    capabilities that the Services will be tasked to provide. In order to
    meet them, the Services will re-shape their force structure, in size,
    types of weapon systems and how those weapon systems will be employed.
    The Air National Guard will be affected; however we do not know what
    the full impact of this change will be. As a full spectrum partner we
    expect to change, just as our active component changes. There will be
    new opportunities for the Air National Guard including new missions,
    some of which are being explored. There could be some reductions in
    force structure. The Air National Guard will work closely with our
    active component to apply this transition in ways that best utilize the
    capabilities of the Air National Guard while maintaining a force that
    is viable, equally trained and equipped.
        Question. It is my understanding that the full-time work force of
    the Army National Guard is at 57 percent of required levels. Are there
    proposals from the Bureau being developed to improve this percentage?
        Answer. The Army has validated a full-time support manpower
    requirement of 41,321 Active Guard Reserve (AGR) and 42,329 Military
    Technician personnel for the Army National Guard (ARNG). Based on Army
    personnel readiness metrics and mobilization deployment scenarios,
    there is a minimum acceptable level of manning necessary to maintain
    required levels of readiness. For the ARNG this minimal level of
    support equates to 30,402 AGR and 29,329 Military Technician personnel,
    or approximately 71 percent of the full-time support requirement.
        The Army plans to seek increases in Reserve Component full-time
    support, incrementally, to attain the 71 percent fill by fiscal year
    2012. However, due to resource constraints within the Army, the plan
    for increases is not funded within Army appropriations. The Army
    National Guard seeks appropriations and authorizations for increases of
    724 AGR and 487 Military Technician personnel per year beginning in
    fiscal year 2002 and culminating in fiscal year 2012.
        Question. What is the status of upgrading and updating aviation
    assets in states such as West Virginia which only has one UH1H lift
    helicopter available to fly? Also, will the aviation force structure in
    West Virginia and other states be large enough to meet mission
    requirements and also be large enough to prevent a reduction in force
    of the full-time aviation personnel and closing of facilities?
        Answer. The Army National Guard (ARNG) is working diligently with
    the Army Deputy Chief of Staff for Operations and Plans (DCSOPS) and
    Army leadership to formulate a realistic plan that will allow for
    timely replacement of our aging UH-1 aircraft. Presently the ARNG is
    receiving the necessary parts to fix a small number of UH-1 helicopters
    per month in order to continue operating until the UH-1 fleet can be
    replaced.
        As pertains to the aviation force structure and support facilities
    and personnel in West Virginia and other States, the impact cannot be
    assessed until the revised 2001 Army Aviation Modernization Plan (AAMP)
    is approved by the Chief of Staff Army (CSA) and released to the ARNG.
    However, it appears a certainty that overall the Army and ARNG aviation
    force structure will be smaller as the Vietnam-era AH-1 and UH-1 fleets
    are replaced with the modernized, more capable AH-64 and UH-60
    aircraft, on a less than one-for-one basis.
                                     ______

             Questions Submitted to Major General Roger C. Schultz

                   Questions Submitted by Senator Ted Stevens

                         ARMY GUARD FLYING HOUR PROGRAM

        Question. I understand that the Army Guard flying hour program is
    significantly underfunded. There is also concern that your pilots are
    not being given enough hours to fly basic minimums. What are your
    challenges in this area? What will be the impact of both short and long
    term readiness of the Army National Guard?
        Answer. In fiscal year 2001, the Army National Guard (ARNG)
    identified a significant shortfall in its flying hour program (FHP).
    This was caused by a small shortage in the number of hours allocated,
    combined with the key fact that the actual cost of flying a modernized
    series ARNG aircraft (UH-60 Blackhawk, AH-64 Apache, CH-47 Chinook)
    significantly exceeds the hourly funding allocated by the Army, and
    does not match the funding per hour provided to other Army commands
    flying the same aircraft in the same geographic areas.
        Based on mission priorities, some ARNG units were not provided the
    FHP necessary to maintain full proficiency in all individual and unit
    tasks. There is a measurable impact of the overall readiness of these
    ARNG aviation units, and this impact is being appropriately reflected
    in the Army's unit readiness reporting system.

                                 MILCON FUNDING

        Question. Please comment on how long, at the current rate of MILCON
    funding, it will take to replace the plant value of your assets and
    your current backlog and annual requirement in real property
    maintenance?
        Answer. Using the current budget, it would take approximately 300
    years to modernize/replace the Army National Guard's (ARNG) assets. The
    current backlog for real property maintenance is nearly $7 billion.
    According to The Army's Installation Status Report, ARNG requires $439
    million per year just to sustain its existing real property at its
    current inadequate condition, and prevent further deterioration.

                           ARMY GUARD AVIATION ASSETS

        Question. Describe the Army's plan to modernize the Army Guard
    Aviation assets--both in short and long terms?
        Answer. While the full details of the revised 2001 Army Aviation
    Modernization Plan (AAMP) are not yet approved by the Chief of Staff of
    the Army (CSA) and released to the ARNG, it is certain that there will
    be a significant short and long term impact.
        In the short term, the repeated groundings of the Army National
    Guard (ARNG) Vietnam-era AH-1 Cobra and UH-1 Huey aircraft, combined
    with full retirement of both fleets (AH-1 in fiscal year 2001 and UH-1
    in fiscal year 2004), severely limits both unit and individual aviator
    readiness. In the long term the Army's current procurement and cascade
    (active to ARNG) rates of modernized aircraft is not adequate to make
    up the differential. The current Army buy of the critical UH-60 utility
    helicopters is 10 per year, at which rate will take well over 20 years
    to bring ARNG aviation units back to acceptable level of fill.

                           TOUR LENGTH TO THE BALKANS

        Question. We were in Kosovo this past February and I was reminded
    again of the great contributions made by the guard in support of our
    national military strategy. I understand that the Army Guard forces
    mobilized for duty in the Balkans typically serve deployed tours of 179
    days. Combined with other required training, the combined length is
    typically 220-250 days for National Guard soldiers. I believe this puts
    a tremendous strain on the units and the individuals who support these
    missions. Has the Army Guard and the Army considered shortening tour
    lengths to the Balkans?
        Answer. The Army National Guard has been following the Chief of
    Staff, Army rotational policy guidance of 179 days in theater for
    Balkan operations. The Army along with the Army National Guard has
    discussed shorter rotations such as 120 days or 90 days for the
    Balkans. The Army National Guard currently deploys units on shorter
    rotations to South West Asia and has reduced rotational lengths for
    medical personnel, lawyers and aviation assets. Discussion continues
    between both staffs on the feasibility for shorter Balkan rotations and
    the potential impacts on units, families, employers, communities and
    funding such as added transportation requirements for personnel and
    equipment and training site usage. As the Guard takes on more of a role
    in the Balkans, it will continue to work towards better rotational
    solutions that will reduce PERSTEMPO and OPTEMPO for all components of
    the Army.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy

                        ARMY NATIONAL GUARD REQUIREMENTS

        Question. General Schultz, does the Army National Guard have a
    requirement for the M109A6 Paladin Self-Propelled Howitzer system? How
    many additional battalions are required to satisfy the current Army
    National Guard requirement? To what degree are these missioned in the
    Commanders-in-Chief (CINC) theater war plans?
        Answer. 13 battalion sets are required to completely modernize Army
    National Guard divisional artillery requirements. Eight of the 13
    battalions are missioned against Commander in Chief (CINC) war fighting
    requirements at echelons above division.

                               M109A6 PROCUREMENT

        Question. Is M109A6 procurement included in the Army fiscal year
    2002 Budget? Realizing that their are funds available as a result of
    Foreign Military Sales of Paladin, could such funds be used for the
    procurement of M109A6 Self-Propelled Howitzers for the Army National
    Guard (ARNG)?
        Answer. The Army fiscal year 2002 Budget does not address the
    procurement of additional M109A6 (Paladins). The Army National Guard
    has 13 Divisional Field Artillery Battalions, which are M109A5
    equipped. Eight of these Battalions are also missioned against
    Commander in Chief (CINC) CORPS war fighting requirements. Although
    nothing is currently programmed, the ARNG anticipates receiving up to
    four additional Cascaded M109A6 Battalion sets in fiscal year 2002. As
    we continue to modernize the ARNG Divisions with M1A1 Abrams Tanks and
    Bradley Fighting Vehicles, it is essential the Divisional Field
    Artillery Battalions (particularly those missioned against CINC CORPS
    war fighting requirements) be modernized. Without Paladin Howitzers,
    these units will lack the essential responsiveness, survivability, and
    interoperability in the Advanced Field Artillery Tactical Data System
    digitized operational environment.
        Question. Do you have additional information that you care to
    provide the Committee on this subject (M109A6 Paladin)?
        Answer. There is an Army National Guard fiscal year 2003-07 POM
    Initiative to buy three battalion sets of Paladin for $102 million. The
    three additional battalion sets would go to California (40th Infantry
    Division (M)), Pennsylvania (28th Infantry Division (M)) and Texas
    (49th Armored Division).
                                     ______

            Questions Submitted to Major General Paul A. Weaver, Jr.

                   Questions Submitted by Senator Ted Stevens

                               FUNDING SHORTFALLS

        Question. I understand that the Air Guard faces significant funding
    shortfalls this year. Can you describe these shortfalls and the impact
    on the Air Guard of not receiving supplemental funds? What will be the
    impact on both short and long term readiness of the Army National
    Guard?
        Answer. Funding shortfalls included in the fiscal year 2001
    supplemental (as of 1 Jun 2001) are flying hours ($93.0 million),
    utility costs ($16.3 million), and depot maintenance surcharges ($10.0
    million). If not fully funded, the ``must pay'' aspect of utility
    bills, working capital fund losses, and civilian compensation unfunded
    mandates require sourcing from other O&M programs. Flying hours,
    already under funded, and depot maintenance are the only viable funding
    options. Some combination of curtailed flying activity and reduced
    over-haul/repair of ANG aircraft will result. Thus readiness is
    vulnerable on two fronts: less training available for aircrews and
    potentially fewer aircraft available for sortie generation.

                                 AEF ROTATIONS

        Question. Describe how the transition to the AEF is going for the
    Air Guard? What are your major challenges in supporting the active Air
    Force in these rotations?
        Answer. The Aerospace Expeditionary Force (AEF) transition has
    presented some real challenges for us and the Air Force, however, we
    are ovecoming them and becoming more adept within the AEF concept. We
    put 24,184 personnel into the AEF in Cycle One which included 8,411
    Expeditionary Combat Support (ECS) personnel. This was a substantial
    effort and equaled approximately 19 percent aviation and 8 percent ECS
    of all the requirements of the three Commanders in Chief (CINCs).
        Our major challenges in the future are securing qualified personnel
    via volunteerism. As the AEF progresses, the ability to get volunteers
    will dwindle to the point where we may have problems filling the slots
    which we have committed. This is our biggest challenge and fear.
    Initially, we felt the Air Force was uncertain about working side-by-
    side with us. The challenge was in their acceptance of us and our two-
    week rotations. Although there are still pockets of skepticism, the
    overall attitude seems to be changing. This is in large part to our
    Guard members performing at exceptional levels that allows the Air
    Force to see we are a well-trained, professional military organization.
        Another challenge that we have taken on, is the ability to get
    names of deployers to the theaters in a timely manner. This is a huge
    problem for a volunteer organization. We are required to have names to
    the CINCs personnel operation 60 days prior to the Date-Required-In-
    place, and although this is a formidable task that we sometimes have
    trouble accomplishing, we are continuing to work this problem and are
    confident that soon it will no longer present such a challenge.
        Question. Based on your operational requirements and lessons
    learned from AEF rotations, do you have the full-time force that you
    need?
        Answer. The Air National Guard (ANG) recently accomplished a
    complete review of both our full-time and traditional guard manpower
    requirements needed to support the AEF now and well into the future.
    The results of this effort validated a requirement of 2,048 additional
    full time manpower resources. Historically the ANG has been resourced
    as a respond (Cold War) force with limited full time manpower to
    operate and maintain facilities, repair aircraft/equipment, and train
    the drilling force. Now with a formalized AEF construct and increasing
    support requirements, the ANG must begin to be resourced properly for
    both drill training and increased Operation Tempo (Optempo). Thus far
    we have funded 1,151 of our requirement through internal ANG offsets
    and through funding and support received from the Air Force during the
    POM process, leaving an unfunded requirement of 897 full-time
    positions. Increased Optempo and aging aircraft and weapon systems are
    driving increased maintenance workloads to ensure aircraft and systems
    are available for training and deployment. Our review also identified
    shortfalls in infrastructure and communications, additional air traffic
    control and combat communications operators, additional full time
    aircrew and crew compliment adjustments in the airlift and air
    refueling mission areas. We are continuing our efforts to obtain the
    balance of the funding and end strength required.

                           REAL PROPERTY MAINTENANCE

        Question. How long, at the current rate of Milcon funding, it will
    take to replace the plant value of your assets and your current backlog
    and annual requirement in real property maintenance?
        Answer. Recapitalization Rate.--The current rate of total MILCON
    funding in the Air Force budget is roughly $57 million per year
    (including planning and design and unspecified minor construction). The
    recapitalization rate is roughly 260 years based on the average
    calculated plan replacement value of $14.9 billion from fiscal year
    2002 to fiscal year 2007.
        Real Property Maintenance (RPM).--The current RPM backlog is $1.1
    billion and growing. The annual funding for RPM is based on the Air
    Force model of 1 percent of plant replacement value (PRV). This funding
    is then reduced by $21 million for what Air Force calls the ``state
    subsidy''. More accurately the reduction accounts for RPM type work
    that is accomplished under the ANG's facilities operations and
    maintenance account (FOMA) which is paid for with real property
    services (RPS) funds. Given our $12.6 billion PRV that means roughly
    $100 million per year is given to the ANG for RPM work. Of this amount
    $70 million goes directly to the bases, and the balance is distributed
    for conversions, design, and overhead. This is far short of the
    requirement across all our installations. It is reasonable to expect
    execution of $150-$200 million per year, which creates an annual
    shortfall of $50-$100 million.
        Projects of highest priority for RPM funding include $230 million
    in airfield pavement repairs for cracked and spalling airfield
    pavements, $115 million for primary mission operational facilities to
    repair leaking roofs and allows functional use of buildings, $465
    million for mission support, aircraft maintenance, security forces, and
    crash fire rescue facilities to repair failed fire suppression systems,
    failed heating and ventilating systems and other quality of life
    issues, and $220 million for base support such as supply storage,
    vehicle maintenance, administrative, and utility distribution systems.

                          GUARD AND RESERVE EQUIPMENT

        Question. Please comment on the importance of the additional funds
    provided by the Congress for procurement of guard and reserve equipment
    each year?
        Answer. The National Guard and Reserve Equipment Appropriation
    (NGREA) account has been instrumental in our efforts to modernize ANG
    aircraft and keep us fully relevant to today's Total Force Military.
    Using NGREA, we have focused on four key areas: precision strike, 24-
    hour operations, information dominance, and enhanced threat
    survivability. Using NGREA and existing Air Force funding we designed
    an F-16 modification program called CUPID that dramatically increased
    the combat capability of the entire CAF F-16 Block 25/30 fleet and
    saved over $100 million in the process. CUPID coupled with another GREA
    success program, the Lightening II targeting pod, has allowed our F-16
    units to perform the full spectrum of combat operations. The Situation
    Awareness Data Link (SADL) is another example of NGREA successes. We
    were also able to field Fighter Data Link (FDL) on the ANG F-15 fleet
    using NGREA funding. FDL is the true F-15 force multiplier and, we are
    able to maintain full combat capability in the ANG F-15 fleet. In the
    area of 24 hour operations, the ANG has led the way in fielding Night
    Vision Imaging Systems (NVIS) across the CAF A-10, F-15 and F-16 fleet.
    These NVIS systems are now the Air Force standard yet were initially
    fielded using NGREA funding. We have made great strides in modernizing
    our 40+ year old KC-135E tankers through the ongoing KC-135E to ``R''
    reengining program. We have also begun to field C-130 Cockpit Armor to
    allow our C-130 units full protection during in-theater rotations. The
    flexibility NGREA funding gives us has allowed the ANG to field
    commercial-off-the-shelf solutions faster and cheaper than otherwise
    able. These combat enhancements have been invaluable in our efforts to
    modernize our fleet and support global taskings. I appreciate your
    continued support for NGREA and offer the heartfelt thanks of our
    106,000 ANG citizen soldiers in this regard.

                                   PERSTEMPO

        Question. I understand the Air Guard has shifted to a 90-day
    rotation policy to reduce PERSTEMPO. How is this working?
        Answer. By definition, Aerospace Expeditionary Force (AEF)
    rotations are 90 days, however, this may be a misunderstanding of
    terms. The Air National Guard (ANG), like the Active Duty, assumes a 90
    day AEF commitment for a given AEF pair. The Air National Guard fills
    this commitment through a process we call ``Rainbowing'' where we
    utilize two units or more to cover this 90 day period. In most cases we
    have three units each filling 30 days of this 90-day period with one of
    the three designated as the lead unit for planning purposes. The units
    then fill their 30-day period with ANG ``volunteers''. Our commitment
    to the Air Force is 15 days in country as a minimum. This is spelled
    out in Air Force Instruction (AFI) 10-400 and also in Air National
    Guard Instruction (ANGI) 10-400. As a rule, approximately 20 percent of
    our personnel have historically volunteered for tours in excess of 15
    days in country; however, ANG policy only requires the 15 days. Our
    goal is for each member of the ANG Expeditionary Combat Support
    community to rotate overseas in support of AEF commitments once every
    30 months (every other AEF cycle). This of course is more difficult to
    accomplish within our aviation packages and in some of our critical
    skills AFSC's. It is important to note that the ANG entered into the
    Expeditionary Aerospace Force (EAF) concept for the long haul. We have
    carefully balanced historical OPTEMPO/PERSTEMPO deployment rates with
    our AEF expectations and have committed to what we believe we can
    ``sustain'' without negatively impacting retention and the health of
    our units.
                                     ______

                 Question Submitted by Senator Patrick J. Leahy

                                     KC-135

        Question. General Weaver, the KC-135 Tanker has served the country
    well over its 35 years of service, but I fear that we are not managing
    the Guard's inventory very well. Increasing operations and maintenance
    funds are being eaten up by the old ``E'' version, which nine Guard Air
    Refueling Wings are still flying. The E has significantly shorter range
    than the re-engined ``R'' model, which contributes more to our aerial
    refueling needs.
        From what I understand, converting the Guard's 93 KC-135Es will
    save up to $7 billion over the life of the program, more than covering
    the $2 billion to complete the conversion. Can you tell me what the
    impact will be of failing to carry out the E to R conversion program?
        Answer. The E-R conversion program is essential to the viability of
    the KC-135 fleet. In addition to the overall savings in maintenance and
    sustainment costs there are many more benefits that will be realized by
    converting to ``R'' model engines.
        The CFM-56 engine on the KC-135 R, meets or exceeds STAGE III noise
    and emission standards, provides fleet commonality and allows
    interoperability between Air Force, Air Force Reserve Command and Air
    National Guard Stage III noise and emission standards went into effect
    at the beginning of this year. Technically government aircraft are
    exempt from these standards, however there is still precedence for
    restricted access to some foreign locations or increased landing fees
    for failure to comply. There is also the ``good neighbor aspect''.
    Since most of our KC-135 E model units are located at civilian
    airfields pressure to comply with the standards is increased because we
    are being constantly compared to civilian traffic. An E model streaming
    black exhaust and rattling windows is not the most effective way to
    advertise your presence in the neighborhood.
        KC-135s are an indispensable part of any United States overseas
    operation. As seen in the recent past more and more tankers are
    required to keep our bombers, fighters and mobility aircraft refueled
    and flying. A common fleet would cut the logistics tail in half and
    reduce forward basing limitations because of differing requirements
    between E's and R's.
        Completing the re-engining of the fleet would also allow total
    interoperability. Any KC-135 crew could fly any KC-135. This would
    increase overall utilization rates for the aircraft and decrease the
    need to pick and choose between units on when and where they will
    deploy.
        When an E model is converted to an R model there are many other
    upgrades included in the modification line. These improvements include,
    just to name a few, a new auxiliary power unit, new main landing gear,
    reinforced wing structure, and more. All these improvements make the
    aircraft safer; more cost efficient and more reliable.
        Following are some of the effects of not upgrading the KC-135.
    Higher Engine Depot Maintenance/Overhaul Costs for the KC-135E will
    continue. ANG fiscal year 2000 TF33-P102, KC-135E engine overhaul costs
    were $588,000 per engine times 70 engines versus $183,000 per engine
    times 6 engines for the CFM-56, KC-135R engines. Projected ANG fiscal
    year 2001 TF33-P102, KC-135E engine overhaul costs are $1.039 million
    per engine times 45 engines versus $399,000 per engine times 10 engines
    for the CFM-56, KC-135R engines.
        Decreased KC-135E aircraft availability as the KC-135E engines have
    a 10 year unscheduled removal rate that is, on average, ten times that
    of the KC-135R engines. Missed cost avoidance opportunity of $137-$276
    million for the replacement of corroded KC-135E engine struts if all
    KC-135E's are not modified to KC-135R's. E to R model conversion
    includes replacement of engine struts.
        E models will continue to accrue additional depot costs to repair
    corroded engine struts. ANG/LGMA cannot validate the purported $7
    billion life cycle savings from a logistic perspective. 1996 OC-ALC
    study states zero life cycle savings to 2040. 1999 Boeing study states
    over $10 billion life cycle savings to 2040.
                                     ______

                Question Submitted by Senator Richard J. Durbin

                                     C-130

        Question. I am very concerned about delays in replacing the aging
    C-130Es at the 182d Airlift Wing in Peoria. The unit had been scheduled
    to get ``H'' models when another unit upgraded to C-17s. While I would
    welcome the 182d receiving the newer J models, the E models are so old
    they are unlikely to last until the J models are delivered in 2016 or
    later. Why has that plan changed? What do you propose to do to
    modernize the C-130 fleet in Peoria to be sure the unit can keep
    flying?
        Answer. The ANG always seeks to acquire and maintain the most
    capable and effective aircraft fleet possible. This desire is
    unfortunately sometimes constrained by fiscal and operational realities
    imposed upon us from external sources.
        While there is no funded ANG program to replace the C-130E
    aircraft, we have developed plans to incorporate a variety of possible
    modernization initiatives into the ANG airlift fleet. The 182 AW at
    Peoria will benefit from the ensuing redistribution following any
    airlift modernization initiatives, as they are next in line in the ANG
    C-130E Modernization Plan, signed by NGB/CF on 22 January 1998.
        The most near-term USAF modernization program is the C-130 Avionics
    Modernization Program, which is pending a source selection decision.
    This will upgrade the avionics and supporting infrastructure of the C-
    130E and C-130H aircraft into a modern, common configuration. This
    modification will provide for full Global Air Traffic Management (GATM)
    compliance, allowing global airspace access.
        The United States Air Force (USAF) C-130J roadmap reflects the ANG
    decision to move 8 C-130H aircraft to the 152 Air Wing (AW) Nevada Air
    National Guard (NVANG) in order to provide additional operational
    capability for that unit in their Senior Scout mission. The 182 Air
    Wing (AW) Illinois Air National Guard (ILANG) replaced Reno in the USAF
    C-130J beddown roadmap, where they are projected to receive 8 C-130J
    aircraft in 2016. This has since changed to reflect the wishes of the
    Adjutant General (TAG) ILANG. The 182AW will receive C-130H model
    aircraft when the 144 Airlift Squadron, Alaska (AK) ANG receives C-17s.

                              SUBCOMMITTEE RECESS

        Senator Inouye. The subcommittee will stand in recess until
    Wednesday, May 23.
        Thank you very much.
        [Whereupon, at 12:13 p.m., Wednesday, May 9, the
    subcommittee was recessed, to reconvene at 9:30 a.m.,
    Wednesday, May 23.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                            WEDNESDAY, MAY 23, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:39 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens and Inouye.

                           NONDEPARTMENTAL WITNESSES

    STATEMENT OF MARY J.C. HENDRIX, Ph.D., PRESIDENT,
                FEDERATION OF AMERICAN SOCIETIES FOR
                EXPERIMENTAL BIOLOGY

                    OPENING STATEMENT OF Senator TED STEVENS

        Senator Stevens. Good morning. I apologize for being late.
    There are all sorts of strange things happening around this
    place this morning, and I know we have 34 witnesses today that
    want to submit their statements and make comments for the
    record. We are going to do our best to hear you. I would hope
    that you would understand our problem.
        Senator Inouye and I are going to have to go vote some time
    in the next 15 minutes and after that we will probably be on a
    10-minute cycle. So what I would like to do is break that cycle
    when we get to the floor, but I do not know how successful we
    will be.
        I would like to tell you that we are going to hear as many
    of you this morning before we go vote as we can. All the other
    statements will be filed in the record as though read if we do
    not get back. But you are welcome to wait as long as your
    patience will allow you to do so. But we do not control the
    situation on the floor and that is the best thing we can do.
        I do appreciate your courtesy of being here. We want to
    hear from you, and as a matter of fact this may be the last
    hearing I will chair, as I turn it over to my friend. As far as
    defense is concerned, it would make no difference. We are
    absolutely in agreement, I believe, on all matters concerning
    defense. So I am very comfortable with telling you I will
    happily listen to Senator Inouye as long as necessary.
        Senator Inouye. We just rotate chairs.
        Senator Stevens. Ms. Hendrix, will you please proceed. The
    shorter you will be, the more people we will hear. Thank you
    very much.
        Dr. Hendrix. Good morning, Mr. Chairman and distinguished
    members of the subcommittee. I thank you for the opportunity to
    testify today as President of the Federation of American
    Societies of Experimental Biology (FASEB). FASEB is comprised
    of 21 societies with more than 60,000 scientist members and is
    the largest coalition of biomedical research associations in
    the United States. Our mission is to enhance the ability of
    biomedical and life scientists to improve through their
    research the health, wellbeing, and productivity of all people.
        I am also especially honored to address the Defense
    Subcommittee today as the daughter of a career naval officer
    Captain Charles N.G. Hendrix.
        It is not commonly appreciated that more than one-half of
    the Department of Defense's (DOD's) 6.1 research budget is
    awarded to university researchers. In addition to research-
    supported academic institutions, the DOD also supports graduate
    students working for their doctorates and also training for
    research careers. The DOD therefore plays a leading role in
    engaging and encouraging future researchers on whom both our
    future military and economic security will depend.
        Let me offer just one stellar example of DOD research. The
    Virtual Naval Hospital, a digital health sciences program to
    deliver expert medical information to health providers,
    patients, and their families at remote sites of deployment,
    represents one of the best examples we know of an academic-
    military partnership that involves the University of Iowa and
    the United States Navy Bureau of Medicine and Surgery. I serve
    as the Administrative Co-Director of the Virtual Naval Hospital
    and have the privilege of working with physicians at the
    University of Iowa and Captain Richard Baccalar, who is
    Director of Navy Telemedicine at Bethesda Naval Hospital.
        The Virtual Naval Hospital provides health promotion
    information and military clinical handbooks and manuals for
    providers, which previously consumed a lot of space on board
    ship, and now all that information is contained on convenient
    computer disks. In addition, the Virtual Naval Hospital offers
    the opportunity for personnel to enroll in educational courses
    on line that accrue credits toward their college degrees. The
    slogan ``Go to Sea and Get a Degree'' was recently carried by
    the press in a recent article about the benefits of the Virtual
    Naval Hospital and shows how taxpayer dollars and time can be
    saved and maximized to everybody's benefit.
        Mr. Chairman, in inflation-adjusted dollars DOD's budget
    for basic research in the life sciences declined by 25 percent
    in the years from 1993 to 1998. This steady erosion in
    commitment has come at a time when the scientific potential to
    dramatically improve our military readiness is more promising
    than ever. As the pace of technology quickens, it is clear that
    new funding and research opportunities for DOD basic research
    programs are at a critical need if the United States military
    is to maintain its current technological superiority.
        Therefore, FASEB recommends a $50 million increase to the
    DOD basic research 6.1 budget for life sciences for fiscal year
    2002. FASEB strongly supports the extramural programs in life
    sciences that are managed by the congressional-directed medical
    research program. This program has maintained the highest
    standards of merit review and has benefited both military and
    non-military individuals.
        Lastly, FASEB also recommends that DOD be encouraged to
    extend its existing interagency collaborations with academic
    institutions, with industry and other government agencies to
    achieve multi-interdisciplinary efforts with broadly based
    information networks.
        Mr. Chairman, that concludes my testimony and I thank you
    for this opportunity.
        Senator Stevens. Thank you very much.
        [The statement follows:]

                 PREPARED STATEMENT OF MARY J.C. HENDRIX, PH.D.

        Mr. Chairman and distinguished Members of the Subcommittee, I am
    Mary J.C. Hendrix, Ph.D., President of the Federation of American
    Societies for Experimental Biology (FASEB) and the Kate Daum Research
    Professor and Head of the Department of Anatomy and Cell Biology and
    Associate Director of Basic Research and Deputy Director of the Holden
    Comprehensive Cancer Center at The University of Iowa in Iowa City,
    Iowa.
        Thank you for the opportunity to testify before you on behalf of
    FASEB, which is comprised of 21 societies with more than 60,000
    scientist-members and is the largest coalition of biomedical research
    associations in the United States. FASEB's mission is to enhance the
    ability of biomedical and life scientists to improve, through their
    research, the health, well-being and productivity of all people. FASEB
    serves the broader public, by serving as the voice of biomedical
    scientists nationwide.

                   FASEB'S COMMITMENT TO DOD RESEARCH MISSION

        In the balance of my testimony this morning, I will be offering
    recommendations developed during FASEB's Annual Consensus Conference in
    December of 2000. Representatives of our 21 member societies gathered
    to review the research portfolios of all federal agencies that support
    biomedical research. As FASEB President, I made sure that my scientist
    colleagues paid special attention to DOD's portfolio, because it
    supports cutting edge research that can benefit our society as a whole,
    as well as support its national security mission.

                          DOD'S BASIC RESEARCH MISSION

        The Department of Defense (DOD) supports a major basic research
    program in the Life Sciences that has produced significant benefits for
    the nation. The productivity of this program is threatened, however, by
    a decline in funding. FASEB urges a reversal of this trend in the
    interests of the nation's health, economy, and military readiness.

                           TABLE 3.--DOD LIFE SCIENCES
    ------------------------------------------------------------------------
                                                              BEHAVIORAL,
            BIOLOGICAL SCIENCES          MEDICAL RESEARCH    COGNITIVE AND
                                                            NEURAL SCIENCES
    ------------------------------------------------------------------------
    Molecular & Cellular                 Infectious        Personnel,
    Systems & Organisms                   Diseases Of       Training And
    Biomimetics                           Military          Leadership
    Biorobotics                           Importance       Human-System
    Biosensors                           Combat Casualty    Integration/
    Marine Mammals                        Care              Human Factors
    Environmental Biology                Military          Pattern
    Non-medical Chemical and Biological   Operational       Recognition
     Defense                              Medicine
                                         Medical Chemical/
                                          Biological (CB)
                                          Defense
    ------------------------------------------------------------------------

        Table 3, DOD basic research in the Life Sciences falls into three
    major categories: biological sciences, medical research and behavioral
    and cognitive neural sciences.
        DOD basic research in the life sciences addresses all of the major
    levels of biological organization: molecular, cellular, tissue, organ,
    organ system, integrated organism, and cognitive science (Table 3). On
    average, about 13 percent of the agency's basic research budget (6.1)--
    which in fiscal year 1999 was $1,107.9 million--is invested in the
    Biological and Medical Sciences; six percent in the Cognitive and
    Neural Sciences \1\ (Figure 6). In addition, the DOD manages the
    Congressional Special Interest Medical Research Programs, which focus
    on, among other areas, programs on cooperative DOD/Veterans
    Administration (VA) medical research, defense health research, defense
    women's health research, and osteoporosis research.
    ---------------------------------------------------------------------------
        \1\ http://www.acq.osd.mil/ddre/research/.

    Figure 6. This chart represents a DOD estimate of the 6.1 investment in
      the Life Sciences ($206.3 million). The agency's investment in the
        Congressional Special Interest Medical Research Programs, which
    includes the Congressionally Directed Medical Research Programs, is not
      reflected in these numbers. Source: Office of Basic Research, ODUSD
                                  (S&T), DOD.

        Most of the extramural basic research is executed through the Army
    Research Office (ARO), the Office of Naval Research (ONR), the Air
    Force Office of Scientific Research (AFOSR), the Defense Advanced
    Research Projects Agency (DARPA), and the Army Medical Research and
    Materiel Command. Coordination and cooperation among offices is managed
    through several committees (called Project Reliance) established to
    minimize unnecessary duplication. Additionally, the DOD collaborates
    with National Institutes of Health (NIH), the VA, and the National
    Oceanographic and Atmospheric Administration to leverage its funding
    and avoid duplication. More than one-half of the DOD's 6.1 budget is
    awarded to universities.\2\ Significant portions of these funds support
    graduate students working for their doctorates and/or training for
    research careers. Thus, DOD is actively engaging and encouraging future
    researchers on whom both the future military and economic security of
    the United States will depend.
    ---------------------------------------------------------------------------
        \2\ Basic Research Plan, Third Edition. Office of the Deputy Under
    Secretary of Defense (Science & Technology/Plans and Programs), pg. II-
    4.
    ---------------------------------------------------------------------------
                             RECENT ACCOMPLISHMENTS

        Today, military personnel are protected from epidemic hepatitis as
    a result of knowledge gained from basic research on the biology and
    immunology of the hepatitis-A virus. In addition, basic research into
    the physiology of body temperature control has produced procedures that
    are used at Army Ranger training sites to protect trainees from
    hypothermia, and which have been adapted for civilian use. The Virtual
    Naval Hospital (VNH), a digital health sciences program designed to
    deliver expert medical information to health providers and patients at
    remote sites of deployment, represents a fruitful academic-USN
    partnership and provides a template to provide telemedicine services to
    civilians and to meet some of the specialized needs of veterans. These
    are just a few examples of the breadth of DOD contributions to
    biomedical research. Detailed below are a few specific accomplishments
    of both military and civilian benefits of life science research.

    Medical Research
        DOD-funded scientists established an in vitro cultivation system
    for malaria parasites, which contributed significantly to the malaria
    genome sequencing, and is thus important in the development of future
    vaccines.
        DOD-funded scientists determined that brain regions mediating the
    highest order mental capabilities are most susceptible to sleep
    deprivation and are also the most easily restored by subsequent sleep.
    These findings will have innumerable consequences for military
    deployments as well as for other occupations in which sleep deprivation
    is an issue, such as airline pilots and physicians.
        DOD-funded scientists determined how red blood cells and platelets
    could be stored long-term for later transfusion into humans, while
    maintaining Food and Drug Administration standards for safety and
    efficacy.
        DOD-funded scientists characterized three protein components of two
    anthrax toxins in order to better understand virulence patterns and to
    facilitate vaccine development.

    Behavioral, Cognitive and Neural Sciences
        DOD supported research leading to the development of an implantable
    ``eye chip'' able to replace damaged retinas to restore lost vision.
    Congressional Special Interest (CSI) Medical Research Programs
        DOD played a significant collaborative role in the development of
    both antibody-mediated and vaccine therapies directed against a novel
    breast cancer protein (HER-2).

                            SCIENTIFIC OPPORTUNITIES

        The demonstrated and potential future impact of DOD's basic
    research program is tremendous. The research programs are competitive,
    productive, and vital to our nation. Advances in immunology,
    toxicology, physiology, neuroscience, biochemistry, psychology, and
    molecular biology, all of which are directed toward the understanding
    of disease and injury processes that will transcend the active military
    applications bringing benefits to both veterans and the broader
    civilian community. The knowledge will be used to enable applied
    research for the development of novel drugs, vaccines, medical devices,
    health promotion and prevention procedures, medical diagnostics, and
    treatments for trauma and disease.
        The following research themes in the biological sciences are
    examples of how additional resources might be used. Such an investment
    will also lead to the expansion of partnerships between the military,
    academe and the private sector.

    Basic Research in the Life Sciences
        Biological Sciences.--Research on olfactory sensing offers novel
    biologically inspired approaches for the design and eventual production
    of engineered systems capable of detecting trace amounts of explosives
    and toxic chemicals. In addition, this research will provide the
    military with unique advanced capabilities for sensing contamination of
    food, clothing, material, and the environment. Basic research on
    antibodies, characterization of cell surface receptors, and cell-based
    sensing has enabled the development of biochemical detector technology
    and provided the U.S. military with its first automated capability for
    detecting biological substances. These discoveries will concomitantly
    benefit society as a whole.
        DOD Cognitive and Neural Sciences.--Two important areas of
    opportunity for collaborative potential with academic and industrial
    partners are Behavioral Science and Neural Science. Behavioral science
    research seeks to use the understanding of human performance to improve
    personnel selection, assignment, and training, to augment personnel
    performance in military environments, and to organize more effective
    teamwork in command and control organizations. Neural science studies
    explore reverse engineering of biological neural systems, for example
    studies of dolphin and bat active sonar processing, for target
    detection, tracking, and classification.

    Congressional Special Interest (CSI) Medical Research Program
        The CSI's Congressionally Directed Medical Research Program (CDMRP)
    is an unprecedented partnership among the military, scientists,
    physicians, and the patient-advocacy community, bringing together
    multi-disciplinary efforts to focus on the control and ultimate
    eradication of specific diseases, such as breast cancer, prostate
    cancer, neurofibromatosis, and ovarian cancer. This highly effective
    program continues to offer opportunities pursuing novel directions in
    medical research and for attracting and training new investigators in
    these fields.

    Partnerships
        Unique funding and partnership opportunities exist from DOD
    sources, which include the Young Investigators Programs, the Small
    Business Innovation Research Program, the Faculty Sabbatical Leave
    Program, the Infrastructure Support Program for Minority Institutions,
    the High School Science Awards Programs, and the Clinical Translational
    Research Programs. Other noteworthy partnerships include the University
    Research Initiative (URI), a merit-reviewed program that is vital to
    the academic-DOD partnership. It is important to maintain funding for
    this program, which includes the Multidisciplinary University Research
    Initiative (MURI), which supports research groups from different
    disciplines working for a common objective; the Defense University
    Research Instrumentation Program (DURIP), which supports badly needed
    instrumentation for scientific and engineering research; the National
    Defense Science and Engineering Graduate Fellowships, which allow
    outstanding students to pursue graduate research in areas of strong
    interest to DOD; and, the Defense Experimental Program to Stimulate
    Competitive Research (DEPSCoR), which funds research in states that are
    under-represented in federal research support.

                            FUNDING RECOMMENDATIONS

        FASEB recommends a $50 million increase to the DOD Basic Research
    (6.1) budget for the Life Sciences for fiscal year 2002. This increase
    should be for the designated purpose of providing an increase to the
    Army, Navy and Air Force Defense Research Science Programs (program
    elements #0601102A, 0601153N and 0601102F), the University Research
    Initiatives, and the Chemical and Biological Defense Program.
        DOD's budget for basic research in the life sciences has declined
    by 25 percent from 1993 to 1998 (in inflation-adjusted dollars).\3\
    These cutbacks have compromised basic biomedical research at a time
    when the potential to have a larger impact on military readiness is
    greater than it has ever been. As the pace of technology quickens, it
    has become obvious that new funding and research opportunities for the
    DOD Basic Research Program are critical if the U.S. military is to
    maintain its technological superiority. Therefore, it is imperative
    that the level of support for this area be substantially increased to
    realize this potential.
    ---------------------------------------------------------------------------
        \3\ Ibid, pg. I-1.
    ---------------------------------------------------------------------------
        FASEB strongly supports the extramural programs in life sciences
    research managed by the Congressionally Directed Medical Research
    Program (CDMRP). The CDMRP has maintained the highest standards of
    merit review, and represents an excellent example of a unique
    partnership among the military, scientists, physicians, and patients.
    The benefits from this collaborative, integrative approach to address
    various aspects of medical research are innumerable--to both military
    and non-military individuals.
        FASEB recommends that DOD be encouraged to extend its existing
    interagency collaborations.
        We highly encourage collaborative extramural partnerships with
    academic institutions, industry, and other government agencies to
    achieve multi-disciplinary efforts with broadly based information
    networks. There are great opportunities to be gained by encouraging
    additional multi-agency collaborative interactions to meet national
    goals and maximize the DOD investment portfolio. In this manner, the
    fundamental research needs of each branch of DOD engaged in basic and
    applied research can be more effectively attained.
        DOD Biological and Biomedical Research is not duplicative of
    funding provided by other agencies. Nonetheless, there are synergistic
    existing partnerships with the National Science Foundation (NSF) and
    other federal departments and agencies, and with interagency groups
    such as those under the National Science and Technology Council. In
    addition, opportunities exist for collaborations with NIH institutes,
    as evidenced by the recent solicitation for research applications on
    likely bioterrorism pathogens by the National Institute of Allergy and
    Infectious Diseases. The National Cancer Institute has announced the
    creation of the first network for cancer information, which will allow
    the integration and sharing of all basic and applied cancer research
    activities among multiple agencies.
        We encourage cross-agency participation of DOD scientific staff in
    NIH and NSF strategic research planning that would likely lead to
    mutually beneficial interagency initiatives, thereby maximizing the
    Congressional investment.
        In conclusion, Mr. Chairman and members of the Subcommittee, I
    thank you for this opportunity to testify before you on behalf of my
    more than 60,000 scientist-colleagues. We urge you to increase support
    for DOD 6.1 research and encourage inter-agency partnerships that will
    leverage the return on our national security research investment.

        Senator Stevens. Dr. Knapp.

    STATEMENT OF DEIRDRE J. KNAPP, Ph.D., AMERICAN
                PSYCHOLOGICAL ASSOCIATION

        Dr. Knapp. Good morning. Mr. Chairman and members of the
    subcommittee: I am Dr. Deirdre Knapp, Manager of the
    Assessment, Research, and Analysis Program at the Human
    Resources Research Organization (HmRRO). I am submitting
    testimony on behalf of the American Psychological Association,
    a scientific and professional association of more than 155,000
    psychologists and affiliates.
        Although I am sure you are aware of the large number of
    psychologists providing clinical services to our military
    members, you may be less familiar with the extraordinary range
    of research conducted by psychological scientists within the
    Department of Defense. Our behavioral researchers work on
    issues critical to the national defense, particularly with
    support from the Army Research Institute for the Behavioral and
    Social Sciences, the Office of Naval Research, and the Air
    Force Office of Scientific Research.
        In its most recently congressionally mandated report, the
    independent Defense Science Board (DSB), noted that
    ``Increasingly, scientific research is the key to military
    supremacy.'' However, for each of the last 5 years the
    Pentagon's budget request for science has not even kept up with
    inflation, much less approach the minimum level suggested by
    the DSB.
        We thank this subcommittee and your colleagues in the House
    for reversing deep cuts and providing critical additional
    support for DOD research in the past several funding cycles.
    American Psychological Association (APA) joins the Coalition
    for National Security Research and the DSB in recommending $10
    billion for DOD research in fiscal year 2002. Within the DOD,
    the military service labs provide a stable mission-oriented
    focus for science and technology, conducting and sponsoring
    basic research, applied exploratory development research, and
    advanced development research. Psychological scientists address
    a broad range of important issues and problems with expertise
    in understanding and optimizing human performance individually,
    in teams, and with regard to human-system interactions.
        For example, I am working with a project now with the Army
    Research Institute to develop the foundation for a promotion
    system that would help ensure that the backbone of the Army,
    its Non Commission Officer (NCO) corps, is prepared to meet the
    evolving demands of the twenty first century.
        As another example, the Navy has funded cutting edge
    research in the development and application of artificial
    intelligence systems that, for example, allow for highly
    effective shipboard training.
        Unfortunately, reductions in the Air Force's support for
    applied research in human factors have resulted in an inability
    to determine the human-system requirements early in system
    concept development, when the most impact could be made in
    terms of manpower and cost savings. DOD research has continued
    to demonstrate the importance of considering the human factor
    in organizational and system performance and has led to
    important outcomes, not only in the military but in the public
    and private sectors in which scientific advances for military
    research have been successfully applied.
        We urge the subcommittee to provide funding increases for
    each of these three military laboratories at the DSB-
    recommended level of inflation plus 2 percent, a total of 4.1
    percent. Please help our military men and women by supporting
    DOD human-oriented research.
        Thank you.
        Senator Stevens. Thank you very much, doctor.
        [The statement follows:]

                 PREPARED STATEMENT OF DEIRDRE J. KNAPP, PH.D.

        Mr. Chairman and Members of the Subcommittee, I'm Dr. Deirdre
    Knapp, Manager of the Assessment Research and Analysis Program at the
    Human Resources Research Organization. I am submitting testimony on
    behalf of the American Psychological Association (APA), a scientific
    and professional organization of more than 155,000 psychologists and
    affiliates. Although I am sure you are aware of the large number of
    psychologists providing clinical services to our military members here
    and abroad, you may be less familiar with the extraordinary range of
    research conducted by psychological scientists within the Department of
    Defense. Our behavioral researchers work on issues critical to national
    defense, particularly with support from the Army Research Institute,
    the Office of Naval Research, and the Air Force Office of Scientific
    Research. I would like to address the proposed fiscal year 2002
    research budgets for these three military laboratories within the
    context of the larger Department of Defense Science and Technology
    budget.

    Department of Defense (DOD) Research Budget
        APA joins the Coalition for National Security Research, a group of
    over 50 scientific associations and universities, in urging the
    Subcommittee to provide DOD with $10 billion for 6.1, 6.2 and 6.3 level
    research in fiscal year 2002. This figure also is in line with the
    recommendation of the independent Defense Science Board.
        The Defense Science Board (DSB) released its most recent
    (Congressionally-mandated) report several weeks ago, noting that
    ``increasingly, scientific research is the key to military supremacy''
    and concluding that ``if the DOD does not pursue a strong forward
    looking Science and Technology Program, it runs the danger of
    ultimately falling behind potential challengers.'' For each of the last
    five years, the Pentagon's budget request for science has not even kept
    up with inflation, much less approached the minimum levels suggested by
    the DSB. We thank this Subcommittee and your colleagues in the House of
    Representatives for reversing deep cuts and providing critical,
    additional support for DOD research in the past several funding cycles.
    Both the DSB and the Coalition for National Security Research (CNSR)
    recommend funding the DOD Science and Technology Program at a level of
    at least $10 billion in fiscal year 2002 in order to maintain global
    superiority in an ever-changing national security environment.
        Within DOD, the military service laboratories provide a stable,
    mission-oriented focus for science and technology, conducting and
    sponsoring basic (6.1), applied/exploratory development (6.2) and
    advanced development (6.3) research. These three levels of research are
    roughly parallel to the military's need to be able to win a current war
    (through products in advanced development) while concurrently preparing
    for the next war (with technology ``in the works'') and the war after
    next (by taking advantage of ideas emerging from basic research). Our
    past investment in basic research in particular is responsible for the
    dramatic increases we have seen in our military capabilities--and yet
    basic research continues to be a target for cuts and elimination.
    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 defense mission needs for
    critical human-oriented research develop.
        The President's budget blueprint does not provide funding details
    beyond the proposed overall DOD budget, but we urge this Subcommittee
    to provide funding increases for each of the three military
    laboratories at the DSB-recommended level of inflation plus two
    percent. Using the current inflation rate for research costs of 2.1
    percent, a 4.1 percent increase in the research budgets will meet the
    DSB's recommendation of inflation plus two percent.

    The Army Research Institute for the Behavioral and Social Sciences
            (ARI)
        In keeping with the DSB's recommendation to increase DOD research
    budgets by inflation plus two percent, APA recommends that the basic,
    applied and advanced development behavioral research programs at the
    Army Research Institute be funded at $24.48 million.
        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; and attrition. ARI is the focal
    point and principal source of expertise for all the military services
    in leadership research, an area especially critical to the success of
    the military as future war-fighting and peace-keeping missions demand
    more rapid adaptation to changing conditions, more skill diversity in
    units, increased information-processing from multiple sources, and
    increased interaction with semi-autonomous systems. Behavioral
    scientists within ARI are working to help the armed forces better
    identify, nurture and train leaders. One effort underway is designed to
    help the Army identify those soldiers who will be most successful
    meeting 21st century noncommissioned officer job demands, thus
    strengthening the backbone of the service--the NCO corps.
        Another line of research at ARI focuses on optimizing cognitive
    readiness under combat conditions, by developing methods to predict and
    mitigate the effects of stressors (such as information load and
    uncertainty, workload, social isolation, fatigue, and danger) on
    performance. As the Army moves towards its goal of becoming the
    Objective Force (or the Army of the future: lighter, faster and more
    mobile), psychological researchers will play a vital role in helping
    maximize soldier performance through an understanding of cognitive,
    perceptual and social factors.

    The Office of Naval Research (ONR)
        APA recommends an increase of inflation plus two percent for the
    Office of Naval Research's 6.1, 6.2 and 6.3 budgets, for a total of
    $63.605 million.
        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.

    The Air Force Office of Scientific Research (AFOSR)
        APA urges the Subcommittee to fund basic, applied and advanced
    technology development behavioral research at the Air Force Office of
    Scientific Research at a level of $105.5 million (inflation plus 2
    percent).
        AFOSR behavioral scientists 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 Air Force 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. For example, although engineers know how to build cockpit
    display systems and night goggles so that they are structurally sound,
    psychologists know how to design them so that people can use them
    safely and effectively.

    Summary
        On behalf of APA, I would like to express my appreciation for this
    opportunity to present testimony before the Subcommittee. Clearly,
    psychological scientists address a broad range of important issues and
    problems vital to our national security, with expertise in
    understanding and optimizing cognitive functioning, perceptual
    awareness, complex decision-making, stress resilience, and human-
    systems interactions. We urge you to support the men and women on the
    front lines by supporting the human-oriented research within the
    laboratories and universities. Thank you.

        Senator Stevens. Sergeant Dean.

    STATEMENT OF CHIEF MASTER SERGEANT RICHARD M. DEAN,
                U.S. AIR FORCE [RETIRED], LEGISLATIVE
                ASSISTANT, AIR FORCE SERGEANTS ASSOCIATION

        Sergeant Dean. Mr. Chairman, distinguished committee
    members: On behalf of the Air Force Sergeants Association and
    our 135,000 Active, Reserve, Guard and military retiree
    members, I want to thank you for the tremendous support this
    committee has provided for our personnel and their families'
    military quality of life issues last year and also thank you
    for this opportunity.
        There are about four areas that I want to highlight today,
    the first being military pay. Due to force drawdowns that
    started in the early nineties, enlisted members have had to
    assume positions of much greater responsibility, and these
    positions often were held by commissioned officers. The
    enlisted corps stepped up and they accepted this increase in
    responsibilities. However, they have had no significant
    increase in compensation.
        We believe the method of military compensation needs a new
    model and we need to compensate them for their increase in
    their responsibilities. We also think that we should raise
    military pay to ensure that all military personnel are above
    the poverty level and that no one is having to receive
    additional funds in order to not be on the food stamp program.
        The next area I would like to highlight is the basic
    allowance for housing (BAH). The basic allowance for housing
    are based on an unrealistic standard. Rank determines the
    square footage, the number of bedrooms, and whether an
    apartment or stand-alone dwelling is authorized. This
    unrealistic standard forces most military members to increase
    their out of pocket expenses so they can live in relatively
    safe neighborhoods with relatively decent schools.
        Two categories of basic allowance for housing currently
    exist, the with-and without-dependent rates. The with-dependent
    rate is seen in order to relieve some of the burdens on married
    military members. However, members in both categories see this
    as unjust. Many single members, especially E-4 and above, are
    forced to live off base because there is not enough dormitory
    space today. Cost for a one-bedroom apartment whether the
    person is married or single does not matter. It still costs the
    same.
        We ask that this committee restructure the BAH system to
    include only one category and a more equitable system aimed at
    protecting all military members regardless of marital status or
    rank.
        Another area of major concern is the retirement benefits.
    Service before self was a core value of military members long
    before core values were buzzwords. Regretfully, our country has
    not shown a reciprocal dedication to some of those military
    members, and those are the ones who retired from the military
    with 20 or more years of service with a service-connected
    disability. These members have their retirement pay offset
    dollar for dollar for every dollar received from Veterans
    Administration (VA) disability compensation.
        We believe that retirement pay and disability compensation
    are as different as daylight and dark. We ask this committee to
    make efforts to not keep these disabled retirees in the dark
    any longer, but to provide them with what they have earned, and
    that is their full military retirement pay and their VA
    disability compensation.
        On the issue of education, we ask you to raise the value of
    the Montgomery GI Bill to cover the cost of an average
    university. We also ask that a one-time enrollment opportunity
    be abolished and replaced with an open enrollment window, to
    occur at any time during a member's military service, and that
    this option be available to all members currently serving in
    the military.
        We also ask that the Montgomery GI Bill enrollment
    contribution fee be eliminated and that this benefit be
    provided as an earned benefit. We also ask that members be
    afforded the option to transfer any or all of their earned
    education benefits to dependents.
        Finally, for our Air Reserve component members, we ask that
    full comparable retirement benefits be provided as soon as the
    reserve member retires from the service to their country,
    instead of having to wait until they are age 60.
        Finally, we ask that funds be made available to pay for our
    Air Reserve members' health care premiums when they are called
    to active duty for periods of more than 30 days.
        Mr. Chairman, committee, with that, thank you.
        Senator Stevens. Thank you very much, Sergeant. Nice to see
    you today.
        [The statement follows:]

                     PREPARED STATEMENT OF RICHARD M. DEAN

        Mr. Chairman and distinguished committee members, on behalf of the
    135,000 members of the Air Force Sergeants Association, we want to
    thank you for the tremendous support this committee provided last year
    to improve the military health care systems, increase military pay and
    allowances, increase educational benefits and provide a special,
    although small, allowance for severely disabled veterans. We also thank
    you for this opportunity to offer our views on the 2002 funding efforts
    needed to assure the quality-of-life of our Armed Forces, thereby
    improving recruitment and retention goals in an effort to ensure the
    defense of our country.
        In this testimony, we will limit the focus to items directly
    related to quality-of-life issues for active duty Air Force, Air
    Reserve Component, and retired members and their families. Those items
    are overall quality-of-life, workload vs. available workforce, military
    health care, housing and housing allowances, pay, and retirement
    benefits.

                        THE QUALITY OF THE MILITARY LIFE

        The men and women in the Armed Forces work very long and hard hours
    in extremely difficult environments to protect this nation. They are
    generally selfless and devoted to get the job done--often to the
    detriment of their own well-being while sacrificing many things the
    average American citizen often takes for granted.
        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, diminishing opportunity for educational
    benefits, and more out-of-pocket expenses with every military member
    relocation. It is amazing that so many continue to selflessly serve in
    the Armed Forces. 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

        As a result of our Armed Forces members' efforts, we have witnessed
    the fall of the Berlin Wall, the collapse of the Soviet Union, and the
    emergence of the United States as the world's only true ``super
    power.'' As the United States got caught up in the so-called ``Peace
    Dividend'' to redirect funds from and decrease manpower within the
    Department of Defense, many failed to acknowledge the increase in our
    Armed Force's responsibilities. No longer is our National Strategy one
    of projecting America's military force only in support of our ``vital
    national interests'' but instead one of global engagement and full
    participation in police actions and humanitarian efforts (military
    operations other than warfare) around the world. This has taken a
    tremendous toll on maintaining an all-volunteer force, because instead
    of decreasing the workload commensurate with the decrease in personnel,
    the workload has increased to provide support for those operations
    other than warfare. Global military missions (with far fewer people)
    have increased several fold while manpower has decreased by almost
    half. The results are not only an increase in deployments, but also an
    increase in responsibilities of those left behind as they now must
    assume even more tasks because the job that needs to be done at home
    must continue to be accomplished.
        Doing ``more with less'' is greatly deteriorating the morale,
    proficiency, recruitment and retention of our military forces. Having
    far fewer people accomplishing far greater tasks has resulted in longer
    hours, significantly more 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 implemented
    initiatives in efforts to decrease the impact of this ``spent force''
    situation by transitioning to an Expeditionary Aerospace Force (EAF)
    concept. Within the EAF concept, predictability of long-term
    deployments are more visible, and members should be better able to plan
    their individual responses to lessen the impact of deployments and
    family separations. However, it should be noted that the EAF is not a
    ``fix'' to the manning problems the Air Force faces, but instead an
    attempt to provide the senior Air Force leadership with a management
    tool to aid them in meeting the increasing demands with fewer people.
        While we applaud this effort, it will only be successful if manning
    levels are increased. Many officials call for further base realignments
    and closures to eliminate unnecessary infrastructure and transfer the
    assets (people, equipment and money) to remaining bases. If this is in
    fact done, it would decrease the workload and lessen the pace of
    deployments. If this transfer of manpower is not done, more and more
    military members will leave, and fewer and fewer people will choose to
    enter any of our Armed 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
    action to establish manpower levels to match the mission requirements
    our nation has chosen to levy on those who serve--both at home and
    abroad.

                                  MILITARY PAY

        Building on the gains made in the fiscal year 2001 Authorization,
    it is important to realize that the work is not finished. We applaud
    the pay adjustments made, but they are only the first step in
    accurately adjusting the pay charts. Also, increasing annual future
    military pay raises through the year 2006 by a half percentage above
    the Employment Cost Index sent a strong signal to those serving in our
    Armed Forces. However, there are some realities which must be examined
    about the way we pay our military members--especially the enlisted
    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 while the manpower
    reductions have placed more and more responsibility upon the shoulders
    of the enlisted force. As AFSA representatives visit United States Air
    Force bases around the world, they run into innumerable cases where
    relatively low-ranking enlisted members are handling technologically
    awesome tasks. In addition, many positions previously held by
    commissioned officers are now held by enlisted members. The
    responsibilities of these converted positions, often involving life or
    death decisions, have not changed; only the pay grades of the persons
    now making those decisions have changed. Not only have the mid-to-upper
    grade noncommissioned members assumed many tasks formerly performed by
    commissioned officers, they often assume the responsibility to train
    junior commissioned officers.
        While at the same time facing the same ``economic survival''
    challenges as the commissioned officers, the enlisted members have not
    only accepted the burden of increased responsibility, they have become
    increasingly educated in an attempt to adequately carry out those
    responsibilities placed upon them. It is time that military
    compensation be re-examined and a new model must be established to
    remove the disparity between the officer and enlisted compensation
    tables by moving them closer together to accurately reflect the
    changing enlisted roles in relation to the overall military
    establishment. This will aid tremendously to help sustain the all-
    volunteer force.
        Another key pay area is the Basic Allowance for Subsistence (BAS).
    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
    their meal card program (payment for the members residing in the
    dormitories to eat in base dining facilities). Also, DOD maintained
    that limiting the growth of BAS would allow the provision of BAS
    allowances to those residing in the dormitories--a reality that has yet
    to come about except in very rare cases--usually when it is
    inconvenient for the government to feed the troop due to his/her
    austere duty hours. When it is in the best interest of DOD, DOD
    complains that it cannot feed military members in their dining
    facilities at the allowance rate for BAS. Last year's Defense Bill even
    tied BAS to a food index. AFSA and its members believe that it is time
    to once again tie the annual growth of BAS to military pay increases.
        We must:
      --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 level without having to provide
            special subsidies in efforts to avoid admitting there are
            enlisted personnel eligible for food stamps.
      --Tie the annual increase of BAS to the military pay raise
            percentages.

                         HOUSING AND HOUSING ALLOWANCES

        Where a military member and his/her family live is dictated by a
    number of factors, usually not by the member's choice. Those deploying,
    of course, live where (and under whatever 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 which 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 or cause more out-of-pocket expenses
    for the military member.
        For those who must live off-base, the provision of the Basic
    Allowance for Housing (BAH) is intended to account for the average of
    85 percent of the members out-of-pocket housing expenses. This
    committee has recently taken strong 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, under the BAH standard, the only enlisted grade
    authorized a stand-alone dwelling is the very highest grade of ``E-9.''
    AFSA supports full funding of BAH, but maintains that BAH 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, enlisted
    members--especially the mid to lowest ranking (who are obviously paid
    the least)--must expend additional out-of-pocket dollars. A fact of the
    military institution is that privileges and benefits increase following
    the achievement of higher rank; however, BAH needs to be restructured
    to protect all military members and their families regardless of the
    member's rank.
        Another inequity in the BAH arena is the difference in housing
    allowances paid to married members versus single members. While it is
    understood this difference is aimed at easing the burden on married
    military members, this is seen by members on both sides as unjust in
    light of equal compensation for equal work. The single member works
    side by side with the married member on a daily basis doing the exact
    same job. The single member willingly often sacrifices to volunteer for
    deployments and work holidays so that married members can have the
    opportunity to spend a little more time with their families. The single
    members do this out of a sense of esprit de corps and to help out their
    counterparts who happen to have a family. Furthermore, many single
    members (especially after attaining the grade of E-5) are forced to
    live off-base because there is not enough single or unaccompanied
    quarters available on-base. This is where the dissatisfaction,
    rightfully so, begins to appear. The single member must pay the same
    amount for a one-bedroom apartment as does the married member. This is
    not equal pay for equal work--it is discrimination. This fact often
    contributes to the single military member's decision to leave the
    military service. We ask that this committee eliminate this injustice
    by replacing the ``with and without dependents'' categories with one
    BAH category.
        To improve housing and housing allowances, we ask this committee
    to:
      --Ensure that military members' housing and housing allowances are
            adequate to cover actual housing cost.
      --Restructure BAH to provide adequate housing in safe neighborhoods
            with quality schools for those members who must live off-base.
      --Modify the housing standard that determines square footage, number
            of bedrooms, and apartment or stand alone dwelling to more
            closely coincide with average private sector standards.
      --Eliminate the ``With and Without dependents'' categories and
            replace them with one category to provide more equal
            compensation for equal work accomplished.

                              MILITARY HEALTH CARE

        Military health care and readiness are inseparable, and military
    members and their families must know that no matter where they are
    stationed or where the families live, their health care needs will be
    taken care of. In recent years, military family member, retiree and
    retiree family member medical and dental care have evolved from fully
    funded coverages to member-subsidized coverages. Members have noted
    these ``DOD erosion-conscious'' choices to lessen their overall benefit
    which was promised to them and their families. 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 needs,
    or must travel a distance to a health care facility for specialized
    care. It is important to note that the 106th Congress adopted
    legislation to allow for reimbursement of medically related travel
    expenses; however, to date funding has not been obtained. This
    legislation was seen as a monumental step in the right direction, and
    members are anxiously awaiting full implementation of the program.
    Without a doubt, medical care for self and family--while on active duty
    and after retirement--is one of the top priorities of our military
    members. The availability, or lack thereof, of quality medical care
    greatly influences the member's decision when deciding to ``stay
    military'' or look for better options in the private sector. This
    association asks for your support to fund medically related provisions
    that enhance the quality of life of the personnel who so greatly
    sacrifice for the defense of this great country.

                              RETIREMENT BENEFITS

        One of the values of the enlisted corps--before ``core values''
    were buzzwords--was ``service before self.'' Thankfully many military
    members took this value seriously and decided to remain in the service
    to their country because of patriotism, their desire to make a
    difference in the world, and their dedication to and pride in their
    country. Regretfully, their country has not shown a reciprocal
    dedication to many of those who gave so much in defense of this
    country--those being the members who retired after 20 or more years of
    honorable service with a service connected disability. Retired members
    in this category have their retirement pay reduced dollar-for-dollar
    for each dollar they receive in veterans disability compensation. Any
    other disabled veteran, regardless of whether they continued to work
    for and eventually retire from the Federal Sector (as FBI agents, Civil
    Service employees, elected officials, etc.), State, City or County
    government, or any other form of employment receive their full veterans
    disability compensation and their full retirement pay.
        It is our position that ``retirement pay'' is for extended and
    honorable service. It is also our position that ``veterans disability
    compensation'' is compensation for decreased functionality or suffering
    as a result of that service. We do not believe these two in any shape,
    form or fashion--regardless of the math used--equate to using the same
    period of service for similar benefits. Retirement pay and disability
    compensation are not similar benefits, they are as different as
    daylight and dark. Armed Forces' retirees see a disgrace in their
    country asking them to pay their disability compensation for injuries
    sustained in the defense of their country! We ask this committee to do
    the right thing and correct an injustice that has gone on far too long.
    This injustice can be corrected by adopting S. 170, The Retired Pay
    Restoration Act of 2001.
        Another area where there is great concern among our membership is
    the reduction in benefits from 55 percent to 35 percent for those
    surviving spouses receiving annuities under the Survivors Benefits Plan
    (SBP) and entitled to Social Security benefits. Upon retirement, the
    military members who elected to participate in SBP had a portion of
    their retirement pay withheld for the purpose of paying for their
    surviving spouse's annuity. Enactment of S. 145 would, over a period of
    time through 2011, eliminate the offset and bring all SBP annuity
    recipients up to the same percentage level.
        To show this country's dedication and compassion for its military
    retirees, we ask you to:
      --Provide military retirees full concurrent receipt of their earned
            retirement pay and Veterans Disability Compensation by
            supporting S. 170 would do.
      --Eliminate the SBP reduction surviving spouses face when they attain
            the age of 62 by supporting S.145.

                                   EDUCATION

        We should take action now to raise the value of the Montgomery G.I.
    Bill (MGIB), the military's primary tool for a successful post-military
    readjustment into civilian society. The MGIB should cover the cost of
    an average university, instead of an arbitrary dollar figure that has
    little to do with actual education costs. This should include adequate
    funding to cover books, tuition and fees toward a higher education for
    not only after separation, but also for those able to take classes
    while in the military. The better educated a member becomes, the better
    he/she can perform their increasingly difficult taskings and accept
    greater responsibilities.
        Also, we ask this Congress to change the enrollment methods now in
    place. The first thing to do is immediately provide an opportunity, an
    open window, for all military members not enrolled in the MGIB to
    enroll in that program. The other enrollment change is to eliminate the
    one-time enrollment opportunity during basic training--when members can
    little afford to enroll and are so overwhelmed with information. We ask
    you to allow military members to enroll in the MGIB anytime during
    their careers. However, if only windows of opportunity for enrollment
    are to be used, a less than optimum option we recommend is to allow an
    opportunity for enrollment at each reenlistment point.
        Additionally, we ask you to support legislation to change the
    policies that tend to push members away from the educational benefit.
    Policies such as requiring military members to contribute $1,200 toward
    their own educational ``benefit.'' 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.
        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. We should not be concerned that the MGIB
    benefit may be used if members are allowed to transfer the benefit, but
    instead encourage its use to provide for a better educated citizenry.
        We ask that:
      --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 be implemented.
      --An open window for enrollment for in the MGIB be established.
      --Eliminate the member's $1,200 enrollment fee and make the MGIB an
            earned benefit.
      --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 members 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.'' Our military
    forces could not even come close to accomplishing the many and varied
    tasks levied upon them by our national military command authority
    without the members of the Air Reserve Components ([ARC] Guard and
    Reserve). The Citizen soldiers used to be standing ready in the
    background in case they were needed in an extreme national emergency.
    This is not the case today. The citizen soldier is working side-by-side
    with their active duty counterparts on an almost daily basis. It is
    safe to say, that our military forces could not meet mission
    requirements without the constant dedication and support from the ARCs.
    In addition to facing many of the same challenges active duty members
    face, ARC members are still not totally recognized for all their
    sacrifices. Therefore, additional funding must be made available to
    provide the ARC members with adequate health care, full benefits,
    comparable retirement benefits, and protection of their families. Their
    readiness is critical to our nation's defense and attainment of these
    goals for ARC members is important.
        Just as with the active duty force, increased mission taskings are
    coming despite plans for continued cutbacks in Reserve forces end
    strengths. Furthermore, 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. Proposed tax credits as in S. 540,
    Reserve Component Tax Assistance Act of 2001, if implemented for
    employers and self-employed ARC members would be great gestures on the
    part of our nation for their support to our ARC members and more
    importantly-the defense of this country.
        In order to meet the readiness needs of today's ARC 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.
      --Provide comparable retirement benefits at the point of retirement
            instead of at age 60.

                                    CLOSURE

        We not only ask members of our military forces to accomplish great
    things under austere conditions, but to be ready to accomplish those
    great things anywhere in the world on a few hours notice. These members
    sacrifice many facets of their family lives. We ask them to sacrifice
    many things most Americans take for granted. We--more often than not--
    prevent them from owning a home due to change-of-assignment moves. We
    force them to lose money in every change-of-station move because funds
    provided do not cover actual cost and low weight allowances force them
    to get rid of items they will have to replace at their new duty
    location. We ask them to miss the births of their children, to miss
    watching their children take their first steps, to miss seeing the
    accomplishments of their children as their children grow up and become
    adults. The military member can only hope that their families will
    understand that all their sacrifices are for a higher calling--the
    protection of the freedoms America holds so dearly. Service before self
    is a value few can really say they understand. America's military
    members and their families, can beyond a shadow of a doubt, honestly
    say they understand that value.
        Mr. Chairman, AFSA 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. We also ask that while you're deliberating the
    appropriation requirements of the fiscal year 2002 Defense Bill, its
    personnel programs, and its role in attracting and retaining those who
    serve, that you pay particular attention to the quality of the military
    lifestyle. A lifestyle that inherently brings sacrifices that should
    not be compounded through the loss or reduction of benefits, pay,
    education or an unjust expectation that they someday pay their own
    disability compensation. We trust you to take care of our men and women
    in uniform and their families by maintaining current benefits and
    ensuring future benefits--to include retirement benefits--commensurate
    with the sacrifices we ask of our active and Air Reserve Component
    members. 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. Dr. Bursell and Mr. Violi.
    STATEMENTS OF:
            SVEN BURSELL, M.D., JOSLIN DIABETES CENTER
            RON VIOLI, JOSLIN DIABETES CENTER
        Mr. Violi. Thank you, Mr. Chairman. I am Ron Violi with
    Children's Hospital. I am here with Dr. Bursell from Joslin
    Diabetes. I want to thank you for having us here today.
        As we have shared with you in the past, Dr. Massimo Trucco
    was the first scientist to discover the link between a common
    childhood virus and the onset of juvenile diabetes. We now know
    through published results that the Coxsackie B Virus (CVB), or
    hand, foot, and mouth virus triggers the onset of type 1
    diabetes in children and adults who are genetically at risk for
    the development of this disease. This new research, which has
    been conducted in collaboration with Army medical personnel, is
    bringing us one step closer to developing a vaccine against
    type 1 diabetes.
        For fiscal year 2002, we are respectfully requesting $7.6
    million in Federal funding to expand the joint diabetes project
    by pursuing a program that will allow us to screen military
    personnel and their dependents for genetic susceptibility to
    diabetes. Our proposal has three broad goals:
        First, by screening larger populations we intend to improve
    our ability to determine who will actually develop diabetes.
    Currently we can identify who is susceptible and who is
    resistant with about an 85 percent accuracy.
        Secondly, we plan to use Joslin's telemedicine network to
    communicate information about individuals at risk for
    developing diabetes, both to health care professionals and
    families. In the future, this will be especially useful for
    caring for minority populations, such as the American Indians
    in Alaska or New Mexico, where there is a higher proportion of
    incidence of diabetes.
        Finally, we are offering appropriate counseling to limit
    the psychological and behavioral effects that this information
    will have.
        We envision this to be a two-phased project. The first
    phase will evaluate 5,000 families from ten separate Army
    bases. Based on the results from phase one, the research
    protocols will be refined, with the intention of implementing a
    larger-scale screening program that would be made available on
    all Army bases.
        As part of our collaboration with Joslin, their
    telemedicine infrastructure will be utilized to centralize the
    data stored from our studies. By doing so, we can quickly
    develop a large shared database with which we can establish any
    association that may exist between genetic risk and a more
    rapid development of diabetes complications.
        The bottom line advantage to this analysis is that patients
    that are at risk for developing diabetes or diabetic
    complications may be detected early and managed more
    appropriately via telemedicine, thus improving their medical
    care, reducing complications, and lowering health care costs.
        Mr. Chairman, we are pleased to be part of this project
    with the Department of Defense and appreciate your and Senator
    Specter's continuing support again this year.
        Sven.
        Dr. Bursell. Yes. I would also like to express our thanks
    to the committee for their support and leadership. The Joslin
    Vision Network (JVN) project represents a translation project
    leveraging telemedicine technologies. The mission is to
    translate results from 25 years of national multi-center
    clinical trials in diabetic retinopathy into clinical practice
    and make this evidence-based medical care available to all
    diabetic patients.
        As part of the project, by the end of December 2001 we will
    have deployed a total of 31 remote JVN imaging sites and 8
    centralized reading centers. Additionally, to date we have
    trained and certified JVN images, 16 readers, and 3 senior
    adjudicators. For fiscal year 2002 funding, taking this number
    of imaging sites, with each imaging site potentially being able
    to image 30 patients per day, we would be able to access
    358,800 diabetic patients per year. The physicians who conduct
    the imaging reading look at this in terms of over 700,000 eye
    examinations per year because you have to examine each eye
    separately.
        We are also working with the participants in the DOD and
    the VA towards the development of a comprehensive diabetes
    management program in a virtual environment. With fiscal year
    2002 funding of $7.6 million, we anticipate deploying a further
    15 imaging stations at 10 different sites.
        I would also like to highlight briefly the collaboration
    with Children's Hospital of Pittsburgh that Mr. Violi referred
    to. Again, we are excited about this because it will focus on
    the analysis and potential identification of genes associated
    with the development and complications of diabetes, and we will
    leverage the JVN telemedicine platform and the work done for
    retinopathy assessment and patient education.
        Again, thank you very much for your attention and support,
    sir.
        Senator Stevens. Thank you very much, gentlemen.
        [The statement follows:]

                     Prepared Statement of Dr. Sven Bursell

                                  INTRODUCTION

        Mr. Chairman and Members of the Committee, we would like to thank
    you for the opportunity to appear before you. I am Dr. Sven Bursell of
    the Joslin Diabetes Center, and joining me today to present an update
    on the Joint Diabetes Project is Ronald Violi, president and chief
    executive officer of Children's Hospital of Pittsburgh. We are here to
    provide information on our work with the Departments of Defense and
    Veteran's Affairs on the health concerns related to diabetes.
        The establishment of the Joint Diabetes Project has allowed each of
    our institutions to contribute its unique strengths and scientific
    talents to this partnership. Three years ago, you provided us with the
    opportunity to combine our resources to offer the most advanced
    detection, treatment, prevention and basic and applied research
    approaches to managing diabetes and its resulting complications.
        We are excited about the progress that we have made to date and
    remain enthusiastic and optimistic about our future collaborative
    endeavors. Our proposal for third year funding will allow us to
    continue to provide the most balanced approaches available to
    addressing Type 1 and Type 2 diabetes (or juvenile and adult onset
    diabetes, respectively).

    Children's Hospital of Pittsburgh Plan for Fiscal Year 2002
        As we have shared with you before, our principal investigator, Dr.
    Massimo Trucco, was the first scientist to discover an immunologic link
    between a common childhood virus and the onset of juvenile diabetes. We
    now know through our recently published results that the particular
    viral infection in which we are interested, CVB, or hand, foot and
    mouth virus, triggers the onset of Type 1 diabetes in children and
    adults who are genetically at-risk for developing the disease. This
    research further emphasizes the involvement of viruses in initiating
    autoimmune responses that cause the onset of diabetes.
        Through our work with the Army's Telemedicine and Advanced
    Technology Research Center (TATRC), we propose to continue our work
    with Army medical personnel and with specialists in Endocrinology at
    Walter Reed Army Medical Center to further isolate segments of the CVB
    virus with the intent of developing a vaccine against type 1 diabetes.
        Last year, to assist with these efforts, we began a collaborative
    initiative between the National Science Foundation's Science and
    Technology Center located at Carnegie Mellon University in Pittsburgh
    and with experts in microarray technology at the University of
    Tuebingen in Germany. This partnership has provided us with the ability
    to use advanced medical technology to screen thousands of blood samples
    each month to determine an individual's genetic susceptibility to
    diabetes and other autoimmune diseases.
        Using this technology, these blood tests can be performed in less
    than 30 minutes and at a very reduced cost, allowing larger populations
    to be screened more effectively. Our ultimate goal is that once at-risk
    individuals are identified, they can be followed more closely and
    ultimately vaccinated against type 1 diabetes.

                       FISCAL YEAR 2002 PROGRAM OVERVIEW

        For fiscal year 2002, we look to expand upon the Joint Diabetes
    Project funded by Congress through the Department of Defense by
    pursuing a program that will allow us to embark upon an outreach
    project that will enable us to screen Army personnel, and later other
    military personnel and their dependents, for genetic susceptibility to
    diabetes.
        Using the advanced testing technology that we discussed, we feel
    that we are uniquely qualified to provide rapid and cost-effective
    diabetes screenings for large military populations.
        Once these screenings have occurred, we can offer the most current
    diabetes care, including psychological, emotional and clinical care
    components to military personnel regardless of their location via the
    use of telemedicine. In the future, this methodology will be especially
    useful among minority populations such as the American Indians in
    Alaska or in New Mexico where there is a higher proportional incidence
    of diabetes.
        This proposed project has three broad goals:
      --First, by screening larger populations we intend to improve our
            ability to determine who will develop diabetes. Currently, we
            can identify who is susceptible and who is resistant with an
            accuracy rating of between 80 and 85 percent.
      --Second, we plan to utilize the telemedicine network that has been
            already well established by Joslin to communicate information
            about an individual's risk of developing diabetes both to
            health care professionals and to families.
      --And finally, we will tailor appropriate counseling to limit the
            psychosocial and behavioral effects that this information will
            have on individuals and family members.
        We envision this to be a two-phased project. The first phase will
    allow for the evaluation of 5,000 families from 10 Army bases, and
    would include all children between 7 and 16 years of age. On the basis
    of the results received from the first phase, the research protocols
    will be refined with the intention of implementing a larger-scale
    screening program that would be made available at all Army bases.
        As part of our collaboration with Joslin, their telemedicine
    infrastructure will be utilized to centralize the data stored from our
    studies. In this way, we can quickly develop a large shared database of
    genetic information from which we can perform the required analysis to
    establish any association that may exist between genetic risk and a
    more rapid development and/or progression of diabetic complications,
    such as retinopathy, cardiovascular disease and kidney disease.
        The bottom line advantage to this analysis is that patients who are
    at-risk for developing diabetes or diabetic patients who are at
    increased risk for developing complications could be detected early
    enough so as to be appropriately managed via telemedicine, thus
    improving their medical care, reducing complications and lowering the
    costs associated with their care.

    FISCAL YEAR 2002 CHP/DIABETES INSTITUTE OF PITTSBURGH FUNDING REQUEST--
                                   $7,600,000

        The diabetes research program at Children's Hospital of Pittsburgh
    has become a world-class, state-of-the-art research center that will
    have a tremendous impact at both the regional and national levels.
        For fiscal year 2002, we are respectfully requesting $7.6 million
    in federal funding so that we may continue our efforts and expand upon
    the important work that we have begun. The proposed budget will
    consider expenditures associated with:

    New Advanced Technology to Improve Prediction and Prevention of Type 1
    Diabetes

    Salary Support................................................  $500,000
    Equipment (laboratory and electronic)......................... 2,500,000
    Supplies/Reagents............................................. 1,500,000
    Management Cost (mailing, receiving, bar-coding, storing blood

        samples).................................................. 1,500,000
    CHP & Joslin Joint Program (mapping of genes predisposed to
        diabetes complications)...................................   500,000
    DOD Administrative Fee........................................ 1,100,000
                        --------------------------------------------------------------
                        ____________________________________________________

          Total CHP/Diabetes Project Costs........................ 7,600,000

                             JOSLIN DIABETES CENTER

    Fiscal Year 2001 Status Report
        JVN Deployment.--By December 2001 we will have deployed a total of
    8 independent remote JVN imaging sites and 5 centralized reading center
    sites operating off 2 independent servers in the Department of Defense
    Infrastructure concentrating on sites in Hawaii, Walter Reed Army
    Medical Center and Alaska at Elmendorf Air Force Base and Bassett Army
    Medical Center. In the VA system we will have deployed a total of 10
    remote imaging sites, 3 reading center sites operating off 2
    independent servers and at the Joslin Diabetes Center we will have 7
    imaging sites and 4 reading center sites operating of the Joslin JVN
    server for a total of 37 separate sites operating the JVN system.
    Additionally, a total of 21 JVN imagers, 16 JVN readers and 3 senior
    JVN adjudicators have been trained and certified throughout the
    participating organizations.
        JVN Validation.--The JVN validation study has been completed and
    the results published in the March issue of Ophthalmology. The results
    demonstrated the equivalence, with respect to level of diabetic
    retinopathy assessment, between JVN digital video imaging through a
    non-dilated pupil to the current clinical gold standard of the Early
    Treatment Diabetic Retinopathy Study protocol of dilated 7 stereo
    standard field 35-mm photography. In addition the above prestigious
    peer reviewed publication the JVN studies have resulted in a further 5
    peer reviewed publications and a total of 10 abstracts accepted for
    presentation at the Association for Research in Vision and
    Ophthalmology, American Diabetes Association, and American Telemedicine
    Association national meetings. Additionally, the ATA has devoted a
    symposium for the 2001 meeting dedicated to the JVN system with an
    opportunity for participants from all organizations to present results
    in a focused forum.
        JVN Application Enhancement.--The enhancements to the JVN
    application will be tested and completed by March 31, 2001. This next
    generation JVN application is developed using totally non-proprietary
    hardware and software. Workstations are now standard PCs with MicroSoft
    2000 operating systems interfaced to the Agfa PACS environment. The
    system is fully DICOM and HL7 compliant as well as being compliant to
    the latest HIPAA security standards. The development off the Agfa PACS
    environment facilitates direct interfaces to the DOD CHS and VA VISTA
    medical record systems. Thus the JVN system becomes an integrated
    component of the DOD and VA patient medical record system.
    Additionally, the JVN system is operational over the internet with the
    appropriate securities implemented. The deployments in 2001 will be
    performed so as to develop a proof-of-concept model for widespread,
    cost effective, and sustainable deployment and support.
        Deployment of the Advanced System.--The prototype of the new non-
    mydriatic retinal imaging system has been completed and will undergo an
    iterative cycle of testing and refinement during the rest of 2001. The
    rationale for this development effort was to enable a portable and less
    expensive retinal imaging system that would overcome the current
    limitations of the commercially available models. The portability is a
    critical requirement for mobile operations to remote communities as
    well as in the DOD. The automated reading center application is also
    being readied for deployment. The JVN has been working with an image
    analysis vendor to develop this application. The first phase of the
    application has been developed and will be undergoing validation
    testing in April using the JVN data base of 48,000 retinal images that
    have already undergone manual grading for diabetic retinopathy. If the
    validation tests prove to be positive then the application will be
    deployed with all JVN reading center systems. The application is
    currently designed to automatically detect any abnormalities in the
    retinal images. It is anticipated that the implementation of this
    application will reduce the reading center workload by at least 50
    percent.

          COLLABORATIVE PROGRAM WITH CHILDREN'S HOSPITAL OF PITTSBURGH

        An initial symposium that includes investigators from the JVN and
    Children's Hospital of Pittsburgh will be hosted by the VA as part of
    their National Diabetes meeting on March 28, 2001. The deliverable for
    this meeting is consensus agreement on a formalized collaborative
    program that leverages the telemedicine experience of the JVN and the
    immunogenetics expertise of Children's Hospital of Pittsburgh in the
    devlopment of a program that can significantly impact on the care of
    diabetic patients.

    Fiscal Year 2002 Objectives
        Deployment.--We anticipate that the current level of funding for
    2002 will allow us provide support for existing JVN systems and to
    target new deployments for 15 additional JVN systems at 10 different
    sites that will be identified in collaboration with the participating
    agencies. This will make a total of 22 sites deployed through the DOD
    and VA that will be operating the JVN system.
        JVN Application Enhancements.--There will be ongoing development
    work to continue enhancements to the JVN platform. These enhancements
    will include incorporation of a module to facilitate rigorous clinical
    research studies in diabetic eye disease, to validate JVN imaging for
    the detection of other eye diseases such as glaucoma and age related
    macula degeneration, and to incorporate application enhancements based
    on user feedback.
        Comprehensive Diabetes Management program.--Work will be continuing
    for the development of the appropriate modules that will be deployed
    and implemented in the web-based comprehensive diabetes management
    program. The development of these modularized components is vital to
    user acceptance as modularization will facilitate customization to meet
    the specific needs of each practice. It is anticipated that the
    development of the interactive web-based education and behavior modules
    will provide the largest potential benefit with respect to motivating
    patients to set reasonable goals for their management of diabetes and
    thus maximize the clinical benefit.
        Deployment of the Advanced System.--We will incorporate full
    automation into the new retinal imaging system. This will facilitate
    the imaging of the different fields required for assessment of level of
    diabetic retinopathy. Thus it is anticipated that the retinal imaging
    system based on retinal tracking and translation of the optical system
    be capable of acquiring all retinal images without having the patient
    change fixation. This will reduce the time for retinal imaging and
    significantly increase patient throughput. We will also continue our
    development efforts to enhance the capability of the automated retinal
    reading application to detection of specific types of retinal lesions.
    This will further enhance the efficiency and reduce the resource load
    that would be needed to staff a JVN reading center.

          COLLABORATIVE PROGRAM WITH CHILDREN'S HOSPITAL OF PITTSBURGH

        The main area of potential collaboration would be in the
    identification of genes associated with the risk for diabetic
    complications. This is important as we know that some diabetic patients
    will develop complications much more rapidly than other diabetic
    patients who are comparably aged with comparable glycemic control. This
    fact would implicate a genetic component associated with a risk for
    developing diabetic complications. Thus it becomes logical to leverage
    the expertise at Pittsburgh with respect to immunogenetics and genechip
    technologies and Joslin's expertise with gene analysis and JVN
    technology to undertake a study involving gene expression associated
    with an increased risk for development of diabetic complications such
    as diabetic retinopathy with a primary focus on type 2 diabetic
    patients.

    Joslin Diabetes Center Fiscal Year 2002 Budget

    Joslin expenses and personnel costs, including Equipment
        purchases for DOD ownership...............................$3,628,000
    DOD/VA expenses and personnel costs........................... 2,560,000
    Management and fees extracted by DOD..........................   912,000
    Collaborative research with CHP...............................   500,000
                        --------------------------------------------------------------
                        ____________________________________________________

          Total, Joslin Diabetes Center........................... 7,600,000

                                    SUMMARY

        For fiscal year 2002, federal funding for the Joint Diabetes
    Project will allow both Joslin Diabetes Center and Children's Hospital
    of Pittsburgh to continue their work to improve the diagnosis and
    treatment of enlisted personnel and their dependents with diabetes.
    Through concentration of efforts and cutting edge research, it is our
    intent to ultimately identify a vaccine against and a cure for the
    disease.

    Joint Diabetes Project, Fiscal Year 2002 Funding

    Joslin Diabetes Center........................................$7,600,000
    Children's Hospital of Pittsburgh............................. 7,600,000
                        --------------------------------------------------------------
                        ____________________________________________________

          Total Program...........................................15,200,000

        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. Please know that we would be appreciative of
    your continued support again this year. At this time, we would be
    pleased to answer any questions from you or any other Members of the
    Committee.

        Senator Stevens. Our next witness is Chief Master Sergeant
    Olanoff.

    STATEMENT OF CHIEF MASTER SERGEANT MARK H. OLANOFF,
                U.S. AIR FORCE [RETIRED], NATIONAL
                LEGISLATIVE DIRECTOR, THE RETIRED ENLISTED
                ASSOCIATION

        Mr. Olanoff. Good morning, Mr. Chairman. I know that the
    time is short. We have submitted our statement and hopefully
    you and your staff will have time to read it. But I do want to
    thank you, and I am sure you remember from the last couple
    years of us coming here, and many of us are back, about the
    promise. Well, I am sure you are aware that we worked with
    Senator Warner, with the authorizing committee, and you know
    the TRICARE for Life happened and the senior pharmacy benefit
    happened and this committee funded it, and I would like to
    thank you and your ranking member Senator Inouye for all your
    help.
        I am sure you are aware there still are some shortfalls in
    military health care, but I think that they are going to be
    addressed and I think that there is going to be a supplemental
    that you are going to consider later.
        However, I want to bring up two issues for this year for
    the committee to really look at and consider. One of the
    previous speakers mentioned the fact about the promise of
    retired pay, and this is another issue that we realize that we
    have to go back to Senator Warner and the Armed Services
    Committee authorizers to get authorization for you to fund it.
    However, I would like you to know that Senate Bill 170, a
    bipartisan bill introduced by Senator Reid, 10 members of this
    subcommittee are co-sponsors, 16 of the full committee,
    Appropriations Committee, are co-sponsors, and a total of 59 of
    your colleagues are co-sponsors of this bill.
        So there is a lot of momentum to restore the retired pay.
    This is an injustice that has been going on for many, many
    years, and we have had large bipartisan success in the House.
    Now we have the success in the Senate and we are hopeful this
    year that the Armed Services Committee will report a bill out
    to you so you can fund the restoration of retired pay so our
    retired military veterans do not have to pay for their own VA
    disability.
        Mr. Chairman, the other issue is the survivor benefits
    plan. I do not know how familiar you are with this, but there
    are a couple of bills out there, one by Senator Thurmond and
    one by Senator Smith. Basically, the problem with this is that
    widows who thought that they were going to get a 55 percent
    survivor benefit when their spouses passed away, they find out
    after the fact that this benefit is lowered from 55 percent to
    35 percent, and the two bills ask for an increase to get them
    back up to 55 percent. One bill would do it over a phase-in
    period over about 6 or 7 years. Senator Smith's bill would
    implement it immediately.
        So those are the two big issues for us this year. Again,
    Mr. Chairman, we really thank you for what you have done over
    the last few years and we look forward to working with you in
    the future. Thank you.
        [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. TREA commends the Chairman
    for his help with the funding of the Defense Health Program and the new
    provisions of TRICARE for Life. We are sure that the chairman remembers
    the discussion of last year and his challenge to us in working with the
    Armed Services Committee to determine the promises of healthcare for
    military retirees. Again, we salute you for the fine effort.

                                   HEALTHCARE

    TRICARE
        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.
        TRICARE Standard (CHAMPUS) reimbursement levels are still much too
    low to attract quality health care providers. There are also
    unreasonable delays in reimbursement for TRICARE Standard (CHAMPUS)
    claims. 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 sees 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 TRICARE subcontractor would
    pay the claim. 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'', and TREA understands that DOD is
    currently working to implement improvements effective October 2002. As
    stated in a December 11, 2000 TriCare press release, ``the TriCare
    Management Activity (TMA), DOD's designee for evaluating the new rule,
    has formed a group of experts from its staff and uniformed services
    into an Integrated Program Team (IPT). The IPT is currently studying
    how best to apply these standards to the eight administrative
    transactions used routinely in health care administration, including
    claims processing.'' TREA appreciates this effort and requests that
    this committee continues to stay abreast to this work in progress.
        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.

    TRICARE for Life (TFL)
        TRICARE for Life is part of the Fiscal Year 2001 National Defense
    Authorization Act (NDAA) to be effective October 1, 2001. We applaud
    the President and the Congress (Budget Resolution) for including the
    additional $3.9 billion needed to fund TFL for fiscal year 2002 and we
    now ask that this subcommittee appropriate the money.
    TRICARE Standard Improvements
        TRICARE Standard, the fee-for-service option, needs improvement to
    at least equal the quality and standard of care as provided under the
    Federal Employee Health Benefits Program (FEHBP) standard fee-for-
    service by:
      --Eliminating the need for Non-availability statements (NAS) from
            military treatment facilities and clinics and completely
            eliminate the requirement for pre-authorization.
      --Eliminating the 115 percent billing limit when TRICARE Standard is
            second payer to other health insurance.

    Lowered Catastrophic Caps Funding
        Additional funding is required to cover the lowered catastrophic
    caps for TriCare users. Fiscal Year 2001 DOD Defense Authorization Act
    lowered the cap from $7,500 to $3,000 but there is currently no funding
    to pay for it. DOD's request that TriCare participants keep the
    documentation, ask their carriers to wait until DOD pays them is
    unfortunate. The lowered cap is law and TREA requests that it be
    funded.

    Medicare Part B Waiver for Military Retiree 65+
        The recently passed TFL requires the participant to be on Medicare
    Part B. Most retirees who settled near a military treatment facility
    (MTF) were counseled by MTF advisors not to enroll in Part ``B''
    because the MTF would provide 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 that this committee will
    work with your colleagues to help authorize and then appropriate 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, and most importantly, TriCare-for-Life, as well 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 too
    costly. We realize that the authorizing committee must provide
    legislative relief, however, we ask for this committee to support this
    effort.

    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 offset 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 offset. Last year, the Senate included legislation, outlined in S.
    145 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 2001 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. 305 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 2002, 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 expand 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 to $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. 170, sponsored by
    Senator Reid, is complete concurrent receipt of military retirement pay
    and VA disability compensation.
        Mr. Chairman, 56 of your colleagues in the U.S. Senate are now co-
    sponsors of S. 170 including 10 on this subcommittee and a total of 16
    on the full Appropriations Committee which also includes your ranking
    member, Sen. Inouye and we ask for your consideration in this matter.

        Senator Stevens. Thank you. I will say, however, that the
    amount of funding we have got now for retired persons is over 6
    percent of the budget. If we grant your request it will be over
    10 percent of the budget for defense. We did not use to take
    retired benefits out of the current year funding for the
    Department of Defense. That is going to grow as the years go on
    and I think we will all have to think about how to do that.
        We ought to be looking to a system which funds retirement
    on an annual basis, as we do the civil service. But we have not
    done that. I commend to you the thought of trying to figure out
    how to do it.
        When that reaches more than 10 percent a year, it will mean
    that we will be putting more money into those people who have
    served in the past than we are in training the people who are
    coming in. That is self-defeating. So I think we have to find a
    new system.
        Thank you very much.
        Mr. Olanoff. Thank you, Mr. Chairman.
        Senator Stevens. They tell me I must go now. We will try to
    get back. Thank you very much.
        Senator Inouye [presiding]. The chair recognizes Dr.
    William Nelson, the Association for the Cure of Cancer of the
    Prostate. Dr. Nelson will be accompanied by Dr. Richard Atkins.

    STATEMENT OF WILLIAM G. NELSON, Ph.D., ASSOCIATION FOR
                THE CURE OF CANCER OF THE PROSTATE
    ACCOMPANIED BY RICHARD N. ATKINS, M.D., NATIONAL PROSTATE CANCER
                COALITION

        Dr. Atkins. Mr. Chairman, on behalf of CAPCURE and the
    National Prostate Cancer Coalition, I am delighted to introduce
    Dr. Bill Nelson from Johns Hopkins, one of the country's
    outstanding young biomedical researchers.
        Dr. Nelson. Thank you, and thank you very much, Mr.
    Chairman. I am a cancer research scientist and clinical
    investigator at Johns Hopkins and I have dedicated my life to
    searching for new opportunities to beat prostate cancer. I am
    here today to speak in support of the invaluable contributions
    that are now made each year by the Department of Defense
    prostate cancer research programs. To that end, I would like to
    ask your committee to provide $135 million to support the
    Congressionally Directed Medical Research Program (CDMRP), in
    prostate cancer for the fiscal year 2002, and also ask that you
    maintain sufficient funding to support the intramural prostate
    cancer research program at the Walter Reed Army Hospital.
        I know that you, Mr. Chairman, and all the members of your
    committee share my concern that prostate cancer has become the
    most commonly diagnosed non-skin cancer for men in the United
    States. This year more than 198,000 men, or three times the
    number of casualties in the 10 years of the Vietnam War, will
    learn that they have prostate cancer. Nearly 32,000 men, or the
    size of an entire corps of the United States Army, will lose
    their lives to prostate cancer, making prostate cancer the
    second most common cause of cancer death among men.
        Why do we need a national investment? This country's
    investment in all of cancer research pales in comparison to the
    dark and devastating specter of cancer, in that less than one-
    thirtieth of what we spent on cancer care goes to research to
    find new treatments. Just this month, the opportunities are
    really arising. Just this month, we have marveled at the
    appearance of a new drug called Glivak, a Novartis
    Pharmaceutical pill that treats chronic myelogenous leukemia
    that was developed by a colleague of mine, Dr. Brian Druker, at
    the University of Oregon. That disease, once inevitably fatal,
    may be curable in as many as 90 percent of the patients who
    suffer from it.
        Now, remarkably, this discovery was made and translated to
    the clinic in less than a decade and, although we know that not
    every miracle for cancer patients is going to move as quickly,
    I believe that if we made a greater national investment in such
    discoveries we could accelerate progress greatly.
        Why the military? Prostate cancer poses a grave risk to our
    men in uniform and, while we do not know the full impact of
    prostate cancer on our military service, we can posit some
    estimates. Eighty-five percent of active and reserve uniformed
    service personnel are men, constituting about two million
    individuals. If their prostate cancer risks are the average
    expected, that means that more than 300,000 military men will
    be diagnosed with prostate cancer during their lifetimes.
        But the economic and social impact of the disease does not
    stop there. There are more than eight million people in the
    Department of Defense health network worldwide. The cost of
    prostate cancer in terms of direct health care expenditures and
    human capital over time could be enormous.
        Why is the Department of Defense program the right program
    for prostate cancer research? The CDMRP prostate cancer program
    is the only program that focuses specifically on prostate
    cancer, and there are four features of this funding strategy
    that I would like to comment on.
        First, the funding strategy adopted by the CDMRP is both
    innovative and effective. An example are the idea development
    awards initiatives, which provide funding to stimulate venture
    research, recognizing and rewarding speculative but promising
    ideas. These projects often do not qualify for funds from other
    Federal sources because of an abundance of proof of principle
    evidence is usually required before those funds are awarded.
    However, since these ideas are at the cutting edge of research
    they often bring us the greatest returns. It is worth noting
    that Dr. Druker has said that he did not get his first three or
    four research grants.
        The second point, the CDMRP is committed to correcting the
    unequal burden of prostate cancer on America's African American
    men and their families through its health disparity awards. It
    is providing funds for research and training to help solve this
    problem and it is offering collaborative research grants to
    historically black colleges and universities.
        Third, the CDMRP is committed to accelerating clinical
    trials. Fiscal year 2001 marks the first time they have had
    sufficient funding to support clinical research. However, we
    believe that the potential impact is echoed by the successes of
    the CDMRP program for breast cancer research, which hastened
    the development of Herseptin, an important tool in breast
    cancer treatment.
        Finally and perhaps most important, the CDMRP is committed
    to developing new prostate cancer research consortia and it
    needs more funding to pull this off. The CDMRP research
    development consortia awards bring together researchers from
    two or more institutions to collaborate on research focusing on
    a common theme. It is widely regarded that the establishment of
    centers of research excellence of this sort that balance
    research collaboration and competition is the best way to beat
    the disease. That is also one way the DOD efforts can synergize
    with the efforts at the National Cancer Institute.
        In conclusion, the CDMRP is an important source of research
    funding for prostate cancer. Over the past few years, the
    growing commitment of Federal funds that Congress has
    appropriated to beat prostate cancer and other serious cancers
    has begun to make a difference. But I believe we can do more,
    we must do more, and with the right investments I am confident
    that we can and will beat prostate cancer.
        So on behalf of the millions of American men and their
    family members whose lives have been touched and all too often
    devastated by prostate cancer, I thank you for your continuing
    commitment to eradicate it. Thank you very much, Mr. Chairman.
        [The statement follows:]

                 PREPARED STATEMENT OF WILLIAM G. NELSON, PH.D.

                                  INTRODUCTION

        Mr. Chairman, my name is Bill Nelson. I am Associate Professor of
    Urology, Oncology, Pharmacology, Medicine and Environmental Health
    Sciences at Johns Hopkins University and to my left is Dr. Richard
    Atkins, the Vice Chairman and Chief Operating Officer of the National
    Prostate Cancer Coalition. We are pleased to appear before you on
    behalf of both of our organizations and thank you for your time and
    commitment to the issues that surround prostate cancer.
        As a research scientist and clinical investigator, I spend my life
    searching for new opportunities to beat prostate cancer, and I am here
    to support the incalculable contributions that are now made annually by
    the Department of Defense prostate cancer research programs. They must
    continue, and they must grow. To that end, I ask your committee to
    provide $135 million for the Congressionally Directed Medical Research
    Program (CDMRP) in prostate cancer in fiscal year 2002. On behalf of
    the National Prostate Cancer Coalition and CaP CURE, I also ask that
    you maintain sufficient funding for the intramural prostate cancer
    research program at Walter Reed Army Hospital.
        I know that you, Mr. Chairman, and members of this committee share
    my concern that prostate cancer remains the most commonly diagnosed
    nonskin cancer in America. More than 198,000 men will learn that they
    have the disease in 2001. Nearly 32,000 men will lose their lives to
    prostate cancer this year, making it the second most common cause of
    cancer death among men. Those statistics translate into devastating
    realities for men and families across this country.

                         AFFECTING THE NATION'S ECONOMY

        Prostate cancer will affect one in six men in the United States
    during his lifetime. More than 25 percent of those battling this
    disease are under the age of 65, prime years of productivity for
    families and for this nation. As baby boomers continue to pass the
    threshold of age 50, the number of Americans impacted by cancer--and
    prostate cancer--is expected to grow. If unchecked during the next
    decade, cancer incidence and mortality rates could increase by 25
    percent to 30 percent. Cancer already costs this nation more than $110
    billion a year, a figure that might exceed $200 billion annually by
    2010.

                          MAKING A NATIONAL INVESTMENT

        The country's investment in cancer research pales in comparison:
    less than about one-thirtieth of what we spend on cancer care goes into
    research to find new treatments. This month, we celebrated the historic
    arrival of a drug called Gleevec, Novartis Pharmaceuticals' landmark
    new treatment for chronic myelogenous leukemia. That disease,
    inevitably fatal, may now be curable for more than 90 percent of
    patients who suffer from it. Gleevec began as a dream in the laboratory
    of my fellow medical oncologist, Brian Druker. How much time did it
    take to translate Brian's dream into a reality for thousands of
    patients? Less than a decade. Not every miracle for cancer patients is
    going to occur as quickly, but many could if there were a greater
    national investment in such discoveries.
        During the past decade, about five cents of every federal cancer
    research dollar has been directed to prostate cancer, a
    disproportionate sum for a disease that has accounted for about 15
    percent of all new cancer cases and 15 percent of male cancer deaths.
    Congress is beginning to correct that inequity, and I thank you for it.
    But, we must do more.

                      DESTROYING AFRICAN AMERICAN FAMILIES

        We must do more because prostate cancer unequally impacts America's
    African American families. Prostate cancer incidence rates are 35
    percent to 50 percent greater in African American men than among white
    males, and death rates are twice as high.

                           DETECTING THE GENETIC LINK

        We must do more because prostate cancer unequally impacts men who
    have close relatives with the disease. If a man has one close relative
    with prostate cancer, his risk of the disease is double. With two close
    relatives, his risk is fivefold. Should he have three close relatives,
    his likelihood of a prostate cancer diagnosis is nearly certain.

                         PROTECTING MEN IN THE MILITARY

        We must do more because prostate cancer also poses a risk to our
    men in uniform. While we don't know the full impact of prostate cancer
    on our military service, we can posit some estimates. About 85 percent
    of active and reserve uniformed service members are male, about two
    million individuals. If their risks are only average expectable, that
    means that more than 300,000 men will be diagnosed with prostate cancer
    during their lifetimes. But the economic and social ramifications on
    the Department of Defense don't stop there. There are more than eight
    million people in the defense health network worldwide. The cost of
    human and fiscal capital, over time, could be enormous. That's one
    compelling reason to encourage the CDMRP program in prostate cancer to
    thrive.

                         EXPANDING RESEARCH DEVELOPMENT

        The CDMRP program must thrive because it is also unique. Providing
    $135 million to the program in fiscal year 2002 expands its special
    contributions to research idea development, remedies health
    disparities, provides for research consortium development and enhances
    clinical trials--along with funds to support postdoctoral trainees and
    young investigators.

                    MAKING ORGAN SITE SPECIFIC RESEARCH WORK

        Within the research resources of the federal government, the CDMRP
    prostate cancer program is the only one that is organ site specific. I
    can personally attest to the impact the program has had. Since its
    inception in 1997, CDMRP has made fourteen research awards at Johns
    Hopkins, more than $4.2 million, in most of its designated categories.
    As they are at other institutions, these awards are non-duplicative of
    other funding sources.
        First, CDMRP is committed to innovation through its ``Idea
    Development Awards.'' These awards stimulate ``venture research,''
    projects that reward often speculative but promising ideas. In general,
    these projects would not qualify for grants from other federal
    resources, wherein demonstration of ``proof of principle'' is generally
    required. Since these ideas are good, but speculative, they often
    forecast great returns on the investment made. At Hopkins, for example,
    one Idea Development awardee is studying potential drug targeting on a
    specific enzyme affecting prostate cancer cells. This methodology is
    similar to the one that led to a great payoff in Brian Druker's
    laboratory for leukemia.
        CDMRP is committed to correct the unequal burden of prostate cancer
    on America's African American families through its ``Health Disparity
    Awards.'' It is providing funds for research and training to help solve
    the problem, and it is offering collaborative research grants to
    Historically Black Colleges and Universities (HBCU), so that, in
    partnership with other universities and medical centers, prostate
    cancer research opportunities at minority institutions are
    strengthened. At Hopkins, colleagues are searching for biomarkers that
    isolate aggressive prostate cancer in African American men, developing
    survey measures targeting inner-city African American men and studying
    the potential role of African American churches in prostate cancer
    prevention.
        CDMRP is committed to accelerate clinical trials. Fiscal year 2001
    is the first time that CDMRP has received sufficient funding in
    prostate cancer to support clinical research. But the potential impact
    is echoed by the successes of the sister CDMRP program for breast
    cancer research, which uniquely hastened the availability of Herceptin,
    a drug targeted to impact the specific expression of a protein in
    breast cancer cells. The April 1998 business plan submitted by CDMRP to
    Congress indicates that, at the then forecasted full funding level of
    $200 million, the prostate cancer research program could engage in
    significant support for clinical trials. An appropriation of $135
    million next year will energize that effort.
        Perhaps most important, CDMRP is committed to develop new prostate
    cancer research consortia, and it needs more funding to make these
    opportunities thrive. The CDMRP consortium development awards bring
    researchers together from two or more institutions to collaborate on
    research that engages a common theme. Why is this important? It is
    widely recognized that the establishment of centers of research
    excellence hasten efforts to beat any serious disease. These awards
    start the process through the creation of ``virtual centers of
    excellence,'' and they may well pave the way for any single institution
    to receive a SPORE (special program of research excellence) grant from
    the National Cancer Institute (NCI) in future years. That's one
    significant way that research support at DOD and research support at
    NCI synergize a common aim.
        Finally, CDMRP fills another important niche in this nation's
    research efforts to find new treatments for prostate cancer. It has
    become an important contributor to the market forces governing prostate
    cancer research. Those of us who enter this field frequently come into
    it with significant debt accrued from the expensive years of medical
    training. To stay in prostate cancer research, access to research
    funding is crucial. My first three attempts to secure funding from the
    National Institutes of Health (NIH) failed, but there were no
    alternative resources at the time.

                                   CONCLUSION

        CDMRP is one important alternative resource. While maintaining high
    standards of peer review, its application process is far less
    cumbersome than that of other federal agencies. Its focus on breeding
    young investigators and nourishing creative ideas is singular. A good
    friend, Jonathan Simons, and a former colleague at Johns Hopkins, is
    now director of the Winship Cancer Institute of Emory University in
    Atlanta. When Jonathan was considering prostate cancer research as a
    vocation, his friends outside the field told him he would be committing
    ``professional suicide.'' Funds weren't there to sustain a career.
        The CDMRP program has begun to change that. Indeed, Congress's
    growing commitment of federal funds to beat this disease is making a
    big difference. While prostate cancer may not yet be an all-alluring
    field of dreams among biomedical research opportunities, its growth is
    forecasting great new developments. With the right investments, we
    can--and we will--beat prostate cancer.
        On behalf of the millions of American men and family members whose
    lives have been touched--and too often devastated--by this disease, I
    thank you for your continuing commitment to eradicate it.
        Thank you, Mr. Chairman and members of the committee.

        Senator Inouye. Doctor, you can be assured that we will do
    our best.
        Dr. Nelson. Thank you.
        Senator Inouye. Thank you very much.
        Now may I call upon Dr. Rogene Henderson, Lovelace
    Respiratory Research Institute. Dr. Henderson.

    STATEMENT OF ROGENE F. HENDERSON, Ph.D., LOVELACE
                RESPIRATORY RESEARCH INSTITUTE
        Dr. Henderson. Thank you for allowing me to speak to you
    today about a problem shared by defense agencies as well as
    other government agencies and industry. I am speaking of the
    problem of determining how complex mixtures of air pollutants
    contribute to health effects. Defense agencies are attempting
    to understand and deal with exposures of military personnel and
    civilians to mixtures of airborne hazardous materials
    encountered in training and military operations.
        At the present time we do not know how to deal with
    mixtures of pollutants very well. Research and regulation have
    focused on single air contaminants or classes of contaminants.
    Little effort has been spent to understand the effects of
    pollutants as we actually breathe them, that is in complex
    mixtures.
        Let me give examples of pollutant mixtures of concern to
    the military. All services are concerned about emissions from
    engines used to propel vehicles. The Army alone operates the
    Nation's largest fleet of diesel-powered on-road and off-road
    vehicles, including the Nation's largest truck fleet. The Navy,
    through its Naval Sea Systems Command, is concerned with diesel
    emissions from vessels, as is the Coast Guard. The Air Force
    and other services are concerned with emissions of traces of
    toxic materials from heaters, paints, and solvents, and even
    chemical warfare agents.
        In 1998 Congress initiated a multi-agency government-
    industry program, the National Environmental Respiratory
    Center, specifically to attack this problem. The center is
    based at our institute, but also involves researchers at other
    laboratories. The effort is supported by Environmental
    Protection Agency (EPA), Department of Energy (DOE), Department
    of Transportation (DOT), one State, five trade associations,
    and 11 individual corporations.
        We are developing new information comparing the composition
    of specific mixtures with their induced health effects through
    identically designed laboratory studies. These mixtures include
    diesel and gasoline engine emissions, wood smoke, cooking
    fumes, tobacco smoke, road dust, and coal combustion emissions.
    Over 400 components of the mixtures and 200 health effects are
    being measured.
        This database will allow statistical analyses that will
    point towards the components and their combinations that are
    associated with different health effects. Beyond this program,
    our institute offers additional resources that have been used
    by the DOD during recent years to study issues such as
    detecting airborne chemical-biological hazards, the composition
    of emissions from heaters in field tents, the long-term effects
    of retained depleted uranium fragments, and the long-term
    effects of inhaling small amounts of the nerve gas sarin.
        We are discussing several additional projects with the
    military. For example, we observed that a month after an
    exposure to a level of sarin that caused no measurable
    immediate effects in rats, neuroreceptors in the hippocampus of
    the brain were altered. This is the region of the brain
    associated with memory. We also observed a depression in the
    activity of cells in the immune system. These findings warrant
    follow-up to determine the long-term implications and the level
    of exposure to cause these effects.
        We are also focusing on acute respiratory distress syndrome
    (ARDS), a rapidly developed accumulation of fluid in the lungs
    that accompanies shock and injury. ARDS is responsible for many
    deaths of wounded personnel, who survive to leave the
    battlefield but later die.
        Mr. Chairman, we seek the encouragement of this committee
    for the Department of Defense through the Army to establish a
    cooperative agreement with the Lovelace Respiratory Research
    Institute to participate in the National Environmental
    Respiratory Center and other military-related research at
    Lovelace in an ongoing, iterative working relationship with the
    agency.
        Thank you.
        [The statement follows:]

                PREPARED STATEMENT OF ROGENE F. HENDERSON, PH.D.

        Thank you for allowing me to draw your attention to a problem
    shared by several Defense agencies. I'm speaking of the so-called
    ``mixture'' problem, a simple name for the difficulty of determining
    how individual air contaminants contribute to the health effects of
    exposure to complex mixtures of air contaminants. Defense agencies are
    attempting to understand and deal with exposures of military personnel
    and civilians to traces of airborne hazardous materials encountered
    together with other exposures in training and military operations. This
    is something that we can't do well at the present time.
        Let me give an example. All services are concerned about emissions
    from propulsion systems for vehicles. The Army alone operates the
    nation's largest fleet of diesel-powered on-road and off-road vehicles,
    including the nation's largest truck fleet. This is why its Tank-
    Automotive and Armaments Command (TACOM) is a major partner with other
    agencies and industry in the 21st Century Truck Program, in part to
    identify and reduce the most hazardous components of diesel emissions.
    The Navy, through its Naval Sea Systems Command, is concerned with
    diesel emissions from vessels, as is the Coast Guard. The Air Force and
    the other services are concerned with aircraft emissions. All services
    have concerns for exposure to traces of other airborne toxic materials
    ranging from heater emissions, to paints and solvents, to chemical
    warfare agents.
        These issues have a common root problem: our poor understanding of
    the health hazards presented by individual components of complex
    mixtures of air contaminants. This issue also plagues other federal
    agencies, state and local governments, and industry. Research has
    focused on single air contaminants, classes of contaminants, or source
    emissions one at a time. Little effort has been spent to understand the
    effects of traces of pollutants as they are actually breathed in
    complex mixtures. We have poor ability to determine which contaminants
    or combinations of contaminants cause which health effects and what
    levels are hazardous. This problem is not new, but it has been
    sidestepped because of its daunting complexity. We can't possibly study
    every combination of air contaminants!
        A multi-agency, government-industry program, the National
    Environmental Respiratory Center, was initiated by Congress
    specifically to attack this problem. Based at our Institute but also
    involving researchers at other laboratories, this effort is supported
    by EPA, DOE, DOT, one state, five trade associations, and 11 individual
    corporations.
        We are developing new information on mixture composition vs. health
    by identically designed laboratory studies of several complex mixtures,
    including diesel and gasoline engine emissions, wood smoke, cooking
    fumes, tobacco smoke, road dust, and coal combustion emissions. Over
    400 composition variables and 200 health variables are being measured.
    This database will support the kind of statistical analyses that will
    point toward the components and their combinations that are associated
    with different health effects in a way that is impossible using data
    from past laboratory and epidemiological studies. This strategy will
    require approximately $6 million/year for 6 years to complete--a large
    sum, but not so large if spread across the stakeholders.
        Beyond this program, our Institute offers resources that have been
    accessed by DOD during recent years to study issues such as detecting
    airborne chemical/biological hazards, the composition of emissions from
    heaters in field tents, the long-term effects of retained depleted
    uranium fragments, and the long-term effects of inhaling small traces
    of the nerve agent Sarin. We are discussing additional projects. For
    example, we observed that a month after an exposure to Sarin that
    caused no measurable immediate effects, neural receptors in the brain
    hippocampus were altered. This is the brain region associated with
    memory. We also observed a depression of cells in the immune system.
    These findings warrant follow-up to determine long-term implications
    and the level of exposure required to cause the effects. We are also
    focusing on the ``acute respiratory distress syndrome'', a rapidly-
    developing accumulation of fluid in the lung that often accompanies
    shock and injury, and is responsible for many deaths of battlefield
    wounded that survive to leave the battlefield, but die later.
        Mr. Chairman, we seek the encouragement of this Committee for the
    Department of Defense, through the Army to establish a cooperative
    agreement with the Lovelace Respiratory Research Institute to
    participate in the National Environmental Respiratory Center, and other
    research, in an ongoing, iterative working relationship with the
    Agency.
        Thank you.

        Senator Inouye. Thank you very much, doctor. Where is
    Lovelace located?
        Dr. Henderson. It is in Albuquerque, New Mexico, on
    Kirtland Air Force Base.
        Senator Inouye. Thank you very much.
        Now may I call upon Martin B. Foil, National Brain Injury
    Research Treatment and Training Foundation. Mr. Foil.

    STATEMENT OF MARTIN B. FOIL, JR., NATIONAL BRAIN INJURY
                RESEARCH, TREATMENT AND TRAINING FOUNDATION

        Mr. Foil. Good morning, Senator Inouye. It is nice to see
    you again, sir. I appreciate your allowing me to be here.
        My name is Martin Foil. I am the father of a man with a
    severe brain injury. I sit on the boards of the National Brain
    Injury Research, Treatment and Training Foundation and on the
    John Jane Brain Injury Center. I am the immediate Past Chairman
    of the International Brain Injury Association (BIA) and for
    many years served as Chairman of the BIA here in the United
    States.
        On behalf of my son and the thousands of military personnel
    that receive brain injury treatment and services annually, I
    respectfully request that $5 million be added to the DOD's
    health affairs budget for the operation and maintenance for the
    defense and veterans head injury program. This would be in
    addition to the $7 million already in the budget, thus a total
    of $12 million.
        Good morning, Mr. Chairman.
        Senator Stevens [presiding]. Good morning, sir.
        Mr. Foil. A total of $12 million for the fiscal year 2002.
        Brain injury is a major national problem that
    disproportionately affects the Nation's young service men and
    women. It is the leading cause of death and disability in young
    Americans. Approximately one and a half to two million injuries
    occur each year. Ninety thousand injuries lead to long-term and
    severe disability. Males from the ages of 14 to 24 have the
    highest incidence.
        Under the leadership of Defense Secretary Cheney, the
    Defense and Veterans Head Injury Program (DVHIP) was
    established when it became apparent after the Gulf War that
    there was no overall systematic program for providing brain
    injury-specific care and rehabilitation within the DOD and the
    Department of Veterans Affairs (DVA), and as a result our
    service men and women now receive brain injury care and
    rehabilitation second to none in the world.
        The DVHIP is a significant contribution to the health of
    the United States military and veteran populations. It is a
    component of the defense military health system, providing
    direct care at military treatment facilities and veterans
    hospitals throughout the Nation.
        While there is a research component to the program, the
    primary purpose is to provide state of the art medical care to
    personnel sustaining concussions and more severe brain injury
    while on active duty. The purpose is to get them back to work
    or to appropriate rehabilitation as soon as possible.
        This program strengthens our Nation's military readiness by
    helping service members get appropriate care and return to
    duty. Combat readiness requires spilt-second decisions to be
    made as to whether a soldier is capable of returning to his
    post. Assessing the extent of the injury and functional
    capacity of the injured military personnel is critical,
    especially in the use of sophisticated weapons systems. Just as
    important, if not more important, our treatments help determine
    which injured personnel are not capable of returning to their
    post.
        I am pleased to report that through the DVHIP the DOD
    realizes significant savings in medical and retirement costs.
    The cost of a brain injury in a young adult may cost $4 million
    over a lifetime. I have expended more than that on my son. DOD
    saves millions if only three service men are treated by this
    program.
        I respectfully request your support for the $5 million in
    the DOD appropriations bill under health affairs for operation
    and maintenance, for a total of $12 million for fiscal year
    2002. We are always grateful for your support for the project
    over the years and hope you will again support our efforts to
    provide the best care possible for our Nation's men and women
    in uniform. I will answer any questions.
        [The statement follows:]

                   PREPARED STATEMENT OF MARTIN B. FOIL, JR.

        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 serve
    on the Board of Directors of the National Brain Injury Research,
    Treatment and Training Foundation (NBIRTT) \1\ and the John Jane Brain
    Injury Center (JJBIC).\2\ I am the immediate past Chairman of the
    International Brain Injury Association \3\ (IBIA) and also previously
    served as Chairman of the national Brain Injury Association (BIA).\4\
    Professionally, I am the Chief Executive Officer and Chairman of
    Tuscarora Yarns in Mt. Pleasant, North Carolina.\5\
    ---------------------------------------------------------------------------
        \1\ NBIRTT is a non-profit national foundation dedicated to the
    support of clinical research, treatment and training. It coordinates
    the non-governmental programs of the Defense and Veterans Head Injury
    Program.
        \2\ JJBIC in Charlottesville, Virginia, provides brain injury
    rehabilitation to military retirees, veterans and civilians through an
    innovative and cost effective day treatment program.
        \3\ IBIA is a non-profit organization that represents medical and
    clinical professionals as well as persons with brain injury and family
    members dedicated to improving treatment and rehabilitation for persons
    with brain injury throughout the world.
        \4\ BIA is a national, non-profit organization dedicated to serving
    persons with brain injury, their families and caregivers in all 50
    states and the territories.
        \5\ I receive no compensation from this program. Rather, I have
    raised and contributed millions of dollars to support the non-
    governmental components of this program.
    ---------------------------------------------------------------------------
        On behalf of the thousands of military personnel that receive brain
    injury treatment and services annually, I respectfully request that $5
    million be added to the Department of Defense (DOD) Health Affairs
    budget for Operation and Maintenance for the Defense Brain and Spinal
    Cord Injury Program (DBSCIP). This would be in addition to the $7
    million provided in the Department of Defense's budget, thus DBSCIP
    funding would total $12 million for fiscal year 2002.
        I appreciate the opportunity to provide testimony regarding this
    important program which is a collaborative effort among DOD, Veterans
    Affairs (DVA), the Henry M. Jackson Foundation and NBIRTT. Last year,
    the Uniformed Services University of the Health Sciences (USUHS)
    changed the name of the Defense and Veterans Head Injury Program
    (DVHIP) to DBSCIP to reflect the collaborative research on spinal cord
    injury being done at the University. In addition, this year the
    National Brain Injury Research Treatment and Training Foundation
    (NBIRTT) has joined the effort to assist in coordinating the non-
    governmental aspects of the program through the use of its Scientific
    Advisory Board and to share some of its privately funded research
    findings with the DBSCIP. This testimony only reflects the work on
    brain injury through the DVHIP and its civilian partners, yet requests
    full funding for the entire DBSCIP.

    The Defense and Veterans Head Injury Program (DVHIP)
        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. The program was created after the Gulf War in 1991, when
    it became apparent that there was no overall systemic program for
    providing brain injury specific care and rehabilitation within DOD or
    DVA. With the leadership of Defense Secretary Richard Cheney and the
    Congress, the DVHIP was established, and as a result, our service men
    and women now receive brain injury care and rehabilitation second to
    none in the world.
        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 is a prime example of a dual use project that contributes
    significantly to U.S. military readiness. The program not only treats
    active duty military personnel who sustain brain injuries each year and
    helps them return to duty, but the DVHIP serves as an important
    resource to veterans and the civilian population as well. Nationwide,
    there are some 1.5 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.

    DVHIP and Military Readiness
        An important goal of the DVHIP is to address basic questions
    relating to active duty military personnel sustaining brain injuries,
    including acute care and the combat casualty process, but the greatest
    impact on readiness is the assessment of mild brain injury on combat
    performance. The DVHIP has developed basic combat casualty care
    protocols (including penetrating head injury) that can ensure
    treatments for brain injury are available in the field.
        The DVHIP is a program of integrated care combined with
    translational research--the purpose is to use DVHIP research findings
    on the battlefield. Combat readiness requires split second decisions to
    be made as to whether a soldier is capable of returning to his post.
    Assessing the extent of brain injury and functional capacity of injured
    military personnel is critical, especially with the use of
    sophisticated weapon systems.
        The DVHIP maintains an extensive historical military TBI archive,
    including WWI, WWII (Okinawa Campaign), Korean War, Vietnam War and
    Gulf War TBI medical records. The Vietnam War data include paper and
    computerized records of Phases I and II of the Vietnam Head Injury
    Study (VHIS) that have led to numerous publications. The DVHIP also
    includes a simple, updated Head and Spinal Combat Injury Registry form
    similar to that used by the Vietnam Head Injury Study. The registry has
    been approved by the Joint Committee of Military Neurosurgeons of the
    American Association of Neurological Surgeons and Congress of
    Neurological Surgeons and is ready for deployment in time of war. Early
    identification of injured soldiers will not only assist in immediate
    readiness efforts, but will facilitate long term management as well as
    the study of TBI resulting from battlefield operations.

    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,\6\ 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. Highlights of the program
    include:
    ---------------------------------------------------------------------------
        \6\ 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.
    ---------------------------------------------------------------------------
      --DVHIP maintains brain injury patient registries at each of the
            primary and secondary centers. The registry now includes some
            9,000 patients, over 1,600 of whom have been added in 2000. The
            DVHIP registry includes mostly participants from DVHIP centers,
            but is working to expand to the entire military and veterans
            medical systems.
      --A TBI treatment and referral algorithm was designed to assist
            primary caregivers in the management and referral of their
            patients with TBI. This now has been implemented at DVHIP sites
            and disseminated throughout the DVA medical system.
      --A broad education and referral network has been created which
            includes providers from all branches of the military.

    DVHIP's ``Learn as We Treat'' Site Projects
        The combat training and sports TBI program identifies the impact of
    mild TBI on military performance and develops 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.
        The site at Camp Pendleton incorporates a surveillance system for
    concussive injury into an operational setting, provides continuous
    education to primary medical providers, and has collected pilot data
    using a screening battery on patients with Grade 3 concussive injuries.
        The DVHIP program at Walter Reed Army Medical Center, using
    telemedicine, conducted a briefing on TBI for all Army psychology
    services worldwide.
        A third randomized trial is ongoing at Wilford Hall Air Force
    Medical Center focusing on military personnel with acute mild TBI. The
    study 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.
        The DVHIP site at the Naval Medical Center, San Diego provides
    outpatient evaluations and case management services to TBI survivors
    across the entire range of severity of injury.
        The lead veterans' centers are conducting a randomized controlled
    study comparing in-hospital cognitive therapy to in-hospital functional
    rehabilitation for individuals with more severe TBI. The primary
    outcome measures are return to work and level of independence at one
    year post injury.
        DVHIP has developed three neuroprotective trials for service men
    and women with both severe and mild TBI. Focusing on combat training
    injury in Marines at Camp Pendleton, these studies utilize safe and
    inexpensive compounds--pyruvate and niacinamide--to protect energy
    metabolism in the injured brain.
        A TRICARE demonstration project providing specialized treatment
    reimbursement and rehabilitation of military beneficiaries at four lead
    veterans sites is being continued.
        In June, 2000, the results of the WRAMC Randomized Controlled Trial
    of Cognitive Rehabilitation were published in the Journal of the
    American Medical Association. Participants in this study had a 90
    percent return-to-work rate and 67 percent returned to active duty.

    NBIRTT and Translational Research
        The National Brain Injury Research Treatment and Training
    Foundation is a great addition to the program. As a national foundation
    dedicated to the support of clinical research, treatment and training,
    it makes available the results of private sector research grants to
    support DVHIP objectives. NBIRTT works closely with the Henry M.
    Jackson Foundation and USUHS to coordinate the non-governmental
    programs of the DVHIP (the work of JJBIC, IBIA and BIA). NBIRTT's
    Scientific Advisory Board reviews the non-governmental partners'
    activities to assure that all efforts are or can be militarily related
    and consistent with the principles and goals of the DVHIP.
        Many of the Foundation's Board Members have been personally
    affected by brain injury, including Jim and Sarah Brady and Felicia and
    Byron Rubin of Texas. The Rubin Family has contributed millions of
    dollars toward research on brain injury and will continue to do so.
    These resources enhance the work of the DVHIP and help assure that
    federal funds are used primarily for treatment of military personnel
    and veterans.

                IBIA/JJBIC 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 and the John Jane Brain Injury Center in
    Charlottesville, Virginia assists in the three major components of the
    DVHIP: clinical treatment, clinical research and clinical training:
      --IBIA/JJBIC/DVHIP supports research and treatment to address
            neurobehavioral problems that affect return to work and fitness
            for duty.
      --The IBIA is sponsoring the development of evidence based practice
            guidelines for the treatment of mild traumatic brain injury,
            neuroimaging in brain 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 21st 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/JJBIC/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/JJBIC/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.

                BIA Services--Information and Resources
        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 members seeking
    assistance for brain injury treatment, placement, rehabilitation, and
    general information. In particular, BIA does the following:
      --BIA maintains a nationwide 1-800 help line, staffed by trained
            specialists. 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's Brain Injury Resource Center (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.\7\
    ---------------------------------------------------------------------------
        \7\ 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.
    ---------------------------------------------------------------------------

    Conclusion
        The DVHIP is a significant contribution to the health of the United
    States military and veteran populations. Using the principle ``learn as
    we treat,'' the program has three major components: clinical treatment,
    research and training. The goal is to maximize the potential of
    military personnel, assist able soldiers to return to duty, and conduct
    translational research that will revolutionize care on the battlefield.
        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 DOD significant medical and retirement costs.
        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
    NBIRTT 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 $5 million for fiscal year 2002
    in DOD Health Affairs for Operation and Maintenance to continue this
    important program (at a total funding level of $12 million).

        Senator Stevens. Thank you very much.
        Senator Inouye, I appreciate your courtesy.
        Mr. Foil. Thank you so much for allowing us to be here.
        Senator Stevens. Dr. Ko, National Security Research.

    STATEMENT OF HARVEY KO, Ph.D., COALITION FOR NATIONAL
                SECURITY RESEARCH

        Dr. Ko. Good morning, Mr. Chairman and members of the
    subcommittee. My name is Harvey Ko. I have over 28 years of
    experience in classified DOD programs. I am presently the Chief
    Scientist for Counterproliferation at the Johns Hopkins
    University Applied Physics Laboratory.
        I am here to testify today on behalf of the Coalition for
    National Security Research (CNSR), a broadly based group of
    scientific, engineering, mathematical, and behavioral
    societies, universities, and industrial associations committed
    to a stronger defense science and technology base. The CNSR
    strongly supports DOD's science and technology (S&T) programs
    across all defense organizations, especially those defense
    research programs providing support to our Nation's
    universities. These programs are the foundation of the
    Department's research, development, test and evaluation
    activity.
        I want to express deep appreciation for the committee's
    past support for the fiscal year 2001 funding approved for
    these programs. We urge the subcommittee to approve robust and
    stable funding for these basic, applied, and advanced
    technology development elements in fiscal year 2002.
    Specifically, CNSR joins many other organizations in urging the
    subcommittee to increase the S&T program to $10 billion in
    fiscal year 2002, a funding target consistent with numerous
    program and Department review, including recommendations made
    by the Defense Science Board.
        With consideration of the fiscal year 2002 budget, it is
    important to recognize the critical role that Department of
    Defense science and technology plays in ensuring the future
    national security of the United States and the safety and
    effectiveness of our soldiers, sailors, airmen, and marines.
    Simultaneously, these defense science programs contribute to
    the research enterprise of the country, especially the
    education of tomorrow's scientists and engineers.
        I would like to now take a few moments to give you an
    example of the return on investment of these DOD programs. In
    response to the need to deter and counter the use of biological
    and chemical weapons of mass destruction, the Applied Physics
    Laboratory of the Johns Hopkins University is working under
    Defense Advanced Research Projects Agency (DARPA) sponsorship
    to develop and test new technologies that will protect both
    military and civilian populations.
        Advanced time of flight mass spectrometer instruments are
    being developed and tested to be able to detect a broad range
    of biological pathogens and chemical warfare agents. Background
    environmental characterization and biosurveillance networks are
    being tested to measure behavior in a population that could
    signal the possible use, terrorist use of biological and
    chemical warfare agents. The background characterization helps
    us to understand the nature of the background fluctuations, to
    differentiate naturally occurring phenomena such as seasonal
    flu from anomalous events like the West Nile Virus and man-made
    biological threats introduced by terrorists.
        Such systems will inform government when such events occur,
    help decide the proper course of action, and reassure the rest
    of the unaffected population.
        New biosurveillance networks are using information-based
    architectures, sampling data from local medical,
    pharmaceutical, and veterinary sources. Sophisticated signal
    processing techniques, such as those we have used in anti-
    submarine warfare, are being used to collate this information
    in a positive fashion.
        Collectively, these developments will give us the
    capability to deal with today's threat spectrum and future
    emerging threats.
        In closing, I want to thank again the subcommittee for its
    continued support of defense science and technology and for the
    opportunity to appear here today on behalf of the Coalition of
    National Security Research. We look forward to assisting you in
    any way possible. Thank you.
        [The statement follows:]
        Senator Stevens. Thank you very much, Dr. Ko.

                      PREPARED STATEMENT OF DR. HARVEY KO

        Good morning Mr. Chairman and Members of the Subcommittee, my name
    is Dr. Harvey Ko. I have 28 years of experience with DOD research
    programs and am currently Chief Scientist for Counterproliferation at
    the Johns Hopkins University Applied Physics Laboratory. I am here to
    testify today on behalf of the Coalition for National Security
    Research, a broadly based group of scientific, engineering,
    mathematical and behavioral societies, universities and industrial
    associations committed to a stronger defense science and technology
    base.
        CNSR strongly supports DOD's S&T programs across all defense
    organizations, especially those defense research programs providing
    support to our nation's universities. These programs are the foundation
    of the Department's Research, Development, Test and Evaluation (RDT&E)
    activity. I want to express deep appreciation for the Committee's past
    support and for the fiscal year 2001 funding approved for these
    programs. We urge the subcommittee to approve robust and stable funding
    for these basic (6.1), applied (6.2) and advanced technology
    development (6.3) elements in fiscal year 2002. Specifically, CNSR
    joins many other organizations in urging the subcommittee to increase
    the S&T program to $10 billion in fiscal year 2002, a funding target
    consistent with numerous program and department reviews including
    recommendations made by the Defense Science Board.
        Despite substantial appreciation for the importance of DOD S&T
    programs on Capitol Hill, total research within DOD declined by over 24
    percent in constant dollars during the last decade. This decline poses
    a real threat to America's ability to maintain its competitive edge in
    the long term, as warfare becomes increasingly technology- and
    information-based. As you know, the President proposes to increase
    defense R&D programs by $20 billion over five years, including $2.6
    billion in fiscal year 2002. Although the administration did not
    specify which R&D accounts would receive increases, we strongly
    recommend that enough of this proposed increase be directed to the core
    S&T research accounts to achieve the $10 billion funding target, an
    increase which will continue the positive trend started in fiscal year
    2001 and allow for both preparation and protection of the men and women
    in our future military.

    Partnerships
        Basic research is of critical strategic value to all of DOD and
    important to maintaining the relationship between DOD, other federal
    agencies, and the university research community. The Department's
    investment in S&T, which comprises about 25 percent of the overall
    RDT&E line, is executed through a partnership among the Defense
    Agencies, service laboratories, universities, industry and
    international collaborations. Each member of the partnership provides
    its own unique capabilities and strengths. Universities perform roughly
    60 percent of all basic S&T for the Department of Defense. These
    partnerships have resulted in enormous benefit to all parties involved
    by significantly advancing the frontiers of knowledge in service of our
    military.

    The Need for DOD S&T
        With consideration of the fiscal year 2002 budget, it is important
    to recognize the critical role DOD S&T plays in ensuring the future
    national security of the United States and the safety and effectiveness
    of our soldiers, sailors, airmen, and marines. Simultaneously, these
    defense science programs contribute to the research enterprise of the
    country and the education of tomorrow's scientists and engineers. The
    Department provides a critical investment in several disciplines
    including engineering, physical, math, computer and behavioral sciences
    vital to our future national security.
        The challenges of a new era--in homeland defense, asymmetric
    threats, infrastructure protection, and disruptive technologies, among
    others--place an even more important emphasis on enhanced battlefield
    awareness and increased warfighter protection. From an R&D standpoint,
    DOD must maintain focus on both the near-future readiness and
    modernization needs of the department and on the long-term future needs
    of the warfighter, ten and twenty years from now. Throughout this
    century, our most significant military achievements have derived from
    the transforming discoveries of science and the development of new
    technological capabilities enabled by science. Future military
    capabilities will rest on our commitment to making significant
    investments in science and technology, which has provided the technical
    basis for the strong economic growth of the United States over the past
    30 years. DOD research programs provide new knowledge and understanding
    in science and engineering fields that underpin national defense. This
    research creates new opportunities to enhance capabilities of future
    military systems and to make them easier and less expensive to
    manufacture, operate and maintain.
        As you are aware, previous investments in defense science and
    technology have led to breakthrough developments in areas such as
    distributed networking, advanced materials, global navigation,
    precision guidance, and stealth technology that have equipped America's
    men and women in uniform with the finest technologies in the world.
    Current research in remotely-operated mini-robots, remote medicine,
    chemical and mechanical sensors, large scale battlefield simulations
    and advanced data memory systems will protect the warfighters of the
    future by removing them from harm's way, providing on-site emergency
    medical care, identifying dangerous environments, improving training
    and speeding data availability and usability.
        The support of this subcommittee is critical to ensuring that we
    maintain a viable S&T base to meet our future security needs on land,
    in the air, and at sea.

    DOD S&T Results for National Security and Domestic Applications
        Now I would like to take a moment to highlight a few examples of
    the return on investments in basic R&D provided to DOD and the nation.
    I know you will all recognize some of these successes, but some might
    be less well known. I will start with some examples from my own
    institution.
        In response to the need to deter and counter the use of biological
    and chemical weapons of mass destruction, the Applied Physics
    Laboratory of the Johns Hopkins University is working under DARPA
    sponsorship to develop and test new technologies that will protect both
    military and civilian populations. Advanced Time-of-Flight Mass
    Spectrometer instruments are being tested to rapidly detect a broad
    range of biological pathogens and chemical warfare agents. Background
    Environmental Characterization and Biosurviellance networks are being
    tested to measure anomalous behavior that could signal the terrorist
    use of biological and chemical warfare agents. These developments will
    give us the capability to deal with today's threat spectrum and future
    emerging threats.
        The University of South Carolina, through its DEPSCoR-supported
    Industrial Mathematics Institute (IMI), has developed algorithms and
    software that enable the rapid display, querying and registration of
    Digital Terrain Maps. This software is of potential value in mission
    planning, autonomous and semi-autonomous navigation, rapid targeting
    and post battlefield assessment.
        A DOD-funded researcher at the University of California at
    Berkeley, using a pair of Plexiglas wings he called ``Robofly,'' for
    the first time provided a comprehensive explanation of how insect fly.
    The research could lead to the development of tiny flying devices that
    could be dispatched in swarms to spy on enemy forces.
        Improved energy efficiency throughout the Defense Department and
    its mission activities--testing, training, operations, facilities--has
    the potential to save the federal government, and in turn the taxpayer,
    millions per year. Fuel cells are among the most promising sources of
    clean energy needed for numerous civil and military devices. The
    development of efficient electrocatalysts is essential to the
    improvement of fuel cell performances. Researchers at the University of
    South Carolina, supported by DOD S&T funding, are applying theoretical
    and computation methods to the understanding of electrocatalysis,
    focusing on the electron reduction of oxygen on platinum electrodes.
        No one foresaw the enormous range of applications and whole
    industries that have evolved from the Defense-sponsored discovery of
    lasers. The basic concepts leading to the development of the laser were
    discovered in a microwave research program at Columbia University
    funded by the three Services. Lasers were combined with transistors and
    the billion-dollar fiber optic industry resulted. Fiber optic
    communications, compact disk players, laser printers, procedures to
    reattach eye retinas and new cancer surgeries all exist because of
    these breakthroughs, the result of defense basic research.
        In response to threats due to inadequate or outdated mission
    terrain mapping tools, the Georgia Institute of Technology developed
    Falcon View, a laptop-mapping software. Designed for the U.S. Air
    Force, U.S. Special Operations Command and the U.S. Navy, Falcon View
    integrates aeronautical charts, satellite images and other data to
    provide detailed, up-to-date data imagery to flight crews conducting
    mission planning using a relatively simple laptop computers. The system
    is credited with reducing typical mission planning time from seven
    hours or more down to twenty minutes.
        DARPA and ONR-sponsored researchers at Duke University Medical
    Center and the Massachusetts Institute of Technology have tested a
    neural system in animals that utilizes implanted electrodes to assist
    brain signals in controlling robotics. Scientists transmitted the brain
    signals over the Internet, remotely controlling a robot arm 600 miles
    away. The recording and analysis system could form the basis for a
    brain-machine interface that would allow paralyzed patients to control
    the movement of prosthetic limbs. The finding also supports new
    thinking about how the brain encodes information, by spreading it
    across large populations of neurons and by rapidly adapting to new
    circumstances.
        The Applied Physics Laboratory of the University of Washington,
    Seattle, has developed under U.S. Navy sponsorship, a high resolution,
    imaging sonar for underwater mine detection and identification in poor
    visibility waters such as those commonly encountered in ports and
    harbors. The unique sonar, based on acoustic technology that mimics the
    optical lens and retina of the human eye, produces a picture-like
    image. One version of the sonar is designed to be the ``eyes'' of the
    unmanned, autonomous, underwater vehicles being developed for mine
    clearance and special operations. A hand-held version enables a diver
    to easily and accurately distinguish between mines and false targets
    such as mine-like debris, and to identify specific mine types in zero-
    visibility water. It is intended to assist Special Forces and Explosive
    Ordnance Disposal teams and is presently being used in Bahrain.
        In the late 1960's, DOD-initiated research to explore linking
    computers in different geographical locations to improve communication
    between their users. The research produced the world's first packet-
    switched network, the ARPANET, which connected major universities. As a
    result, more and more people gained access to more powerful computers.
    Innovation in network design and improved research spawned a new breed
    of information scientists who expanded the network to every corner of
    the country and the world. Electronic mail, which was considered
    earlier to be of minor interest to users, has become the most used
    service of computer networks. Through ARPANET, defense basic research
    made it possible to launch the National Information Infrastructure.

    Conclusion
        In closing, I want to again thank the subcommittee for its
    continued support of Defense S&T and for the opportunity to appear here
    today on behalf of CNSR and its members. The Coalition for National
    Security Research looks forward to assisting you in any way possible.

        Senator Stevens. Next, Harold Grimes, National Commander of
    the Uniformed Services Disabled Retirees. Good morning, sir.

    STATEMENT OF HAROLD G. GRIMES, SR., NATIONAL COMMANDER,
                UNIFORMED SERVICES DISABLED RETIREES

        Mr. Grimes. Good morning, Mr. Chairman, Mr. Inouye, members
    of the Appropriation Committee. I am pleased to have this
    opportunity to appear before you to convey issues and concerns
    of American disabled military retirees, men and women who have
    given most of their adult life in the service of their country
    and the people of this great Nation.
        Before I discuss the issues of concern facing the disabled
    military retirees, let me convey the thanks of all Uniformed
    Services, Disabled Retirees (USDR) members and 400,000 plus
    disabled military retirees and 28 million veterans of this
    country. Your continued support of this committee for uniformed
    services disabled retirees has one major purpose and that is to
    allow disabled retirees to live out their lives in dignity and
    honor which they truly earned.
        Our organization and Representative Michael Bilirakis of
    Florida have tried for more than 20 years to pass the issue of
    concurrent receipt. The Congress for this period of time has
    contended that because of large national deficits it was
    impossible to allow the passage of H.R. 303, concurrent
    receipt. Now, with the support and help of Senator Harry Reid
    of Nevada, there is tremendous strength and support in the
    Senate and House, with Bills H.R. 303 and Senate Bill 170. We
    now feel that, with the large surpluses and the support which
    USDR and all the national veterans organizations have gained in
    both Houses, that we must ask that the Appropriations Committee
    do whatever is necessary to allocate the moneys for the passage
    of these important bills.
        The passage of concurrent receipt will be an asset in many
    ways. The earned retirement dollars that would be paid to
    disabled veterans will be taxed in most cases and 25 percent of
    those revenues will be returned to the U.S. Treasury in tax
    dollars of one-half a billion dollars or more. The cost of
    military recruiting can be affected at a savings of millions of
    dollars now being spent needlessly because of the lack of
    support of the military retiree community. The loss of our
    support and help because of this issue and the loss of other
    benefits has helped cause the lack of recruits for today's
    military and a cost that is unwarranted.
        Mr. Chairman, the disabled military retiree is the only
    government employee or agency that is asked to undergo such
    discrimination. Because of this injustice, it has placed undue
    hardships upon the men and women who have given more to their
    country than anyone else, only to be put on the back shelf and
    forgotten because of an archaic law that should have been
    rescinded years ago.
        We ask for our retirement that has been earned as an
    entitlement for 20 years or more of arduous service to the
    United States of America. Additionally, we ask for the VA
    service-connected disability award, which is a completely
    different issue and benefit than retirement pay. It is awarded
    as compensation for injuries and illness contracted during
    those years of service to his or her country.
        The Congress of 1984 saw fit to pass a bill to establish a
    military retirement trust fund administered by the Department
    of Defense and--correction, administered by Department of
    Treasury, for all who served honorably for 20 or more years.
    There has also been established a VA compensation program to
    pay disability for pain and suffering to those who were
    disabled in service to this great Nation.
        VA compensation is still granted and being paid, but only
    the military retiree is told to pay his own disability for his
    earned retirement entitlement. We currently have a majority of
    support from both houses of the Congress, but still have been
    unable to get a bill to the floor for a favorable vote.
        I ask, Mr. Chairman, that your committee take whatever
    actions are necessary to make funds available to fund this
    entitlement and also the VA benefit. This issue has lingered on
    far too long and has been put off by delaying actions and
    tactics such as Mr. Matt Thornberry's action taken this year in
    the House to have the House once again send it to the
    Secretary.
        Senator Stevens. Mr. Grimes, I am sorry to tell you your
    time has expired. Besides that, this is an entitlement. This
    committee has nothing to do with that other than to vote on the
    floor. That is not within the jurisdiction of our committee to
    fund. I am sorry, I think you know that. I appreciate your
    appearance. Thank you very much.
        Mr. Grimes. Thank you, sir.
        [The statement follows:]

                  PREPARED STATEMENT OF HAROLD G. GRIMES, SR.

        Messrs, Chairman and members of the Appropriations Committee: I am
    pleased to have this opportunity to appear before you to convey issues
    and concerns of Americas' Disabled Military Retirees, men and women who
    have given the best years of their adult life in the service to their
    country and the people of this great nation.
        Before I discuss the issues of concern facing the Disabled Military
    Retiree, let me convey the thanks of all USDR members and the 400,000
    plus Disabled Military Retirees for the continued support of you and
    your committee.
        The Uniformed Services Disabled Retirees has one major purpose, and
    that is to allow all Disabled Retirees to live out their lives in
    dignity and honor, which they truly earned. Our organization and
    Representative Michael Bilirakis of Florida have tried for more than
    twenty years to pass the issue of con-current receipt. The Congress for
    this period of time has contended that because of large National
    deficits it was impossible to allow the passage of H.R. 303, Con-
    Current Receipt. Now with the support and help of Senator Harry Reid of
    Nevada there is tremendous strength and support in the Senate and House
    with bills H.R. 303 and S. 170. We now feel that with the large surplus
    and the support which USDR and all of the National Veterans
    Organizations have gained in both houses, that we must ask that the
    Appropriations Committee do what ever is necessary to allocate the
    monies for the passage of these most important bills. The passage of
    con-current receipt will be an asset in many ways. i.e. the earned
    retirement dollars that will be paid out to disabled veterans will be
    taxed in most cases at 25 percent level and add revenues of one-half
    billion dollars or more to the U.S. Treasury--the cost of military
    recruiting can be affected at a savings of millions of dollars now
    being spent needlessly because of the lack of support from the military
    retirement community. The loss of our support and help because of this
    issue and the loss of other benefits has helped caused the lack of
    recruits for todays military and a cost that is unwarranted.
        Mr. Chairman, the Disabled Military Retiree is the only government
    employee or agency that is asked to under-go such discrimination.
    Because of this injustice it has placed undue hardships upon the men
    and women who have given more than anyone, to their country only to be
    put on the back shelf and forgotten because of an archaic law that
    should have been rescinded years ago. We ask for our Retirement that
    has been earned as an entitlement for 20 or more years of arduous
    service to the United States of America, additionally we ask for the VA
    Service Connected Disability Award, which is a completely different
    issue and benefit than Retirement Pay, is awarded as compensation for
    injuries and illnesses contracted during those years of service to his/
    her country.
        The Congress of 1984 saw fit to pass a bill to establish a military
    retirement trust fund administered by the Department of the Treasury
    for all who served honorably for 20 years or more. There has also been
    established a VA compensation program to pay disability for pain and
    suffering to those who were disabled in the service of this great
    nation. VA compensation is still granted and being paid but only the
    military retiree is told to pay his own disability from his earned
    retirement entitlement.
        We currently have a majority of support from both Houses of
    Congress but still have been unable to get a bill to the floor for a
    vote. I ask Mr. Chairman, that your committee take what-ever actions
    that are necessary to make funds available to fund this entitlement and
    also the VA Benefit. This issue has lingered on far to long and has
    been put off by to many delaying tactics. Mr. Chairman, as of this date
    over 331 members of the House have co-sponsored H.R. 303 and over 56
    members of the Senate have co-sponsored S. 170. I fail to understand,
    with this kind of support for the Disabled Military Retiree, and the
    facts that have been presented over the past twenty years, why this
    injustice continues.
        After a review of H. Con. Res. 83 of the 107th Congress, it is hard
    for me to understand why there is no money for persons who fought for
    this country. Billions of dollars are spent for social security for
    illegal aliens to this country, paying for their education, health
    benefits but we forget our own.

        Senator Stevens. Our next witness, Ms. Hershkowitz.

    STATEMENT OF LOUISE E. HERSHKOWITZ, CRNA, AMERICAN
                ASSOCIATION OF NURSE ANESTHETISTS

        Ms. Hershkowitz. Chairman Stevens, Senator Inouye, good
    morning.
        Senator Stevens. Ms. Hershkowitz, pardon me.
        Ms. Hershkowitz. Thank you. Thank you for the opportunity
    to testify before the subcommittee today. My name is Louise
    Hershkowitz and I am a certified registered nurse anesthetist
    (CRNA). I am a CRNA and a member of the American Association of
    Nurse Anesthetists (AANA).
        I am testifying today on behalf of AANA, which represents
    more than 28,000 CRNA's, including over 600 that serve in our
    armed forces. I hope to inform you today about the national
    nursing shortage that has been well publicized, how that
    affects the availability of nurse anesthetists, and how this
    committee may help DOD face this crisis.
        Enrollments in nursing programs continue to decline and the
    nursing work force continues to age and retire. This is true
    for CRNA's as well. Recruitment and retention of CRNA's for the
    military becomes increasingly difficult when the civilian
    sector faces such critical shortages. According to a 1998 work
    force survey by AANA, as many as 59 percent of civilian
    institutions in this country are also actively recruiting
    CRNA's.
        In addition, the escalating number of health care
    procedures requiring anesthesia have increased the need for
    CRNA's. However, the demand for services currently exceeds the
    availability of these anesthesia providers. This shortage
    continues to create a competitive hiring market in which it is
    difficult for the military to compete. 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.
        In addition, the high demand and low supply of CRNA's in
    the health care community leads to higher incomes, widening the
    gap in pay for CRNA's in the civilian sector as compared with
    the military. There has been no change in the incentive
    specialty pay (ISP), since the increase from $6,000 to $15,000
    was instituted in fiscal year 1995, even though civilian pay
    has continued to rise during this time.
        We would like to thank the members of this committee for
    their continued support and funding of the ISP and for board
    certification pay for nurse anesthetists. At this time we
    request that the committee look at raising the ISP for both
    members under service obligation and those no longer under
    service obligation payback for their education in anesthesia.
    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 the Department of Defense could benefit even
    more with more appropriate utilization of its anesthesia
    providers. For decades, CRNA's have staffed ships, isolated
    U.S. bases, forward deployed combat hospitals, and forward
    surgical teams without physician anesthesia support. Currently
    in Kosovo there is a single nurse anesthetist that is providing
    all the anesthesia care, again no anesthesiologist present. If
    such practice models are accepted for deployed situations,
    there is no reason they should not be acceptable in urban
    military treatment facilities.
        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, AANA thanks this committee again for its
    support of military CRNA's through the ISP and 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 their consideration of
    these issues and will be happy to answer any questions you may
    have.
        [The statement follows:]

                  PREPARED STATEMENT OF LOUISE E. HERSHKOWITZ

        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 outcome 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 United States 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. No anesthesiologists are assigned to
    these missions.
             nursing shortage--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, 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.
        In addition, the AANA cited a decline in anesthesiology resident
    positions, as well as an increase in office-based surgery and surgery
    in places other than hospitals as driving the increased need for CRNAs.
    Additionally, with managed care continuing to pursue cost-cutting
    measures, coverage plans are recognizing CRNAs for providing high-
    quality anesthesia care with reduced expense to patients and insurance
    companies. The cost-efficiency of CRNAs helps keep escalating medical
    costs down.
        According to AANA's 1998 Workforce Survey, 35 percent of
    respondents cited an increase in the number of CRNA positions, compared
    with a 20 percent increase in 1997. Forty-three percent of the nurse
    anesthetist managers reported open positions for CRNAs within their
    departments, ranging from one to twelve available jobs. Fifty-nine
    percent of the respondents were actively recruiting CRNAs.
        The escalating numbers of health care procedures requiring
    anesthesia have increased the need for CRNAs. However, the demand for
    services currently exceeds the availability of these anesthesia
    providers. In recent years, an increase in the number of CRNAs who are
    retiring, combined with decreasing graduation rates from nurse
    anesthesia programs, has contributed to the overall decline in CRNA
    numbers.
        In 1990, the U.S. Department of Health and Human Services published
    findings indicating a national shortage of almost 5,400 nurse
    anesthetists. The study concluded that nurse anesthesia educational
    programs would need to produce between 1,500 and 1,800 graduates
    annually to meet societal nurse anesthesia demands by the year 2010.
    Nevertheless, only about 1,000 nurse anesthesia students graduate
    annually.
        As recently as February 28, 2001, Brigadier General Barbara C.
    Brannon, Director of the Air Force Nursing Corps, testified before this
    Senate Committee that, ``the national nursing shortage is having a
    devastating effect on staffing throughout the health care industry, and
    the Air Force Medical Service is no exception. For the third
    consecutive year, we are experiencing shortfalls in accessions. We were
    85 nurses, or 30 percent, short of our nurse recruiting goal in fiscal
    year 1999.'' We couldn't agree more. This nursing shortage will
    continue to create a competitive environment for CRNAs to be recruited
    by the civilian sector or military service branches.
        In addition, at a time of a national nursing shortage greater
    utilization of nurses at the military treatment facilities (MTFs) will
    be needed to meet the medical needs of aging retirees in the new
    TRICARE for Life program. The passage of the Fiscal Year 2001 Defense
    Authorization Act included TRICARE for Life, the expansion of medical
    care for all military retirees over the age of 65 at the MTF.
        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
        On February 28, 2001, Rear Admiral Kathleen Martin, Director of the
    Navy Nurse Corps, testified before this Senate Committee:

              Our recruiting success depends heavily on your continuation
            of the accession bonus and the education stipend programs.
            Given today's competitive health care environment, that may not
            be enough to maintain the force structure. Currently, only
            nurse practitioners, midwives and nurse anesthetists receive
            any type of specialty pay. That program has been a successful
            retention tool thus far, but the civilian-military pay gap is
            rapidly widening. Further retention bonuses may be needed to
            retain all types of nurses as competition increases for the
            dwindling supply.

        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, ``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 was
    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.
        High demand and low supply of CRNAs in the health care community
    leads to higher incomes widening the gap in pay for CRNAs in the
    civilian sector compared to the military. The fiscal year 2000 AANA
    Membership survey measured income in the civilian sector by practice
    setting. The median income in a hospital setting is $100,000, MDA group
    $90,000, and self-employed CRNA $108,000 (includes Owner/Partner of a
    CRNA Group, CRNA Physician Group, or Locum Tenens Agency and or
    Independent Contractor). These median salaries include call pay,
    overtime pay, and bonus pay.
        In civilian practice, all additional skills, experience, duties and
    responsibilities, and hours of work are compensated for monetarily.
    Additionally, training (tuition and continuing education), health care,
    retirement, recruitment and retention bonuses, and other benefits often
    equal or exceed those offered in the military. For example the AANA
    fiscal year 2000 membership survey reported, CRNA's median annual
    vacation is 22 days, 6 days of holiday and 6 sick days.
        Active duty CRNAs are subject to working 24 hours a day 7 days a
    week when deployed. In contrast, civilian contract CRNAs employed
    within MTFs work 35-40 hours a week and have higher pay. These contract
    CRNAs have higher salaries ranging from $93,000-$129,000. Depending on
    the contract, these CRNAs typically work weekdays with no on-call
    duties, or other administrative, supervisory, or teaching
    responsibilities. AANA members have mentioned that this can create a
    morale issue amongst CRNAs working at MTFs. In addition, there are
    cases when active duty CRNAs have separated from the military to then
    contract with a TRICARE subcontractor and make a higher salary at the
    same MTF.
        Rear Admiral Kathleen Martin, Director of the Navy Nurse Corps,
    stated for the record before this Senate Committee at the February 28,
    2001 hearing:

              Compensation is an issue for military staff as well. I
            clearly see this as an MTF commander. Military personnel work
            side by side with contract staffs who command salaries far
            exceeding those of their military counterpart. This creates
            additional dissatisfaction for our military members.
            Compensation is a powerful driver in the decision to remain on
            active duty or to leave the service.

        Salaries in the civilian sector will continue to create incentives
    for CRNAs to separate from the military, especially at the lower grades
    without a competitive incentive from the military to retain CRNAs.
    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. In March of 2000, Rear Admiral Kathleen Martin, Director
    of the Navy Nurse Corps, testified to this Senate Committee:

              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.

        Senator Stevens. What is the enlistment period for a new
    nurse anesthesiologist?
        Ms. Hershkowitz. The commitment after nurse anesthesia
    education is 4 years.
        Senator Stevens. We would be very interested in some
    mechanism to help them pay off their student loan if they come
    in with student loans. Would you give us some estimate on that?
    I do think you are right, this is one of the critical areas of
    the services, according to the hearings we have had so far. We
    would like to have a conference with you and see what we can do
    to help you.
        Ms. Hershkowitz. We would be very happy to do that,
    Senator.
        Senator Inouye. I just want to point out that on my last
    surgery at Walter Reed the anesthesia was administered by a
    nurse anesthetist.
        Ms. Hershkowitz. Thank you, Senator Inouye, for your
    support over the years as well.
        We would very much like to work with you on that, Senator.
        Senator Stevens. Thank you very much. Please contact us. We
    will be happy to work with you.
        Ms. Hershkowitz. Thank you. We will.
        Senator Stevens. Dr. Taylor.

    STATEMENT OF ROBERT TAYLOR, M.D., Ph.D., CO-CHAIR,
                GOVERNMENT AFFAIRS AND ADVOCACY COMMITTEE,
                RESEARCH SOCIETY ON ALCOHOLISM

        Dr. Taylor. Good morning, Mr. Chairman and members of the
    subcommittee. My name is Robert Taylor. I am a professor of
    pharmacology and medicine and chairman of the Howard University
    College of Medicine's Department of Pharmacology. I also co-
    chair the Government Affairs and Advocacy Committee for the
    Research Society on Alcoholism (RSA). RSA is a professional
    research society whose 1200 members conduct basic medical
    psychosocial research on alcoholism and alcohol abuse,
    primarily at academic institutions.
        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 has
    recognized this problem by providing additional funding for
    medical research in the defense health program in recent years,
    and we are particularly pleased that alcohol research has been
    specifically mentioned as one area to be funded. We commend
    this committee, particularly the efforts of Senator Harkin, in
    the past.
        Furthermore, we are pleased to report that 4 of the 14
    proposals that were recommended for funding by the DOD for
    fiscal year 2000 were for alcohol abuse prevention research.
    You will recall that Congress appropriated $25 million in
    fiscal year 2000 to DOD to cover research in 14 specific areas,
    including alcoholism research. We believe that there is a clear
    need for more research in this area and would like to propose
    that additional funds be directed toward research that will
    address the problem of alcoholism and alcohol abuse in the
    military.
        Although the peer-reviewed medical research program created
    by Congress in fiscal year 1999 is relatively new, the DOD
    reports recently that projects funded from that program and
    projects from early fiscal year 2000 have already produced
    significant research outcomes, ranging in areas from basic
    research to clinically applicable findings. For instance, in
    the area of alcohol abuse a research team at Tripler Army
    Medical Center showed that even short-term alcohol abuse,
    equivalent to three days of binge drinking, can alter the
    hydration status of the individual 18 hours after the last
    drink of alcohol.
        As you know, alcoholism is a tragedy that touches all
    Americans and American families. One in ten Americans suffer
    from alcoholism or alcohol abuse and their drinking will impact
    on their family, their community, and society as a whole.
        Recent research also indicates that alcoholism costs the
    Nation approximately $185 billion annually. One-tenth of this
    pays for treatment. The rest is lost productivity, accidents,
    violence, and premature death.
        Now, with regards to the military, the effects of
    alcoholism and abuse are likely to be more enormous. For
    example, 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 alcohol, heavy alcohol use, is about
    1.8 times higher for the military than for civilians. This is
    data from the 1998 Department of Defense survey of health-
    related behaviors among military personnel.
        Among personnel in the lower pay grades, for example E-1 to
    E-3, about one in five individuals report lost productivity due
    to drinking and one in six report serious consequences of
    drinking. Because these negative effects are most prominent
    among the junior enlisted personnel, the absolute numbers of
    personnel experiencing drinking problems is quite large.
    Furthermore, the effects of alcohol abuse in the military place
    in jeopardy the health and safety of all who serve in the armed
    services.
        Importantly, heavy alcohol use and associated negative
    effects have not declined significantly over the past decade.
    This is in contrast to declines in the use of illicit drug use
    among the military, and this highlights the critical need for
    more programmatic effort and resources directly targeting
    alcohol use in the military.
        Research, however, holds the promise of developing a better
    understanding of the etiology of alcoholism, and we in the
    alcohol research community are actively trying to find ways to
    bring our research to bear on the military situation.
        I thank you for your efforts, Mr. Chairman, and to the
    committee, and I appreciate your efforts in the past.
        Senator Stevens. Thank you very much, Dr. Taylor.
        [The statement follows:]

                      PREPARED STATEMENT OF ROBERT TAYLOR

        Good morning Mr. Chairman and Members of the Subcommittee. My name
    is Robert Taylor. In addition to being the Chairman of Howard
    University's Department of Pharmacology, I am the Co-Chair of the
    Government Affairs and Advocacy Committee for the Research Society on
    Alcoholism (RSA). RSA is a professional research society whose 1,200
    members conduct basic, medical, 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 4 of the 14 proposals that were recommended
    for funding by the Department of Defense (DOD) for the fiscal year 2000
    were for alcohol abuse prevention research.
        You will recall that Congress appropriated $25 million in fiscal
    year 2000 to DOD to cover research in 14 areas, including alcoholism
    research. We believe that there is 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.
        Although the Peer Reviewed Medical Research Program created by
    Congress in fiscal year 1999 is still relatively new, the DOD reports
    that projects funded in fiscal year 1999 and early fiscal year 2000
    have already produced significant research outcomes, ranging in areas
    from basic research to clinically applicable findings. For instance, in
    the topic area of alcohol abuse, a research team at Tripler Army
    Medical Center showed that even short-term alcohol abuse, equivalent to
    3 days of binge drinking, can alter the hydration status of the
    individual 18 hours after the last drink of alcohol.
        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 $185 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 effects 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.
        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). Because
    these negative effects are most prominent among the junior enlisted
    personnel, the absolute numbers of personnel experiencing drinking
    problems are quite large. Furthermore, the effects of alcohol abuse in
    the military place in jeopardy the health and safety of all who serve
    in the armed services.
        Importantly, heavy alcohol use and associated negative effects have
    not declined significantly over the past decade. These findings stand
    in striking contrast to dramatic declines in rates of illicit drug use
    among military. This highlights the critical need for more programmatic
    effort and resources directly targeting alcohol use in the military.
        Research, however, 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. In addition, 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.
        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, such as acamprosate, 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.
        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. RSA also urges the Subcommittee to include alcohol abuse
    and alcoholism in the list of priority research areas recommended for
    the Department of Defense Peer Reviewed Medical Research Program.
        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 significant problem of alcoholism and alcohol abuse among
    the men and women serving in our armed forces.
        Thank you for your consideration of our request.

        Senator Stevens. Our next is Dr. Donald Burke.

    STATEMENT OF DONALD BURKE, M.D., CHAIRMAN, LEGISLATIVE
                TASK FORCE, AMERICAN SOCIETY OF TROPICAL
                MEDICINE AND HYGIENE

        Dr. Burke. Chairman Stevens and Senator Inouye, thanks for
    the opportunity to speak to you. I am here representing the
    American Society of Tropical Medicine and Hygiene. I am a
    professor of international health at Johns Hopkins University
    and a retired Army colonel, where I was at the Walter Reed Army
    Institute of Research for many years and had some extremely
    valuable interactions with you over the past, and thank you for
    your help in the past.
        I am here today to call attention to two particular issues.
    One is the military Human Immunodeficiency Virus (HIV) and
    Acquired Immune Deficiency Syndrome (AIDS) program, which is
    funded for $24 million for the coming fiscal year, at least is
    budgeted for. What I would ask is that you consider increasing
    that appropriation by at least $10 million to put it to the $34
    or $35 million mark. What that would allow that program to do
    is to continue to be funded at a level funding.
        I think you are aware that the military AIDS vaccine
    program and molecular epidemiology programs are leaders in the
    world today, and if they do not get that additional $10 million
    then they will have to cut back in programs which are ongoing
    and excellent programs already. If I can be of any assistance
    to you in that, I would be happy to do that.
        The second issue I would like to call your attention to is
    the military overseas laboratories. The Army and the Navy have
    laboratories in five countries around the world where they do
    leading research on malaria, enteric infections, viral
    diseases, mosquito-borne, and other tropical diseases. Over the
    last decade the number of those laboratories has decreased from
    seven to five, with closure of laboratories in the Philippines
    and in Brazil and no increase in any laboratories anywhere
    around the world.
        I think it may be time that you may want to consider
    looking at that program and deciding is that optimally
    configured in a way that meets the national security concerns
    of the U.S. military in infectious disease and emerging
    infectious diseases.
        So I will keep it short and thank you very much for your
    support.
        [The statement follows:]

                     PREPARED STATEMENT OF DR. DONALD BURKE

        The American Society of Tropical Medicine and Hygiene (ASTMH)
    appreciates the opportunity to submit testimony to present our views on
    fiscal year 2002 funding priorities to the Subcommittee.
        The ASTMH is a professional society of 3,500 researchers and
    practitioners dedicated to the prevention and treatment of infectious
    and tropical diseases. The collective experience of our members is in
    the areas of basic science, medicine, insect vector control,
    epidemiology, and public health.
        DOD medical research programs play a critical role in our nation's
    infectious disease efforts. Furthermore, the programs are vitally
    important to maintain the health of our troops in the theater. Working
    with other U.S. public health agencies, DOD scientists at the U.S. Army
    Medical Research Institute for Infectious Diseases (USAMRIID), the
    Walter Reed Army Institute of Research (WRAIR), the U.S. Naval Medical
    Research Center (NMRC), and DOD medical laboratories abroad are helping
    us to better understand, diagnose, and treat infectious and tropical
    diseases. Such diseases include malaria, AIDS, dengue, leishmaniasis
    and other parasitic infections, cholera, and common diarrheal diseases,
    scrub typhus, and hepatitis.
        Infectious diseases are the second leading cause of death
    worldwide, accounting for over 13 million deaths (25 percent of all
    deaths worldwide in 1999). Twenty well-known diseases--including
    tuberculosis, malaria, cholera, and Rift Valley Fever--have reemerged
    or spread geographically since 1973, often in more virulent and drug-
    resistant forms. At least 30 previously unknown disease agents have
    been identified in this period--including HIV, Ebola, Nipah virus,
    Marburg virus, and hepatitis C--for which therapy is not optimal or
    does not exist at all.
        Last year the CIA's National Intelligence Council issued a report
    labeling global infectious disease a threat to U.S. national security.
    ``The Global Infectious Disease Threat and Its Implications for the
    United States,'' concluded that infectious diseases are likely to
    account for more military hospital admissions than battlefield
    injuries. The report also assessed the global threat of infectious
    disease, stating ``New and reemerging infectious diseases will pose a
    rising global health threat and will endanger U.S. citizens at home and
    abroad, threaten U.S. armed forces deployed overseas, and exacerbate
    social and political instability in key countries and regions in which
    the United States has significant interests.''
        As mandated in The Presidential Executive Order issued 30 September
    1999, entitled ``Improving Health Protection of Military Personnel
    Participating in Particular Military Operations,'' mandates that ``It
    is the Policy of the United States Government to provide our military
    personnel with safe and effective vaccines, antidotes, and treatments
    that will negate or minimize the effects of these health threats.''
    This includes diseases endemic to areas of military operations.
    Accordingly, the primary mission of the DOD's Military Infectious
    Diseases Research Program is to develop new products with which to
    protect and maintain the health of our troops in the theater. With
    worldwide deployment of our military personnel, it is imperative to
    protect them against infectious diseases that occur around the globe.
    Often our troops are exposed to new strains of a disease that does not
    exist within our own borders. Examples of the highly focused research
    conducted by the Program include efforts to make vaccines to prevent
    malaria and overseas strains of the AIDS virus.
        In 1987 Congress mandated that the DOD establish the HIV Research
    program because of the significant risk of active-duty personnel in
    acquiring the HIV virus. 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. Among other federally-supported HIV research
    efforts, the DOD HIV Research program has the facilities, resources,
    collaborations, and personnel to produce novel candidate AIDS vaccines
    and test them in international locations.
        ASTMH appreciates past Congressional support for military
    infectious diseases research. In November, 1999, the long awaited
    WRAIR/NMRC laboratory building opened in Silver Spring, Maryland. This
    outstanding laboratory facility is now the focus of tropical medicine
    research conducted by the Army and Navy. It is staffed by military and
    civilian experts in tropical medicine. The WRAIR and NMRC supervise and
    support the DOD's overseas laboratories.
        The Society believes the military's overseas laboratories deserve
    special mention. The U.S. Army and the Navy currently support medical
    research labs located in five developing countries, including Thailand,
    Egypt, Indonesia, Kenya, and Peru. These research laboratories serve as
    critical sentinel stations alerting military and public health agencies
    to dangerous infectious disease outbreaks and increasing microbial
    resistance to drugs. The research stations are an important national
    resource in the ongoing battle against emerging disease, and should be
    strengthened with increased funding and increased opportunities for
    collaborations with civilian scientists. The laboratories provide field
    sites for testing of new drugs and vaccines, for performing basic
    research, and for increasing our understanding of disease and the
    spread of disease. The overseas laboratories strengthen collaborations
    between U.S. and foreign countries, expanding our knowledge and
    understanding of infectious diseases, and providing hands-on training
    for both U.S. and local students and investigators, and for local
    health authorities.
        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 first
    modern drugs for prevention and treatment of malaria. 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 worldwide. 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. Specifically,
    malaria causes an enormous burden of disease in Africa, and is
    considered a primary cause of poverty.
        Along with Venezuelan Equine Encephalitis, the DOD also developed
    or supported promising vaccines for prevention of Rift Valley Fever,
    Argentine Hemorrhagic Fever, Adenovirus disease in recruits, and
    plague. Two of these vaccines (plague and adenovirus) are no longer
    licensed in the United States. As a result of a significant outbreak in
    Saudi Arabia and Yemen, the first epidemic outside of Africa, Rift
    Valley Fever vaccine has become of interest to an important ally.
    Spread of this disease to the United States is not out of the question,
    since mosquitos capable of transmitting Rift Valley Fever are found in
    the United States. Further development of these vaccines is an
    important national priority.
        Other notable advances accomplished by military experts in tropical
    diseases working with corporate partners include the invention of
    hepatitis A vaccine at WRAIR and its ultimate licensure based on
    studies conducted at the U.S. Armed Forces Research Institute of
    Medical Sciences (AFRIMS) in Bangkok; the discovery (during WWII), and
    later licensure of Japanese encephalitis vaccine, based on studies
    conducted at AFRIMS and WRAIR; and the discovery and licensure of
    mefloquine and halofantrine for treatment and prevention of malaria.
    WRAIR scientists reported the first successful cultivation of vivax
    malaria. A significant accomplishment made by military scientists at
    WRAIR and their corporate partners is the discovery of the first
    prototype vaccine shown to be capable of preventing falciparum malaria.
    Novel vaccines, such as a DNA vaccine for malaria, are being developed
    under the leadership of scientists at the NMRC. Most recently,
    licensure has been awarded for Malarone, a new drug for prevention and
    treatment of malaria. Another anti-malarial drug, Tafenaquine, is in
    advanced field trials with a corporate partner. With the certainty that
    resistance to malaria drugs quickly appears, these drugs have a useful
    lifespan of only about ten years. Replacements must be sought
    continually.
        Request: ASTMH urges a strong 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 to improve global health and economic stability in
    developing countries. The DOD's Military Infectious Disease Research
    Program has been a highly successful program. ASTMH urges the
    Subcommittee to make DOD infectious disease research a high priority in
    the DOD budget for fiscal year 2002.

                                   CONCLUSION

        Our borders remain porous to infectious and tropical diseases,
    including most recently the West Nile Virus, which was recently found
    right here in Washington, DC. Other diseases still largely confined to
    the tropics, like malaria, pose a major threat to American travelers
    and especially to our military. In all military operations in the last
    century where malaria is transmitted, including the Pacific Theater in
    World War II, Vietnam, and Somalia, more casualties were caused by
    malaria than by combat injuries. And with global warming, the
    increasing resistance of insect vectors to insecticides, and the
    increasing resistance of the malaria parasite to antimalarial drugs,
    the range of malaria and other vector-borne diseases is expanding.
        The ASTMH urges you to provide strong support for the DOD Military
    Infectious Diseases Research Programs. Our nation's commitment to this
    research is critically important given the resurgent and emerging
    infectious disease threats that exist today. If we don't make these
    important programs a priority, the health of our troops, as well as the
    health of all Americans, 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.

        Senator Stevens. Thank you very much, doctor. Are you
    associated at all with prion disease now?
        Dr. Burke. I am not.
        Senator Stevens. Is your department?
        Dr. Burke. I am not, although I do serve on a committee for
    the Food and Drug Administration (FDA) that looks at those
    issues.
        Senator Stevens. Thank you very much.
        We will now turn to Meg Kulungowski, please. We have
    skipped one person. We have a Senator who wishes to be here
    personally at that time.

    STATEMENT OF MEG KULUNGOWSKI, SENIOR ISSUES SPECIALIST,
                NATIONAL MILITARY FAMILY ASSOCIATION

        Ms. Kulungowski. Mr. Chairman, Senator Inouye, thank you
    for the opportunity to appear before you today. The message I
    bring to you today is that the momentum begun with the actions
    of the 106th Congress must be sustained in addressing the
    critical issues facing our military families and their
    communities. In my brief oral testimony I would like to
    emphasize the issues of military health care, housing,
    relocation reimbursements, military spouse employment
    assistance, and full Survivor Benefit Plan (SBP) entitlements
    for survivors of members who die on active duty.
        Last year's Defense Authorization Act included many health
    care provisions beyond TRICARE for Life, which the National
    Military Family Association (NMFA) wants to ensure are fully
    implemented. NMFA urges Congress and the Department of Defense
    to work together to obtain an adequate, sustainable funding
    level for the defense health program. This funding is needed to
    sustain the ongoing functions of the program, to include the
    maintenance and improvement of the infrastructure at military
    treatment facilities, and to fully implement newly authorized
    benefits.
        We look to the housing privatization initiatives to help
    expand the housing base at installations where the community
    sector cannot meet the military families' need for adequate,
    affordable housing in a safe neighborhood with good schools.
    The privatization initiative will allow military construction
    funds to be directed to overseas areas. Military families
    overseas tell NMFA that the predominance of substandard, poorly
    maintained housing is their number one quality of life concern.
        Overseas installations do not have their own local
    Congressional advocate. We ask this subcommittee to be the
    advocate for families overseas and ensure adequate resources
    for their communities.
        Military families move on average of every 2.9 years, twice
    as much as their civilian counterpart. A 1999 DOD survey of
    permanent change of station moves found that service members
    reported average out of pocket expenses of over $1,100 with
    each move. NMFA believes military members must be compensated
    at a more realistic level for their moving costs. Families will
    continue to subsidize their military-directed moves if rates
    for mileage, per diem, and temporary lodging expenses are not
    raised to reflect today's costs.
        The financial impact of a move is often exacerbated by the
    loss of the spouse's employment. NMFA is encouraged by
    initiatives coming from the DOD-U.S. Chamber of Commerce
    military quality of life partnership that promote training,
    education, and employment of spouses through corporate
    partnering. However, this program still needs funding for its
    startup and to guarantee its long-term stability.
        Additionally, we hope that as legislation is crafted to
    address the national shortage of nurses, teachers, and child
    care providers, there will be provisions to include military
    spouses in spite of their frequent relocations.
        Lastly, I will briefly discuss the issue of SBP for active
    duty deaths. Authorizing the Department of Defense to conduct
    posthumous retirements could solve the issue of SBP for active
    duty deaths. Senator Kay Bailey Hutchison is considering a bill
    which would do just this. This would eliminate imminent death
    retirements and the burden imposed on military medical
    professionals asked to perform life-saving measures while the
    necessary retirement paperwork is prepared.
        Additionally, it would eliminate the disparity of benefits
    paid to survivors if one member of an accident was killed
    immediately and another lives long enough to be retired.
        The U.S. armed forces are fortunate that the numbers of
    active duty deaths each year are few, but the changes of
    benefits to individual families would be significant.
        We thank the subcommittee and the Congress for the
    attention over the past 2 years to the quality of life issues
    important to the readiness of the force and to military members
    and their families. These actions have helped rebuild military
    members' trust and to ease the crisis in recruiting and
    retention. However, the stability of the military family and
    community rests on the Nation's continued focus on the entire
    package of quality of life components.
        Again, Mr. Chairman, I thank you for this opportunity.
        Senator Stevens. Thank you very much. We appreciate your
    coming.
        [The statement follows:]

                     PREPARED STATEMENT OF MEG KULUNGOWSKI

            QUALITY OF LIFE ISSUES FOR MILITARY FAMILIES, APRIL 2001

        Distinguished Members of the Subcommittee, the National Military
    Family Association (NMFA) is honored to have the opportunity to discuss
    the quality of life of military families. NMFA is grateful to the
    Congress for continuing the efforts begun two years ago to end the
    erosion in quality of life that has contributed to the military
    Services' recruiting and retention challenges. Of particular importance
    were:
      --Provision for a 3.7 percent pay raise, payable January 1, 2001 and
            for targeted raises for mid-grade enlisted personnel, effective
            July 1, 2001
      --Funding increases for the Basic Allowance for Housing with the goal
            to eliminate average out-of-pocket costs by 2005
      --Health care benefit improvements for active duty families such as
            the elimination of co-payments for active duty family members
            in TRICARE Prime, the addition of a Prime-like benefit for
            active duty families in remote locations, and the addition of
            school physicals as a TRICARE benefit
      --Health care benefit improvements for the retiree population such as
            the reduction in the catastrophic cap, the creation of a
            pharmacy benefit for Medicare-eligible military beneficiaries,
            and the restoration of the promise of lifetime care for
            military retirees and their dependents with the creation of
            TRICARE for Life.
      --Funding to assist civilian school districts in educating military
            children.
        NMFA believes that the most important message we can bring to you
    today is that the momentum begun with the actions of the 106th Congress
    must be sustained in addressing the critical issues facing military
    families and their communities--pay, housing, health care, family
    support, and education for our children. The families we represent,
    including our 120 installation representatives who report to us on a
    regular basis, say they recognize the good that the recent improvements
    will bring. They also tell us, however, that we are not out of the
    woods yet. Several concerns continue to take their toll: a continuing
    civilian/military pay gap, a decaying housing and workplace
    infrastructure, ongoing deployments and high perstempo that increase
    family separations, a health benefit that changes based on where one
    lives and how much money is available for the system, and a military
    move process that disrupts a spouse's career and a child's education
    while frequently draining a family's savings.
    Military Families Today--Who Are They?
        The all-volunteer military today is predominantly a young, married
    force with children. Currently, 55 percent of the military is married;
    56 percent of the married population is between the ages of 22 and 29.
    Studies show that military members tend to marry younger, begin to have
    children at a younger age, and have larger families than their civilian
    peers. Nearly one million children, or 73 percent of all military
    children, are under age 11; 40 percent are five years of age or
    younger. Approximately 6 percent of military members are single
    parents, ranging from a low of 3 percent of Marines to a high of almost
    8 percent of Army members. Eighty to ninety percent of all spouses are
    in the labor force, including 87 percent of junior enlisted spouses (E-
    1 to E-5).\1\
    ---------------------------------------------------------------------------
        \1\ Demographic information has been obtained from the Profile of
    the Military Community: 1999 Demographics, prepared for the Deputy
    Assistant Secretary of Defense for Military Community and Family Policy
    by the Military Family Resource Center, available at
    www.mfrc.calib.com.
    ---------------------------------------------------------------------------
    Quality of Life Components for the Military Family Relocation
        One of the primary challenges facing military families is the
    frequency with which they move. Along with the death of a family
    member, loss of a spouse, and natural disasters, moving and
    unemployment rank among the top five stress producers in the population
    as a whole. Military families move on average every 2.9 years; the
    civilian average is twice that figure. No other employer moves its
    youngest employees with the frequency that the military moves its
    junior servicemembers.
        Moving is a fact of life for military families. Unfortunately,
    losing money whenever they move is just as predictable a fact for
    military families. A 1999 DOD survey of Permanent Change of Station
    (PCS) moves found that servicemembers reported average out-of-pocket
    expenses of over $1,100 with each move. The average reimbursement for
    reimbursable expenses was only 62 cents on the dollar; for junior
    enlisted members, only 27 cents. These rates do not include the loss of
    either the spouse's job or the servicemember's second job that helped
    the family make ends meet. They do not include the extra expenses such
    as house hunting trips that are not reimbursed.
        NMFA urges DOD and the Services to build on the information
    gathered from the current array of pilot move projects to institute a
    more user-friendly move process. Because we believe the pilots have the
    potential to provide much-needed information on how to fix the move
    process, we were greatly disturbed by press reports of the Navy's pull-
    out of the pilot projects. This is too important an issue for families
    and too much information is being accumulated through these pilots to
    abandon them now.
        NMFA believes military members must also be compensated at a more
    realistic level for their moving costs. Legislative changes in the
    fiscal year 2001 NDAA addressed some concerns by authorizing temporary
    lodging expenses for enlisted members going to their first duty
    station, increasing the dislocation allowance for E-1 to E-4s with
    dependents to the E-5 rate, and authorizing servicemembers on PCS moves
    to receive advance payment for their travel allowances, thus enabling
    them to avoid incurring large credit card debt. The families sent to
    locations with costly pet quarantines are also grateful for the
    authorization of a $275 allowance to help cover quarantine costs. We
    believe, however, that families will continue to foot the bill for too
    many legitimate reimbursable expenses unless the rates for mileage, per
    diem, and temporary lodging expenses are raised to reflect today's
    costs. These rates have not been adjusted since the mid-1980s and thus
    do not reflect families' actual travel and lodging costs.
        Another unique aspect of a military move is the unpredictability.
    NMFA hears from families about orders being changed or not issued until
    the eleventh hour. In the 1999 PCS survey, 20 percent of the
    participants reported receiving less than 30 days notice before the
    move and about 11 percent reported having a change in the assignment
    after getting their initial orders. Last minute switches place an
    additional burden on the spouse who typically is the one to research
    schools and neighborhoods, find a new job, and reassure the children
    that they will indeed fit in at the new location. Although online
    relocation information provided by the Services may help reduce anxiety
    and enable families to prepare for the move, NMFA believes the
    personnel system still has room for improvement in its ability to
    forecast assignments, particularly follow-ons from unaccompanied tours.

    Spouse Employment and Readiness
        Another fallout from the frequent military move cycle is the cut in
    family income due to the military spouse's loss of employment. The loss
    of the spouse's income at exactly the time the family is facing
    hundreds of dollars in additional expenses is exacerbated when a spouse
    is unable to collect unemployment compensation due to provisions of
    state laws. In many states, the military spouse is not eligible to
    collect unemployment compensation when the change of jobs is due to the
    servicemembers' change of duty location. States frequently determine
    that the decision of a military spouse to move with the servicemember
    is a ``voluntary quit'' and thus they deny the benefit.
        ``Trailing spouses'' face other difficulties after the move
    experience is over and boxes unpacked. Despite the existence of highly
    touted DOD and Service spouse employment programs, many spouses still
    report problems finding jobs commensurate with their skill and
    experience levels or even any job at all. In 1999, 46 percent of
    installation commanders reported that availability of jobs for spouses
    was a problem in their communities. Because of the high costs of the
    military move, many spouses are forced to take the first available job
    just to make ends meet, regardless of whether or not it furthers their
    career. When the spouse's earnings suffer as a result of the military
    member's service, the member's career intentions decline. The prospect
    that the spouse would have to give up a good job--found with
    difficulty--and start over again after the next move may prompt a
    family decision that the servicemember should leave the military.
        NMFA has heard from spouses for years about the problems they faced
    in navigating the DOD personnel system. In recent testimony before the
    Defense Subcommittee of the Senate Appropriations Committee, the Chief
    Nurses of both the Army and Navy discussed their program's difficulties
    with the personnel system in ways very familiar to military spouses.
    According to BG William T. Bester, Chief of the Army Nurse Corps,
    ``Government hiring practices are archaic, cumbersome, and threaten
    human resource availability. Wages are set by law and not easily
    adapted to market forces. We must have the flexibility to develop and
    implement accession programs that meet the current critical need for
    the swift hiring of highly qualified candidates.'' If the Army Nurse
    Corps can't work the system, how can we expect young military spouses
    to navigate their way?
        While still having work to do on its own personnel system, DOD has
    made strides in seeking corporate partnerships to establish training
    and employment programs for military spouses. NMFA applauds the
    department's efforts to establish procedures to use scholarships and
    child care subsidies from industry for military spouses. The department
    is also investigating how to help spouses obtain certification, whether
    in a trade or a professional field. DOD has eased one group of military
    spouses' job placement difficulties over the past year: DOD schools now
    have policies in place that encourage the hiring of qualified military
    spouses for open teaching positions.

    Education for Military Children
        Military children are our nation's children. Whether they attend
    Department of Defense schools, civilian public schools, private
    schools, or are home schooled, they deserve a quality education.
    Today's military force is an educated force and 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.
        Even when transferring to schools with the best reputations,
    military children often face hurdles in getting placed in proper
    programs, becoming involved in extracurricular activities, and
    transferring grades and credits for graduation. Their parents are often
    frustrated because they do not understand how to navigate the new
    system's procedures and policies in order to provide proper input on
    their children's education. The increase in state accountability
    systems and high stakes testing, each with different standards, can
    also make transferring from school to school difficult for military
    children. NMFA applauds DOD's creation of the Educational Opportunities
    Directorate to address the needs of all military children wherever they
    go to school. The Directorate is currently conducting a series of
    roundtables in states with high military populations to raise awareness
    of issues affecting the mobile military child among parents, state and
    local educational leaders, and installation officials. The military
    Services are dedicating more efforts to improve communication with
    local school districts, institute partnerships between units and local
    schools, and provide assistance for parents in navigating school
    district chains of command to obtain the proper educational services
    for their children.
        NMFA thanks this Subcommittee for its support of schools operated
    by the Department of Defense Education Activity (DODEA). Because
    approximately 80 percent of military children attend civilian public
    schools, however, NMFA is also grateful to the Congress for its support
    of quality education for these children and their civilian classmates.
    Appropriations for the DOD Impact Aid Supplemental Funding helps those
    districts most affected by the military presence.

    Child Care
        In ten years, the military has transformed its child care system
    from one of the nation's worst to what has been called a model for the
    nation. A military force often asked to go in harm's way needs to be
    able to go to work and not worry about what is happening to their
    children.
        Although we believe that families' cost for military child care are
    still reasonable given the quality found in military child development
    centers, NMFA does see some challenges for DOD in meeting child care
    needs without breaking the bank. DOD must continue to build new child
    development centers where needed, and increase efforts to recruit and
    train more family care providers. Family day care providers are an
    alternative for families when child development centers are full or for
    military members needing after-hours care. The fiscal year 2000 NDAA
    allowed DOD to ``provide financial assistance to an eligible civilian
    provider of child care services or youth programs.'' DOD and the
    Services need to fully utilize this authorization to increase the
    availability of child care.

    Military Family Health Care
        Military families appreciate the health care improvements contained
    in the fiscal year 2001 NDAA and thank the Congress for addressing many
    of the issues they have raised about the military health care benefit.
    By restoring the promise of lifetime health care to Medicare-eligible
    military beneficiaries through TRICARE for Life and the senior pharmacy
    program, Congress also told current servicemembers and their families
    that their own service to the nation is appreciated and that the
    government will continue to show it values that service even after the
    member retires. By eliminating co-payments for active duty family
    members in Prime and by establishing a Prime-like benefit for all
    remotely-assigned active duty family members, you moved us closer to
    achieving a uniform benefit.
        However grateful we are for the important benefit improvements in
    the NDAA and for the opportunity for beneficiary input provided by DOD,
    NMFA remains apprehensive about the estimated $1.4 billion deficit in
    this year's Defense Health Care budget. In recent testimony before the
    Defense Subcommittee of the House Appropriations Committee, the Service
    Surgeons General stated that their military treatment facilities would
    have to cut back on operations this summer unless supplemental funding
    was provided. They also discussed the significant repair and
    maintenance backlogs and the infrastructure needs of their facilities.
        Dr. Jared Clinton, Acting Assistant Secretary of Defense for Health
    Affairs, testified that the elimination of co-payments for active duty
    families and the expansion of the TRICARE pharmacy benefit to Medicare-
    eligible military beneficiaries are on target for their April 1
    implementation and the implementation of TRICARE for Life as a second-
    payer to Medicare will begin on schedule October 1. Dr. Clinton also
    noted, however, that implementation of several benefits that became
    effective with the passage of the NDAA may have to be delayed because
    of lack of funding. These benefits include the reduced catastrophic
    cap, the school physical benefit, and the reimbursement for travel
    expenses for active duty families in TRICARE Prime who must travel over
    100 miles for specialty care.
        NMFA is grateful for the fiscal year 2000 NDAA Congressional
    mandate and DOD's response in implementing the new Women, Infants and
    Children Overseas (WIC-O) Program. Since January 2001, the TRICARE
    Management Activity with the cooperation of the Defense Commissary
    Agency and command and local installation family support personnel has
    implemented WIC-O in 5 overseas areas. After years of hearing from
    military families who lost access to this federally-funded, but state
    run, program because the military was sending them overseas, NMFA is
    excited that this valuable nutrition program is now available to at
    least some families. Although DOD has begun plans to implement a second
    phase of the program at 12 more sites by the end of the summer, we are
    concerned that funding shortfalls in the Defense Health Program, the
    funding agent for WIC-O, will delay complete implementation until
    sometime next fiscal year.
        Beneficiaries rarely complain about the quality of care they
    receive in the military health system. Many do complain about accessing
    appropriate care in a timely manner. The DOD Healthcare Quality
    Initiatives Review Panel, a federal advisory panel chartered by
    Congress in Public Law 105-174 to assess quality initiatives in the
    military health system, recently sent its report to Congress. In its
    chapter on Beneficiary Communications, the panel concluded: ``To
    beneficiaries, the issue of quality of healthcare cannot be separated
    from a discussion of access and the robustness and uniformity of
    healthcare benefits.'' Although the improvements in TRICARE procedures
    and the benefits added in the NDAA will improve access for many
    beneficiaries, program-funding issues could provide additional
    constraints.
        NMFA urges Congress and DOD to work together to obtain an adequate,
    sustainable funding level for the Defense Health Program. This funding
    not only is needed to provide the newly-implemented benefits, but also
    to sustain the ongoing functions of the program, implement WIC-O at all
    locations overseas, and maintain and improve the infrastructure in
    military treatment facilities (MTFs).

    Supporting Families for Readiness
        As NMFA has testified in the past, a variety of factors place and
    keep young military families on the financial edge:
      --Frequent PCS moves
      --Transportation expenses
      --Out of pocket housing costs
      --A lack of comprehensive financial education, either before the
            member enters the military or for both servicemember and spouse
            once in the military, making the family more vulnerable to
            consumer scams, unable to budget properly, or make the best
            spending and saving decisions
      --Poor access to affordable credit
      --Frequent deployments or the threat of deployments that cause either
            a loss in the family's second income or increase child care
            costs
      --The consequences of recruiting someone with a family and expecting
            them to live on a salary more appropriate for a single person
            in the barracks.
        NMFA believes that DOD and the Services must provide young families
    with the tools they need to handle the disruptions so common in
    military life so that the servicemember can perform the mission. We
    encourage outreach efforts by installation family service personnel and
    other program staff to reach young families unfamiliar with both the
    military lifestyle and the benefits that come with service. For
    example, we applaud the efforts of family service and commissary staff
    to educate both single servicemembers and young families about the
    value of the commissary benefit by holding special information events
    and commissary tours. The Defense Commissary Agency's best value
    program and other initiatives to reduce prices have resulted in average
    customer savings of 29 percent.
        NMFA also commends the increased DOD and Service efforts to improve
    both the amount of and quality of financial education offered to
    servicemembers. We are encouraged by Service interest in including
    spouses in financial education and teaching them how to fulfill their
    responsibilities for managing family finances when the servicemember is
    deployed.
        As operations, deployments, and training missions continue at a
    high pace, the military family's lifeline--its community--feels the
    strain. Family services are important even to an installation not
    pressured 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, provide financial
    counseling and other services, offer programs for families in the
    Exceptional Family Member Program, and sponsor meaningful activities
    for military youth, especially in the vulnerable preadolescent years.
    Additional services set up to support families when units deploy
    include counseling services, email and video teleconferencing centers,
    and special family activities. These services both ease the strain of
    deployment for families left behind and reassure the servicemember that
    the family has a support network on which to call.
        NMFA notes that the services have done a magnificent job in
    supplying e-mail communication, education programs, and a wide array of
    Morale, Welfare, and Recreation (MWR) programs for forward-deployed
    units. Some of those servicemembers have deployed from installations in
    Europe. Their family members left behind at many of those installations
    tell NMFA of cutbacks in MWR services in their communities because of
    tight budgets or the inability of program managers to hire employees at
    current pay scales. USAREUR Commander General Montgomery Meigs spoke to
    the press last year of problems funding quality of life programs in his
    communities: ``In USAREUR, we fund training at 100 percent, and frankly
    we don't have enough for quality of life.'' Families talk of
    unpredictable or shortened hours at bowling alleys, swimming pools, and
    other recreational facilities used heavily by military children. While
    families understand the importance of quality programs for deployed
    servicemembers in Bosnia, they ask that money be found so their
    commanders can also help the spouse in stairwell housing in Germany
    trying to keep the children occupied until the deployment is over.
    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 live on an
    installation, with an ongoing relationship with a local unit, when the
    servicemember deploys. Many others, however, find themselves isolated
    in a civilian community without access to military support networks.

    Reserve Family Support
        Men and women of the National Guard and Reserve contribute more
    than 13 million duty days to missions and exercises. Ten years ago when
    reserve forces had about 22 percent more personnel, they averaged
    approximately 1 million duty days. Just like their active duty
    counterparts, the Guard and Reserve are doing more with less. The
    integration of reserve components into the Total Force includes their
    families. Now more than ever, reserve component families are dealing
    with extended overseas deployments and for some on a fairly continual
    basis.
        Another unique aspect of family support in the reserve component is
    the geographic dispersion of the members and their families. Unlike the
    active component divisions that are usually co-located on one
    installation, most reserve component divisions are spread over many
    states. The family does not usually have the military community support
    or even the recognition in their civilian community that the
    servicemember is deployed. In these cases, truly, ``an ounce of
    prevention is worth a pound of cure.'' Reserve family members'
    awareness of their rights and benefits before the deployment and how to
    access information and support during deployment are essential to the
    unit's readiness.

    Survivors' Benefits in Active Duty Deaths
        Although most active duty family members do not dwell on the
    tragedies that can occur to servicemembers in the line of duty, these
    incidents do happen and focus attention on inequities in the provision
    of survivors' benefits. The current benefits for survivors of active
    duty deaths include Dependency and Indemnity Compensation (DIC)
    payments from the Department of Veterans Affairs and Social Security
    survivors' benefits. If the servicemember had over 20 years service,
    the survivors also receive Survivor Benefit Plan (SPB) benefits, which
    are 55 percent of what the members' retired pay would have been. This
    is a valuable benefit that NMFA worked for years to achieve.
        The problem in the provision of benefits comes when servicemembers
    not eligible for retirement are involved in fatal incidents. If the
    servicemember is only one month shy of retirement eligibility, for
    example, and is killed instantly, the surviving spouse does not receive
    SBP. If, however, the servicemember lived long enough to be medically-
    retired, the spouse would receive SBP. This difference in the way
    benefits are determined can mean the survivors of two members with the
    same rank and length of service killed in the same accident will
    receive different benefits simply because one is killed instantly and
    one lives just long enough to be medically-retired. NMFA believes that
    the Services should be allowed to award posthumous retirements so that
    all survivors in active duty deaths may be able to receive SBP.

    Housing: a 3-Prong Approach: BAH, Privatization, Military Construction
        Families living off-base 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. BAH
    is the first of DOD's three-prong approach to addressing the housing
    needs of servicemembers and their families. NMFA thanks Congress for
    the repeal of the mandate requiring servicemembers to pay 15 percent of
    their housing costs out of pocket. We also applaud the beginning of
    funding toward a five-year plan to eliminate out of pocket housing
    costs.
        NMFA was pleased with DOD's efforts this year to improve the
    accuracy of the housing cost surveys used to determine BAH.
    Installation commanders and their housing officials worked with the DOD
    contractor to identify appropriate neighborhoods for servicemembers and
    their families and obtained additional information on utility rate
    increases in the late fall before making final BAH calculations. We do
    remain concerned, especially given recent utility hikes, that BAH may
    need to be more flexible to respond to cost changes that could have a
    negative impact on family finances.
        Although the plan to eliminate out of pocket housing costs is
    admirable, NMFA fears that the rhetoric may not always match reality.
    BAH is based not only on the costs of renting and paying utilities on a
    dwelling, but also on a DOD standard set for each rank. The standard
    used for determining the rent for an E-5, for example, is a two-bedroom
    townhouse; therefore, an E-5 with three children who is renting a
    three-bedroom single-family detached house will still have out of
    pocket housing costs even after the buy-down is complete in 2005. NMFA
    believes the DOD housing standard is not commensurate with current
    civilian housing standards, on-base housing standards, or with the
    level of responsibilities shouldered by military personnel. For
    example, the current standards provide that among enlisted
    servicemembers, only E-9s receive BAH to cover the cost of renting a
    three-bedroom single-family detached house. If the standard is left
    unchanged, servicemembers will probably continue to have out of pocket
    housing costs despite the well-publicized promises to the contrary. In
    the fiscal year 2001 NDAA, Congress raised the standard slightly for
    the most junior enlisted, E-1s to E-3s, to a level between the E-3 rate
    (two bedroom apartment) and the E-4 rate (two-bedroom townhouse). NMFA
    urges the Congress to direct DOD to do an across-the-board review of
    the standard's appropriateness across all ranks.
        Since the law creating the housing privatization authorities was
    first passed, NMFA has regarded the concept of privatization, the
    second prong in DOD's housing approach, as perhaps the only way to meet
    the housing needs of military families in a timely manner. We know the
    need. We have seen and lived in the houses that are a part of the
    repair and renovation backlog of almost 200,000 units worldwide. We
    know how far this housing is from today's standards, especially for our
    special needs family members. We have seen the housing available
    outside the gate in many communities. Families who cannot get into base
    housing end up living in slum conditions because they cannot afford the
    transportation necessary to live farther from the installation. In
    recent testimony, Randall Yim, Deputy Under Secretary of Defense
    (Installations), stated that DOD would need $16 billion and more than
    30 years to eliminate the backlog using traditional military
    construction funding. Using privatization would substantially solve the
    problem in much less time, although probably not by DOD's target date
    of 2010.
        Although we see the need for the infusion of private capital to
    revitalize military housing, NMFA has watched early privatization
    efforts with some concerns:
      --Where are the standards for oversight of the development process
            and the outcome measures to gauge a project's long-term costs
            and benefits?
      --Who provides oversight of housing management and maintenance?
      --What is the role of the installation commander?
      --How is community input sought and used in the process?
      --Who is the advocate for family members living in the housing?
      --How are the projects' effects on servicemembers' budgets and
            community services evaluated and calculated into project plans?
      --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?
        Although we understand the need for project flexibility to meet the
    needs of local installations and communities, NMFA asks Congress to
    continue its oversight of the privatization process and work with DOD
    and the Services to establish a common core set of standards and
    outcome measures for privatization projects.
        NMFA is gratified that some attention is being paid to the needs of
    the community, both on and off the installation, when new housing is to
    be built. Changing transportation needs, recreational needs, and child
    care options should be part of the decision-making process with each of
    these projects. The educational needs of military children and the
    local school district's ability to meet those needs are of paramount
    importance to a successful privatization initiative. We are encouraged
    that service officials now can articulate the link between the
    ownership of the land and federal Impact Aid funding for schools
    serving military children. Impact Aid, however, provides money school
    districts use to pay the operating expenses--teachers' salaries,
    utilities, and textbooks--for educating these children. It will not
    cover the cost of building the school that is needed when the
    installation's housing stock is increased under privatization
    arrangements.
        We also caution installation leaders to be aware of some unintended
    consequences of privatization on both family budgets and school
    district funding. The law requires that servicemembers living in
    privatized housing be paid BAH, which is then turned over to the
    developer as rent. Eligibility for safety net programs administered by
    the U.S. Department of Agriculture such as food stamps; the Women,
    Infants, and Children (WIC) nutrition program; and free and reduced
    price school lunches is based on a family's total income. When an
    installation's housing is privatized and servicemembers start receiving
    BAH, the total income as indicated on the Leave and Earnings Statement
    (LES) seems to have increased, even though the BAH is turned over to
    the developer. Many servicemembers then lose eligibility for safety net
    programs. Press reports state, for example, that two-thirds of the
    families receiving food stamps on Fort Carson lost their eligibility
    once the housing was privatized. When families lose eligibility for
    free and reduced school lunches, their local school can also lose other
    funding. Federal Title 1 and E-rate technology funding as well as state
    poverty funding is based on a school's poverty rate, which in turn is
    based on the percentage of children receiving free and reduced lunches.
    Fountain-Fort Carson District 8, a district of approximately 4,900
    children, reports that it received $400,000 less in funding from these
    sources in the year after installation housing was privatized and
    servicemembers on Fort Carson began receiving BAH.
        NMFA believes that the third prong of housing improvement, the use
    of military construction funds, must remain as a viable, well-funded
    option. 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, not just for
    housing but also for the underlying infrastructure. A recent article in
    the Honolulu Advertiser (2/26/01) described military housing challenges
    in Hawaii, but also highlighted extensive improvements. Navy junior
    enlisted families praised new housing featuring wooden cabinets,
    ceramic tile entryways, and steel framing to battle termites.
    Unfortunately, this wonderful new housing was built on an old worn-out
    sewer line. One sailor described his new home as ``great,'' but said:
    ``What we don't like is it is the same old neighborhood and the sewer
    lines are 30 years old. They back up.''

    The Military Community--Ready to Meet the Mission
        Members of the uniformed services are doing the nation's work. They
    ask the nation to give them the tools they need to be ready for that
    work: equipment, training, and leadership. They also look to the nation
    for recognition that their job is not a nine to five one and that it
    involves their families in ways few other jobs demand. Military members
    and their families want the nation to understand that the military
    family drives the retention decision, that the family's quality of life
    is a readiness requirement, and 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. With gratitude for your help in the past, NMFA
    asks you to maintain your support for the military families we
    represent. The military community is not just bricks and mortar. It is
    the stabilizing force that enables military families to survive and
    thrive. Your continued help is needed to keep that community strong.

        Senator Stevens. Dr. Boudjouk. We are informed that the
    Senator cannot be here because of a conflict and would be
    pleased to have your testimony now, sir.

    STATEMENT OF PHILIP BOUDJOUK, Ph.D., CHAIRMAN,
                COALITION OF EPSCoR STATES

        Dr. Boudjouk. Thank you very much, Mr. Chairman. Mr.
    Chairman, members of the committee, my name is Philip Boudjouk.
    I am a professor of chemistry and Vice President for Research
    at North Dakota State University. I served as the Project
    Director for the Experimental Program to Stimulate Competitive
    Research (EPSCoR) program in North Dakota from 1992 to 2000. I
    currently serve as Chairman of the Board of the Coalition of
    EPSCoR States.
        Thank you for the opportunity to testify today on behalf of
    the 19 States and Puerto Rico that comprise the coalition
    regarding the Defense Department's basic scientific research
    program and the defense experimental program to stimulate
    competitive research (DEPSCoR). Next month the DOD will make a
    site visit to Hawaii to evaluate its eligibility for DEPSCoR
    and Alaska is now in its second year as an EPSCoR State.
        I wish to commend the subcommittee for its strong support
    for funding DOD S&T programs. The Coalition of EPSCoR States
    urges you to maintain a stable investment in the Department's
    S&T efforts. The coalition would like to be associated with the
    statement of Dr. Harvey Ko, who testified earlier this morning
    on behalf of the Coalition for National Security Research.
        EPSCoR is a catalyst for change to assist States which
    historically had not participated fully in Federal research and
    development funding. It is widely viewed as a model Federal-
    State partnership involving several Federal agencies: DOD,
    National Science Foundation (NSF), National Institute of Health
    (NIH), DOE, National Aeronautics Space Administration (NASA),
    EPA, and United States Department of Agriculture (USDA). Every
    Federal dollar is matched between 50 cents to more than a
    dollar by State funding and technically every dollar provided
    to EPSCoR State projects leads to four dollars of nationally
    competitive Federal funding.
        The defense EPSCoR program contributes to the States' goals
    of developing and enhancing their research capability. Research
    is funded only if it is in areas important to national defense.
    In North Dakota 24 DEPSCoR projects in science and engineering
    have been funded since 1994. It is a true partnership between
    DOD, the State of North Dakota, and the universities involved.
        We have DOD-sponsored projects in logistics, database
    development, encryption science, and a variety of materials-
    based programs that include anti-corrosion studies for military
    aircraft and the development of semiconductor materials
    composed of quantum dots, particles less than one ten billionth
    of a meter. We will embed these nanoparticles in polymers to
    make a new class of materials called nanocomposites.
        The sky is the limit here. One could say that the smaller
    the particle the larger the potential for scientific and
    technical answers. Mr. Chairman, this is a very exciting new
    area of research and it will provide our military with new war-
    fighting capabilities for the twenty first century.
        DEPSCoR is a wise and worthwhile investment of scarce
    public resources. The coalition recognizes the very tight
    fiscal constraints the subcommittee faces in the new era of a
    balanced Federal budget. But given the impact that the DEPSCoR
    program is having in our States, we respectfully request that
    you provide $25 million for the Defense EPSCoR program for
    fiscal year 2002.
        Mr. Chairman, the Coalition of EPSCoR States supports the
    Defense Department's basic research programs, functions 6.1 and
    6.2. It is essential that Congress ensure that 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. We strongly endorse recommendations that
    Congress provide $10 billion to DOD science and technology
    programs for fiscal year 2002.
        Mr. Chairman, it was at this hearing a year ago that you,
    referring specifically to nanotechnology, urged States like
    Alaska and North Dakota to get on the train before it leaves
    the station, so to speak, and bring our resources to bear on
    the needs of DOD in this vital area. In North Dakota, with the
    urging and assistance of Senator Dorgan, we took that advice to
    heart and formed a partnership with the University of Alaska in
    Fairbanks, North Dakota State University, DARPA, and the
    Defense Microelectronics Agency to launch a joint effort to
    meet DOD needs in the area of ultra-low power sensors for
    battlefield applications.
        But DOD is only part of this new team. Also included are
    three private sector partners--Alien Technology, Northrop
    Grumman, and Superconducting Technologies, Incorporated--that
    are providing new technologies critical to the next generation
    of sensors.
        Mr. Chairman, I have in my hand a vial containing thousands
    of computers. You see, each one of these particles that are
    suspended in water, that look no more than the size of a fleck
    of pepper, each one of those particles is a computer chip with
    the capacity to hold the entire history of a piece of
    equipment, to sense chemicals in the air, or store a program
    that can enhance, confound, or make a weapon obsolete in an
    instant.
        In the partnership I mentioned, we are engaged in using a
    new technology that allows us to place millions of these chips
    exactly where we want them.
        [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 (DEPSCoR).
        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 served as
    the Project Director for the EPSCoR program in North Dakota from 1992-
    2000. 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 recommends that Congress appropriate
    $25 million to the Defense Department's budget for the Defense
    Experimental Program to Stimulate Competitive Research in Program
    Element Number PE 61114D. The Coalition also supports the Department's
    budget request for basic research, of which the Defense EPSCoR program
    is a small, but significant, part.
        The Coalition wishes to be associated with the statement of Dr.
    Harvey Ko who testified earlier this morning on behalf of the Coalition
    for National Security Research (CNSR). This Subcommittee has long
    demonstrated its strong support for funding Defense Department science
    and technology programs. These are programs that have produced the
    research and innovation that have contributed so much to ensuring that
    our fighting men and women have the best available systems and weapons
    to support them in executing their national defense missions.
    Fundamental research and development efforts in our universities and
    laboratories produce significant benefits for the people in the field
    and on the front line. The Coalition of EPSCoR States urges you to
    maintain a stable investment in the Department's S&T efforts.
        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 research goals of the Department of
    Defense. 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 F-22 fighter planes. This center has strong 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.
        In fiscal year 2001 the Defense Department issued an announcement
    of a competition under the aegis of the Defense EPSCoR program. A total
    of 224 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), 63 projects were
    selected for funding with $18.7 million made available in fiscal year
    2001. The average award was $298,000.
        Let me now tell you something about our program in North Dakota.
    Twenty-five 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 a 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,
    nanocomposites. 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 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. Indeed, Mr. Chairman it was at this hearing a year ago
    that you urged EPSCoR states to ``get on this train before it leaves
    the station'', so to speak. In North Dakota, we took that good advice
    to heart and formed a partnership with the University of Alaska in
    Fairbanks, DARPA and Defense MicroElctronics Activity (DMEA), to launch
    a joint effort to meet DOD needs in the area of ultra low power sensors
    for battlefield applications.
        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, the University of
    Dayton Research Institute 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 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.
        In addition to these projects in North Dakota, I would like to
    share with you a few examples of DEPSCoR funded research in other
    States:
      --An Assistant (now Associate) Professor of Physics at the University
            of Kansas, Dr. Judy Wu, was funded by the Air Force Office of
            Scientific Research (AFOSR) to perform research on high
            temperature superconducting thin films. As a result of that
            DEPSCoR support, she has developed methods for coating mercury-
            based high temperature superconductors onto oxides and metals
            in processes that have led to two United States patents, and
            one U.S. patent pending. Superconducting coatings of these
            materials, that have transition temperatures above 130K onto
            oxides, can be used for superconducting microwave
            telecommunication devices of superior performance in terms of
            low loss, high resolution, and lightweight. These properties
            have recently been demonstrated on small-scale microwave
            devices. Superconducting coatings of these superconductors onto
            metals can be used to form superconducting cables that can be
            used for power-related applications including low-loss/high
            power generators, transmission cables, electric motors, and
            high-field magnets.
      --A land mine detector developed by Dr. James Sabatier, a research
            scientist at the University of Mississippi based National
            Center for Physical Acoustics, has passed a second round of
            military tests, making it the most accurate mine-hunting system
            in the U.S. Army's inventory. The system, via sound waves and
            laser beams which scan the ground's surface to detect and
            identify vibrational patterns produced by buried mines,
            detected 95 percent of the hidden antitank mines with only one
            false alarm and 100 percent of the buried antipersonnel mines
            with four false alarms.
      --Dr. P. Stanley May, Associate Professor of Chemistry at the
            University of South Dakota (USD), has built on his successful
            DEPSCoR grant, ``Energy Transfer Mechanisms in Lathanide Pairs
            in Up-conversion Materials,'' and secured major funding from
            NSF for a collaborative USD/South Dakota State University
            (SDSU) Photodynamics Research Cluster. Dr. May's research
            studies, which were supported by the Army Research Office,
            explore how interactions between different phosphors can be
            exploited to make novel phoshpor materials called
            ``upconverters.'' Upconversion phosphors have the unique
            ability to produce high-energy light using low energy
            exitation. One potential use of such phosphors would be in the
            development of ``blue'' lasers, important in atmospheric
            sensing applications, which could be powered by batteries or
            solar panels.
      --The University of Wyoming's DEPSCoR project on ``Elastic Spider
            Silks'' has resulted in the cloning and sequencing of the gene
            for the protein that makes up flagelliform or capture spiral
            silk. This silk has an elasticity of over 200 percent and
            tensile strength of approximately 100,000 psi. Dr. Randolph
            Lewis, a molecular biologist, was funded by the Army Research
            Office. The work resulted in two major publications in The
            Journal of Molecular Biology on the sequence of the cloned
            cDNA, and in Science on the gene structure of the protein. The
            gene structure is unique in that the coding and non-coding
            regions together are repeated numerous times. Even more
            striking is the fact that the non-coding regions are more
            highly conserved in DNA sequence than are the coding regions.
            This suggests that these regions are required to keep this very
            large repetitive gene stable during replication of the DNA. In
            addition, a patent has been issued for the sequence of the silk
            protein and gene.
        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 2002.
        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. It is important that this Committee ensure that the fiscal
    year 2002 budget request keeps pace with the needs of science and
    technology. The Coalition of EPSCoR States supports realistic funding
    levels that help sustain vigorous science and engineering research
    programs at the Defense Department.
        Thank you for your consideration of this request.

        Senator Stevens. Doctor, I am going to have to stop you. We
    have to keep going here if we are going to hear everybody. We
    all have a vial of those. As a matter of fact, several people
    have been by giving me a vial of them. We are very pleased
    about your arrangements with the university. We will do our
    best.
        Did you say billion dollars, $10 billion?
        Dr. Boudjouk. For the S&T, $10 billion for DOD S&T programs
    for fiscal year 2002.
        Senator Stevens. Thank you very much. I appreciate it.
        We urge witnesses to understand our situation. We are both
    going to have to leave here soon and we do want to listen to as
    many people as we can.
        Ms. Goldberg. Good morning.

    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. Chairman Stevens, Senator
    Inouye, thank you. I am Joan Goldberg, Executive Director of
    the American Society for Bone and Mineral Research. I represent
    3,500 researchers and clinicians dedicated to promoting bone
    and mineral research and bone health, as well as the National
    Coalition for Osteoporosis and Related Bone Diseases.
        We thank you for this opportunity to testify on the need
    for sustained funding of the Department of Defense's unique
    research program in osteoporosis and related bone diseases.
    This small but important research program directly affects
    military readiness. We are grateful for the subcommittee's past
    support. We believe the $11 million appropriation will ensure
    the stability of this program in fiscal year 2002.
        Bone diseases and bone fractures occur in all populations
    and all ages. They are devastating diseases and disorders with
    disabling and costly effects. For a military population, the
    most common bone problem is stress fracture. It was the
    Department of Defense's recognition of the extent of this
    problem that led to a commission of the report by the Institute
    of Medicine.
        What do we know about stress fractures? They are overuse
    injuries. Muscles become fatigued and are unable to absorb
    added shock. Eventually, the fatigued muscle transfers the
    overload of stress to the bone and this causes the tiny crack
    that we call a stress fracture. The crack is not always easy to
    see and new diagnostic methods are needed and being researched
    now by DOD-funded researchers.
        Stress fractures often result from increasing the amount
    and intensity of an activity too rapidly. If the activity that
    causes the stress fracture is resumed too quickly, larger,
    harder to heal fractures can develop and re-injury can lead to
    chronic problems.
        Thirty percent of stress fractures occur in women, even
    though women today comprise only 14 percent of active duty
    military. Consider how common and costly the problem is.
    Studies have found from 10 to 14 percent of female cadets,
    officers, and recruits suffer stress fractures within 10 weeks.
    Stress fractures among 2,000 female recruits cost more than
    4,000 training days and an average of 8 or more weeks to heal.
    Stress fractures of the femur and the pelvis can take even
    longer.
        There are approximately 200,000 women on active duty in the
    U.S. Army, an additional 150,000 in the reserves, and nearly
    25,000 female recruits. Stress fractures thus may afflict at
    least 40,000 female military. But they are not limited to
    women, as you know. There is one study that shows that nearly 5
    percent of marine male recruits suffer them as well, and the
    military trains nearly 180,000 male recruits every year.
        Why are women at greater risk? Basic training subjects
    recruits to extensive physical conditioning over a relatively
    short period of time. The resultant stress on the less
    physically fit, both male and female, increases the likelihood
    of injury. A family history of osteoporosis also increases the
    risk for females.
        According to the Institute of Medicine (IOM), stress
    fractures increase the length of training, the cost of the
    program, and the time to military readiness. These injuries
    also lead sufferers to end their military careers prematurely.
    One study of female marine recruits demonstrated that nearly
    four times as many recruits with stress fractures were
    separated from the Marine Corps as uninjured recruits.
        Here are some quick highlights of bone research findings by
    the Department of Defense. We have discovered that the run time
    in habitual physical activity predict high-risk subjects. Those
    individuals suffered three times as many stress fractures. DOD
    researchers investigated whether a 1-week rest period early in
    training might prevent fractures. Unfortunately, the answer is
    it is not so easy.
        However, ongoing research offers promise in exercise,
    nutrition, and pharmacological treatment strategies to prevent
    stress fractures. Current research includes studies to
    determine if electric field stimulation would enhance bone
    stress fracture recovery, identify gait patterns, that is how
    we walk and run, and whether there are particular ones
    associated with stress fractures, determine if a protein-based
    supplement could help increase bone mass in physically active
    recruits. Other studies have already indicated that protein is
    very important in bone strength in the elderly.
        There are also studies to assess the relative predictive
    importance of the bone masses measured at the hip, spine, and
    tibia, of diet, including calcium, as well as the impact of
    menstrual function. We know from other studies that anorexia,
    which leads to amenhorrea, lack of menstrual periods, is
    associated with osteoporosis. We are also looking to see
    whether low-dose estrogen might prevent or slow bone loss in
    high-risk young females.
        These studies, along with others in progress, will
    determine the most cost-effective approach to diagnosing and
    treating stress fractures to accelerate the return to duty. An
    improved understanding will form the basis for preventive
    measures for military men and women and the rest of us, for we
    are all at risk. The current program is on the cusp of
    significant breakthroughs in our understanding of the effect of
    physical forces on the bone. This too is vitally important to
    understanding bone disease process and prevention.
        Senator Stevens. Thank you very much, doctor. Thank you.
        [The statement follows:]

                      PREPARED STATEMENT OF JOAN GOLDBERG

        Mr. Chairman and Members of the Subcommittee: I am Joan Goldberg,
    Executive Director of the American Society for Bone and Mineral
    Research, a professional society of 3,500 researchers and physicians
    dedicated to promoting excellence in bone and mineral research and
    ensuring that clinical and basic science are translated into health
    care practice.
        The National Coalition for Osteoporosis and Related Bone Diseases
    (the Bone Coalition) appreciates this opportunity to present our
    position on the need for sustained funding of the Department of
    Defense's research efforts on osteoporosis and related bone diseases.
    This is a small, but important, research program that directly affects
    military readiness. The Bone Coalition believes a funding level of $12
    million will ensure the stability of this critical program in fiscal
    year 2002. The Bone Coalition also wishes to thank this subcommittee
    for its continuing support for this program.
        The Bone Coalition is dedicated to educating the public and its
    elected officials about the need to promote lifelong bone health and
    the need for federal research funding to assist in reducing the
    widespread prevalence of osteoporosis and related bone diseases. The
    leading national bone disease organizations that comprise 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 Osteogenesis Imperfecta
    Foundation.
        Together, we represent more than 485,500 individuals, while the
    diseases we address affect about 30 million Americans.
        Bone diseases and associated fractures occur in all populations and
    at all ages. They are devastating diseases and disorders with
    significant physical, psychosocial and financial consequences.
        Stress fracture has been identified by the Department of Defense
    (DOD) as a major problem for the military population. A report by the
    Institute of Medicine (IOM) noted the significant occurrence of stress
    fracture during basic training, with stress fractures accounting for a
    large proportion of time-loss injuries. Thirty percent of these
    injuries occur in women.
        What is a stress fracture? Stress fracture is an overuse injury. It
    occurs when muscles become fatigued and are unable to absorb added
    shock. Eventually, the fatigued muscle transfers the overload of stress
    to the bone. This causes a tiny crack called a stress fracture. Stress
    fractures often are the result of increasing the amount or intensity of
    an activity too rapidly. If the activity that caused the stress
    fracture is resumed too quickly, larger, harder-to-heal stress
    fractures can develop. Reinjury also could lead to chronic problems
    where the stress fracture might never heal properly.
        Recognizing the severity and magnitude of the problem within its
    population, the Department of Defense commissioned the Institute of
    Medicine to examine the incidence of stress fractures in military basic
    training. In particular, the IOM was asked to address why the incidence
    of stress fractures in military basic training was greater for women
    than for men.
        The greater incidence of stress fractures in military women appears
    to be due in part to the ability of bone to withstand the sudden large
    increase in physical loading. Basic training subjects recruits to
    extensive physical conditioning over a relatively short period of time
    to bring them to the fitness level required to meet standards. The
    resultant stress on the less physically fit, both male and female,
    increases the likelihood of injury. A family history of osteoporosis
    increases the risk for female recruits.
        According to the IOM, the incidence of stress fractures has a
    marked impact on the health of service personnel and imposes a
    significant financial burden on the military by delaying the training
    of new recruits. Also stress fractures increase the length of training
    time, program costs, and time to military readiness. These injuries may
    also lead sufferers to end their military careers prematurely.
        The IOM study noted that stress fractures among 2,000 female Marine
    recruits resulted in 4,120 lost training days. The fractures required
    an average of eight or more weeks to heal.
        When we consider that approximately 200,000 women are currently
    serving on active duty in the U.S. Armed Forces, and an additional
    150,000 are serving in the Reserves, the impact of stress fractures
    takes on gigantic proportions. More than 14 percent of female cadets at
    the U.S. Military Academy alone developed stress fractures. However,
    stress fractures are not limited to women. The IOM report also pointed
    to 3.7 percent of male cadets at the U.S. Military Academy who
    developed stress fractures. The need to address the problem
    intensifies.
        The Bone Coalition applauds the DOD for the research it supports
    aimed at improving the bone health of recruits. Research currently in
    progress includes studies to:
      --determine if electric field stimulation enhances tibia stress
            fracture recovery. The tibia is the bone most frequently
            involved in stress fractures in military recruits. The
            prolonged time to healing (approximately 3 months), which
            requires rest from weight-bearing activity, adds up to a
            significant impact on military readiness.
      --identify gait patterns associated with stress fracture risk. The
            identification of biomechanical or body movement factors
            associated with stress fracture may lead to the development of
            preventive measures. How one runs is known to be associated
            with injury risk. During running, the body experiences vertical
            forces of nearly three times one's body weight.
      --determine if a protein-based supplement food bar can promote an
            increase in bone mass in physically active young military
            trainees. One study tests the hypothesis that nutrients other
            than calcium are critical to achieving peak bone mass. If a
            measurable benefit can be demonstrated through the use of a
            nutrient supplement, this could be of immediate use in military
            dietary strategies.
      --assess the relative importance of bone mass at the hip, spine, and
            tibia, and diet including calcium. For female cadets in this
            four year study of the epidemiology of stress fractures in
            cadets in the class of 2002 at the U.S. Military Academy (West
            Point), the importance of menstrual function on bone mass will
            also be assessed.
      --determine if low dose estrogen oral contraceptives can prevent or
            slow bone loss and decrease stress fractures in high risk
            females.
        These studies, along with other DOD studies in progress, will
    determine the most cost-effective approach to diagnosis and treatment
    of stress fracture to accelerate the return to duty. An improved
    understanding of these injuries will also form the basis of potential
    preventive measures.
        Mr. Chairman, a budget of $12 million in fiscal year 2002 will
    ensure the stability of the DOD osteoporosis and related bone diseases
    program and further its findings, which are critical to military
    readiness and recruit health.
        Thank you for this opportunity to testify before the Committee.

        Senator Stevens. Joe Barnes. I am sorry. We are on 10-
    minute votes. Senator Inouye is over voting now, but I have to
    be over there before the 10 minutes is over.
        Mr. Barnes.

    STATEMENT OF JOE BARNES, DIRECTOR OF LEGISLATIVE
                PROGRAMS, FLEET RESERVE ASSOCIATION

        Mr. Barnes. Mr. Chairman, on behalf of the more than
    150,000 shipmates who serve in or who have retired from the
    Navy, Marine Corps, and Coast Guard, I extend gratitude for the
    concern and active interest of this subcommittee in providing
    funds for our Nation's defense. The Fleet Reserve Association
    also salutes you, the members and staff for the outstanding
    efforts in the 106th Congress that brought about significant
    health program and quality of life enhancements. They are very
    much appreciated by the enlisted personnel that Fleet Reserve
    Association (FRA) represents.
        The association calls upon the Congress to continue its
    strong commitment and support for our men and women in uniform.
    Many important programs have long been ignored due to
    inadequate budget requests and demanding operational
    requirements. These negatively impact recruiting and retention,
    troop morale, and readiness. Recruiting and retention are
    primary concerns for the services and for FRA, due in part to
    inadequate pay and benefits to compete with compensation
    packages offered by civilian employers.
        With regard to the promised extra billion dollars for pay,
    FRA strongly recommends that Congress adopt an across the board
    increase of one-half to 1 percent in basic pay for all hands
    and target the balance to fund higher basic pay for enlisted
    grades E-5 through E-9. This recommendation is in addition to
    the 4.6 percent basic pay increase proposed for January 1st,
    2002.
        Reenlistment decisions are also impacted by access to the
    military health system. As the primary health care program for
    active duty members and their families and an integral part of
    their retirement package, the system has been chronically
    underfunded. The system has become reliant on emergency
    supplemental appropriations or the reprogramming of funds
    within DOD to ensure the availability of services. Supplemental
    appropriations have been proposed for the current fiscal year
    and FRA strongly supports this initiative.
        Another facet of the retention challenge is DOD's permanent
    change of station process. In contrast to Federal civilian
    employees, service members are being shortchanged for similar
    demands to relocate for duty assignments. In the event the
    oversight committee adopts the new plan, FRA requests the
    subcommittee to seek adequate funding for its implementation.
    Likewise, if authorized, FRA asks for your support for funding
    the concurrent receipt of both military retired pay and VA
    disability compensation without offset.
        Reform of the survivor benefit program is also needed to
    increase the basic annuity for surviving spouses, whose
    benefits are reduced when they become eligible for social
    security.
        These quality of life improvements will further enhance
    DOD's pay and benefit package and enable the services to better
    compete for highly skilled and dedicated personnel.
        Mr. Chairman, allow me to again express the sincere
    appreciation of the association's membership for all the
    subcommittee does for our military personnel. FRA is most
    grateful for this opportunity to express these concerns. Thank
    you.
        Senator Stevens. Thank you very much, Mr. Barnes.
        [The statement follows:]

                        PREPARED STATEMENT OF JOE BARNES

                                  INTRODUCTION

        Mr. Chairman. On behalf of its membership and the men and women of
    the Sea Services whom it represents, the Fleet Reserve Association
    (FRA) gratefully acknowledges the significant contributions this
    Subcommittee has made to quality-of-life programs for the personnel of
    the Uniformed Services. The Association salutes you, the members and
    staff, for a job well done throughout the many years the FRA has been
    associated with your distinguished Subcommittee.
        Fiscal year 2001 proved a banner year for military personnel
    legislation. Congress adopted new and improved military health care
    policies; TRICARE-for-Life and expanded pharmaceutical benefits.
    Additionally, to name but a few of the other major accomplishments; a
    sizeable basic pay increase, housing allowance reform, pay reform for
    mid-grade noncommissioned and petty officers, enhancement of the
    Montgomery GI Bill (MGIB), modification of the Impact Aid program, and
    increased compensation programs to financially assist junior enlisted
    personnel.
        The successful adoption and enactment of these and other programs
    in the fiscal year 2000 and fiscal year 2001 National Defense
    Appropriations and Authorization Acts can be attributed to the
    persistence and effectiveness of this Subcommittee, its members and
    staff. The legislation adopted by Congress in the previous two years
    will go far to augment the stability and readiness of the All Volunteer
    Force (AVF) which, in turn, lends greater credence that the AVF is the
    most reliable source for the defense of the United States and its
    Allies.

                     FRA: LOYALTY, PROTECTION, AND SERVICE

        The role of FRA, the oldest and largest enlisted military service
    organization, has been constant for more than three-quarters of a
    century. It has been and continues to be the ombudsman for all enlisted
    men and women of the three Sea Services--the U.S. Navy, Marine Corps,
    and Coast Guard. The membership, 150,000 strong, consists of enlisted
    personnel serving on active duty, in the Naval, Marine Corps and Coast
    Guard Reserve, or retired after honorably serving the Nation in war and
    peace. Many of the latter are combat veterans having served in one, two
    or three major conflicts involving the United States.
        Noteworthy, is the Association's lead among all military and
    veterans' organizations in initiating and campaigning for legislation
    beneficial to quality-of-life projects that enhance recruiting and
    retention. Among its major successes are the Civilian Health and
    Medical Program for the Uniformed Services (CHAMPUS), now TRICARE, the
    uniformed services Survivor Benefit Plan (SBP), and in the past three
    years, repeal of REDUX (the onerous 1986 military retirement system)
    and Pay Reform for mid-grade noncommissioned and petty officers.

                               THE DEFENSE BUDGET

        Mr. Chairman. The Constitution of the United States begins with
    ``We, the People of the United States, in order to form a more perfect
    union, establish justice, insure domestic tranquility, provide for the
    common defense, promote the general welfare, and secure the blessings
    of liberty to ourselves and our posterity, do ordain and establish this
    Constitution for the United States of America.'' The words provide for
    the common defense are emphasized because they proceed the words,
    ``promote the general welfare.''
        In 1900, for example, the federal budget outlay (based on 1999
    dollars) was $10.5 billion of which $4 billion (38 percent) was
    earmarked for defense expenditures. In 1999, the federal outlays were
    $1.7 trillion with $268 billion (16 percent) for defense. In the past
    eight years the defense budget has dropped from 19.3 percent of the
    federal budget to an estimated low of 15.9 percent in 2001. Under this
    scenario, FRA believes it has the duty to alert the Congress that
    increased authorization and funding for the programs necessary to
    maintain the highest degree in personnel readiness are priorities for
    fiscal year 2002. Should the Administration follow through with its
    statement of no significant increase in the fiscal year 2002 Clinton
    Defense Budget (in addition to the $3.7 billion for military health
    care, pay raises, and a boost in housing allowances) the Congress must
    enhance both authorization and funding to cover improvements in other
    quality-of-life projects. The current Administration may need
    additional time to develop a budget based on future strategic
    necessities, but time is not required to realize the immediate funding
    needs for repair parts, housing, modernizing infrastructures, and other
    programs that remain constant regardless of the strategic scenario.

                                    CONCERNS

        It would appear the successes recorded in the 106th Congress would
    be more than adequate to forego further requests for improvements in
    uniformed personnel programs. However, the need exists to continue the
    march for quality of life enhancements for our men and women in the
    Armed Forces, as well as those who have retired from the uniformed
    services after serving the required number of years on active or
    reserve duty. Many programs have been long ignored due to inadequate
    budget requests from previous Administrations. Slim budgets have played
    havoc with troop morale and readiness; too many operational demands on
    manpower, reduced or canceled training exercises and sessions,
    shortages of equipment and repair parts, inadequate housing and working
    facilities--plus the stress of juggling the demands of the Service with
    that of family life.

                       SUSTAINING THE ALL VOLUNTEER FORCE

        The recently published draft report, Road Map for National
    Security, released January 31, 2001, by The United States Commission on
    National Security/21st Century, calls upon the Nation to ``strengthen
    government (civil and military) personnel systems in order to improve
    recruitment, retention, and effectiveness at all levels.''
        It further attests to the Services' difficulties in recruiting and
    retention. To give the military Services ``the flexibility to adapt and
    dramatically reshape their personnel systems to meet 21st century
    mission needs,'' the report calls upon the President and the Congress
    to propose and adopt legislation that will enhance both military
    compensation and the retirement system.
        FRA agrees with the Commission's views on recruiting and retention.
    Without attaining goals in these two categories, there would be no All
    Volunteer Force (AVF). Although FRA soundly believes military service
    for all physically-abled young men should be mandatory, it continues to
    support the AVF--provided the taxpayers are willing to spend the money
    to maintain its structure.
        The recruiting and retention scene has dramatically changed over
    the last 30 years. Taxpayers are paying as much as a $20,000 bonus,
    plus an educational benefit worth $50,000, to access one individual
    into the Armed Services. Taxpayers also pay more money to enlist
    married persons, with or without children, persons with families, or
    single parents with child(ren). Apparently, this is now a necessity or
    the AVF cannot attain its manpower objectives through accessing only
    unmarried and unencumbered males and females. Members of this group are
    not swarming into recruiting stations demanding to enlist.
        According to the 1998 Youth Attitude Tracking Study (YATS), the
    propensity of young males to enlist in the military has dropped to 26
    percent compared to 34 percent in 1991. The percentage of youth going
    to college is increasing and those going to college express little
    interest in serving in uniform.
        In its list of priorities for fiscal year 2001, FRA is recommending
    to the Congress that during the authorization and funding process it
    consider adopting the following: (1) further pay reform to include all
    enlisted grades from E-5 through E-9; (2) adequately fund the
    Department of Defense's Health Care Program to include enhancements
    adopted in the Fiscal Year 2001 Floyd D. Spence National Defense
    Authorization Act; (3) improve the permanent change of station (PCS)
    process; (4) increase the size of the military manpower pool (or reduce
    deployments to ``fit'' the size of DOD's current uniformed strength);
    (5) adequately support Reserve component requirements, and; (6) enhance
    other quality-of-life programs including reform of the uniformed
    services Survivor Benefit Plan, authorizing full concurrent receipt of
    retired pay and disability compensation, reforming sea pay, enacting
    equity amendments to the Uniformed Services Former Spouses Protection
    Act (USFSPA), and enhancing GI Bill benefits.

                     PAY REFORM FOR CAREER ENLISTED GRADES

        The Association's membership, along with shipmates from the Navy,
    Marine Corps and Coast Guard, are extremely grateful to Congress for
    adopting the FRA Pay Reform package for mid-grade noncommissioned and
    petty officers (NCO) effective July 1, 2001. The reform came a year
    late, but the value of the delay prompted Congress to direct DOD to
    take another look at enlisted pay rates for the NCO corps.
        The 9th Quadrennial Review of Military Compensation (QRMC) has made
    a commitment to review NCO basic pay by reconsidering the enhanced
    value of the NCO corps to the Armed Services. Their increased
    educational level and advanced technical knowledge command high wages
    in the civilian market.
        FRA welcomes the attention given to NCO basic pay. The All
    Volunteer Force (AVF) that provided young enlisted members with higher
    basic pays, improved housing allowances, inflated enlistment bonuses,
    enhanced Cold War educational entitlements, and special pays (to name a
    few) is producing pay inversion--junior enlisted personnel are earning
    more pay than their senior NCOs/petty officers.
        Congress has approved the use of more tax dollars to ensure junior
    service members receive extra pays (i.e. additional allowance for
    housing and to remove them from dependency on food stamps), yet this
    group normally will be promoted 3 to 4 additional pay grades in two to
    three years with a 43 percent to 55 percent increase in basic pay. On
    the other hand, a senior noncommissioned officer in pay grade E-9 can
    manage but a 30 percent increase in basic pay over a 16-year period.
        This is the year to fix the pay inversion that engulfs NCOs and
    causes many of our mid-level noncommissioned and petty officers to bail
    out of the military in their 10th to 15th years of service. It's not
    just the lure of higher wages in the civilian world, it's looking
    forward to a bleak future in the Armed Forces that promises compressed
    pays at the senior enlisted level (E-8 and E-9) and a lack of
    recognition and appreciation for their roles as leaders and teachers.
        Many of these bright and intelligent young people should aspire to
    attaining the grade of E-8 or E-9 instead of opting for a warrant or
    commissioned officer spot where the money can be a factor. Reviewing
    the current military retirement program finds the average enlisted
    military retiree in pay grade E-7, the average officer in pay grade O-
    5. The E-7's annual retirement pay as of January 1, 2001 will be
    $16,552 for 20 years of service. For the O-5, $34,741, or more than
    twice the pay of the retired E-7. Even an O-3's retirement pay at 20
    years will be $25,752, more than a 50 percent increase over that of the
    E-7.
        Who can blame these young people with 10 to 15 years of enlisted
    service to opt for the life of a commissioned officer. The financial
    lure is greater--greater than the retirement pay of an E-7, E-8, or E-
    9. Yet, there is a pressing need for the services to retain senior NCOs
    and Petty Officers to guide, lead, teach, train, counsel, and inspire
    their junior charges.
        The Armed Forces cannot endure with only an officers' corps and a
    junior enlisted force. Few young people would seek a commission if it
    required them to have the experience to perform the same tasks now
    accomplished by the NCO corps. There must be an intermediate corps in
    the Armed Forces of dedicated men and women, conditioned and
    experienced by years of service, capable of enforcing the commands of
    the officers charged with planning and directing the unit's mission.
        NCOs and petty officers do much more than carry out the orders of
    their officers. They also teach, train and counsel young men and women
    entering the officer ranks, replace officers in positions of command
    and, when called upon, change their stripes for bars during national
    emergencies.
        The Association opposes utilizing the additional $1 billion
    promised for pay increases to fund bonuses and special pays. FRA
    recommends that Congress adopt a lesser across-the-board increase in
    basic pay for all hands (perhaps one-half to 1 percent) and target the
    balance to fund higher basic pay rates for the E-5 to E-9 enlisted
    grades.
        This recommendation is in addition to the higher than the ECI 4.6
    percent basic pay increase proposed for January 1, 2002.

                              HEALTH CARE FUNDING

        FRA appreciates the significant military health care enhancements
    enacted in fiscal year 2001 and recommends that the Congress reiterate
    its commitment to authorize and appropriate sufficient funds for these
    improvements within the Department of Defense (DOD) Health Program
    (DHP). And further, to direct the Health Care Finance Administration
    (HCFA) to reimburse DOD for its care of Medicare-eligible military
    families at Military Treatment Facilities (MTFs), and expand the option
    of participating in the Federal Employees Health Benefit Plan (FEHBP)
    to military beneficiaries who are unable to find TRICARE providers for
    care, because of the absence of Medicare Part B, or because they are
    under age 65 and do not have the option to enroll in TRICARE Prime.
        The Military Health System (MHS) is chronically underfunded,
    resulting in execution shortfalls, lack of adequate equipment
    capitalization, failure to invest in infrastructure and slow
    reimbursement to Managed Care Support contractors. For a number of
    years, the MHS has been forced to rely on emergency supplemental
    appropriations or the reprogramming of funds within DOD.
        The military's health care program is one of the most important of
    all benefits afforded the men and women who serve in or have retired
    from the Uniformed Services, plus their families and survivors. The
    promise of ``free'' lifetime care in military treatment facilities
    (MTFs) was a major selling point in the military's recruiter's and
    career counselor's pitch to enlist or retain personnel in the Uniformed
    Services. Other than travel, adventure, and a 20-year retirement, what
    else was there to entice our service members to remain in uniform?
        FRA is also represented by a more detailed statement in The
    Military Coalition's statement on additional health care issues and
    invites members of the distinguished Subcommittee to peruse that for
    additional information on this important issue.

                IMPROVE THE PERMANENT CHANGE OF STATION PROCESS

        The FRA is very concerned that service members continue to incur
    significant out-of-pocket expenses in conjunction with government-
    directed relocation orders.
        A survey conducted by FRA via the Association's web site last fall,
    revealed that out of pocket expenses for military personnel averaged
    $2,270 across all pay grades. In addition, the 1999 Calibre Associates
    Study commissioned by DOD revealed that junior enlisted personnel
    indicated that providing a list of entitlements with permanent change
    of station (PCS) orders was their most desired change to existing
    policy. Due in part to confusion and misunderstanding of the entire
    process, junior enlisted personnel had a lesser proportion of their
    authorized expenses (27 percent) reimbursed by the government compared
    to the median (62 percent) of all other study respondents.
        In contrast to federal civilians, service members are being
    shortchanged. Federal civilians receive substantial reimbursements in
    conjunction with government directed moves, up to and including
    reimbursement for house-hunting trips and homeowner closing costs. In
    the words of an FRA member, ``I am a civil servant with a DOD agency
    and a Naval Reservist who has PCSed as a civilian. These (DOD)
    officials had every penny of their relocation expense reimbursed--by
    contrast the military PCSer has a very limited scheme of reimbursement.
    The answer to this, as it is to so many federal reimbursement systems,
    is simple. Just use the same reimbursement formula for the military
    member as applies to members of the senior civil service.'' FRA
    concurs.
        Although the services are now authorized to provide advance
    temporary subsistence expenses and per diem to service members on duty
    outside the Unitede States, in Hawaii or Alaska, the PCS mileage
    allowances and per diem rates have not been adjusted since 1986. The
    Association applauds and strongly supports the expanded household goods
    demonstration projects which have the potential for significantly
    improving the quality of service and reducing the administrative
    requirements associated with claims and other procedures.
        While fully understanding that the Subcommittee is not responsible
    for authorizing further enhancements to PCS programs, the Association
    asks for your support of improvements that may be included in fiscal
    year 2002 authorizing legislation.

                          UNIFORMED MANPOWER STRENGTHS

        FRA continues to be concerned over the strength of the Nation's
    uniformed manpower, particularly that of the Navy, Marine Corps, and
    Coast Guard. There's far too much rhetoric regarding the adequate
    number of uniformed personnel; it's either too many or too few. FRA
    subscribes to the latter view--there aren't sufficient numbers of
    personnel to sustain the number of world-wide operations and training
    commitments. Sea Service members, as well as those in the Army and Air
    Force, are unduly stressed because there isn't sufficient manpower
    available to meet mission requirements. Optempo is such that it impacts
    heavily on perstempo resulting in a serious negative effect on
    readiness.
        FRA concedes that accessing greater numbers of recruits for the
    Armed Forces will be an extreme challenge to the Services recruiting
    force. Most of the Armed Forces have bolstered their recruiter ranks
    substantially along with associated budgets for advertising, enlistment
    bonuses and other costs. If an individual Service must attract
    increased numbers of qualified personnel, the Congress should provide
    adequate resources to attain that goal.
        Most importantly is the threat that certain ``defense experts''
    will recommend further reductions in the active forces in favor of
    increasing Reserve units. Although the Reserves have served
    magnificently in war and peace, the Nation should remember the Korean
    conflict. In WW I and WW II, the Vietnam and Desert Storm, the United
    States had some time to train its uniformed personnel before committing
    them to combat. For the Korean conflict, the United States had a small
    regular force, mostly untrained, to send into battle. The United States
    was outnumbered, outmaneuvered and slaughtered before the Reserves
    could be mobilized and committed to battle. When the Congress considers
    Reserve strengths, which FRA believes should be increased, it must
    remember the ``Forgotten War''--Korea--and augment the active forces as
    recommended by Service chiefs.

                            RESERVE COMPONENT GOALS

        The Reserve components of the Navy, Marine Corps, and Coast Guard
    are an important part of the Total Force concept and essential to
    sustaining the high state of readiness of the Nation's Armed Forces.
    Reservists have carried the brunt of defending the United States
    against all enemies. As the old saying goes, there are more names of
    Reservists on the headstones in our wartime cemeteries than members of
    the regular force. FRA salutes its Reservists' members and seeks
    authorization and funding from the Congress for the following:
      --Adoption of a permanent policy authorizing six years of Selected
            Reserve service to qualify for retirement.
      --Authorizing employer and reservist tax credit for unreimbursable
            expenses.
      --Extension of the ten year limitation for selected reservists to use
            their MGIB benefits.
      --Deferring repayment of certain federal student loans for activated
            reservists.
      --Increasing medical coverage for reservists who become ill while
            performing inactive duty for training.
      --Extending the VA Home Loan Guarantees for selected reservists.

                          OTHER QUALITY-OF-LIFE ISSUES

    Survivor Benefit Plan
        FRA supports and recommends the adoption and funding of Sen. Strom
    Thurmond's S. 145, to amend title 10, United States Code, to increase
    to parity with other surviving spouses the basic annuity that is
    provided under the Uniformed Services Survivor Benefit Plan for
    surviving spouses who are at least 62 years of age. Further, to adopt
    and fund a proposal to amend the date now established in law
    authorizing paid up SBP premiums for statutory-eligible participants
    from October 1, 2008 to October 1, 2002.
        Currently, the plan falls short of what is offered our retired
    Federal civilian counterparts once employed by the DOD. Under the
    Federal Employees Retirement System (FERS) they receive a subsidy of 42
    percent, and under Civil Service Retirement System (CSRS) 50 percent.
    Uniformed Service members, on the average, pay less than retired DOD
    civilian employees but pay into the plan over a longer period (e.g. 36
    years compared to 19) for the retired DOD employee. Members' surviving
    spouses also receive less of a gain than CSRS and FERS surviving
    spouses although payments to the former are made over a longer period.
        Some Congressional sources state there is a conflict as to whether
    the original intent of the SBP was to have the Federal Government
    subsidize 40 percent of its costs. They claim there is nothing to
    support the existence of that subsidy. But there is such a base. The
    then Assistant Secretary of Defense for Force Management Policy
    forwarded a report on the Survivor Benefit Plan on July 18, 1996, to
    the Chairman of the Committee on National Security. The report on page
    ES-18 emphasized that the original intent was to provide a subsidy of
    40 percent, that it was then about 28 percent, and that a selection of
    recommended options in the report should be selected to raise the
    subsidy to approximately 40 percent.
        If the Federal Government provided its 40 percent share over the
    past years, there would be sufficient funding in the participants'
    contributions to authorize and appropriate funds (approximately $3
    billion over a ten-year period) to enact the changes requested above.

    Concurrent Receipt
        FRA urges Congress to adopt and fund S. 170, sponsored by your
    colleague, Sen. Harry Reid,, that would authorize nondisabled retired
    members of the Armed Forces who later become eligible for service-
    connected disability payments to receive both full military retired pay
    reason of years of military service, and compensation payments from the
    Department of Veterans Affairs. The enactment of this proposal would
    halt the discriminate practice of denying retired military personnel
    concurrent receipt while authorizing such for retired civilian
    employees of the DOD and other Federal agencies.
        Opponents claim that two Federal payments should not be authorized
    for the same period of service; however, certain Federal employees
    receive two payments from the U.S. Treasury for their employment while
    concurrently receiving pay for active duty for training in the Reserve
    components of the Armed Forces. FRA believes it can say without a doubt
    that this is two Federal payments for the same period of time.

    Former Spouses Protection Act (FSPA)
        The Uniformed Services FSPA, Public Law 97-252, is probably the
    most ambiguous, misunderstood, inequitable, and prejudiced law ever
    forced on retired members of the Uniformed Services. It is not that the
    majority of retired military members wish to not share their military
    retirement pay with ex-spouses, but the fact that family courts appear
    to use the Act to penalize many military retirees and as a means to
    force payment of divorce settlements through the United States
    Government.
        State courts almost automatically award ex-spouses percentages of
    the respective members' retirement pay ordering the DOD to directly pay
    the courts' awards to the ex-spouse or an appropriate state agency.
    However, without full assurance, the courts have jurisdiction over the
    members concerned. Whereas the language of the Act states the courts
    ``may'' treat military retirement pay as property, the majority of
    courts interpret the word as ``will'' or ``shall.'' Further, should a
    state court ignore provisions of law in the USFSPA or a decision made
    by the United States Supreme Court, there is no available means within
    the United States Judiciary to assist the member in forcing the
    offending state court to amend its unlawful ruling.
        There are many inequities in this law, heavily weighted against the
    retired military member. Congress must face the unpleasant task of
    reforming the Act so that it is as fair to the retired member as to his
    or her ex-spouse. FRA, as well as many other military and veterans
    organizations, representing millions of members, will be pleased to
    support the Congress in amending the Act. True, USFSPA has been amended
    11 times in favor of the ex-spouse and only once for military retirees.
    FRA recommends that no such further amendments be adopted without
    considering favorable and equitable changes for military retirees.
    Sea Pay
        FRA urges the Congress to authorize and appropriate funding
    increases in Career Sea Pay. And additionally, to authorize and fund
    sea pay for junior enlisted sailors in the grades of E-1 through E-3.
    In 1995, one of the Association's legislative staff members
    participated as a member of the Defense Science Board Quality of Life
    Panel. In visits to Naval installations and ships, recurring comments
    were heard from both ships' officers and senior enlisted chiefs about
    the importance of providing sea pay, or its equivalent, to junior
    enlisted sailors. These young sailors go to sea the same as the career
    force and perform the essential but unglamourous jobs on ships.
    Additionally, in many cases they are required to live aboard the ships
    when in dock for repairs where the noise is deafening--resulting in no
    rest, no sleep, and no peace of mind.

    GI Bill
        Educational benefits are the most attractive Armed Forces
    recruiting incentive and, despite improvements made in fiscal year 2001
    to the Montgomery GI Bill (MGIB), further program enhancements are
    needed. With the Services experiencing continuing difficulties in
    recruiting quality personnel, it is almost imperative that the Congress
    increase the Bill's appeal to the Nation's eligible youth.
        However, enhancement should not be so attractive that the first
    term service member opts to leave the military to take advantage of an
    improved MGIB. Additional benefits should be predicated on the service
    member's further retention. First-termers who reenlist for four or more
    years would be offered additional benefits. For those remaining in
    uniform for longer periods of service, greater entitlements would be
    available. If the service member serves 20 years or more for retirement
    purposes, only the member performing such service would be so
    authorized an even greater benefit package or choose the option of
    transferring the entitlement to a member of the immediate family.
        Additionally, FRA recommends that the MGIB be opened to enrollment
    of qualified members on active or Reserve duty who have not previously
    enrolled or disenrolled provided they reenlist for a term of no less
    than three years. The costs of these improvements may be high, but the
    benefits will be even higher. Better yet, the All Volunteer Force will
    survive.

    Other Goals
        In addition to FRA's primary goals, there are others issues listed
    below that have been adopted by the Association's members in assembly
    at its 2000 National Convention. To adopt:
      --Adequate funding as required by law for Basic Allowances for
            Housing.
      --Expansion of the number of family housing and barracks to replace
            aging and substandard units.
      --Adequate funding for commissary stores to preserve current
            benefits.
      --Continuation of augmenting Impact Aid appropriations to ensure
            adequate funding to military-impacted schools.
      --Support the continuation of the Relocation and Transition
            Assistance Programs.
      --Abbreviated military treatment facilities (MTFs), commissary stores
            and exchanges at military installations ordered to close where
            there is a sizeable military patronage of active, Reserve, and/
            or retired service members.
      --Adequate funding to provide for the procurement of necessary
            equipment and essential spare parts.
        Mr. Chairman. There are other goals not listed herein; goals that
    need to be resolved for the benefit of the men and women serving in the
    Uniformed Services. They do not, however, concern the programs and
    issues assigned to this distinguished Subcommittee. FRA will make them
    known to the appropriate panels with a request that the members of this
    Subcommittee actively support their adoption if brought to the House
    floor for consideration. The latter includes the need to escalate the
    modernization and construction of living, working, and recreational
    facilities on board ships as well as on land--issues FRA is addressing
    in testimony to the Subcommittee on Military Construction
    Appropriations.
        Meanwhile, FRA extends its appreciation for the opportunity to
    present its goals for fiscal year 2002, to seek your support for the
    issues presented, and to wish the Subcommittee the very best in its
    deliberations on dividing the budget to fund the programs of importance
    to our uniformed personnel.

        Senator Stevens. I will vote and the next witness will be
    Ms. Hinestrosa.
        Senator Inouye [presiding]. The chair calls upon Maria
    Carolina Hinestrosa, Board member of the National Breast Cancer
    Coalition.

    STATEMENT OF MARIA CAROLINA HINESTROSA, BOARD MEMBER,
                NATIONAL BREAST CANCER COALITION

        Ms. Hinestrosa. Thank you very much, Mr. Chairman and
    members of the committee, for your exceptional leadership in
    the effort to increase and improve breast cancer research. As
    my testimony will describe in detail, the investment and cancer
    research made by you in this committee has brought us closer
    than ever to the verge of significant discoveries about cancer.
        I am Carolina Hinestrosa, founder of Nueva Vida and member
    of the Board of Directors of the National Breast Cancer
    Coalition (NBCC). I am also a two-time breast cancer survivor
    and a consumer advocate in the Department of Defense Breast
    Cancer Research Program Integration Panel, and we do
    programmatic review.
        As you know, the National Breast Cancer Coalition is a
    grassroots advocacy organization made up of more than 600
    organizations and tens of thousands of individuals and has been
    working since 1991 toward the eradication of this disease
    through advocacy and action. As a member of the integration
    panel, I participate in the evaluation of all the proposals
    submitted to the DOD breast cancer research program. I also
    take part in the careful discussion that sets the vision for
    this unique program.
        On behalf of the National Breast Cancer Coalition and the
    2.6 million women now living with breast cancer, I thank you
    for your strong past support of the DOD breast cancer research
    program and urge your continued support of this important
    program with level funding for financial year 2002.
        The National Breast Cancer Coalition believes this program
    is vital to the eradication of breast cancer. My written
    testimony, which I would like to submit for the record, has
    specific examples of scientific achievements resulting from
    funding through the DOD breast cancer research program. The
    main point I want to make today is that developments in the
    past few years have begun to offer breast cancer researchers
    crucial insights into the biology of breast cancer and have
    brought into sharp focus the areas of research that hold
    promise to build on the knowledge and the investment we have
    made.
        Breakthroughs in basic research have opened the door for
    targeted approaches that address one woman's breast cancer in a
    different way from another woman's breast cancer. The DOD
    program has contributed immensely to the body of knowledge
    about this very complex disease in the areas of prevention,
    detection, androgenesis, vaccines, and clinical applications.
    But we still have a great deal more to learn.
        Mr. Chairman and members of the committee, the investment
    that you have made in the program over the years is now
    beginning to pay off. This is not the time to step back from
    funding this unique and innovative research program. Rather,
    this is precisely the time to continue a focused, targeted
    program that looks specifically at breast cancer.
        As a result of the DOD program, the amount of scientific
    information about breast cancer is exploding. We must continue
    this focus in order to build on this gained knowledge and on
    the discoveries that we have made. The DOD breast cancer
    research program has been an incredible model that others have
    replicated. The innovative research performed through the
    program has the potential to benefit not only breast cancer,
    but all cancers, as well as other diseases. Its success is
    literally changing the face of biomedical research in many
    areas.
        An inherent part of this program has been the participation
    of consumer advocates at every level, which has created an
    unprecedented working relationship between advocates and
    scientists and ultimately led to promising research in breast
    cancer. 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
    facts.
        The program is also responsive to the public. All the
    research that has been funded through the DOD breast cancer
    research program is reported to the public in a biannual
    conference called the Era of Hope Meeting. 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 have gone directly to research grants. 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, as we truly believe it is one of our best
    chances at finding a cure or a true 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 research to forge ahead. Level funding
    would allow the momentum to continue towards eliminating the
    enormous toll that breast cancer puts on American families.
        NBCC asks you, the Defense Appropriations Subcommittee, to
    recognize the importance of what you have initiated. You have
    set in motion an innovative and highly efficient approach of
    fighting the breast cancer epidemic. You must continue to
    support this effort by funding research that will help us win
    this very real and devastating war against a cruel enemy.
        Very shortly you will receive a letter that has been signed
    by more than 60 of your colleagues in support of the
    continuation of the breast cancer research program and funding
    at $175 million.
        I want to thank you very much for inviting me to testify
    and giving hope to the 2.6 million women living with breast
    cancer in the United States. Thank you.
        Senator Stevens [presiding]. Thank you.
        [The statement follows:]

                PREPARED STATEMENT OF MARIA CAROLINA HINESTROSA

        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 that has brought us closer
    than ever to the verge of significant discoveries about cancer. I am
    Carolina Hinestrosa, member of Programa Nueva Vida and member of the
    Board of Directors of the National Breast Cancer Coalition. I am also a
    breast cancer survivor, and a consumer advocate on the Department of
    Defense Breast Cancer Research Program Integration Panel, which does
    programmatic review.
        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 2002. 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 more than 600 organizations and tens
    of thousands of individuals and has been working since 1991 toward the
    eradication of this disease through advocacy and action. NBCC supports
    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.

               OVERVIEW OF THE DOD BREAST CANCER RESEARCH PROGRAM

        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.

                          UNIQUE FUNDING OPPORTUNITIES

        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. Therefore, they
    complement, and do not duplicate, other federal funding 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.

                            SCIENTIFIC ACHIEVEMENTS

        Following are just some of the achievements of the DOD BCRP which
    are included in DOD's Congressional Directed Medical Research Programs
    Annual Report (September 1999) sent to Congress. The DOD Peer-Reviewed
    Program has 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.
        One of the most promising outcomes of research brought about by the
    BCRP was the development of Herceptin, a drug that prolongs the lives
    of women with a particularly aggressive type of advanced breast cancer.
    This drug could not have been developed without first researching and
    understanding the gene known as HER2-neu, which is involved in the
    progression of some breast cancers. In a DOD BCRP funded study,
    researchers found that over-expression of HER-2/neu in breast cancer
    cells results in very aggressive biologic behavior. Most importantly,
    the same researchers demonstrated that an antibody directed against
    HER2-neu could slow the growth of the cancer cells that over-expressed
    the gene. This research led to the development of the drug Herceptin.
    Other researchers funded by the BCRP are currently working to identify
    similar kinds of genes that are involved in the initiation and
    progression of cancer. They hope to develop new drugs like Herceptin
    that can fight the growth of breast cancer cells.
        Several studies funded by the BCRP will examine the role of
    estrogen and estrogen signaling in breast cancer. For example, one
    study examined the effects of the two main pathways that produce
    estrogen. Estrogen is often processed by one of two pathways; one
    yields biologically active substances while the other does not. It has
    been suggested that women who process estrogen via the biologically
    active pathway may be at a higher risk of breast cancer. It is
    anticipated that work from this funding effort will yield insights into
    the effects of estrogen processing on breast cancer risk in women with
    and without family histories of breast cancer.
        One DOD Idea award success has supported the development of new
    technology that may be used to identify changes in DNA. This technology
    uses a dye to label DNA adducts, compounds that are important because
    they may play a role in initiating breast cancer. Early results from
    this technique are promising and may eventually result in a new marker/
    method to screen breast cancer specimens.
        Another DOD BCRP Idea award has generated a new vaccine targeted
    against ductal carcinoma in situ (DCIS), a malignant, non-invasive
    lesion that can develop into an invasive breast cancer. The vaccine is
    being tested on mice that develop spontaneous mammary tumors that over
    express the HER-2/neu protein. Mice treated with the vaccine show a
    markedly decreased rate of tumor development when compared to that
    generated for the prevention of tumor formation in women at risk for
    the development of HER-2/neu expressing tumors.
        Investigators funded by the DOD have developed a novel imaging
    technique that combines two-dimensional and novel three-dimensional
    digital mammographic images for analysis of breast calcifications.
    Compared to conventional film screen mammography, this technique has
    greater resolution. Ultimately, this technique may help reduce the
    number of unnecessary breast biopsies.
        Despite the enormous successes and advancements in breast cancer
    research made through funding from the DOD BCRP, we still do not know
    what causes breast cancer, how to prevent it, or how to cure it. It is
    critical that innovative research through this unique program continues
    so that we can move forward toward eradicating this disease.
        Research that has been funded through the DOD BCRP is available to
    the public. Individuals can go to the Department of Defense website and
    look at the abstracts for each proposal.

                            FEDERAL MONEY WELL SPENT

        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 have gone directly to research grants. The overall structure
    of the system has streamlined the entire funding process, while
    retaining traditional quality assurance mechanisms.
        Since inception of the DOD BCRP, more than 15,000 proposals have
    been received. For the fiscal year 2000 BCRP, 1,234 proposals in 14
    different award mechanisms were received and 347 proposals have been
    recommended for funding.
        A total of 1,772 one-page proposals for Concept Awards (a new type
    of grant for preliminary ideas that could not otherwise get funding)
    was received electronically as a result of a second fiscal year 1999
    Program Announcement. The fiscal year 1999 appropriation funded 98
    Concept Awards, and negotiations for 206 awards to be funded with the
    fiscal year 2000 appropriation have begun and should be completed by
    September 30, 2001.
        As you know, Congress appropriated $175 million for the fiscal year
    2001 BCRP. The fiscal year 2001 Program Announcement was this month.
    Following a two-tier review, all awards will be negotiated by September
    2002.
        The outcomes of the BCRP-funded research can be gauged, in part, by
    the number of resultant publications, abstracts/presentations, and
    patents/licensures reported by awardees, to date. There have been 2,300
    publications in scientific journals, 1,800 abstracts and 30 patents/
    licensure applications.
        The American people can truly be proud of their investment in the
    DOD BCRP.

                       POSITIVE FEEDBACK ON THE DOD BCRP

        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 two public meetings called the ``Era of Hope'' (one in
    1997, and one in 2000). These have been the only times that 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. These meetings
    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.
        At the first ``Era of Hope'' meeting in 1997, many scientists
    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.''

        This enthusiasm was reiterated at the second Era of Hope meeting
    last 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.

               COMMITMENT OF THE NATIONAL BREAST CANCER COALITION

        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 called 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
    was an essential component of reaching the $2.6 billion goal that so
    many women and families worked to gain.
        Once again, NBCC is bringing its message to Congress. Just a few
    weeks ago, many of the women and family members who supported the
    campaign to gain the 2.6 million signatures participated in NBCC's
    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 in, 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.
        NBCC asks 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. Mr. Pearce, American Chemical Society,
    please.

    STATEMENT OF ELI PEARCE, Ph.D., PRESIDENT-ELECT,
                AMERICAN CHEMICAL SOCIETY

        Mr. Pearce. Chairman Stevens and Senator Inouye, good
    morning and thank you for the opportunity to testify today. My
    name is Eli Pearce and I am President-elect of the American
    Chemical Society (ASC). A congressionally chartered
    organization, the American Chemical Society represents 163,000
    chemical scientists and engineers.
        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. As a
    professor of chemistry at Polytechnic University in Brooklyn,
    New York, I know first-hand the importance of DOD research. The
    society thanks the subcommittee for the substantial increases
    it provided for defense research in fiscal year 2001, which was
    an important step toward reversing the declines that the
    defense research programs experienced in the 1990's.
        Mr. Chairman, the ACS urges the committee to increase the
    science and technology program 10 percent to $10 billion for
    fiscal year 2002. This is not an arbitrarily chosen target. In
    fact, it is consistent with the longstanding recommended level,
    reiterated this spring by the Department's own science board. A
    strong, steady investment in the science and technology
    program, especially in the 6.1 basic research account, will
    enable DOD to capitalize on synergies between new discoveries
    and developing technologies.
        Currently DOD must decline almost as many highly rated
    grant proposals as it can fund. These are lost opportunities.
    We are delighted that President Bush has emphasized the need to
    make the long-term science and technology investments required
    to safeguard our national security, not just this year or next
    year, but 10 and 20 years down the line. As you know, the
    President proposes to increase defense Research and Development
    (R&D) programs by $20 billion over 5 years, including $2.6
    billion in fiscal year 2002.
        Although the administration has not specified which R&D
    accounts would receive increases, we strongly recommend that
    enough of this proposed increase be directed to the core
    science and technology research accounts to achieve the $10
    billion funding target.
        Mr. Chairman, I would now like to share an example with you
    of how fundamental scientific discoveries have helped the
    Department of Defense solve long-term challenges. This example
    comes from university researchers working with chemists at the
    Naval Research Laboratory, exploring ways to uncover plastic
    mines, which are difficult to detect with metal detectors. This
    work has led to a new way to detect explosives using nuclear
    quadrupole resonance (NQR). These life-saving devices,
    successfully tested by the Navy in 1999, have significant
    potential for increasing civilian airport security as well,
    making NQR an interesting example of dual use technology.
        Examples such as these are what DOD's science and
    technology investments are all about, investing in those
    fundamental areas of research that have the highest potential
    for discoveries that can cut costs, save lives, and, above all,
    advance our national security. To stay several technological
    steps ahead of adversaries, we simply have no choice but to
    invest in cutting edge science today.
        Thank you for your attention to this important matter. The
    American Chemical Society looks forward to assisting you in any
    way possible.
        Senator Stevens. Thank you very much.
        [The statement follows:]

                        PREPARED STATEMENT OF ELI PEARCE

        Chairman Stevens, Ranking Member Inouye, and Members of the
    Subcommittee: Good morning. My name is Eli Pearce, and I am President-
    Elect of the American Chemical Society. I am also a chemist professor
    at Polytechnic University in Brooklyn, New York. 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 more than 163,000 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.
        Advances in science and engineering have produced more than half of
    our nation's economic growth in the last 50 years. They remain the most
    important factor in the productivity increases responsible for our
    growing economy and rising standard of living, economists agree. Each
    field of science contributes to our diversity of strengths and
    capabilities and has given us the flexibility to explore new fields and
    apply science in unexpected ways. The Society thanks this subcommittee
    for the substantial increases you provided for defense research last
    year, which was a substantial step towards reversing the declines the
    defense research programs experienced in the 1990's.
        Mr. Chairman, the DOD program that our members are most concerned
    about is the Science and Technology (S&T) program. It 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. Specifically, ACS urges the Committee to increase DOD's S&T
    program 10 percent to $10 billion this year, up from its level of $9
    billion in fiscal year 2001.
        DOD's S&T program consists of 3 parts commonly known as the 6.1,
    6.2, and 6.3 accounts. DOD's basic research, or 6.1 account, is
    critical to maintaining the technological edge that has been so central
    to our national security. DOD's basic research, 60 percent of which is
    conducted by our nation's universities, 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 and
    trains for the next generation of scientists and engineers in
    disciplines critical to our national security. Currently, DOD must
    decline almost as many highly-rated grant proposals as it can fund.
    These are lost opportunities for significant discoveries. Increases in
    core, peer-reviewed research in chemistry, materials, and other areas
    are essential to lay the foundation for leading-edge battlefield
    technology.
        Research funded through the Applied Research (6.2) and Advanced
    Technology Development (6.3) accounts enable fundamental science
    discoveries to be integrated into new technologies and applications,
    some of which also may be useful in the civilian sector. A strong,
    steady investment in these three accounts, which make up the DOD S&T
    program, will enable DOD to capitalize on synergies between new
    discoveries and developing technologies.
        We are delighted that President Bush has emphasized the need to
    make the long-term S&T investments needed to safeguard our national
    security--not just this year or next year, but 10 or 20 years down the
    line. As you know, Mr. Chairman, President Bush proposes to increase
    defense R&D programs by $20 billion over 5 years, including $2.6
    billion in fiscal year 2002. Although the Administration did not
    specify which R&D accounts would receive increases, we strongly
    recommend that a significant proportion be directed to the core S&T
    research accounts. This would help achieve the $10 billion funding
    level many groups are seeking for defense science and technology, which
    is in line with the levels recommended by the Department's own Science
    Board. In 1998, the Defense 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
    reiterated this position in an updated report released just this month.
        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 S&T investments are all about--
    investing in those fundamental areas of research that have the highest
    potential for advancing our national security.
        Research investments being made today will result in discoveries
    that can cut costs and save lives. For example, Air Force researchers
    discovered ways to remove more than 95 percent of the nitrogen oxides
    and sulfur dioxide from the exhaust of jet and diesel engines. The new,
    highly effective exhaust systems help the Air Force filter tons of
    pollutants and avoid the fuel costs associated with carrying heavy
    pollution control equipment. In addition, university researchers and
    chemists at the Naval Research Laboratory are working on new ways to
    uncover plastic mines, which are difficult to detect with regular metal
    detectors. This work has led to a new way to detect explosives, using
    Nuclear Quadrupole Resonance (NQR). The basic science underlying NQR
    began back in the 1980's, and has relied on improvements in magnetic
    resonance imaging as well as the development of new materials. This
    potentially life-saving device, tested by the Navy in Bosnia in 1999,
    typifies the fundamental science necessary to serve unique national
    security needs. These examples are areas of scientific research that
    industry prefers to avoid because of the small financial returns
    associated.
        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 judgment, we must avoid having future
    opportunities take a back seat. We must realize that a strong
    investment in the defense science and technology program, 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.
        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.
        Put most simply, we are asking the Subcommittee to keep a close eye
    on the long view of our national security. 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. The American
    Chemical Society looks forward to assisting you in any way possible.

        Senator Stevens. Mr. Spiegel, Reserve Officers Association.

    STATEMENT OF JAYSON L. SPIEGEL, EXECUTIVE DIRECTOR,
                RESERVE OFFICERS ASSOCIATION OF THE UNITED
                STATES

        Mr. Spiegel. Thank you, Mr. Chairman. On behalf of the
    Reserve Officers Association, we are grateful for the
    opportunity to present our views with respect to how the fiscal
    year 2002 budget may affect the Reserve components. We
    appreciate each of your strong support of the National Guard
    and reserves in the past and look forward to working with you
    in the future.
        In the interests of brevity, let me focus on just a few
    issues, first being force structure. The Reserve components
    remain the best bargain in DOD, costing about 25 percent of the
    comparable active component soldier or unit. We are concerned
    that as the review process continues in the Pentagon there may
    well be efforts to further reduce the National Guard or Reserve
    in the interest of generating budgetary savings. We would
    submit that the Congress ought to approach any such
    recommendations with caution.
        The Reserves have been deployed to a much greater extent
    than at any time in history. Reserve deployments are up 300
    percent since 1990 even though the size of the Reserve force
    has gone down approximately 30 percent. Given that, we would
    submit that when you are in a hole you ought to start thinking
    about stopping digging and to look much more seriously at how
    best to structure DOD to capitalize on the individual skills
    that Reserve components bring from their civilian lives.
    Information technology, civil affairs, information warfare are
    the kinds of things that reservists have expertise in and,
    rather than cut those forces, we ought to think seriously about
    how best to grow them.
        Of course, it takes approximately 7 years to reconstitute a
    reserve unit after it has been slated for deactivation. It is
    not a renewable resource.
        Let me draw the committee's attention to a late-breaking
    development that may be of interest. Within the last 2 weeks, a
    national marketing firm has surveyed public attitudes towards
    the Reserve components and revealed that 94 percent of the
    American public find that the Reserves, quite correctly, play a
    significant role in defense policy, and two-thirds of the
    American public would not support further reductions in the
    Reserve components at this time in order to generate budgetary
    savings.
        A copy of the poll results will be circulated to each
    Senate office this week. We think that once again the American
    people have it right, that the Guard and Reserve are a unique,
    cost-effective asset for executing national defense policy, but
    they need to be adequately resourced. So we would first ask
    that the committee not entertain any further reductions in the
    size of the Reserve components.
        We also recognize that the cost of training is a serious
    issue and we would ask the committee to look seriously at the
    size of the full-time support provided to the Guard and
    Reserve, particularly on the Army side. The full-time support
    people who do the work day to day enable the Reserve units to
    train for their wartime skills on the weekend rather than
    performing administrative or maintenance functions, and we
    would ask that sufficient funding be provided for Active Guard,
    Reserve, Training and Administration of Reserves (TARS), Air
    Reserve Technicians (ARTS), Military Technicians (MILTECH's),
    the entire panoply of full-time support that the reserve
    components enjoy.
        With respect to equipment, that has long been a problem in
    the reserve components, whether the equipment cascades from the
    active or is provided directly. The Guard and Reserve tend to
    get the least modernized equipment than the active component.
    We urge the committee to look very seriously at this issue. We
    strongly support continuation of the National Guard and Reserve
    equipment appropriation (NGREA). We recognize that the Pentagon
    pledged to provide adequate funding for Guard and Reserve
    equipment in their budget submit, thereby obviating the
    continued need for NGREA. History demonstrates the Pentagon has
    not done that and we would urge the committee to fund those
    unique Guard and Reserve equipment priorities if the Department
    does not do so.
        Senator Stevens. Thank you very much. We appreciate your
    recommendation.
        [The statement follows:]

                    PREPARED STATEMENT OF JAYSON L. SPIEGEL

        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 2002.
        At the outset, I must preface my testimony with the observation
    that unlike previous years, at the moment we have no real details of
    what the Department of Defense budget request contains. Thus, our
    testimony must, of necessity, reflect requirements based upon last
    year's submission and anticipated programmatic needs. We will provide
    the committee with supplemental testimony and analysis at a later date
    that will have the benefit of greater detail.
        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.''

                              STUDIES AND ANALYSES

        The results of recent force structure studies have proven
    disappointing as far as detailed recommendations regarding the Reserve
    components are concerned. Indeed, the detailed Reserve component
    recommendations were largely manifested as significant reductions to
    Reserve end strength underpinned by undue optimism. It remains to be
    seen what changes to the national defense strategy may be forthcoming
    as a result of the findings and recommendations of the National
    Security (Hart-Rudman) Commission, the new administration's initial
    Defense assessment, the National Defense Strategy, and the 2001 QDR.
    Evolutionary or revolutionary, these changes will ultimately hinge on
    affordability and the prudent acceptance of risk. Absent a fundamental
    shift in national priorities, increases in the defense share of the
    annual budget will be marginal at best.
        Although earlier force structure reviews were described as being
    threat-based rather than budget-driven, common sense and experience
    says that both of these factors will play a large part in developing
    the final product in both cases. Ultimately the recommended solution
    will bear evidence of pressure from both sides of the equation. To
    achieve balance in the face of unyielding economic constraint, force
    structure will be modified and so, too, will the definition of the
    perceived threat.
        Clearly, this is not the way to develop a national defense strategy
    for the next century; nevertheless, the actual product is more likely
    to resemble this model than not. What may be salutary in this process
    will be the necessity of modifying significantly the structure of the
    Total Force to integrate components and to eliminate as much as
    possible the current unnecessary redundancies that exist, both inter-
    and intra-service and component. However the structure is finally
    crystallized, one thing is virtually certain: our Reserve forces will
    play an increasingly significant role in it and its employment.

                     GREATER RELIANCE ON RESERVE COMPONENTS

        The 50 years of reliance on a large, Cold War, standing military
    have 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 265,000
    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 48,000 Reservists have again
    demonstrated their readiness and their capability to respond to their
    nation's call. For the past several years, the Reserve components have
    provided approximately 12.5 million support days to the Active
    components annually. That equates to some 35,000 support years
    annually, the equivalent of two Army divisions.
        A strong, viable Reserve force is an inseparable part of America's
    military, a cost-effective augmentation to the Active force and the
    marrow of the mobilization base. Ultimately, mobilizing Reserve forces
    is the litmus test and the enabler of public support and national will.
    The early and extensive involvement of the Guard and Reserve in the
    Gulf War was instrumental in achieving the strong public support of the
    military and our national objectives.

                     RESERVE COMPONENTS' 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 38 percent of
    the Total Force, but cost only 7.5 percent ($23.4 billion) of the
    fiscal year 2002 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

        The Army Reserve has played a major role in the Army's increased
    post-Cold War OPTEMPO. When the Army has deployed, so has its Army
    Reserve. The downsizing of America's Army and the Army's decision to
    transfer much of its combat service (CS) and combat service support
    (CSS) into the Reserve have required a much greater reliance by the
    Army on its Army Reserve. The Army can no longer go anywhere or sustain
    its operations once there without the support of its Reserve
    components. However, this increased reliance has not generated adequate
    funding in the Defense budget.
        The expected fiscal year 2002 budget request, as have previous
    budgets, appears to critically underfund the Army Reserve personnel,
    operation and maintenance, and military construction accounts. These
    resourcing shortfalls will adversely affect readiness and training and
    ultimately the quality of life, the morale, and the retention of these
    highly motivated and patriotic citizen-soldiers.
        The Army Reserve's expected share of the Army budget request in the
    fiscal year 2002 DOD budget request is $4.3 billion or 5.7 percent of
    the entire $75.5 billion Army request. Separated into the Reserve
    Personnel, Army (RPA) and the Operation and Maintenance, Army Reserve
    (OMAR) accounts, the request is for approximately $2.6 billion RPA and
    $1.7 billion OMAR. At those funding levels 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 is expected to exceed $300 million.

    Reserve Personnel, Army
        The fiscal year 2001 authorized end strength for the Army Reserve
    is 205,300. Reliance on the Guard and Reserve for involvement in real
    world operations and domestic contingencies increased considerably
    during the last decade. During this evolution of the Reserve from a
    break-glass-in-case-of-emergency-type operation to its current role as
    a full partner in the Army's real world operations, adequate resourcing
    to support readiness, training, manning and equipping of the Reserve to
    enable it to support the Army and our national military strategy has
    become critical.
        The expected RPA budget request for $2.6 billion will not provide
    adequate funds to train, educate, man, and support Army Reserve
    personnel and units at levels required for immediate mobilization and
    deployment. Based on preliminary budget estimates we believe the fiscal
    year 2002 Defense budget request will critically underfund the Army
    Reserve by over $150 million in several Reserve Personnel, Army
    accounts. For example:

                Active Guard Reserve (AGR) Personnel
        Active Guard Reserve (AGR) personnel give USAR 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. One of the greatest challenges facing
    the Army Reserve today is an insufficient number of full-time manning
    (FTM) authorizations to support the over 1,900 USAR units in day-to-day
    operations.
        The Army Reserve has the lowest percentage of FTM of all the
    Reserve components and historically has been the component most
    frequently called and deployed. The shortage of FTM personnel
    constrains high priority units and causes personnel turbulence in lower
    priority units, as personnel are cross-leveled to fill higher priority
    units.
        The Army has established an 11-year ramp of 300 AGRs each year
    beginning in fiscal year 2002 to increase the level of AGR FTM
    positions within the USAR. Projected fiscal year 2002 costs to support
    the fiscal year 2001 AGR increase and the fiscal year 2002 ramp is
    projected to be $23.5 million. The Army Reserve has a critical/
    executable-funding shortfall of $23.5 million in its AGR FTM program.

                Incentives Program
        The USAR has validated requirements for $147 million to support its
    fiscal year 2002 incentives programs. Expected funding for the program
    based on the September 2000 Best Estimate (BES) is $115 million leaving
    a critical shortage of $32 million. Any shortfall will put at risk
    initial payments for non-prior service, prior service, reenlistment,
    and health professional recruiting and retention bonuses; its health
    professional loan repayment program; the Montgomery GI Bill Kicker; and
    College First. Recent congressional actions to enhance incentives have
    increased the non-prior service bonus from $5,000 to $8,000, the health
    professional loan repayment from $20,000 to $50,000, and the
    reenlistment window from 10 to 14 years. We believe the Army Reserve
    will have a critical executable funding shortfall of $32 million in its
    incentives program.

                Fiscal Year 2002 Individual Duty Training (IDT) Shortfall
        The fiscal year 2002 validated requirement to fund the 48 statutory
    IDT drills for Army Reserve unit soldiers is $712.5 million. Projected
    levels of funding for IDT in fiscal year 2002 will only fund 44 of the
    48 statutory drills--failing to fund one month's worth of drills per
    soldier. The projected level of funding is $662.5 million leaving a
    critical shortfall of $50 million. The expected executable/critical
    shortfall for Individual Duty Training is $50 million.
    Operations And Maintenance, Army Reserve (OMAR)
        The expected fiscal year 2002 DOD budget request for the Army
    Reserve Operations and Maintenance (OMAR) account is $1.6 billion. We
    believe there is at least a $157 million executable/critical OMAR
    shortfall in the fiscal year 2002 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 and contributing to a lower
    quality of life for unit soldiers.
        Currently the expected OMAR appropriation is experiencing serious
    resourcing shortfalls in FTM, recruiting and advertising, automation
    system life cycle support, and the backlog of maintenance and repair
    amounting to more than $160 million.
    Full-Time Manning: MILTECHs
        The lack of adequate numbers of required military technicians
    (MILTECHs) in USAR units and maintenance facilities jeopardizes unit
    readiness. The Army has a validated requirement for 8,990 MILTECHs
    based on staffing standards that require minimum staffing levels of
    required MILTECHs of 90 percent for Force Package (FP)1 units, 80
    percent for FP2 units, 70 percent for FP3 units and 65 percent for FP4
    units. These percentage levels are considered the ``high-risk''
    threshold for USAR and ARNG MILTECH authorizations.
        The current USAR MILTECH endstrength of 7,094 is 1,896 below the
    validated requirement of 8,990. These MILTECHs will enable units to
    maintain a higher level of readiness by providing additional training,
    technical, functional and military expertise required to efficiently
    and effectively transition from peacetime to wartime posture.
        The Fiscal Year 2001 Defense Appropriations Act and the 2001 NDAA
    recognized the requirement for additional FTM by providing $20.5
    million in OMAR funding and the authorization for 650 MILTECH in fiscal
    year 2001. The Army has established a ramp of 250 MILTECH each year
    beginning in fiscal year 2002 to increase the level of MILTECH FTM
    positions within the USAR. Projected fiscal year 2002 costs to support
    the fiscal year 2001 MILTECH increase and the fiscal year 2002 ramp is
    projected to be $7.8 million. The executable/critical shortfall for the
    USAR MILTECH program is $7.8 million.

    Advertising
        Army Reserve advertising is expected to be underfunded by at least
    $13.5 million in the fiscal year 2002 budget request. Without adequate
    advertising funding, the Army Reserve will be unable to overcome the
    market effects of a strong economy and the low propensity of our
    nation's youth to enlist in the military.
        The USAR fiscal year 2002 recruiting advertising requirement is
    $60.6 million, but it is funded at only $47.1 million. The Army Reserve
    must expand its Internet advertising to keep pace with new technology
    and media habits of the targeted market. It must also consider the
    expanding female and Hispanic markets. Women constitute only 25 percent
    of the USAR force, but can volunteer for 99 percent of the Army's job
    skills. Hispanics are also underrepresented in the USAR. The USAR
    recruiting environment is difficult. A good offset is a vibrant,
    adequately funded ad campaign that reaches the target audiences. The
    executable/critical shortfall for advertising is $13.5 million.

    USAR Reserve Component Automation System (RCAS) Life Cycle Support
        The RCAS infrastructure enables the USAR to integrate rapidly into
    joint organizations and is required to support Joint and Army C\4\/IT
    systems/concepts, i.e., Defense Message System (DMS), Common Access
    Card (CAC) Global Combat Support System (GCSS) and others. The life
    cycle support of the fielded RCAS systems becomes the responsibility of
    each Reserve component in fiscal year 2002. The Army has insufficient
    TOA to fully resource these costs that the USAR must pay to maintain
    the systems worth $2.4 billion in capital investment.
        RCAS is crucial to the USAR day-to-day CONUS/OCONUS operations and
    is designed to support virtually every type of mission including
    effective C\2\, soldier's pay, mobilization, training, sustainment, and
    administration. The executable/critical shortfall for the RCAS Life
    Cycle Support is $45.2 million.

    Real Property Maintenance
        The USAR currently operates facilities in approximately 1,400
    locations worldwide (CONUS, Puerto Rico, Germany, and the Pacific) and
    commands and controls 6 installations including 2 power projection
    installations (Fort McCoy, WI, and Fort Dix, NJ).
        Real property maintenance is funded at only 61 percent of the
    fiscal year 2002 requirement. Historically, inadequate RPM funding has
    contributed to poor conditions in many USAR facilities, forcing unit
    commanders to spend scarce mission dollars for repairs and to defer
    repairs to critical facility systems such as roofs, plumbing,
    electrical, etc., accelerating facility and system deterioration. This
    threatens soldier safety, and health; degrades training, and hampers
    recruiting and retention efforts, while lowering the soldiers' quality
    of life. The projected fiscal year 2002 budget request critically
    underfunds the executable Real Property Maintenance account by at least
    $57.0 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'',
    (the 2001 report is not available) 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.
        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. ROA urges the Congress to
    continue the NG&REA and to fully fund the Army Reserve $458 million
    fiscal year 2002 equipment modernization requirement.

                               AIR FORCE RESERVE

        Since the Air Force Reserve came into existence in 1948 until
    Desert Storm, it had been involved in 10 contingencies. In the time
    since Desert Storm it has been involved in over 30 contingency, nation-
    building and peace keeping operations. The reasons are obvious: the
    Active component has lost 700,000 people at the same time the United
    States has become the only super power on Earth. That has forced the
    Reserve component, which lost 200,000 members in the draw down, to
    assume a much larger share of the mission.
        Its key issues are people, readiness and modernization. With
    support for those issues from the active the Air Force and the
    Congress, the Air Force Reserve has become an indispensable national
    asset. ROA thanks both for consistent support, that has allowed the
    command to demonstrate its skill in carrying out its portion of the
    national military strategy.
    Specific Issues
        Recruiting and Retention.--The active duty recruitment pool has
    diminished from 50,000 in the early 1990s to 13,000 in 2001. Further
    complicating the recruiting challenge is the current Air Force OPTEMPO.
    The Air Force Reserve Command would benefit from either reduced OPTEMPO
    or an increase in force structure. ROA urges the Congress to provide
    authorization for a force structure adequate for today's OPTEMPO and to
    provide parity of benefits with Active component members.
        Modernization.--The Air Force Reserve Command must receive modern
    equipment at the same rate as the Active component. A prime example
    follows. As of spring, 2001 there is no stated replacement aircraft for
    AFRC's 40 C-141 strategic airlifters. By 2006 all C-141s will be
    retired. With them will go the 5,000 highly trained personnel who fly,
    maintain and support that portion of the strategic airlift mission and
    their 1.9 million ton-mile-per-day airlift capability. ROA urges the
    Congress to direct DOD to keep a minimum of 60 C-141 aircraft in AFRC
    until sufficient numbers of C-17s or a combination of C-17s and
    refurbished C-5s are acquired to keep all AFRC units fully equipped and
    to fulfill the ton-mile requirement of the national military strategy.
        To a war-fighting CINC ``interoperability'' means that all forces
    in his fight must have the same capability. Without it, the forces with
    less capability are made irrelevant. Thus, day/night proficiency must
    be the same in both Active and Reserve components. Not just one
    component, but both components must have precision munitions
    capability. Both must have self-protection and electronic warfare
    capabilities, and both must have identical digital battlefield data-
    link equipment. ROA urges the Congress to fully fund the modernization
    of all AFRC assets.

                                 NAVAL RESERVE

        Thanks to the Congress, funding for fiscal year 2001 enabled the
    Naval Reserve to resource peacetime contributory support, bonuses, a
    substantial pay raise, real property maintenance, base operating
    support, and recruiting advertising/support. 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, without a detailed fiscal year 2002 President's
    Proposed Budget, the Reserve Officers Association must withhold
    substantive focused comment; however, we await the QDR01 and other
    national security reviews with anticipation for the continued
    recognition of the value of the Naval Reserve to our nation's security
    posture. The Naval Reserve's top five Issues continue to be manpower,
    training, equipment and systems compatibility, force shaping and fleet
    support and significant progress has been made in addressing many of
    these issues. Nevertheless, substantial unfunded requirements continue
    to slow progress toward complete force integration with the Fleet and
    cost greater amounts of scarce operations and maintenance resources
    than is desirable must be expended on operating and maintaining dated
    and obsolete, low performance, systems and platforms.
        Naval Reserve end-strength was reduced from 90,288 in fiscal year
    2000 to 88,900 in fiscal year 2001. The issue of peacetime contributory
    support versus surge training requirements continues to pull Naval
    Reserve personnel policies and operations in two different, not wholly
    compatible, directions. Highly trained, motivated and experienced Naval
    Reserve personnel should not be lost to the Naval Reserve Force during
    budget-driven reductions until the future national security direction
    is determined. ROA strongly urges the Congress to defer reduction of
    Naval Reserve end-strength below 88,900 pending completion of a
    comprehensive reexamination of the Naval Reserve's role to be conducted
    after the results of the QDR01 and other national security reviews are
    completed.

    Specific Issues
        Two Naval Reserve personnel programs in particular should be
    maintained: (1) Active Duty for Training is a program that provides
    Naval Reservists to the Navy CinCs for unique, short-term periods in
    support of Fleet requirements. ROA supports a funding level of $13.8
    million for fiscal year 2002 for this highly successful program. (2)
    Additional support for non-prior service accessions allows Naval
    Reserve recruiters greater direct access to the public. This program
    accounts for approximately one-third of new USNR enlistees. ROA
    encourages the Congress to maintain current levels of funding for this
    effort in fiscal year 2002.

    Equipment Modernization
        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) and to earmark funding for the Naval Reserve in the traditional
    procurement appropriations. Accordingly, ROA has identified unfunded
    fiscal year 2001 Naval Reserve equipment requirements for consideration
    by Congress for addition to the administration's request for fiscal
    year 2002, in either the NGREA or as earmarked additions to the Navy's
    traditional procurement appropriations.
        Among the top priorities are the C-40 aircraft, IT infrastructure,
    and the P-3 AIP/BMUP kits. As the number one priority of the Naval
    Reserve, the Boeing C-40A ``Clipper'' transport aircraft is of vital
    importance to fleet logistics as the Naval Reserve provides 100 percent
    of the Navy's organic lift capability, and direct logistics support for
    fleet CINCs in all operating theaters. Commercial aircraft are replaced
    every 7 to 8 years, yet the average age of the Naval Reserve's C-9
    fleet is approximately 25 years. Obsolescence is being reached because
    of deficiencies in the avionics suite, power plant, and the aging of
    the airframe.
        The P-3 AIP (ASUW Improvement Program) and BMUP (Block Mod Update
    procurement) kits bring Reserve maritime patrol aircraft in line with
    Active fleet capabilities and broaden the mission of the Reserve P-3Cs
    beyond the role of anti-submarine warfare. Additional funding is
    essential to sustain the momentum of the P-3C Update III upgrade
    program and to achieve complete compatibility with the Active fleet for
    the remaining 13 aircraft that have not yet been reconfigured.
        Equipment modernization is the most critical priority for the Naval
    Reserve. ROA strongly urges the Congress to provide $471.6 million to
    support the vital and continuing Naval Reserve unfunded equipment needs
    in fiscal year 2002.

                              MARINE CORPS RESERVE

        Because the Administration's fiscal year 2002 budget proposal has
    not been submitted in detail for congressional consideration at the
    time of testimony, the ROA supports the increase in end-strength to a
    level of 39,558 in fiscal year 2001 for the Selected Marine Corps
    Reserve (SMCR), but defers judgment of the fiscal year 2002 proposed
    end-strength. There was also slightly increased funding for Marine
    Corps Reserve personnel, to $437 million in fiscal year 2001, an
    increase of a little more than $1 million from fiscal year 2000.

    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 (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.
        Additional O&MMCR funds are needed for initial issue of equipment,
    replenishment and replacement of equipment, exercise support, and
    organizational and depot maintenance. Only by equally equipping and
    maintaining 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 Marine Corps Reserve personnel appropriation also appears to
    continue to be underfunded. The major deficiency in this appropriation
    is in the area of active duty for special work (ADSW). This valuable
    individual activity 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 duty counterparts. Further, ADSW provides
    critical support to Active force commanders, allowing them to augment
    Regular forces with Reserve Marines to participate in both USMC
    combined arms exercises and scheduled joint exercises in support of the
    warfighting CINCs. These are win-win efforts, not only making up
    critical shortfalls in the Regular Marine Corps forces, but also
    providing invaluable training for Marine Reservists.
        The authorization of 58 additional Active Reserve personnel in
    fiscal year 2001 is essential to increased readiness and employment of
    Marine Corps Reserve units, and recognized the serious difficulties
    created for the Marine Corps Reserve by the Quadrennial Defense Review
    1997 (QDR97) reductions in the Active Reserve program. These reductions
    significantly hampered the Reserve's ability 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, if implemented, will continue to undermine the
    Marine Corps Reserve's ability to maintain readiness and meet
    requirements for Reserve employment. To fiscal year 2000, the Marine
    Corps Reserve has taken the cuts directed by QDR97 and will continue
    with reductions through fiscal year 2003 if directed, but every cut
    taken in the Marine Corps Reserve decreases the operational or tactical
    capabilities of the Marine Corps. ROA strongly urges the Congress to
    direct DOD to defer any further QDR97-recommended reductions in the
    Marine Corps Reserve until these reductions can be reviewed by QDR01
    and the other ongoing national security reviews.

    Equipment Modernization
        Modern equipment continues to be 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
    continues to be Engineering Change Proposal 583 (ECP-583), which will
    make its F/A-18A aircraft compatible with the F/A-18Cs and Ds utilized
    by the Active force. As part of a complete modernization to achieve
    complete Force interoperability and support compatibility, this
    initiative will upgrade the aircraft to state of the art avionics and
    weapons systems. 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.

                                  COAST GUARD

        We are fully aware that this committee is not responsible for the
    direct funding of the Coast Guard or the Coast Guard Reserve.
    Nevertheless, funding for the Coast Guard is very austere, with only
    $3.199 billion in operational funding, the minimum level required for
    basic services. Similarly, funding for the Department of Defense and
    the Department of the Navy remains constrained. Therefore, it is vital
    to be farsighted as we cross into the 21st century to ensure a
    continued robust sea power.
        The Coast Guard currently operates ships with high personnel and
    maintenance costs. Some ships have been in service for more than 50
    years. Simply stated, the continued protection of the public, at a
    lower cost, requires further investment to enable the Coast Guard to
    design more capable and less labor-intensive ships and aircraft.
    Without the necessary investment, pressure will continue to build on
    the operational account, as anticipated lower personnel and maintenance
    costs that would be achieved through investment become unachievable.
    The Reserve Officers Association urges the Congress to fully support
    the Coast Guard's Integrated Deepwater Project, its new start
    authority, and the Navy's acquisition of assets for the Deepwater
    project.

                              COAST GUARD RESERVE

        In the Defense Operations arena, the six Coast Guard Reserve port
    security units (PSUs) continued to provide non-redundant force
    protection to high-value assets in strategic seaports of debarkation.
    In December, following the terrorist attack on the U.S.S. Cole,
    elements of PSU 309, based in Port Clinton, Ohio, deployed in support
    of CENTCOM.
        For fiscal year 2002, the priority is retain its force of 8,000 and
    ensure that Coast Guard Reservists are fully trained, equipped and
    ready to perform their mission. Specifically, for fiscal year 2002, the
    Coast Guard will work to:
      -- Improve the training and support infrastructure for the current
            force. This includes assurances of the availability of formal
            training and structured on-the-job training opportunities.
      -- Improve support services, such as full-time support staffing, and
            mitigate Reservists' out-of-pocket expenses, such as berthing
            for those who live over 50 miles from their drill sites.
        Longer term, the Coast Guard will continue to refine and prioritize
    Reserve force requirements. There is considerable pent-up demand for
    additional Reserve support from operational commanders and headquarters
    program managers, and we believe the best course is to address these
    needs incrementally over several years so as not to exceed the
    service's ability to support and service the SELRES force.

    Coast Guard Selected Reserve Strength
        The fiscal year 2002 administration request is anticipated to
    maintain the Coast Guard Selected Reserve's authorized end-strength at
    the 8,000-level. In 1997, the commandant, as directed by OMB, conducted
    an in-depth study that justified a requirement for nearly 12,300 Coast
    Guard Reservists. However, the 1997 study did not include any maritime
    security requirements needed to counter more recently identified
    homeland security risks in U.S. ports and waterways from weapons of
    mass destruction. As a result of this and other issues, Coast Guard is
    currently updating the roles and mission study to identify more
    accurately the increased Reserve force end strength and skill mix.

    Coast Guard Reserve Funding
        The administration has requested $83.2 million for the Reserve
    Training (RT) appropriation for fiscal year 2002. Given the present
    procedures for reimbursement for operating expenses and direct payments
    by the Coast Guard Reserve, this is the minimum needed to fund a
    training program for 8,000 personnel. Even at the $83.2 million funding
    level, Coast Guard reservists would continue to receive only 12.5 days
    of annual training (AT) each year (all the other armed services
    prescribe 14 days' AT as required by statute). In additional, the RT
    appropriation will not be able to fund 15 days' ADT and 60 drills per
    year for Reservists assigned to expeditionary units to ensure they are
    ready for prompt deployment.
        The funding required in fiscal year 2001 to support the full 8,000-
    level authorized was approximately $80 million. It should, however, be
    noted that the fiscal year 2001 appropriations bill, in appropriating
    $80 million for the Coast Guard Reserve, limited the amount of Reserve
    training funds that may be transferred to operating expenses to $22
    million. Given the continuing high OPTEMPO/PERSTEMPO stress on the
    entire Coast Guard workforce and the congressional language to hold
    strength insofar as possible, the Coast Guard Reserve is trying to
    maintain its strength for this year.

    Coast Guard Reserve Equipment
        In fiscal year 1998, the Congress provided over $13 million for the
    much-needed refurbishment of its existing three port security units and
    the establishment of three additional port security units. Today, the
    Coast Guard Reserve is in need of equipment for its mobile support
    unit, as well as chemical, biological, and radiological defense
    equipment.
        The mobile support unit (MSU) is designed to be a limited
    deployable logistical and maintenance support and repair facility
    service for up to two co-located squadrons of Coast Guard 110-foot
    patrol boats. This unit is staffed by Reservists and support the Active
    component (and the combatant commanders-in-chief) when deployed for
    operations overseas. The MSU provides on-site repair facilities for
    hull maintenance, engineering and electronics systems for use by
    support personnel assigned for operational maintenance.
        Chemical, biological, and radiological defense is required for
    Coast Guard Reserve personnel assigned to marine safety offices that
    have Department of Defense strategic load-out responsibilities.

                                   CONCLUSION

        Thank you for the opportunity to represent the Reserve Officers
    Association's views on these important subjects. Your support for the
    men and women in uniform, both Active and Reserve is sincerely
    appreciated. I'll be happy to answer any questions that you might have.

        Senator Stevens. Vice Admiral Lautenbacher.

    STATEMENT OF CONRAD C. LAUTENBACHER, JR., VICE ADMIRAL,
                U.S. NAVY [RETIRED], PRESIDENT, CONSORTIUM
                FOR OCEANOGRAPHIC RESEARCH AND EDUCATION

        Admiral Lautenbacher. Mr. Chairman, Senator Inouye, thank
    you very much for the opportunity to appear before you this
    morning and discuss the fiscal year 2002 defense budget. I am
    the new President of the Consortium for Oceanographic Research
    and Education. I believe most of you know my predecessor,
    Admiral Jim Watkins. I have been in this position for several
    months and it is a delight to be here, and also to express my
    thanks to the committee in my former role as the Vice Admiral
    in charge of Navy programming and budget development.
        I understand the time is short, so I want to keep it to
    four basic points that I would like to make this morning. The
    first is that our organization, as well as me personally,
    support a strong defense S&T budget. We believe it is critical
    for the leadership of our country as well as for the strong
    support of ocean science. As an example, the S&T budget for the
    Department of Defense in 1993 was roughly $10 billion. Today it
    is $9.1 billion.
        We believe that this budget deserves the support of the
    committee and if at all possible to raise this at least back to
    the 1993 levels and get on track. The leadership of the country
    in terms of economic development and research and technology
    and industrial health and welfare depend on a strong defense
    S&T budget.
        The second point that I want to make from our organization
    is that the national oceanographic partners program has become
    an excellent vehicle for cross-agency cooperation. This act was
    created by Congress--this was an act by Congress in 1996. It
    has been working for 3 or 4 years now very well. It brings 14
    agencies together from the Federal Government to work in
    concert on ocean research and scientific issues. It is ready to
    step up to the next level.
        My third and fourth points are the level that that should
    be stepped up to. There are two important initiatives that I
    believe are national initiatives. One is an integrated coastal
    and ocean observing system. If you ask any of the scientists in
    our organization what is needed if we are going to get to the
    next level of understanding of the issues that we need to
    understand for climate, for control of resources, for public
    policy, for quality of life, issues across our land that affect
    even the farm lands in the middle of our country, not just
    people who live on the coast, it is an ocean observing system.
    It is understanding what is happening on our coasts from Maine
    to Florida, in the Gulf, California, Alaska, Hawaii.
        It is very important to us to be able to start building a
    database to understand the processes that create things like
    the carbon cycle and carbon sequestration and greenhouse gases,
    as well as to manage the coastal resources that we have. This
    integrated ocean observing system can be managed by the
    National Oceanographic Partnership Office (NOPP) program and we
    believe it is time to step up and put the right resources
    against this.
        The last point that I want to make is another system which
    NOPP can help with very much and we would like your support on,
    and that is the recapitalization of the university
    oceanographic national laboratory system, or the UNOLS fleet.
    These are ships which are manned by our universities in support
    of national objectives. They help the Navy as well as basic
    research and science within our universities. They pick up a
    national workload as well as a workload from our coastal areas,
    from our States.
        The fleet is old at this point. It needs to be
    recapitalized. It also needs help this year with its operating
    funds. This is an important issue.
        In closing, I would like to thank in terms of the NOPP
    leadership the Office of Naval Research and our Naval
    Oceanographic Office. They have been instrumental in trying to
    make this program work and it is working very well.
        Again, I appreciate the support of the committee for their
    efforts on behalf of me when I was in the Navy and for our
    organization of course. Thank you, sir.
        Senator Stevens. Thank you very much, Admiral.
        [The statement follows:]

         PREPARED STATEMENT OF VICE ADMIRAL CONRAD C. LAUTENBACHER, JR.

        Good morning, Mr. Chairman. I want to thank you for the opportunity
    to testify on the fiscal year 2002 Defense budget. I am the President
    of the Consortium for Oceanographic Research and Education or CORE for
    short. CORE is the Washington, DC based association of U.S.
    oceanographic research institutions, universities, laboratories and
    aquaria. Our 63 members represent the nucleus of U.S. research and
    education about the ocean. CORE is united by a commitment to a strong
    defense science and technology base and believes that solid funding of
    the 6.1 account is critical to our Nation's security.
        For three and one-half years, I was responsible for preparing the
    Navy five-year program. I believed deeply then as I do now, and it is
    the CORE position as well, that the Navy 6.1 account needs to be
    increased to meet the future needs of the Navy. Naval research today,
    will yield ocean warfare superiority 15 to 20 years from now. With many
    nations attempting to develop a blue water capability and project
    force, I recognize, more than most that what is in the lab today will
    have a profound affect on how we meet any future foreign contingencies.
        Today, I want to emphasize the critical strategic value of basic
    research to all of DOD and the importance of maintaining the
    relationship between DOD, other Federal agencies, and the university
    research community. These partnerships have resulted in enormous
    benefit to all parties involved by significantly advancing the
    frontiers of knowledge in the world's oceans and atmosphere. As you may
    be aware, CORE currently manages the National Oceanographic Partnership
    Office which welds together multiple public (12 agencies) and private
    entities (academic and industrial) in ocean S&T under the law of
    Congress passed in 1996. NOPP has demonstrated that working together,
    the ocean community at all levels can get more out of combined efforts
    than if they had acted as independent and autonomous players. The more
    I see NOPP working, the more impressed I become at the depth and
    commitment to collaboration across multiple agencies.
        I want to personally commend the Subcommittee for its support of
    basic research at DOD in the fiscal year 2001 appropriation bill.
    Fiscal year 2001 was a milestone year for basic research. Last year the
    civilian and defense accounts, when combined, resulted in a total basic
    research portfolio that amounted to just over $20 billion. In the past,
    it has been far too easy to sacrifice our long-term research needs to
    meet short-term fiscal goals. I have to point out that in fiscal year
    1993, the 6.1, 6.2 and 6.3 accounts at DOD were funded at a level of
    $10 billion. Last year in fiscal year 2001, while gains were made in
    these functions, we funded those same accounts at a level of $9.1
    billion. In real terms, DOD research was hit hard in the decade
    following the Cold War's end.
        The support of this Subcommittee is critical to ensuring that we
    maintain a viable S&T base to meet our future security needs on land,
    in the air, and of course, on the sea. For fiscal year 2002, CORE urges
    the subcommittee to fund DOD's S&T program at $10 billion in fiscal
    year 2002. CORE hopes that in fiscal year 2002 we can bump research at
    DOD to that level to ensure a robust defense science base.
        This committee has given strong support to the defense S&T program
    in the past. Today, in my limited time, I would like to share a few
    examples from my personal experience of how central defense basic
    research programs are to the long-term national security needs of our
    country. I am going to use satellite programs as the example and I will
    explain why it is relevant to the ocean sciences.
        In the past, we had several agencies that ran meteorological
    satellite programs that were independent of one another. The Department
    of Commerce's (DoC) National Oceanic and Atmospheric Administration
    (NOAA) and DOD, with technical support from the National Aeronautics
    and Space Administration (NASA), used to run essentially separate
    meteorological satellite programs and the exchange of information was
    limited. That changed in 1994 with a Presidential Decision Directive.
    This directive consolidated the Defense Meteorological Satellite
    Program and the civil Polar-orbiting Operational Environmental
    Satellite system into a single program. It required the establishment
    of a joint agency group with representatives from DoC and DOD to
    establish data needs of the parties involved and also required a 50-50
    cost-sharing agreement.
        As a result of the convergence of assets between DoC and DOD, we
    avoided over $1.5 billion in duplicative costs. This program is known
    today as the National Polar-Orbiting Operational Environmental
    Satellite System (NPOESS). The program value is $6.5 billion and the
    system contract award is due next year. It will result in 6 NPOESS
    satellites being built to serve both civilian and military mission
    requirements. It has already resulted in meshing data needs between
    military and civilian agencies.
        This is a remarkable development in the research world because it
    marks a move towards integration and cross-fertilization of research
    assets across a military-civilian threshold that no one had
    contemplated, or even thought possible. DOD and NOAA have worked out
    the data requirements and ground station logistics to serve both of
    their operational mission requirements.
        While weather forecasts are the primary purpose of the NPOESS
    program, ocean measurements drove the design of three of the major
    sensors onboard the spacecraft. As a result, we will now get improved
    measures of sea surface temperatures, sea surface winds, ocean currents
    and a host of other observations. These measurements are needed to
    better understand the role of the oceans in climate, and will be useful
    to military planners in their operational theaters. The integration of
    resources and a collaborative approach has benefited both DOD and NOAA
    and is based on the research portfolios of both organizations using
    their collective research expertise to make it work.
        Another solid example of this collaborative approach is the
    National Oceanographic Partnership Program (NOPP). NOPP consists of the
    Navy, NOAA, NASA, National Science Foundation, Environmental Protection
    Agency, Minerals Management Service, United States Geological Survey,
    Army Corps of Engineers, and the Department of Energy. NOPP is doing
    for ocean researchers what NPOESS has done for the meteorological
    satellite community. NOPP's innovative organizational approach both
    within the federal government and within the national ocean community
    was needed to promote interdisciplinary research, cooperatively operate
    distributed observing systems, manage information from numerous
    sources, and meet agency mission requirements. NOPP has exceeded
    expectations and it is critical that the government fosters these
    cooperative and reciprocal relationships to sustain such activities.
        I believe that this multi-agency management of research assets
    needs to become the operational norm for the federal government. The
    satellite example and NOPP are just one of several programs that are
    now beginning to drive a more integrated research approach that results
    in more and better data at lower cost for all program participants.
        However, it is clear to me that if this move toward research
    integration is to occur on a national scale, there must be a long-term
    commitment to funding the basic research that underpins this new
    approach to the management of research assets. With an appropriate
    policy framework that links agency commitments with the Administration
    and Congress, programs like NPOESS and NOPP have given the federal
    government ways to do a better job at lower cost. I believe that if we
    commit the funding resources necessary, the nation will realize many
    economic, environmental, and public health benefits as a result of this
    new approach. These benefits cannot happen in the absence of adequately
    funded research, including the Defense S&T Program.
        I would be pleased to discuss this issue further at your
    convenience. I appreciate the opportunity to appear before you and
    would be happy to answer any questions you may have.

        Senator Stevens. Our next witness, Dennis Achgill. Good
    morning.

    STATEMENT OF DENNIS ACHGILL, AMERICAN SOCIETY OF
                MECHANICAL ENGINEERS INTERNATIONAL

        Mr. Achgill. Good morning. Thank you, Mr. Chairman, Senator
    Inouye. My name is Dennis Achgill. I appear before you today as
    a representative of a committee of the American Society of
    Mechanical Engineers (ASME), International, concerned with
    Federal funding of research and development. ASME International
    has 125,000 members, including 20,000 students. Mechanical
    engineers are a major part of the Nation's technology base, a
    base that is essential for the Nation's defense.
        Out of all the engineering disciplines, mechanical
    engineering claims the largest share of DOD engineering funding
    at 23 percent. Therefore, we appreciate 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.
        The single most important message I would like to convey to
    you today is, as a result of the declining support for defense-
    related research and development for much of the past decade,
    the defense industry has had great difficulty in attracting and
    retaining the best of the best engineering and scientific
    talents of this Nation. The defense industry now has a work
    force whose average age has been increasing at an alarming
    rate. That is why we are pleased with the efforts of your
    subcommittee in reversing this declining support.
        We sincerely believe that your continued support in
    strengthening defense-related engineering sciences is essential
    for meeting the future needs of the DOD. The valuable
    contributions of our engineers and scientists have been a
    constant and powerful force over the past four decades. These
    contributions could not have been made without the vision and
    support of members of Congress like yourselves, who promote the
    continued strengthening of this Nation's investment in DOD
    science and technology programs.
        Defense agencies have historically been the largest source
    of Federal funding for engineering research in our industry, as
    well as at the Nation's universities. The universities are
    significant collaborators with industry and are the source for
    young engineering talent for the defense sector for both public
    and private.
        Funding for defense-related research and development peaked
    at $9.8 billion in fiscal year 1993. The decline in support
    subsequent to 1993, together with an accompanying pattern in
    which advanced technology demonstration programs designed to
    accelerate the insertion of research efforts would be stretched
    out, delayed, and cancelled, resulted in the waste of valuable
    resources, confusion, and deterrent to attracting a generation
    of highly skilled, highly motivated engineers and scientists,
    the folks who transform ideas into reality.
        As research and development budgets were reduced, the job
    market for engineers in the defense sector shrunk, leaving
    little incentive for young engineers to seek defense-related
    career opportunities. Continued unabated, the repercussions of
    a declining defense investment in research will inevitably
    extend to the commercial sector as well. Without question,
    America's civilian aviation industry has benefited greatly from
    the technological advancements in defense. The situation facing
    the United States could be a technologically deficient military
    together with a subpar civil aviation industry. Obviously,
    neither scenario is in the best interests of the Nation.
        We applaud the support that your subcommittee provided DOD
    science and technology programs for the past 2 years. The
    fiscal year 2001 budget for the 6.1, 6.2, and 6.3 accounts were
    increased about 6 percent or $600 million from the previous
    year, for a total of $9 billion.
        We strongly urge your continued support for a balanced
    portfolio of physical and life sciences accompanied by a
    healthy increase in these accounts for fiscal year 2002 and
    beyond. In 1998 the Defense Science Board recommended that the
    research programs of the DOD should consistently be about 3.5
    percent of the total defense budget. We believe this is a
    worthy target, one that will result in an investment
    approaching $11 billion in fiscal year 2002. This would also be
    consistent with President Bush's commitment to increase the
    defense R&D by $20 billion over the next 5 years. That is why I
    urge the members of this subcommittee to continue their
    support.
        It will take a great deal of continued attention to defense
    R&D to ensure that the best engineering and scientific minds
    are once again willing to apply their talents to meeting the
    future needs of this Nation.
        Thank you for the opportunity to offer our views.
        Senator Stevens. Thank you very much.
        [The statement follows:]

                      PREPARED STATEMENT OF DENNIS ACHGILL

    Introduction
        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.
        ASME has 125,000 members including 20,000 students. Mechanical
    engineers are a major part of the nation's technology base that is
    essential for the nation's defense. Out of all of the engineering
    disciplines, mechanical engineering claims the largest share of DOD
    engineering research funding, at 23 percent.
        We applaud the support that your Subcommittee provided DOD Science
    and Technology (S&T) programs for fiscal year 2001. The budget for the
    basic 6.1, applied 6.2 and advanced technology development 6.3 accounts
    were increased about six percent, for a total of $9 billion.
        We are also pleased to see President Bush's proposed increase for
    Research and Development (R&D) in DOD R&D in his ``Blueprint for New
    Beginnings.'' According to the blueprint, the DOD budget for R&D in new
    technologies would increase $2.6 billion in fiscal year 2002 ($20
    billion over five years). However, we do not know how much of that
    increase would go to the 6.1, 6.2 and 6.3 accounts, the extent to which
    it may be dedicated for missile defense, or whether there will be
    offsetting cuts in other DOD R&D programs.
        Funding for S&T peaked at $9.8 billion in fiscal year 1993. The
    budget for basic, applied, and advanced technology development programs
    declined until fiscal year 2000 when the S&T accounts were increased to
    $8.4 billion, and again in fiscal year 2001, when they were increased
    to $9 billion. We strongly urge this Subcommittee to continue
    strengthening the nation's investment in the DOD S&T programs.
        Because program-level details in the fiscal year 2002 budget are
    not yet available, it is too early to assess the full impact of the DOD
    S&T budget request. The balance of our testimony will focus on the role
    of research at DOD, the benefits derived from that research, and the
    importance of increasing funding for fiscal year 2002.
    Role of Research at the Department of Defense
        Investment in DOD S&T programs produced the scientific and
    engineering research underlying today's preeminent U.S. military
    forces. As increasingly varied and unpredictable threats to America
    develop in the coming years, this technological superiority will become
    a national security imperative.
        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 extremely serious, one that could jeopardize the ability of the
    United States to maintain air and ground superiority over potential
    adversaries in the coming years.
        The research of today, particularly the basic research of today,
    largely determines the technological advancements of a decade or more
    from now. For example, thermal imaging, the ability to see objects by
    minute differences in the heat they emit, matured in the 1980's and now
    makes it possible to see through smoke, fog, and dust at long ranges in
    day or night. Civilian applications from Defense Basic Research in
    thermal imaging enable us to monitor earth resources from space, detect
    cancer, and gaze with greater clarity into space.
        Similarly, no one foresaw the enormous range of applications and
    whole industries that have evolved from the Defense-sponsored discovery
    of lasers. Applications have included the billion-dollar fiber optic
    industry, compact disk players, laser printers, procedures to attach
    eye retinas, and new cancer surgeries.
        Researchers are currently working on ``inverse'' scattering--an
    attempt to find the shape of an unknown object given only data about
    the ingoing waves and the echoes that reflect back from the object.
    Detection of underground objects by microwave detection will soon be
    realized. There are urgent practical applications of this research for
    our military. The ability to detect and acquire significant information
    about mines and buried bunkers on a battlefield could preserve American
    lives in future battles. In a different direction, the development of
    such technology would enable reconnaissance organizations to detect the
    presence of underground bunkers where nuclear weapons are secretly
    being made and stored.
        Other examples of current research programs that are important for
    our national security include:
        Rotorcraft technologies.--Historically strong cooperative programs
    between DOD and NASA produced the advanced technologies needed to
    provide the advances in rotorcraft technology for the future military
    applications. However, recent reductions in NASA's aeronautics R&D
    budget have effectively terminated this cooperative effort. Rotorcraft
    are crucial to national defense and we urge the Committee to work with
    their colleagues to reestablish the continuation of this essential and
    highly effective cooperative effort between DOD and NASA.
        Aircraft Propulsion Technologies.--The Integrated High Performance
    Turbine Engine Technology (IHPTET) program which is directed towards
    developing versatile affordable advanced turbine engines, is a new
    initiative within the Department's R&D activities. We urge the
    Committee to sustain support for this technology development program in
    order to ensure its availability for next generation of military
    aircraft.

    Consequences of Declining Investment in Research
        The decline in defense-funded research and development that began
    in 1993 and continued until recently, resulted in a serious disruption
    in the cycle of highly skilled, highly motivated engineers and
    scientists who have been the mainstay of the nation's defense
    technology base. As research and development budgets were reduced,
    irreplaceable research facilities and infrastructure were destroyed to
    reduce corporate overhead costs.
        The defense agencies have historically been the largest source of
    federal funding for engineering research at the nation's universities.
    The decline in support has led many engineering departments to seek
    other sources of support, thereby threatening the important
    contributions of the nation's universities to the U.S. defense
    technology base.
        Bachelors degrees in engineering awarded by America's universities
    declined from a peak of 78,178 in 1986 to 63,635 in 2000. As defense
    research and development budgets were reduced, the job market for
    engineers in the defense industry shrunk, leaving little incentive for
    young engineers to enter the defense industry. They have, instead, been
    attracted to areas with exciting new challenges and where federal
    investment in R&D has been strong--in areas such as bioengineering and
    information technologies.
        However, the repercussions of neglect in defense research will
    inevitably extend in the future to the private sector as well. For
    example, without question, America's civilian aviation industry has
    benefited greatly from technological advancements in defense. In short,
    the situation facing the United States in 2020 could be a
    technologically deficient military that also results in a sub-par civil
    aviation industry. Obviously, neither scenario is in the best interest
    of the nation.

    Recommendations
        We applaud the subcommittee's efforts to reverse the decline in
    funding for basic, applied and advanced research programs at the
    Department of Defense. We strongly urge you to support a healthy
    increase in the 6.1, 6.2 and 6.3 accounts for fiscal year 2002 and
    beyond. In 1998, the Defense Science Board recommended that the
    research programs of DOD should consistently be about 3.5 percent of
    the total defense. We believe this is a worthy target, which would
    result in an investment approaching $11 billion for fiscal year 2002.
        It should also be noted that as DOD S&T declined in the 1990s, the
    federal investment in research in engineering and the physical sciences
    declined overall. Other federal agencies did not pick up the slack.
    Although we support the rapid increase in federal investment in the
    life science in recent years, neglect for funding of research in
    engineering and the physical sciences should be of great concern to
    members of this subcommittee. A balanced portfolio of research and
    advances in engineering and the physical sciences is essential for
    maintaining U.S. technological leadership in areas critical to defense.
        Thank you for the opportunity to offer our views on the science and
    technology budget request of the Department of Defense.
        ASME International is a non-profit technical and educational
    organization with 125,000 members worldwide. The Society's members work
    in all sectors, including industry, education, and government. This
    statement represents the views of the DOD Task Force, of the Inter-
    Council Committee on Federal Research and Development, and is not
    necessarily a position of ASME as a whole.

        Senator Stevens. Mr. Harnage, National President, the
    American Federation of Government Employees.

    STATEMENT OF BOBBY L. HARNAGE, SR., NATIONAL PRESIDENT,
                AMERICAN FEDERATION OF GOVERNMENT
                EMPLOYEES, AFL-CIO

        Mr. Harnage. How are you doing, Mr. Chairman. Mr. Chairman,
    thank you for the opportunity to speak before the Senate
    Defense Appropriations Subcommittee. My name is Bobby Harnage,
    Senior, and I am National President of the American Federation
    of Government (AFG) Employees, representing some 600,000
    Federal and D.C. government employees. I will discuss today
    three of our service contracting concerns expressed in our
    written testimony: the need to track the cost of contracting,
    the need for real public-private competition for our work and
    new work before it is given to contractors, and the need to use
    public-private competition to hold contractors accountable to
    the same extent that civilian employees are.
        I will leave the relevant experts from recent Inspector
    General (IG) and General Accounting Office (GAO) reports to my
    written statement. However, I will note that GAO has reported
    that, despite spending almost $100 billion last year alone on
    contractors, DOD still has ``not developed a proposal to revise
    and improve the accuracy of the reporting of contract service
    costs. DOD officials stated that the momentum to develop a
    proposal to improve the reporting of contract service costs had
    subsided. Without improving this situation, DOD's reports on
    the cost of contract services would still be inaccurate and
    likely understate what DOD is paying for certain types of
    services.''
        For DOD, giving work to contractors is still more important
    than ensuring that work is done right. That is not just bad for
    civilian employees, that is bad for war-fighters and taxpayers
    as well. The Army deserves recognition and encouragement for
    its recent establishment of an inventory to track the cost and
    size of its contractor work force. I ask that the subcommittee
    require that other parts of DOD use the Army's system in
    establishing their own inventories.
        Requiring public and private competition. Despite the fact
    that A-76 is still a money-loser overall and after all these
    years, fair and full public-private competitions for genuinely
    commercial activities performed by contractors as well as
    civilian employees have the potential to save money for the
    taxpayers. However, because public-private competition is
    merely an option for DOD, there are no incentives for DOD to
    take it seriously.
        Given the problems within A-76 and the service contracting
    generally, you may be surprised, Mr. Chairman, that I do not
    come before you and demand an end to all servicing contracting
    forever and ever. I am actually coming to you with a much
    different request: require DOD to give Federal employees
    opportunities to compete in defense of their own jobs as well
    as new work. The number of civilian employees has fallen by
    almost 300,000. Spending on service contracting has rocketed
    ever upward, but less than one percent of service contracts in
    1999 were undertaken after an A-76 review.
        That is, DOD has dramatically increased service contracting
    and reduced its own civilian employee work force while almost
    never using public-private competition. According to the IG,
    there is often little competition among contractors for work.
    If GAO reports that savings are possible from individual A-76
    competitions and if DOD insists that savings are generated
    through A-76 competitions generally, whether the work stays in
    house or is contracted out, then civilian employees should be
    allowed to compete for more work, both their own work as well
    as new work.
        That is why the subcommittee should establish a requirement
    that DOD consider in-house performance before giving any work
    to contractors.
        Our third concern is contracted-in. Mr. Chairman, AFG has
    long believed that if savings were possible by competing the
    jobs of Federal employees, then they were possible by competing
    the jobs of contractors as well. As you know, A-76 provides for
    in-sourcing as well as out-sourcing. The same rules and the
    same rationale apply.
        At a time when the Pentagon is supposedly championing
    public-private competition, less than 3 percent of all A-76
    studies performed by DOD were directed at work performed by
    contractors. In other words, public-private competition is
    being used to replace civilian employees.
        DOD should be required----
        Senator Stevens. I am sorry, I have to stop you there. They
    tell me I have to vote.
        Mr. Harnage. Thank you very much for this opportunity.
        Senator Stevens. I am sorry to do this to you.
        [The statement follows:]

                  PREPARED STATEMENT OF BOBBY L. HARNAGE, SR.

        My name is Bobby L. Harnage, Sr., and I am National President of
    the American Federation of Government Employees. On behalf of the
    American Federation of Government Employees, AFL-CIO, which represents
    more than 600,000 federal employees, including 200,000 in the
    Department of Defense (DOD), who serve the American people around the
    world and across the nation. Mr. Chairman, I thank you for this
    opportunity to speak before the Senate Defense Appropriations
    Subcommittee.

    Problem #1: DOD is spending more and more on service contracting for
            less and less.
        In fact, we don't even know how much DOD is spending on service
    contracting, let alone if those hundreds of billions of taxpayer
    dollars are being spent wisely. We do know that the cost to taxpayers
    of service contracting has increased drastically. Over the last eight
    years, Pentagon officials have systematically replaced federal
    employees with contractors, often regardless of whether or not it makes
    any sense. According to the Office of Personnel Management, the DOD
    civilian workforce fell from 966,000 to 682,000 in 2000. (Chart 1)
    Service contracting, on the other hand, increased from $39.9 billion in
    1992 to $51.8 billion in 1999, according to the Inspector General (IG).
    (Chart 2)

                                   [Chart 1]

                                   [Chart 2]

        It's clear that the emphasis in DOD's service contracting crusade
    has been giving the jobs of federal employees to contractors, not in
    making sure that work has been well done.

              ``. . . DOD managers and contracting personnel were not
            putting sufficient priority during the 1990's on (service
            contracting), which likewise was virtually ignored for the
            first few years of recent acquisition reform efforts.
            Consequently, we think the risk of waste in this area is higher
            than commonly realized . . . We reviewed 105 Army, Navy, and
            Air Force contracting actions, valued at $6.7 billion, for a
            wide range of professional, administrative, and management
            support services amounting to about 104 million labor hours, or
            50,230 staff years. We were startled by the audit results,
            because we found problems with every one of the 105 actions. In
            nearly 10 years of managing the audit office of the IG, DOD, I
            do not ever recall finding problems on every item . . .''

                        Robert J. Lieberman, Assistant Inspector General
                                for Audits, Department of Defense;
                                ``Federal Acquisition: Why Are Billions of
                                Dollars Being Wasted?'' (testimony before
                                the House Subcommittee on Government
                                Management, Information, and Technology);
                                March 16, 2000.

        One of the principal architects of DOD's massive transfer of work
    from federal employees to the private sector was sheepish when asked
    during a Senate Readiness Subcommittee hearing last year about the IG's
    damning report:

              ``. . . I agree with (the IG about) needing significant
            improvements in service contracting . . . (T)his has become a
            major challenge for us . . . (W)e have to really significantly
            improve our service buying . . . (I)t's probably going to take
            us a few years . . . to shift towards really professional
            service buying.''

                        Jacques Gansler, Under Secretary for Acquisition &
                                Technology, Department of Defense; ``A
                                Hearing on Acquisition Reform'' (testimony
                                before the Senate Subcommittee on
                                Readiness); April 26, 2000.

        The General Accounting Office (GAO) has weighed in as well, both
    with respect to service contracting undertaken pursuant to OMB Circular
    A-76 and service contracting generally.

              ``Efforts to improve the accuracy of data on savings from A-
            76 (public-private competition) studies at the time the studies
            are completed are warranted, as are efforts to assess savings
            over time. Both are key to establishing more reliable savings
            estimates and improving the credibility of the A-76 program
            amidst continuing questions in Congress and elsewhere.''

                        General Accounting Office, DOD Competitive Sourcing
                                (NSIAD 01-20), December 2000.

        In an earlier report on A-76, GAO had noted that entries in the
    Commercial Activities Management Information System (CAMIS), the system
    that is supposed to be used to monitor contracts undertaken pursuant to
    the circular,

              ``are not modified and are being used continuously without
            updating the data to reflect changes in or even termination of
            contracts. DOD officials have noted that they could not
            determine from the CAMIS data if savings were actually being
            realized from A-76 competitions. Our work continues to show
            important limitations in CAMIS data . . . During our review, we
            found that CAMIS did not always record completed competitions
            and sometimes incorrectly indicated that competitions were
            completed where they had not yet begun or were still underway.
            We also identified where savings data recorded for completed
            competitions were incorrect based on other data provided by the
            applicable service.''

                        General Accounting Office, DOD Competitive
                                Sourcing: Results of Recent Competitions
                                (NSIAD-99-44), March 2000.

        According to a recent GAO report, DOD has chosen not to keep its
    commitment to the Congress to improve its system for reporting the
    costs of contract services.

              ``The Department of Defense (DOD) spends tens of billions
            annually on contract services--ranging from services for
            repairing and maintaining equipment; to services for medical
            care; to advisory and assistance services such as providing
            management and technical support, performing studies, and
            providing technical assistance. In fiscal year 1999, DOD
            reportedly spent $96.5 billion for contract services--more than
            it spent on supplies and equipment. Nevertheless there have
            been longstanding concerns regarding the accuracy and
            reliability of DOD's reporting on the costs related to contract
            services--particularly that expenditures were being improperly
            justified and classified and accounting systems used to track
            expenditures were inadequate . . .
              ``. . . DOD has not developed a proposal to revise and
            improve the accuracy of the reporting of contract service
            costs. DOD officials told us that various internal options were
            under consideration; however, these officials did not provide
            any details on these options. DOD officials stated that the
            momentum to develop a proposal to improve the reporting of
            contract services costs had subsided. Without improving this
            situation, DOD's report on the costs of contract services will
            still be inaccurate and likely understate what DOD is paying
            for certain types of services.''

                        General Accounting Office, CONTRACT MANAGEMENT: No
                                DOD Proposal to Improve Contract Service
                                Costs Reporting (01-295), February 2001.

        DOD's failure to track the billions and billions of dollars in
    increased service contracting has of course resulted in giving
    taxpayers the business, so to speak. However, it's also shafted DOD's
    civilian employees, the working and middle-class Americans who helped
    the nation win the Cold War and become the world's preeminent power.
    They are nearly 300,000 fewer, many of them having been replaced by
    contractors over the last eight years. And, adding insult to injury,
    DOD can't even begin to make the case that this wholesale transfer of
    work to the private sector was actually done in the name of efficiency.

    Solution #1: Require that the rest of DOD use the methodology developed
            by the Army to track the size and cost of its massive
            contractor workforce.
        One part of DOD is striving to deal with this longstanding problem
    and deserves our praise and encouragement: the Army. As the result of a
    recently issued rule, the Army has established an inventory to track
    the growth in the cost and size of the service's contractor workforce
    in a comprehensive, reliable, and contractor-friendly fashion.

              ``(The Army's new contractor inventory will) provide
            unprecedented departmental level visibility of the missions
            supported and functions performed by contractors'' and will
            allow the Army to ``assess whether, and to what extent,
            contractors may be performing (inherently governmental)
            functions, or commercial functions, which, when contracted out
            beyond a certain level of reliance, increase operational risks
            to overall Army mission capabilities and readiness . . . The
            capabilities provided by service contractors consume at least
            one third of the Department's obligation authority; and yet,
            due to lack of reliable data, senior Army planners lack the
            ability to assess the total manpower capabilities within a
            function and major Army organizations that may rely heavily on
            contract support. The data collected under this reporting
            requirement will remedy these defects . . .''

                        Department of the Army; Final Rule on ``Report on
                                Use of Employees of Non-Federal Entities to
                                Provide Services''; Federal Register; 32
                                CFR 668, December 26, 2000.

        The GAO has already endorsed the approach taken by the Army:

              ``Data on the full range of agencies' activities, whether
            performed by federal personnel, or contract, could inform
            managers and other decision makers about how they are
            performing their mission and mission support activities, and
            how they have currently allocated their resources.'' (Emphasis
            added)

                        General Accounting Office, Competitive Contracting
                                (NSIAD-00-244), September 2000.

        The former president of the Professional Services Council, a
    contractors' special interest group, told the Bureau of National
    Affairs' Federal Contracts Report, on March 21, 2000, that the rule
    ``should not be harmful in light of the fact that (compliance) is not
    coupled with receiving payment.''
        Meticulous statistics are kept about federal employees, their
    numbers, their salaries, their work. Virtually nothing, however, is
    known about the federal government's four million-strong contractor
    workforce. The work of federal employees is transparent as a result of
    the budget process, the appropriations process, the Federal Activities
    Inventory Reform Act, and the Government Performance and Results Act.
    The Army's contractor inventory will finally ensure the beginning of
    that same transparency with respect to the service's contractor
    workforce.

    Problem #2: Too much work is contracted out without public-private
            competition.
        Pentagon officials have made a lot of claims about savings from the
    use of OMB Circular A-76 that they have been unable to substantiate. In
    fact, A-76, after all of these years, is still a money-loser. According
    to GAO's DOD Competitive Sourcing: Some Progress, but Continuing
    Challenges Remain in Meeting Program Goals (NSIAD-00-106) report from
    last year,

              ``While our work has shown that savings are being realized
            from individual A-76 studies, overall program costs to date are
            still exceeding savings. The President's fiscal year 2001
            budget submission reports that during fiscal year 1998 and
            1999, the overall costs of the A-76 program have exceeded the
            expected savings.''

        Despite A-76's record, fair and full public-private competitions
    for genuinely commercial activities performed by contractors as well as
    federal employees have the potential to save money for the taxpayers.
    However, because public-private competition is merely an option for
    Pentagon officials--A-76, already riddled with waivers, loopholes, and
    exceptions, is a circular and does not have the force of law--there are
    no incentives for DOD to take it seriously.
        Indeed, because federal employees win too many of the competitions
    for the contractors' liking (60 percent), the competitions take too
    long, the competitions cost too much, and the predicted savings don't
    materialize, DOD has, in some instances, abandoned what should be a
    bedrock principle of public-private competition in favor of a nebulous
    and increasingly worrisome concept known as ``strategic sourcing,''
    while keeping the arbitrary civilian personnel quotas.
        Although Bush Administration officials are talking about competing
    at least 425,000 federal employee jobs, it won't be long until they
    discover that A-76 savings are usually illusory, based in legends
    rather than in ledgers, and hear the same old complaints from the
    private sector that contractors aren't winning often enough and they
    aren't taking our jobs fast enough. Thus, it likely won't be long until
    the Bush Administration follows the Clinton Administration's example of
    retaining arbitrary civilian personnel quotas but moving away from
    public-private competitions in favor of strategic sourcing, i.e.,
    direct conversions to contractor performance as well as downsizing
    civilian employees and then replacing them with federal employees.

    Solution #2: Require that work performed by civilian employees as well
            as new work be subjected to public-private competition before
            it is given to contractors.
        Given the severe problems with A-76 and service contracting
    generally, you may be surprised Mr. Chairman, that I don't come before
    you and demand an end to all service contracting, forever and ever. I'm
    actually coming to you with a much different request: require DOD to
    give federal employees opportunities to compete in defense of their own
    jobs as well as for new work.
        As you may know, Mr. Chairman, in DOD, almost all work is given to
    contractors without any public-private competition. (Please see Chart
    3.)

                                   [Chart 3]

              ``(C)ontracts resulting from a cost comparison performed in
            accordance with OMB Circular A-76 represent an extremely small
            portion of the total number of service contracts awarded by the
            Department during fiscal year 1999 (less than 1 percent).
            Further, these contracts represent a very small portion of the
            total dollars awarded by DOD to private sector contractors
            during fiscal year 1999.''

                        Jacques Gansler, Under Secretary for Acquisition &
                                Technology, Department of Defense; Senate
                                Report 106-53; December 26, 2000.

              ``From fiscal year 1992 through fiscal year 1999, DOD
            procurement of services increased from $39.9 billion to $51.8
            billion annually. The largest subcategory of contracts for
            services was for professional, administrative, and management
            support services, valued at $10 billion. Spending in this
            subcategory increased by 54 percent between 1992 and 1999.''

                        Robert J. Lieberman, Assistant Inspector General,
                                Department of Defense; ``Federal
                                Acquisition: Why Are Billions of Dollars
                                Being Wasted?'' (testimony before the House
                                Subcommittee on Government Management,
                                Information, and Technology); March 16,
                                2000.

        That is, DOD has dramatically increased service contracting and
    reduced its civilian employee workforce--while almost never using
    public-private competition. In fact, there is often little competition
    among contractors for work. The IG reported that in excess of three-
    fifths of the contracts he and his staff surveyed suffered from
    ``inadequate competition.'' Regardless of the level of private-private
    competition, 77 percent of the surveyed contracts had ``inadequate cost
    estimates'' that ``clearly left the government vulnerable--and
    sometimes at the mercy of the contractor to define the cost.''
        DOD managers need not be at the mercy of sole-source contractors,
    however. If GAO reports that savings are possible from individual A-76
    competitions and if DOD insists that savings are generated through A-76
    competitions generally whether the work stays in-house or is contracted
    out, then federal employees should be competing for more work, both
    their own as well as new work.
        If DOD were being run in the interests of warfighters and
    taxpayers, Pentagon officials would be actively considering in-house
    performance of work. Would a firm in the private sector--a big defense
    contractor, let's say--automatically contract out almost all new work,
    as DOD does today? Of course not.
        It's a homely metaphor but today, in the federal services
    marketplace, there are two shops, a civilian employee shop and a
    contractor shop. However, Pentagon officials have instructed managers
    never to use the civilian employee shop--no matter how much more
    effective we are, no matter how much more efficient we are, and no
    matter how much more reliable we are.
        That's why the Subcommittee should establish a requirement that DOD
    consider in-house performance before giving work to contractors. For
    those public-private competitions we win, warfighters and taxpayers
    will be well-served. As for those competitions we lose, we'll learn
    from our mistakes and strive to prevail the next time similar work is
    competed.
        Institutionalizing the public-private competition process will also
    help to address some of the problems with A-76 I identified earlier.
    For example, if DOD understands that public-private competition is not
    an optional extra, they will have incentives to better administer their
    contracts and to develop the capacity to expeditiously and economically
    conduct public-private competitions.
        Another example is in-house personnel ceilings. Work that either
    should be performed by civilian employees because of its inherently
    governmental nature or could be more efficiently performed by civilian
    employees is contracted out in order to stay under onerous personnel
    ceilings. A public-private competition requirement, however, eliminates
    any incentive to discriminate against the civilian workforce because
    DOD would have to consider in-house performance. Pentagon officials
    would have to shift from downsizing the civilian workforce in favor of
    rightsizing the civilian workforce.

    Problem #4: Work performed by civilian employees is being directly
            converted to performance by ``Native American'' contractors
            without any public-private competition.
        A loophole included in a general provision in the defense
    appropriations bill allows for work performed by federal employees to
    be directly converted to contractor performance if the contractor
    happens to be ``under 51 percent ownership by an Indian tribe.'' In the
    last two years, this loophole has been used twice by the Air Force to
    deprive 600 public works civilian employees of their jobs at MacDill
    Air Force Base, FL, and Kirtland AFB, NM. The National Imagery and
    Mapping Agency (NIMA) is now poised to use the direct conversion
    process against 600 civilian employees at installations in the St.
    Louis, MO, and Washington, DC, areas.
        I am proud that AFGE is as diverse as the federal workforce. This
    union obviously bears no animus towards Native Americans. Moreover, we
    do not oppose the use of 8a set-aside contracts that benefit, among
    others, Native Americans. However, this direct conversion process is
    fundamentally different from 8a set-aside contracts. It must also be
    noted that the civilian employees who lose their jobs as a result of
    these direct conversions--who, incidentally, are in many cases members
    of minority groups themselves--are not being replaced by Native
    Americans.
        As DOD's own Guidance for Strategic and Competitive Sourcing
    Programs points out, the use of a direct conversion is not required to
    be substituted in favor of a real public-private competition; in fact,
    the guidance indicates that even when using a direct conversion, the
    process can be modified to allow federal employees to compete in
    defense of their jobs as an MEO. However, after beginning and then
    abandoning an A-76 competition, as in the cases of MacDill and
    Kirtland, NIMA management is on the brink of executing a massive direct
    conversion--without even allowing agency employees to compete in
    defense of their jobs as an MEO.
        Of course, it must be noted that direct conversions, whether to
    Native American tribes or traditional defense contractors, are unfair
    to federal employees who are denied opportunities to compete in defense
    of their jobs and poorly serve taxpayers.

    Solution #4: Oppose the pending NIMA direct conversion and repeal the
            ``Native American'' direct conversion mechanism.
        AFGE appreciates the bipartisan and bicameral group of lawmakers,
    including Senators Richard Durbin (D-IL) and Jean Carnahan (D-MO), who
    signed a letter of opposition to NIMA's direct conversion effort and
    asked Secretary of Defense Donald Rumsfeld to prevent the loophole from
    being used indiscriminately.

    Problem #5: DOD has failed to look for savings from its massive and
            still ever-growing contractor workforce.
        Mr. Chairman, AFGE has long believed that if savings were possible
    from competing the jobs of federal employees, then they were possible
    from competing the jobs of contractors as well. As you know, A-76
    provides for insourcing as well as outsourcing.
        The Clinton Administration agreed with us--or so we believed. A
    senior OMB official even committed to ensure that agencies, including
    DOD, undertook more contracting in. In a February 2, 1999, letter to
    me, Acting Deputy Director for Management G. Edward DeSeve wrote,

              ``I also agree with you that we should ask federal managers
            to `take pause' and consider the potential benefits of
            converting work from contract to in-house performance. As I
            indicated at our October meeting, OMB will encourage agencies
            to identify opportunities for the conversion of work from
            contract to in-house performance . . .''

        No such guidance was ever offered. We were not deterred, however.
    Thanks to Senators Richard Durbin (D-IL) and Tom Harkin (D-IA) of this
    subcommittee, we secured the enactment of this report requirement:

              ``The Secretary of Defense shall submit a report to . . .
            identify those instances in which work performed by a
            contractor has been converted to performance by civilian or
            military employees of the Department of Defense . . . In
            addition, the report shall include recommendations for
            maximizing the possibility of effective public-private
            competition for work that has been contracted out.''

                        U.S. Congress, Fiscal Year 2000 Defense
                                Appropriations Act, Section 8109.

        The resulting report on DOD's contracting in activities--or, more
    precisely, the lack of contracting in activities--was hardly a
    surprise. DOD's compliance--or, more precisely, DOD's complete failure
    to comply--with the second requirement to develop a contracting in
    policy did cause me some surprise.

              ``Eight of the 286 (OMB Circular A-76 public-private
            competition) studies (completed during the previous five years)
            involved work which was being performed by the private
            sector.'' (Note: Federal employees won five out of the eight
            studies.) ``In responding to the Section 8109 requirement to
            present recommendations for maximizing the possibility of
            effective public-private competition for work that has been
            contracted out, the Department reiterated existing policy
            guidance on the subject.''

                        General Accounting Office, DOD Competitive Sourcing
                                (01-20), December 2000.

        At a time when the Pentagon is supposedly championing public-
    private competition, less than 3 percent of all A-76 studies performed
    by DOD were directed at work performed by contractors. (Please see
    Chart 4.) In other words, public-private competition is being used to
    replace federal employees with contractors, instead of to make DOD as a
    whole more efficient. Moreover, after being directed to come up with a
    plan for increasing its contracting in, the Pentagon thumbed it's
    collective nose at the Congress.

                                   [Chart 4]

    Solution #5: Require DOD to subject work performed by contractors to
            the same degree of public-private competition as that
            experienced by federal employees, starting with those
            categories of work that have been competed under A-76 over the
            last several years.
        With respect to contracting in, it's illustrative to look at local
    government, using survey data collected by the International City/
    County Management Association.

              ``Our data show significant incidence of reverse
            privatization or contracting back in previously privatized
            services . . . From 1992-1997, 88 percent of governments had
            contracted back in at least one service and 65 percent had
            contracted back in more than three services. On average across
            all places, 5 services were contracted back in from 1992 to
            1997.''

                        Mildred Warner and Amir Hefetz, Privatization and
                                the Market Structuring Role of Local
                                Government, Cornell University Department
                                of City and Regional Planning Working Paper
                                #197, December 2000.''

        Why so much contracting in? The authors explain:

              ``Contracting back in reflects problems with the contracting
            process itself, concerns over limited efficiency gains and
            maintenance of service quality . . . Analysis of cases of
            contracting back in shows that it is motivated by desire to
            maintain service quality and local control and to ensure cost
            savings in the face of changing markets.''

        Let's revisit the scene at DOD: The A-76 process is--at least at
    present--a money-loser. Contract administration is virtually
    nonexistent. Sole-source contractors have the department at their
    mercy. To engage in a bit of understatement, it's safe to write that
    conditions are ripe in DOD for the same sort of corrective contracting
    in that's occurring in local government.
        What is the explanation as to why there is so much contracting in
    at the local level and so little at DOD, especially given the strong
    likelihood that there is much less private-private competition for
    DOD's work because of the much greater complexity of the work required
    and contract administration problems are so much more severe?
        Here's the most likely explanation:

              `Ideology does not dominate local service delivery decisions;
            rather, pragmatic local government demonstrate the continued
            importance of public investment, innovation and direct
            involvement in service delivery.''

        In other words, local officials want to do what's right for their
    communities. Can the same good intentions be attributed to those who
    have run DOD in recent years? I'll leave that for others to answer
    definitively. However, it is clear that DOD officials have approached
    contracting out and contracting in with certain prejudices.
        Mr. Chairman, thank you for this opportunity to address the
    subcommittee. I would be happy to answer any questions.

        Senator Stevens. Mr. Peccei, you will be next.
        Senator Inouye [presiding]. The chair now recognizes Mr.
    Roberto Peccei, Vice Chancellor for Research at UCLA.

    STATEMENT OF ROBERTO PECCEI, Ph.D., VICE CHANCELLOR FOR
                RESEARCH, UCLA, ON BEHALF OF ASSOCIATION OF
                AMERICAN UNIVERSITIES

        Dr. Peccei. Thank you very much, Mr. Chairman. Thank you
    for the opportunity to testify today. My name is Roberto Peccei
    and I am the Vice Chancellor for Research at University of
    California, Los Angeles (UCLA). My remarks today are submitted
    on behalf of the American Association of Universities, the
    National Association of State Universities and Land Grant
    Colleges, and the American Council on Education. These three
    associations include universities and colleges in every State
    that performs science and technology research that is funded by
    the Department of Defense.
        I want to thank this subcommittee and you, Mr. Inouye, for
    the support you have shown for science and technology research
    programs in the Department of Defense. As you know,
    universities play the largest role in basic defense research,
    receiving more than 60 percent of the funding in program
    element 6.1. They also receive substantial funding for applied
    research and advanced technology development, program elements
    6.2 and 6.3 respectively.
        Many crucial defense technologies have emerged from
    fundamental research conducted on university campuses. Among
    these are radar, digital computers, lasers, the global
    positioning system, and computer networking. Indeed, ARPANet,
    the forerunner of the Internet, got its start at UCLA in 1969,
    more than 30 years ago.
        With future threats to the national security so uncertain,
    maintaining technological superiority will require a strong,
    continuing research effort. DOD-sponsored university research
    is an important source of new knowledge and innovative
    solutions, ensuring preparedness. Indeed, incremental
    adaptation of existing weapons and equipment are not
    necessarily suitable in this new world situation.
        For example, rapidly developing computer-based information
    technologies, coupled with advanced sensors, promise to
    revolutionize warfare. Research that now is being conducted on
    university campuses into new virtual reality and computer
    visualization technologies will permit future U.S. forces to
    dominate the situation with superior information and
    communications.
        Supporting university research benefits DOD in many ways.
    It produces important advances in knowledge, it helps top
    scientists and engineers to remain involved in defense
    research. Not least, it produces a student who gets hands-on
    research training and eventually becomes the highly qualified
    scientists and engineers of the future who go on to work in
    academia and industry and in Federal laboratories.
        For all these reasons, we hope that this subcommittee will
    continue the progress that has been made in the past few years
    to provide increased support for these programs, which make
    such an important contribution to national security. In fiscal
    year 2002, we hope the subcommittee will provide a combined
    total of $10 billion for science and technology programs under
    elements 6.1, 6.2, and 6.3. This will represent an increase of
    $900 million or approximately 10 percent over the fiscal year
    2001 appropriation.
        Thank you for permitting me to testify today. It will be a
    pleasure to welcome you or members of your staff to the UCLA
    campus so that you can see first-hand the exciting research
    being done with the support of the Department of Defense and
    this subcommittee.
        Thank you very much.
        [The statement follows:]

                  PREPARED STATEMENT OF ROBERTO PECCEI, PH.D.

        Mr. Chairman and members of the subcommittee: Thank you for the
    opportunity to testify today. My name is Roberto Peccei, and I am the
    Vice Chancellor for Research at UCLA. My remarks today are submitted on
    behalf of the Association of American Universities (AAU), which
    includes 63 of North America's most prominent research universities.
    This testimony is also submitted on behalf of the National Association
    of State Universities and Land-Grant Colleges (NASULGC) and the
    American Council on Education (ACE). These three associations include
    universities and colleges in every state that perform the science and
    technology research that is funded by the Department of Defense.
        I want to thank this subcommittee and you, Mr. Chairman, for the
    support that you have shown for science and technology research
    programs in the Department of Defense. As you know, Basic and Applied
    Research are funded under program elements 6.1 and 6.2 in the Research,
    Development, Testing and Evaluation section of the Department of
    Defense appropriation. The Army, Navy, Air Force and the ``Defense-
    wide'' account under the Office of the Secretary all receive separate
    appropriations for these programs. Universities play the largest role
    in basic defense research, receiving more than 60 percent of this
    funding (program element 6.1). They also receive substantial funding
    for applied defense research and advanced technology development
    (program elements 6.2 and 6.3, respectively).
        Many crucial defense technologies have emerged from fundamental
    research conducted on university campuses. Among these are: radar,
    nuclear power, digital computers, semiconductor electronics, lasers,
    fiber optics, night vision, vaccines and drugs for malaria and other
    tropical diseases, inertial guidance, the Global Positioning System,
    stealth and other advanced materials, computer networking (ARPANet,
    forerunner of the Internet in fact got its start at UCLA more than 30
    years ago), and computer-based visualization systems for training and
    for planning and conducting operations.
        With future threats to national security so uncertain, maintaining
    technological superiority will require a strong continuing research
    effort. The armed forces today not only must be ready to fight in
    conventional regional wars like the Gulf War; they also must be ready
    to undertake peacekeeping missions in hostile situations and to defend
    against unconventional threats such as terrorism, biological and
    chemical agents, and computer sabotage.
        DOD-sponsored university research is an important source of new
    knowledge and innovative solutions to these problems. Incremental
    adaptations of existing weapons and equipment are not necessarily
    suitable in the new world situation. University researchers are
    investigating new approaches to assist likely future missions--for
    example, small, highly mobile units operating in ambiguous situations
    far from their bases.
        Rapidly developing computer-based information technologies, coupled
    with advanced sensors, promise to revolutionize warfare. University
    scientists and engineers are working to exploit the information
    revolution faster and better than the rest of the world. Research now
    being conducted on campus into new visual reality and computer
    visualization technologies will permit future U.S. forces to dominate
    the situation with superior information and communications.
        Supporting university research benefits DOD in many ways. It
    produces important advances in knowledge. It helps keep top scientists
    and engineers involved in defense research. Not least, the students who
    get hands-on research training become the highly qualified scientists
    and engineers of the future who go on to work in academia, industry,
    and federal laboratories.
        For all these reasons, we hope this subcommittee will continue the
    progress that has been made in the past few years to provide increased
    support for these programs which make such an important contribution to
    national security. In fiscal year 2002, we hope the subcommittee will
    provide a combined total of $10 billion for science and technology
    programs (6.1, 6.2 and 6.3) in the Office of the Secretary, Army, Navy
    and Air Force. This would represent an increase of $900 million (or 10
    percent) over the fiscal year 2001 appropriation.
        Thank you for permitting me to testify today. It would be a
    pleasure to welcome you or your staff to the UCLA campus so that you
    can see first-hand the exciting research being done with the support of
    the Department of Defense and this subcommittee.

        Senator Inouye. Thank you very much, Dr. Peccei. How many
    universities are involved in DOD research?
        Dr. Peccei. Well, the Association of American Universities
    (AAU) has 63 members. The National Association of State
    Universities and Land-Grant Colleges (NASULGC) has close to 200
    members. Three hundred is the total number. They are in every
    State of the Union. What is particularly nice is that they
    involve a tremendous number of young students, both
    undergraduate and graduate students. Really, they help train
    the future generations.
        Senator Inouye. Thank you very much, Dr. Peccei.
        Dr. Peccei. Thank you.
        Senator Inouye. Now may I call upon Lieutenant Colonel
    Kevin Reagan, Ovarian Cancer National Alliance.
        [No response.]
        Senator Inouye. Then may I call upon Mr. Robert V. Morris,
    Executive Director, Fort Des Moines Memorial Park and Education
    Center.

    STATEMENT OF ROBERT V. MORRIS, EXECUTIVE DIRECTOR, FORT
                DES MOINES MEMORIAL PARK AND EDUCATION
                CENTER

        Mr. Morris. Greetings, Senator Inouye. As you are aware,
    Fort Des Moines is a military installation with a great deal of
    distinction. It was the site of the first officer candidate
    school opened to African Americans in 1917 and the creation of
    the Women's Army Corps in 1942, including the first officer
    candidate school opened to females there as well. President
    Ronald Reagan received his commission there in 1937 and our
    former board member and currently Secretary of State General
    Powell is one who also believes that had it not been for the
    success of that 1917 officers candidate school it would have
    retarded the process of black officer development for 25 years
    and had an impact on the careers of officers like himself.
        As you are aware, sir, we have received prior
    appropriations through the Army, the Corps of Engineers, which
    have done rehabilitation on the 20,000 square foot museum
    building there at the 4-acre park. Unfortunately, due to the
    rigid standards of rehabilitation by the Secretary of
    Interior's office, those funds literally are going to get us a
    shell, a building shell there, without much work being done
    internally.
        The building has been closed since the Vietnam War where
    the museum is going and it took a great deal of work to bring
    it up. We are asking for a final appropriation to complete this
    project. In addition to the $12 million construction and
    development budget for the park, of which we have raised $3
    million, we are also raising an $8 million endowment fund for
    the perpetual operations and maintenance of the park as well.
        So the project is large. That is basically what we are
    asking for at this time.
        [The statement follows:]

                     PREPARED STATEMENT OF ROBERT V. MORRIS

        No military installation has played as great a role in the racial
    and gender integration of America's Armed Forces as Fort Des Moines,
    Iowa, a National Historic Site.
        As you are aware, Fort Des Moines hosted the first U.S. Army
    Officer Candidate School open to African-Americans in 1917 during the
    First World War. The 639 graduate officers led the 92nd Division
    against Imperial Germany in WWI France in 1918 and fathered today's
    racially integrated officer corps.
        In 1942, during the Second World War, Fort Des Moines hosted the
    first U.S. Army training facility open to women. The Womens Army
    Auxiliary Corps (WAAC), later renamed the Womens Army Corps (WAC),
    trained 72,000 female troops for non-combat duty between 1942-1945. In
    addition, the Army's first Officer Candidate School open to women
    graduated 436 female officers, including 39 black women, on 29 August
    1942. WAAC/WAC service released 250,000 men for combat duty in Europe
    and the South Pacific.
        Congress has previously appropriated $4 million which the Army has
    used for structure stabilization of the 20,000 square foot museum and
    5,000 square foot Chapel buildings under the strict guidelines of the
    Secretary of Interior's ``Standards of Rehabilitation.'' Unfortunately,
    the hazardous work and standard conformity have exhausted the prior
    funds and left internal building and landscape development incomplete.
    These funds must be appropriated as a grant through the Defense
    Department due to their limitations on new construction projects.
        Although we have raised nearly $3 million in local public and
    private funds toward the $12 million project, this final $5 million
    appropriation will finish the park for all of America to see and learn
    from. With your help, the Fort Des Moines Memorial Park will become
    America's largest testament as to how the military led greater society
    towards racial and gender equality at two critical turning points in
    history.

        Senator Inouye. Thank you very much. Is the 92nd Division
    still associated with this?
        Mr. Morris. The 92nd Division to my knowledge is not active
    at this time. I think after World War II it became a inactive
    division, because it was a segregated division up through World
    War II.
        Senator Inouye. I was attached to it.
        Mr. Morris. Oh, really? My grandfather, as I believe you
    are aware, was one of the initial officer candidates and served
    with the 92nd in France and was wounded at the Battle of Metz.
    So I have a personal interest in this project and have been the
    leader of the project over the years.
        Senator Inouye. I will look into it, sir.
        Mr. Morris. Thank you. I appreciate it.
        Senator Inouye. Thank you.
        May I now call upon Dr. James Herriot, Vice President, Bios
    Group. Dr. Herriot.

    STATEMENT OF JAMES W. HERRIOT, Ph.D., VICE PRESIDENT,
                BIOS GROUP, INCORPORATED

        Dr. Herriot. In deference to the committee's short time
    this morning, I am going to read an abbreviated statement. You
    have a copy of the full statement for the record.
        Senator Inouye. It will be made part of the record, sir.
        Dr. Herriot. Mr. Chairman and members of the Defense
    Appropriations Subcommittee, Senator Inouye: A powerful new
    science is emerging which is changing the way that we operate
    our military, formulate our strategies, manage our logistics,
    and defend our Nation. This is the science of complexity.
        A few hundred years ago, scientists told us where
    cannonballs would land. Now this new science of complexity is
    telling us where organizations will land or, more precisely,
    about the dynamics of large, complex organizations composed of
    millions of individual interacting parts. Like millions of
    ricochetting, colliding billiard balls, these parts may be
    biomolecules of a living cell, they may be drug runners and
    Coast Guard ships. They may even be fragments of intelligence
    data which, if pieced together swiftly enough, can help
    analysts foretell of a terrorist attack or an international
    financial crisis.
        The important news is that complexity science has matured
    and turned the corner from pure science to real, valuable
    applications. What is complexity science? Let me give you an
    analogy to help here. Hundreds of years ago, the Masons built
    the cathedrals of Europe with an exquisitely fine-tuned body of
    intuitive rules for constructing these stone masterpieces.
    Nevertheless, occasionally the cathedrals fell down, and no one
    knew why.
        Later came structural engineering, the science of building.
    Buildings did not fall down any more and, moreover, architects
    could better adapt to new materials. Fast forward to today,
    when we have amassed a fine-tuned body of intuitive rules for
    constructing organizations, logistical supply chains, military
    organizations, and intelligence systems. Nevertheless,
    sometimes our organizations fall down and we do not always know
    why.
        Complexity science is the structural engineering
    organizations. Why complexity science now? The short answer is
    computers powerful enough to model and even engineer
    organizations. Where did complexity science come from? Los
    Alamos National Labs, as well as scientists like MacArthur
    Award-winning biologist Dr. Stuart Kaufman, a founder of the
    Santa Fe Institute, and our company, Bios Group, a leading
    complexity science company in the world.
        I will close with some examples of projects using
    complexity science. We are building computational models of
    financial instability to anticipate international financial
    crises before they occur, like identifying the dry forest where
    a forest fire may later break out. For DARPA, we are
    constructing thousands of Sherlock Holmes-like software agents
    to sift through millions of often inconsistent intelligence
    data.
        For the Joint Chiefs, we are building models of the drug
    flow from South America to Florida, a battlefield-like
    situation with both sides shifting strategies, often very
    quickly, looking for the most efficacious, robust and adaptable
    policies in the face of uncertainty for our side.
        In conclusion, we would enjoy further briefing this
    committee and other government bodies on this new structural
    engineering of organizations, the science of complexity. Thank
    you, Mr. Chairman, Senator Inouye, and members of the
    committee.
        [The statement follows:]

                 PREPARED STATEMENT OF JAMES W. HERRIOT, PH.D.

        Mr. Chairman and members of the Defense Appropriations
    Subcommittee: A new powerful science is emerging which is changing the
    way we operate our military, formulate our strategies, manage our
    logistics, and defend our nation. This is the Science of Complexity.
    This change is underway now, as I will describe in some examples.
        A few hundred years ago scientists told us where cannon balls would
    land. Now this new Science of Complexity is telling us where
    organizations will land--or more precisely about the dynamics of large
    complex organizations composed of millions of individual interacting
    parts--like millions of ricocheting, colliding billiard balls. These
    parts may be bio-molecules in a living cell. They may be soldiers,
    tanks, and airplanes in a complex field operation. These parts may be
    drug runners and Coast Guard ships. These parts may even be fragments
    of intelligence data which, if pieced together swiftly enough, can help
    analysts foretell of a terrorist attack or an international financial
    collapse.
        The important news is that Complexity Science has matured, and
    turned the corner from academic pure science to real valuable
    applications.
        What is Complexity Science? Perhaps this is best answered with an
    analogy. Several hundred years ago the Masons built the cathedrals of
    Europe. They had an exquisitely fine-tuned body of intuitive rules for
    constructing these stone masterpieces. Nevertheless, occasionally the
    cathedrals fell down, and no one knew why. Later, structural
    engineering came along: the science of building. Buildings didn't fall
    down anymore. Moreover, architects could be more innovative, designing
    more productive spaces and adapting to new materials like steel. Fast
    forward to today when we have amassed an impressively fine-tuned body
    of intuitive rules for constructing organizations, logistical supply
    chains, military operations, and intelligence data systems.
    Nevertheless, sometimes our organizations fall down. And we don't
    always know why.
        Complexity Science is the ``structural engineering'' of
    organizations. Complexity Science contains the dynamics and rules for
    designing large organizations, financial systems, operations,
    intelligence systems, etc. And like the cathedral architects of the
    past, today's generals, officers, CEOs, and business managers can be
    more innovative, designing more productive, adaptable, robust
    organizations in uncertain environments. In military parlance, the
    human is in the loop--more than ever.
        Why is Complexity Science coming to the fore now? The short answer
    is computers. To understand existing organizations, and to ``engineer''
    new organizations, we model them--and to do that we need today's very
    powerful computers.
        Where did Complexity Science come from? Los Alamos National Labs
    was a key birthplace of these ideas, as well as scientists like
    MacArthur Award winning biologist, Dr. Stuart Kauffman, a founder of
    the Santa Fe Institute and founder of our company, Bios Group, Inc.--
    the leading Complexity Science company in the world.
        I will close with some examples of projects using Complexity
    Science. We have many business projects with companies like Procter &
    Gamble, Ford, United Airlines, etc. However, I will focus on three of
    our DOD projects.
        We are building computational models of financial instability to
    look for signs of, and to anticipate, international financial crises
    before they occur. This is akin to identifying the dry forest where a
    forest fire might later break out.
        For DARPA we are (and I am personally) working on a program called
    Evidence Marshalling. Here we are constructing a few--soon thousands--
    of Sherlock Holmes-like software agents to sift though millions of
    often-inconsistent intelligence facts looking for the best surviving
    hypotheses.
        For the Joint Chiefs, we are building models of the drug flow from
    South America to Florida. This is a battlefield like situation with
    both sides shifting strategies, often very quickly. Here we are
    exploring what mathematicians call policy space, looking for the most
    efficacious, robust, and adaptable policies--for our side.
        In conclusion, the Science of Complexity is emerging as the
    powerful new ``structural engineering'' of organizations, operations,
    and strategy. Although Complexity Science is relatively new, it
    promises radical changes. We are already employing it to build more
    productive, more cost-effective, more adaptable organizations,
    logistics, and intelligence.
        We would enjoy the opportunity to further brief this committee and
    other government bodies on this new Science of Complexity, and on the
    many new opportunities this science opens up for our nation. Thank you
    Mr. Chairman and members of the committee.

        Senator Inouye. Do you have papers on this complexity
    science?
        Dr. Herriot. Yes, I can give you papers.
        Senator Inouye. Confusing, but yet intriguing.
        Dr. Herriot. How would we best get those to you?
        Senator Inouye. Just mail it to the U.S. Senate,
    Appropriations Committee.
        Dr. Herriot. We will do that. Thank you.
        Senator Inouye. Thank you very much, sir.
        May I now call upon the Deputy Director of the National
    Security and Foreign Relations Division, American Legion, Mr.
    Dennis Michael Duggan.

    STATEMENT OF DENNIS MICHAEL DUGGAN, DEPUTY DIRECTOR,
                NATIONAL SECURITY-FOREIGN RELATIONS
                DIVISION, THE AMERICAN LEGION

        Mr. Duggan. Good morning, Senator Inouye and members of the
    Appropriations Subcommittee on Defense. On behalf of the
    American Legion, we again would like to convey our sincere
    thanks and gratitude for this opportunity to present its views
    with regard to the fiscal year 2002 defense budget. Needless to
    say, I will be as brief as I can.
        Like you, we in the Legion are anticipating the results of
    the Defense Department's strategy review and we hope it is
    completed in time to be considered in the fiscal year 2002
    defense budget. We also believe a supplemental appropriations
    budget is needed to address a number of defense items, to
    include for example the defense health program, which has been
    critically underfunded over the past number of years.
        Undoubtedly, a strategy review for the long term is
    certainly needed, but such a review we believe is not required
    for the immediate necessities, like military pay raises,
    military housing allowances, and of course the Montgomery GI
    Bill (MGIB). Our top priority at this time very frankly, sir,
    is funding military health care and military treatment
    facilities, as well as the TRICARE for Life program for
    Medicare-eligible military retirees.
        Secondly, as mentioned, we do continue to push for the
    concurrent receipt of military retirement pay and veterans
    disability compensation, which has been a major injustice to
    disabled veterans and retirees over the years.
        Finally, we also believe that the time has come and is
    overdue to eliminate the unfair automatic offset at age 62 of
    the military survivors benefits program with social security
    benefits for military survivors who are at that stage where
    they desperately can use that money.
        Mr. Chairman, the Legion recommends that over the long term
    the following items be considered for implementation: One,
    continued improvement in military pay, health care, housing
    allowances, and housing, and of course, like we said, improved
    MGIB benefits.
        Defense spending we believe as a percentage of gross
    domestic product needs to be maintained, we believe, on the
    order of at least 3 percent of gross domestic product, instead
    of the current 2.7 to 2.9 percent. Defense we feel has been
    underfunded in the last, actually the last 13 to 15 years.
        The Quadrennial Defense Review, which will be reviewed this
    year and evaluated, needs to be completely evaluated at least
    from the standpoint that it has never provided the forces nor
    the capabilities and resources to fight two nearly simultaneous
    major regional conflicts. Recognizably, that is being
    considered in the strategy review. The strategy-resource
    mismatch we hope, which has plagued past and current strategy,
    needs to be desperately eliminated.
        Also, force modernization, to include the Army
    transformation program of General Shinseki, must continue to
    be, we believe, adequately funded.
        Finally, as mentioned, the National Guard and Reserves need
    to be realistically manned, structured, equipped, and
    maintained at high readiness levels. We have been aware lately
    that I believe that it was a National Guard helicopter deadline
    rate has been reported in the vicinity of 60 percent. If that
    is true, we believe that is unacceptable and needs to be
    improved.
        Senator Inouye, Senator Stevens, the armed forces owes you
    a debt of gratitude for all you have done for them over the
    years. The American Legion also would like to add its sincere
    gratitude to that. Thank you very much.
        [The statement follows:]

                     PREPARED STATEMENT OF DENNIS M. DUGGAN

        Mr. Chairman, The American Legion is grateful for the opportunity
    to present its views regarding defense appropriations for fiscal year
    (FY) 2002. The American Legion values your leadership in assessing and
    appropriating adequate funding for quality-of-life, readiness and
    modernization of the nation's armed forces. As history continues to
    demonstrate, it is important for Congress to meet its constitutional
    responsibilities to provide for the common defense in truly a highly
    uncertain world.
        With the end of the Cold War, the clear and identifiable threat
    posed by easily identified foes no longer exists. Today America faces a
    myriad of threats and challenges that appear more perplexing, complex
    and difficult. Serious regional threats continue to plague freedom and
    democracy, especially in areas like the Balkans, North Korea, the
    People's Republic of China, Iraq and Iran. America now must confront
    the on-going proliferation of weapons of mass destruction and
    international terrorism posed by rogue nations and radical groups.
        President Bush's total budget request for fiscal year 2002 totals
    over $1.98 trillion and allocates $310.5 billion for defense or only
    15.6 percent for defense and well over 50 percent for social programs
    and entitlement spending. The fiscal year 2002 defense budget
    represents a $14.2 billion increase in defense spending over the
    current funding level, but it is still 40 percent below the 1985 Reagan
    budget that eventually led to the end of the Cold War. In 1990, America
    was spending 5.1 percent of the gross domestic product on defense. The
    proposed fiscal year 2002 defense budget of $310 billion only
    represents 2.7 percent of the GDP, less than before the 1941 Japanese
    attack on Pearl Harbor. Military manpower has been continually reduced
    from 2.17 million in 1987 to 1.37 million.
        The nation needs to invest more money than the current
    Administration is requesting or projecting to spend in order to
    maintain credible military capabilities. The White House requested DOD
    to conduct a thorough review of the current two-war strategy, as well
    as military force structures and manpower for the long-term. The fiscal
    year 2002 defense budget request may be increased, but The American
    Legion is led to believe that the new Administration would not submit a
    fiscal year 2001 defense supplemental spending request until the review
    was completed. The American Legion believes there are numerous short-
    term improvements in quality-of-life concerns, military readiness and
    force modernization already identified that should be addressed
    immediately.
        The President promises an increase of $5.7 billion in military
    quality-of-life benefits that include a 4.8 percent raise in pay and
    allowances, $400 million for military housing improvements, and $3.9
    billion to fund military health care initiatives. The American Legion
    urges the Congress to increase the defense appropriations to meet these
    quality-of-life improvement promises. Granted, the Administration may
    need more time to develop budgets based on future strategic
    requirements, but additional time is not required to realize the need
    for funding health care, pay raises, housing, child care, education,
    and other family-based programs that demand immediate attention.
        National Commander Ray Smith recently visited American troops in
    South Korea, as well as a number of installations throughout the United
    States. During these visits, he was able to see first hand the urgent,
    immediate need to address these real quality-of-life challenges faced
    by servicemembers and their families. The marked decline in quality-of-
    life issues for servicemembers, coupled with heightened operational
    tempos, plays a key role in the recurring recruitment and retention
    woes and should come as no surprise. The operational tempo and lengthy
    deployments must be reduced. Military pay must be on par with the
    competitive civilian sector. If other benefits, like health care
    improvements, commissaries, adequate quarters, quality child care, and
    improved school systems are ignored, it will only serve to further
    undermine efforts to recruit and retain the best this nation has to
    offer.
        The American Legion has developed a new program to encourage
    Legionnaires and their families spend more quality time with today's
    military members and their families. During visits to active duty posts
    and National Guard armories, American Legion leaders heard soldiers
    tell of inadequate pay, housing problems, health care difficulties, and
    child care concerns.

                                 MODERNIZATION

        The very force projected from the build-up in the early 1980s is
    the one being worn out as a result of extensive operational deployments
    and inadequate funding. As former Secretary of Defense Schlesinger
    previously indicated before the House Armed Services Committee, the
    United States military continues to live off and wear out the
    ``capital'' of the Cold War. Modernizing and maintaining even today's
    smaller military forces takes the kind of sustained commitment and
    fiscal investment, in the future, that took place in the early 1980s.
    What this nation really cannot afford is another decade of declining
    defense budgets and shrinking military forces. If America is to remain
    a superpower able to promote and protect its global interests, it must
    be capable to project force with complete confidence, using state-of-
    the-arts weaponry, in a timely manner.
        The American Legion believes no soldier, sailor, aviator or Marine
    should go into battle without the very best training, equipment and
    weaponry available to win the war. No enemy should ever have a
    technological edge over US forces. To achieve this objective, Defense
    modernization efforts must remain a top priority of the Administration
    and Congress.

                                   READINESS

        In recent years, over-optimistic assumptions about actual funding
    requirements, coupled with multiple unbudgeted contingency operations,
    have resulted in a series of unit readiness problems. Training goals
    are not being met. Military readiness ratings have plunged due to
    reductions in operations and maintenance accounts as a result of
    extended peacekeeping operations. Both the 1st Infantry Division and
    the 10th Mountain Division felt the adverse consequences of
    peacekeeping operations on combat readiness. Recently, the 3rd Infantry
    Division was rated as less than combat-ready due to lack of combat-
    oriented training and personnel. Today, thousands of military personnel
    (both active and Reserve components) are deployed to about 140
    countries around the globe. At any given time, 26 percent of the
    active-duty military force is deployed to overseas commitments. Members
    of the armed forces have little opportunity to spend meaningful time
    with their families. Junior officers are leaving the military in large
    numbers. Maintenance of equipment and weapon delivery systems is in
    peril because of limited spare parts inventories. Due to depleted
    supplies of parts, the cannibalization of parts and creative
    engineering has become a common practice. Manpower shortages have
    resulted in ships cross-decking or borrowing of crewmembers from other
    ships in order to deploy. Such back-to-back tours adversely impact crew
    integrity, morale, and readiness. Hands-on training, actual flying
    hours, and ammunition are being restricted based on available funding.
    When proficiency cannot be maintained, readiness is compromised and
    this places the nation's ability to wage high intensity conflict at
    risk.

                           QUADRENNIAL DEFENSE REVIEW

        Since the collapse of the Soviet Union in 1991, America has
    conducted three substantial assessments of its strategy and force
    structures necessary to meet the national defense requirements. The
    assessment by the former President Bush Administration (``Base Force''
    assessment) and the assessment by the former President Clinton
    Administration (``Bottom-Up Review'') were intended to reassess the
    force structure in light of the changing realities of the post-Cold War
    world. Both assessments served an important purpose in focusing
    attention on the need to reevaluate America's military posture; but the
    pace of global change necessitated 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: Maintain 12 Army combat divisions,
    12 Navy aircraft carrier battle groups, 15 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 theory behind the two-war
    strategy: if America were drawn into a war with one regional aggressor,
    another could be tempted to attack its neighbor. Especially, if this
    aggressor were convinced that America and its allies were distracted,
    lacked the will to fight conflicts on two fronts, or did not possess
    the military power to deal with more than one major conflict at a time.
    Determining the right size of United States forces for more than one
    major conflict would provide a hedge against the possibility that a
    future adversary might mount a larger than expected threat. It would
    also allow for a credible overseas presence that is essential in
    dealing with potential regional dangers and pursuing new opportunities
    to advance stability and peace. The American Legion believes such a
    strategy, however, should be threat-based rather than budget-driven.
        Furthermore, the strategy must employ more robust force structures
    and increased budgeting for quality-of-life, readiness and
    modernization than that recommended in the Bottom-Up Review or its
    follow-on Quadrennial Defense Review (QDR). The American Legion
    believes that the two-war strategy has not been adequately funded. The
    American Legion believes the ``win-win'' two-war Bottom-Up Review
    strategy was delusional. With growing worldwide commitments, America
    has a ``win-hold'' strategy, at best, with only 10 Army combat
    divisions and three Marine divisions to utilize.
        Peacekeeping and humanitarian operations, that do not serve vital
    national security interests, further detract from America's combat
    power and military readiness. Funding for peacekeeping operations must
    be congressionally approved, on a case-by-case basis, and fully
    appropriated by Congress rather than funded through the Services'
    limited operations and maintenance accounts. America expects its
    civilian and military leadership to develop a reasonable and common
    sense national military strategy. If all other reasonable alternatives
    are explored, United States forces must only be committed in response
    to threats against America's vital interests.
        The current national security and military strategies prescribed in
    the QDR fail to match increased military missions with the required
    resources. The QDR, like the Bottom-Up-Review, provides neither the
    forces, lift capabilities, nor budgets to fight two nearly simultaneous
    major regional conflicts and win. Peacekeeping operations fail to
    properly train combat forces to win wars. Congress and DOD need to
    provide a strategy that better matches missions with resources.

                                  PROCUREMENT

        Only a few major systems currently in production would be funded in
    the fiscal year 2002 defense budget. The funding level for weapons
    procurement is one of the lowest of any Administration, since 1950 and
    has been some 71 percent less than that of 1985. The American Legion
    fully supports the Army's Transformation Program. Major development
    programs that The American Legion also 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 more DDG-51 destroyers. Unquestionably,
    the Navy will also need to acquire more submarines.
        If left unadvised, omissions in DOD's modernization budget could
    have the following implications:
      --They will result in the continued deterioration of the defense
            industrial base.
      --The future technological superiority of American forces will be at
            risk thereby increasing the danger to servicemembers 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.
        The American Legion further urges 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 opposes further termination or curtailing of
    essential service modernization programs, diminution of defense
    industrial capabilities, and rejects the transfers of critical defense
    technologies abroad.
        The American Legion firmly believes with the continuing threat of
    nuclear proliferation, America should retain its edge in nuclear
    capabilities as represented by the TRIAD system, and the highest
    priority should be the deployment of a national missile defense.
    Although the development and deployment of advanced theater missile
    defenses to protect United States forward deployed forces is
    imperative; any dismantling of acquisition programs to defend the
    American people is imprudent. America should focus on developing and
    deploying by 2003 an anti-ballistic missile detection and interception
    system that is capable of providing a highly effective defense against
    limited attacks of ballistic missiles.

                             ACTIVE FORCE PERSONNEL

        The American Legion is deeply concerned that a number of influences
    pose significant--and often underestimated--recruitment, retention and
    readiness risks for the remainder of the decade.
        Mr. Chairman, The American Legion and the armed forces owe you and
    this Subcommittee a debt of gratitude for your strong support of
    military quality-of-life issues. Nevertheless, your assistance is
    needed now more than ever. Positive congressional action is needed in
    this budget to overcome old and new threats to retaining the finest
    military in the world. Servicemembers and their families continue to
    endure physical risks to their well being and livelihood, substandard
    living conditions, and forfeiture of personal freedoms that most
    Americans would find unacceptable. Worldwide deployments have increased
    significantly, and a smaller force has operated under a higher ops
    tempo with longer work hours and increased family separations.
        Now is the time to look to the force recruiting and retention
    needs. Positive congressional action is needed to overcome past years
    of negative career messages and to address the following quality-of-
    life features:
      --Closing the Military Pay Gap With the Private Sector.--The Chairman
            of the Joint Chiefs of Staff previously stated 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 Members of
            Congress 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 took its toll and military pay
            continues to lag behind the private sector by about ten
            percent. The American Legion applauds the 3.7 percent pay raise
            effective on January 1, 2001 and E-5, E-6 and E-7 grade-
            adjustments to pay to be made in July 2001. With the new
            Administration pledging to significantly increase military pay
            raises above that dictated by the ``ECI plus one-half of one
            percent,'' there is excitement in the field. We urge you to
            support the new Administration's plan.
      --Basic Allowance for Housing (BAH).--For those who must live off
            base, the provision of the Basic Allowance for Housing (BAH) is
            intended to help with their out-of-pocket housing expenses.
            Former Secretary of Defense Cohen set a goal of entirely
            eliminating average out-of-pocket housing expenses. However, at
            this time it has been estimated that BAH only accounts for
            about 70 percent of out-of-pocket housing costs. This committee
            has taken strong steps in recent times to provide funding to
            move toward lowering such expenses. Please continue to work to
            close the gap between BAH and the member's average housing
            costs.
      --Montgomery G.I. Bill Enhancements (MGIB).--The current veterans'
            educational benefit, the Montgomery GI Bill, has failed to keep
            pace with escalating educational costs and is significantly
            diminished in relation to the unique educational benefits
            offered in the original GI Bill. Today's military educational
            benefits package directly competes with other federally funded
            educational programs, such as AmeriCorp, Pell Grants and others
            that offer equal or greater monetary benefits with less
            personal sacrifice and hardships. The American Legion believes
            that the veterans' educational benefits package for the 21st
            Century must be designed to recruit outstanding individuals to
            meet the needs of the armed forces and to serve as a successful
            transition instrument from military service back into the
            civilian workforce.

                               RESERVE COMPONENTS

        The advent of smaller active duty forces reinforces the need to
    retain combat-ready National Guard and Reserve Forces that are
    completely integrated into the Total Force. The readiness of National
    Guard and Reserve combat units to deploy to a second major regional
    conflict will also cost in terms of human lives unless Congress is
    completely willing to pay the price for their readiness. With only ten
    active Army divisions in its inventory, America needs to retain the
    eight National Guard divisions as its life insurance policy.
        Growing concerns are that the Reserve Components, especially the
    National Guard, should not be overused in contingency operations, as
    these servicemembers have regular civilian jobs and families as well.
    The American Legion understands that retention rates and, therefore,
    strength levels are falling in those States deployed or scheduled to
    deploy Guardsmen overseas. Governors of these states continue to
    express concern that state missions will not be accomplished. The
    National Guard from 44 States has a presence in 35 foreign countries.
        The American Legion is also supportive of all proposed quality-of-
    life initiatives that serve to improve living and working conditions of
    members of the Reserve components and their families, to include
    unlimited access to commissaries.

                                QUALITY-OF-LIFE

        Just as military manpower levels, force structures, operational
    tempos and defense budgets need to be stabilized, so must quality-of-
    life features for servicemembers and their families. This includes
    enhancements to compensation and incentives to preclude seriously
    degrading the All-Volunteer Force. The American Legion believes that
    the most important message is to sustain the momentum begun in the
    106th Congress:
      --Military pay raises;
      --improved housing;
      --access to quality health care;
      --family support activities for the active duty and Reserve
            components;
      --TRICARE for Life for Medicare-eligible military retirees;
      --full concurrent receipt of military retirement pay and veterans
            disability compensation; and,
      --improved Survivors Benefit Plan (SBP) benefits for Social Security
            eligible surviving spouses of military retirees.

                     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 a major concern among military retirees. Until
    recently, military retirees were led to believe that they were entitled
    to free lifetime health care--after having served 20 or more years in
    the most demanding and dangerous of professions. The promise, of
    lifetime health care was perpetuated in military recruitment literature
    as recently as 1993.
        The creation of ``TRICARE for Life'' and a TRICARE Senior Pharmacy
    benefit in Public Law 106-398 was an historic triumph for Congress and
    those 1.4 million Medicare-eligible military retirees and dependents.
    While TRICARE for Life came with its own funding stream in fiscal year
    2001, money must be budgeted to provide for the program for fiscal year
    2002. The American Legion recommends that you make this important
    program a reality by providing the funding to start the program. The
    American Legion also applauds your work last year to eliminate TRICARE
    co-payments for active duty family members. However, several other
    important measures signed into law are on hold due to lack of funding.
    These include extending the TRICARE Prime Remote program to family
    members; lowering the TRICARE Standard catastrophic cap (maximum out-
    of-pocket expenses per fiscal year) from $7,500 to $3,000; providing
    TRICARE coverage for school physicals for dependents; and reimbursement
    for certain travel expenses for TRICARE Prime beneficiaries. The
    American Legion recommends this committee to make these important
    programs work by providing appropriations to get the job done. The
    American Legion recommends that this Subcommittee take the next step to
    make sure that the new military health care improvements come to
    fruition.
        Beginning October 1, 2002, TRICARE for Life (TFL) will be fully
    funded through the Medicare-eligible Retiree Health Care Fund. But TFL
    actually will be implemented one year earlier--on October 1, 2001. This
    first-year funding requires an increase in appropriated defense funds
    over and above the normal defense budget amount. TFL will be funded in
    any event, but without the added money, the Pentagon would have to pay
    for it by ``robbing'' other needed DOD programs. Providing the full
    added TFL funds sends a powerful signal that Congress intends to honor
    the lifetime health care commitment to older servicemembers without
    cutting funds for other needed readiness or quality-of-life programs.
    The American Legion is grateful for Senator Domenici's strong
    leadership in proposing to fully fund military health care.
        The American Legion recommends an additional $1.4 billion be added
    to the Defense Health Program to meet health benefit obligations to
    military beneficiaries for the current fiscal year. This program has
    been chronically under-funded for years.
        The American Legion appreciates the significant military health
    care enhancements enacted in the fiscal year 2001 Floyd D. Spence
    National Defense Authorization Act. The American Legion recommends that
    Congress reiterate its commitment to authorize and appropriate
    sufficient funds for these improvements within DOD's Health Program,
    and further, to direct the Health Care Finance Administration (HCFA) to
    reimburse DOD for its care of Medicare-eligible military families at
    Military Treatment Facilities (MTFs).
        The Military Health System (MHS) is chronically under-funded,
    resulting in execution shortfalls, lack of adequate equipment
    capitalization, failure to invest in infrastructure and slow
    reimbursement to managed care support contractors. For a number of
    years, MHS has been forced to rely on emergency supplemental
    appropriations or the reprogramming of funds within DOD.
        The military's health care program is one of the most important
    benefits afforded the men and women who serve in or have retired from
    the uniformed services. The promise of free health care in military
    treatment facilities (MTFs) was a major selling point in the military's
    recruiter's and career counselor's pitch to enlist or retain personnel
    in the uniformed services.
                         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 convinced them to serve are not kept, the
    retention rate in the current active-duty force will undoubtedly be
    affected. The old adage you enlist a recruit, but you reenlist a family
    is truer today than ever as more career-oriented servicemembers are
    married or have dependents.
        Accordingly, The American Legion believes Congress and the
    Administration must place high priority on ensuring that these long-
    standing commitments are honored:
      --VA Compensation Offset to Military Retired Pay (Retired Pay
            Restoration).--Under current law, a military retiree with
            compensable, VA disabilities cannot receive both military
            retirement pay and VA disability compensation. The military
            retiree's retirement pay is offset (dollar-for-dollar) by the
            amount of VA disability compensation awarded.
        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. A veteran's disability compensation is
    paid to a veteran who is disabled by injury or disease incurred or
    aggravated during active-duty military service. 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. Action should be taken this year to
    provide full compensation for those military retirees who served more
    than 20 years in uniform and incurred service-connected disabilities.
    Disabled military retirees are the only retirees who pay their own
    disability compensation from their retirement pay. It is time to cease
    this inequitable practice. The American Legion supports funding to
    provide full concurrent receipt to all eligible disabled 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 for
            military survivors. 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.
      --Uniformed Services Former Spouses Protection Act (USFSPA).--The
            American Legion urges support for amending language to Public
            Law 97-252, the Uniformed Services Former Spouses Protection
            Act. This law continues to unfairly penalize active-duty armed
            forces members and military retirees. USFSPA has created an
            even larger class of victims than the former spouses it was
            designed to assist, namely remarried active-duty servicemembers
            or military retirees and their new family. The American Legion
            believes this law should be rescinded in its entirety, but as
            an absolute minimum, the provision for a lifetime annuity to
            former spouses should be terminated upon their remarriage.

                                   CONCLUSION

        Twenty-eight years ago America opted for an all-volunteer force to
    provide for the national security. Inherent in that commitment was a
    willingness to invest the needed resources to bring into existence a
    competent, professional, and well-equipped military. Now is not the
    time to dismantle, through the consequences of under-funding national
    defense, but rather to fully support the all-volunteer force.
        What needs to be done? The American Legion recommends, as a
    minimum, that the following steps be implemented:
      --Continued improvements in military pay raises, equitable increases
            in Basic Allowances for Housing and Subsistence, military
            health care, improved educational benefits under the Montgomery
            G.I. Bill, improved access to quality child care, and other
            quality-of-life issues.
      --Defense spending, as a percentage of Gross Domestic Product needs
            to be maintained between 3 and 4 percent annually. At least
            $160 billion should be appropriated over six years to address
            the immediate concerns of the Joint Chiefs of Staff.
      --The Quadrennial Defense Review needs to be fully reevaluated as it
            provides neither the forces nor the defense budgets to fight
            two nearly simultaneous major regional conflicts, while also
            conducting peacekeeping operations. The strategy-resources
            mismatch needs to be eliminated.
      --Force modernization needs to be realistically funded and not
            further delayed or America is likely to unnecessarily risk many
            lives in the years ahead;
      --The National Guard and Reserves must be realistically manned,
            structured, equipped and trained; fully deployable; and
            maintained at high readiness levels in order to accomplish
            their indispensable roles and missions.
        Mr. Chairman, this concludes The American Legion statement.

        Senator Inouye. Mr. Duggan, the chairman and I are both
    members of the American Legion and as such you can be assured
    we will look at your statement very carefully, sir.
        Mr. Duggan. Thank you, sir.
        Senator Inouye. May I now call upon Commander Mike Lord,
    Co-Chair of the Military Coalition Health Care Committee.
    Commander Lord.

    STATEMENT OF MIKE LORD, COMMANDER, U.S. NAVY [RETIRED],
                CO-CHAIR, THE MILITARY COALITION HEALTH
                CARE COMMITTEE

        Mr. Lord. Good morning, Senator Inouye. In a classic
    example of actions speaking louder than words, last year's
    Congress proclaimed in the most effective way possible that it
    really does put people first and it did indeed view the
    fulfillment of the lifetime health care commitment as a top
    priority. The Congress responded to a situation that needed a
    solution in a way that exceeded the hopes of even the most
    optimistic among us. On behalf of our grateful beneficiaries,
    we say thank you. You have really made a difference.
        While the Military Coalition is optimistic that the
    solution has been identified, we cannot ignore the storm clouds
    on the horizon. Just as last year's legislation has given us
    much to be grateful for, it has also presented a major
    challenge. It is a simple fact that the provision of health
    care does not come without cost and it is the issue of funding
    the benefit that has us most concerned.
        Along with the reality of rising health care costs is the
    long history of funding problems experienced by the military
    health system. As you well know, Senator Inouye, the Military
    Health System (MHS) has for the last two decades been plagued
    with annual budget underestimations that have left significant
    portions of the program underfunded. This year is no exception
    as DOD faces a reported $1.4 billion shortfall in the defense
    health program for the current fiscal year.
        The consolidated defense health program (DHP), in existence
    since 1993, has experienced shortfalls requiring supplemental
    funding every year since it was created. The understated
    budgets have often been addressed by reprogramming funds from
    the military departments, supplemental appropriations from
    Congress, or internal adjustments to the DHP, and all of this
    before the introduction of an additional 1.5 million Medicare-
    eligible beneficiaries.
        Because the health benefit is so crucial, it cannot be
    allowed to founder because of lack of funding. It is our hope
    that the over 65 provisions enacted by Congress will serve as a
    much-needed reminder that quality health care comes at a cost
    and will finally force the parties to accept the reality that
    the cost must be identified accurately, up front, and funded
    completely.
        Senator Inouye, we have addressed a few additional funding-
    related items in our written testimony. These include some
    additional health care matters and funding issues related to
    personnel and compensation. In the interest of time, I will not
    go into detail here, but I urge you to consider those matters
    as well.
        Finally, Senator Inouye, I would like to conclude by
    observing that last year the 106th Congress did the right thing
    by fulfilling health care commitments made long ago and
    provided a clear definition for the scope of the health care
    benefit, that being TRICARE for Life. As this committee
    indicated last year, the benefit needed to be defined so this
    committee could fund it. Now that it has been defined, we urge
    you to ensure that it is adequately funded, to see to it that
    the benefit is delivered as promised to all DOD beneficiaries.
        Thank you, Senator Inouye.
        [The statement follows:]

                        PREPARED STATEMENT OF MIKE LORD

        On behalf of The Military Coalition, a consortium of nationally-
    prominent uniformed services and veterans organizations, we are
    grateful to the Subcommittee for this opportunity to express our views
    concerning issues affecting the uniformed services community. This
    testimony provides the collective views of the following military and
    veterans organizations, which represent approximately 5.5 million
    current and former members of the seven uniformed services, 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
      --Non Commissioned Officers Association
      --Reserve Officers Association
      --The Retired Enlisted Association
      --The Retired Officers Association
      --The Society of Medical Consultants to the Armed Forces
      --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
        The Military Coalition, Inc., does not receive any grants or
    contracts from the federal government.

                                  INTRODUCTION

        The Military Coalition (TMC) wishes to express its deepest
    appreciation to this Subcommittee for its extraordinary efforts to
    address shortfalls in military personnel and health care budgets,
    fulfill obligations to active and retired servicemembers, families and
    survivors, and sustain recruiting and retention that is so essential to
    military readiness.
        This testimony summarizes the Coalition's recommendations for
    funding needs in these areas for fiscal year 2002.

                               HEALTH CARE ISSUES

    Provide Adequate Funding For The Defense Health Budget
        One of the Coalition's top priorities for fiscal year 2002 is to
    ensure adequate funding of the Defense Health Budget: to meet readiness
    needs, to include full funding of TRICARE, and to provide access to the
    military health care system for ALL uniformed services beneficiaries,
    regardless of age, status or location. The Coalition believes that an
    adequately funded health care benefit is as critical to the retention
    of qualified uniformed services personnel and to readiness as are pay
    and other benefits. As the Commandant of the U.S. Marine Corps
    underscored at the annual TRICARE Conference on Jan. 22, 2001,
    ``Medical care is a key component of military readiness . . . TRICARE
    influences the intangibles of military readiness, such as morale, the
    will to fight and dedication to duty . . . Our men and women perform
    their daily tasks better if not distracted by worries concerning their
    families.''
        The Military Health System (MHS) budget has been chronically
    underfunded, resulting in execution shortfalls, lack of adequate
    equipment capitalization, failure to invest in infrastructure, and slow
    reimbursement to Managed Care Support Contractors. Each year, the MHS
    has had to rely upon Congress to supply emergency supplemental funding.
    The Coalition has serious concerns about the funding shortfall that has
    become apparent again this year in the execution of the Defense Health
    Program (DHP) budget for fiscal year 2001.
        Service health officials indicate an additional $1.4 billion is
    essential to meet program needs for the remainder of fiscal year 2001,
    including the April 1 implementation of pharmacy benefits for Medicare-
    eligibles. If funding is not forthcoming soon, the Service Surgeons
    General have testified they face furloughs, limitations of pharmacy
    formularies, and extended deferral of equipment maintenance and
    repairs. Meanwhile, important benefit upgrades supposed to have been
    effective last October have had to be deferred, including a lower limit
    on retiree out-of-pocket health expenses, waiver of charges for
    military families assigned to remote areas, and reimbursement for
    school physicals for servicemembers' children. This shortfall threatens
    day-to-day health care operations, has delayed implementation of newly
    authorized programs, and threatens essential preparations for the
    October 1, 2001 implementation of the new TRICARE For Life (TFL)
    coverage that is so important to older military retirees.
        As the Subcommittee is aware, TFL will be funded through a DOD
    Medicare-eligible Retiree Health Care Fund beginning October 1, 2002.
    However, because the statutory effective date for TFL is one year
    earlier--Oct. 1, 2001--DOD will require an increase in appropriated
    funds over and above the current fiscal year 2002 defense budget
    topline if TFL is to reach its full potential, without forcing DOD to
    absorb its costs ``out-of-hide.'' fiscal year 2002 is the landmark year
    for TFL, and adequately funding the health care budget is the
    cornerstone for assuring the program is launched successfully. Doing so
    will eliminate any uncertainty and send a powerful signal to all
    service beneficiaries that Congress is resolved to make TFL a reality.
        In years past, the funding problem was tied to some degree to the
    lack of a clearly defined benefit. Uncertain of the benefit, it was
    difficult to identify the level of funding necessary to fully support
    the Defense Health Program. With the introduction of TFL, the benefit
    is defined and funding requirements should now be understood. The
    Coalition urges the subcommittee to make it a defense imperative to
    provide funds that meet the actual costs for providing health care to
    military retirees, active duty service personnel and their families,
    and to end the practice of relying on annual supplemental funding to
    meet budget shortfalls.
        The Military Coalition strongly recommends this Subcommittee
    appropriate sufficient funds to fully finance the Defense Health
    Program, to include military medical readiness, TRICARE and the DOD
    peacetime health care mission, full funding for TFL and to address the
    $1.4 billion execution shortfall for fiscal year 2001.

    Legislative Adjustments to TFL
        Inpatient Hospitalization and Skilled Nursing facility (SNF)
    Care.--Based on the experience of The Retired Officers Association
    (TROA), regarding hospital stays beyond the Medicare maximum of 150
    days, DOD would save only about $150,000 per year by requiring the
    beneficiaries to pay the $3,000 TRICARE catastrophic cap, before
    TRICARE assumes 100 percent of the cost. [This estimate was derived by
    extrapolating the experience of TROA (where 5 of 150,000 insured
    beneficiaries exceeded the 150 day Medicare limit in one year) to the
    entire 1.4 million Medicare-eligible service beneficiary population.]
    Similarly, DOD would save only about $930,000 per year by requiring
    beneficiaries to pay the $3,000 catastrophic cap before TRICARE assumes
    100 percent of the cost of SNF care beyond the Medicare 100-day
    maximum. [This estimate was also derived by extrapolating the TROA
    experience (31 of 150,000 beneficiaries exceeded the Medicare 100-day
    limit) to 1.4 million potential TFL participants.] These relatively
    rare experiences are highlighted by TFL skeptics as examples of how TFL
    falls short of Standard Medicare Supplemental Plan F coverage. The
    Coalition believes strongly that extending full TFL coverage, when
    hospital and SNF stays exceed the Medicare maximums, offers
    administrative and public relations benefits that far exceed the tiny
    dollar savings that would be foregone.
        The Military Coalition recommends authorization and the modest
    necessary funding to permit TFL to assume 100 percent of the costs for
    service beneficiaries who incur hospital stays that exceed the Medicare
    maximum (90 days plus 60-day lifetime reserve) and SNF stays that
    exceed the 100-day Medicare maximum.
        Private contracts.--In some areas of the country, particularly
    rural areas that are medically underserved, beneficiaries are unable to
    locate providers who accept Medicare for certain specialized services
    and may have to enter into ``private contracts.'' There are also
    instances where a beneficiary may be forced to enter into a private
    contract because some medical practices have exceeded capacity and are
    unable to see additional Medicare patients. Under current policy,
    beneficiaries in these situations are liable for 100 percent of the
    costs. Conversely, in these circumstances, individuals enrolled in the
    Federal Employees Health Benefits Program (FEHBP) do not encounter the
    same degree of out-of-pocket costs, because FEHBP pays the copayments
    it would have paid if Medicare were first payer.
        The Military Coalition recommends that this Subcommittee support
    authority and modest funding necessary to permit TFL to make partial
    payments for individuals who enter into private contracts with non-
    Medicare providers, on the same basis as FEHBP.

    Dual Eligible DOD-VA Beneficiaries
        The Coalition was disappointed to learn that the President's budget
    envisions seeking legislation to force DOD beneficiaries, who are also
    eligible for Veterans Administration (VA) medical care, to enroll with
    only one of these agencies as their sole source of health care. It is
    the Coalition's view that this policy change will be viewed as a
    serious breach of faith.
        The VA health system delivers specialized care and services for
    members with significant disabilities (e.g., prosthetics and treatment
    of spinal injuries) that are difficult if not impossible to duplicate
    in military facilities. But their needs for such specialized care for
    service-connected disabilities should not be turned to their
    disadvantage--either to compel them to get all their care from the VA,
    or to deny them specialized VA care if they choose routine care for
    themselves and their families through TRICARE.
        We acknowledge that a critical, but not insurmountable, challenge
    for Congress, DOD, and VA will be to implement a suitable policy
    framework under which these beneficiaries will be able to access the
    health care they have earned. Retired veterans with VA-rated
    disabilities are entitled to VA health care and, as a matter of
    principle, should not be required to choose between VA health care and
    TFL. These service-connected disabled veterans have earned the right to
    military health care in return for their careers of service in uniform.
    They also have earned access to specialized VA care for the (often
    severe) disabilities that their service has imposed on them.
        The Coalition strongly recommends that the Subcommittee provide
    support and funding to ensure disabled military retirees are not forced
    out of either the VA health care or the DOD health care options they
    have earned by their career service and personal sacrifices.

    Improvements In Tricare
        The Coalition is pleased that the fiscal year 2001 NDAA addressed
    some of the more egregious problems with TRICARE, and thanks the
    Subcommittee for its support in funding provisions to enhance TRICARE
    delivery/effectiveness via:
      --Modernization of TRICARE business practices by implementing an
            internet-based system to simplify and make accessible critical
            administrative processes;
      --Improvements in claims processing, to include use of the TRICARE
            encounter data information system; reducing administrative
            delays, and increasing use of electronic claims processing; and
      --Increased reimbursements in certain localities where access to
            health care services is at risk.
      --While Congress has previously given the authority to the Secretary
            of Defense to increase reimbursements and mandated improvements
            in TRICARE business practices, the Coalition continues to hear
            countless accounts from TRICARE Standard beneficiaries who are
            frustrated with the lack of provider participation in the
            program. While current and previous mandates are greatly
            appreciated, we have yet to see a significant impact as
            beneficiaries attempt to seek access from providers who will
            not accept TRICARE patients; or require payment up front
            because they refuse to accept TRICARE reimbursement rates
            administrative requirements.
        Once providers have left the system, promises of increased
    efficiencies have done little to encourage them to return to the system
    to care for our beneficiaries.
        The Military Coalition recommends that the Subcommittee continue
    monitoring provider participation problems and support additional
    actions as necessary to resolve these issues.

    TRICARE Prime Equity Innovations
        The Coalition is grateful that Congress provided authority and
    funding to eliminate copayments for active duty family members (ADFMs)
    enrolled in TRICARE Prime. This initiative removed financial burdens
    for those who were only able to access care through civilian providers.
    The Coalition was delighted by the restoration of the TRICARE Prime
    benefit for families of servicemembers assigned to remote areas where
    there is no TRICARE Prime option. These families were unfairly burdened
    by having to pay much higher copayments for care than their
    counterparts assigned to areas where they had the opportunity to enroll
    in TRICARE Prime.
        Fiscal year 2001 is a watershed year for military beneficiaries.
    However, the great strides made to improve benefits for ADFMs and
    Medicare-eligible beneficiaries have made apparent the continued
    shortcomings of the TRICARE system for retirees under 65. Many of these
    beneficiaries live in areas not serviced by Prime, thus relying on the
    more expensive Standard benefit. Because many live in rural or
    metropolitan areas that are medically underserved, they continue to
    inform us that they are having difficulty in locating TRICARE
    participating providers. This presents a dilemma for members who have
    no choice but to rely on providers who demand their fees ``up front''
    at the time of service. Obviously, this places an undue financial
    burden upon these deserving beneficiaries. In the light of the benefit
    enhancements provided to the over 65 retirees (TFL) and the ADFM, it is
    apparent that the needs of the under 65 retirees are not being met by
    the current TRICARE system. The Coalition believes that one viable
    option would be to extend TRICARE Prime Remote to TRICARE-eligible
    retirees, their family members and survivors at the same locations
    where the program is established for ADFMs.
        The Military Coalition strongly recommends that the Subcommittee
    work with the Armed Services Committee to authorize and appropriate
    sufficient funds to ensure that TRICARE Prime Remote be extended to
    retirees, their family members and survivors at the same locations
    where it is established for active duty family members.

    Travel Reimbursement for Prime Beneficiaries
        The Coalition also appreciates Congress's action to reduce the
    financial burden for TRICARE Prime beneficiaries in areas where
    specialty care is not available. Previously, Prime enrollees were
    forced to travel great distances from their MTFs to distant specialty
    centers at personal expense. A provision in the fiscal year 2001 NDAA
    authorizes TRICARE to cover the expenses of Prime enrollees who have to
    travel more than 100 miles to get specialty care will greatly reduce
    this burden. However, a further refinement is necessary to achieve the
    desired result. If the patient is a minor child, who must or should be
    accompanied by a parent or guardian, there is no authority to reimburse
    that accompanying individual.
        The Military Coalition recommends that the Subcommittee support
    authority and funding to permit travel reimbursement for a parent or
    guardian of a minor when they accompany the minor to distant specialty
    centers.

    Custodial Care
        Once again, the Coalition is particularly grateful that Congress
    has provided a definition of Custodial Care for military beneficiaries
    that meets industry standards to provide medically necessary care, and
    provided funding for this purpose. While the requirement still has not
    been fully implemented across all TRICARE Regions, it is slowly being
    put into place. Without Congress' intervention, DOD would have
    maintained its ``unique'' definition of medically necessary care for
    beneficiaries considered as custodial patients. The result would have
    meant cost shifting to Medicaid, loss of medically necessary care for
    the most vulnerable of the DOD beneficiary population, or both.
        We urge continued oversight by Congress to monitor the
    implementation of the new case management program mandated by Public
    Law 106-65, the Individual Case Management Program for Persons with
    Extraordinary Conditions (ICMP-PEC). The Coalition is eager to learn
    the results of the study mandated in Public Law 106-65, Sec. 703 due
    March 31, 2000 to determine how other health plans provide care to
    custodial patients.
        The Coalition is aware that TFL will make an additional 1.4 million
    beneficiaries eligible for TRICARE. The Coalition is aware of the
    potential impact these new beneficiaries will have upon the DHS and
    recognizes that some among this population, which is at the greatest
    risk for poor health, will be eligible for the ICMP-PEC. However, the
    Coalition is concerned that the current program has been developed in
    an incremental and piecemeal fashion and is poorly understood by
    providers and beneficiaries. In light of the implementation issues
    concerning the under 65 population in ICMP-PEC, the Coalition urges
    Congress to instruct DOD to develop a program, in concert with
    representatives from advocacy groups, that is equitable to all
    beneficiaries.
        The Military Coalition recommends that Congress provide continued
    oversight to further define what medically necessary care will be
    provided to all Custodial Care beneficiaries; and that Congress direct
    a study to determine how TFL beneficiaries will be integrated into
    ICMP-PEC in an equitable manner; and that Beneficiary Advisory Groups'
    inputs be sought in the integration of TFL beneficiaries into the ICMP-
    PEC. Coordination of Benefits and the 115 percent Billing Limit Under
    TRICARE Standard
        In 1995, DOD unilaterally and arbitrarily changed its policy on the
    115 percent billing limit in cases of third party insurance. The new
    policy shifted from a ``coordination of benefits'' methodology (the
    standard for FEHBP and other quality health insurance programs in the
    private sector) to a ``benefits-less-benefits'' approach that unfairly
    transferred significant costs to servicemembers, their families and
    survivors. Regrettably, this insensitive policy change also currently
    applies to disabled beneficiaries under 65 for whom Medicare is first
    payer and for whom Congress contemplated TRICARE would act as second
    payer to Medicare under the ``coordination of benefits'' methodology.
        Here is TRICARE's Catch 22. Although providers may charge any
    amount for a particular service, TRICARE only recognizes amounts up to
    115 percent of the TRICARE ``allowable charge'' for a given procedure.
    Under DOD's previous, pre-1995 policy, any third party insurer would
    pay first, then TRICARE (formerly CHAMPUS) would pay any balance up to
    what it would have paid as first payer (75 percent of the allowable
    charge for retirees; 80 percent for active duty dependents).
        Under its post-1994 policy, TRICARE will not pay anything at all if
    the beneficiary's other health insurance (OHI) pays an amount equal to
    or higher than the 115 percent billing limit. (Example: a physician
    bills $500 for a procedure with a TRICARE-allowable charge of $300, and
    the OHI pays $400. Previously, TRICARE would have paid the additional
    $100 because that is less than the $300 TRICARE would have paid if
    there were no other insurance. Under DOD's new rules, TRICARE pays
    nothing, since the other insurance paid more than 115 percent of the
    TRICARE-allowable charge.) In many cases, the beneficiary is stuck with
    the additional $100 in out-of-pocket costs.
        DOD's shift in policy unfairly penalizes beneficiaries with other
    health insurance plans by making them pay out of pocket for what
    TRICARE previously covered. In other words, beneficiaries entitled to
    TRICARE 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 strongly recommends that the Subcommittee
    support directing DOD to eliminate the 115 percent billing limit when
    TRICARE Standard is second payer to other health insurance, to
    reinstate the ``coordination of benefits'' methodology, and provide the
    necessary funding for this purpose.

                           PERSONNEL AND COMPENSATION

    Personnel Strengths and Operations Tempo
        The Coalition has been dismayed at past annual Service requests for
    additional force reductions without any corresponding decrease in
    operational tempo. Innumerable newspaper reports have told stories of
    ships deploying with significant manning shortfalls or of hollow and
    overextended units that must cannibalize from others to meet manning
    requirements. Other news reports cite poor unit performance during
    evaluations because units lacked the time or resources, or both, to
    conduct needed readiness training. Still others document the strains on
    families when returning servicemembers still see little of their loved
    ones because they must work longer duty days to address home-station
    workload backlogs and catch-up on training requirements. Service
    leaders have tried to alleviate the situation by reorganizing
    deployable units, authorizing ``family down time'' following
    redeployment, or other laudable initiatives, but such things do little
    to eliminate long-term workload or training backlogs.
        The Coalition strongly believes force reductions have gone too far
    and that simply halting force reductions is inadequate. The force is
    already overstrained to meet current deployment requirements, let alone
    address any new major contingency that may arise. The grinding
    operations tempo has become a major quality of life issue that won't go
    away, and it will not be fixed by ``down time'' or expressions of
    understanding and encouragement. Deferral of meaningful action to
    address this problem cannot continue without risking serious long-term
    consequences. Real relief is needed now, and can only be achieved by
    increasing the force, reducing the mission, or both.
        The Military Coalition strongly recommends restoration of Service
    end strengths consistent with long-term sustainment of current
    deployments and fulfillment of national military strategy. The
    Coalition supports application of recruiting resources/voluntary recall
    policies as necessary to meet this requirement. The Coalition urges the
    Subcommittee to support and fund manpower options to ease operational
    stresses on active and Reserve personnel.

    Pay Raise Comparability and Pay Table Reform
        The Military Coalition is extremely appreciative of the Congress's
    leadership during the last two years in reversing the routine practice
    of capping servicemembers' annual pay raises below the average
    American's. Your determination to begin making up for those past
    shortfalls by funding ``comparability-plus'' pay raises in law through
    2006 offered much-needed acknowledgment that the commitment between
    servicemembers and their Nation cannot be a one-way street. Likewise,
    the July 2000 pay table revision and the targeted pay raises for July
    2001 provided more appropriate financial recognition for mid-career and
    high-performing servicemembers. But the Coalition urges the
    Subcommittee not to consider the work on pay matters complete.
        Military and veterans associations know only too well the
    tremendous leadership effort required to reverse long-standing trends
    and win allocation of additional resources for programs that have been
    long-constrained. It must be acknowledged that the annual increases
    currently programmed will make up only a small fraction of the
    cumulative pay raise sacrifices imposed on servicemembers for almost
    two decades. As important as overturning past pay cap practices has
    been, we must acknowledge that an extra one-half of one-percent raise
    does not put a big boost in the typical enlisted member's take-home
    pay. Perhaps the best way to put the issue in perspective is to recall
    that the last time a large pay comparability gap coincided with a
    retention crisis (in the late 1970's), the gap was eliminated via
    double-digit raises in both 1981 and 1982.
        Some have speculated that the cumulative 13.5 per cent gap between
    military and private sector pay growth between 1982 and 1999 would be
    obviated by the July 1, 2000 and 2001 pay table reforms or other
    ``targeted'' increases. Nothing could be further from the truth. In the
    past, when raises have been allocated differentially by grade or
    allowance, they have been described in ``aggregate equivalent pay
    raise'' terms (i.e., the overall pay raise value of the differential
    increase is calculated as if the cost of the initiative were applied
    equally across the board to all members). In aggregate terms, the
    fiscal year 2000 pay table realignment represented the cost equivalent
    of a 1.4 percent across-the-board pay raise. The targeted raises
    scheduled for this July equate to an additional 0.8 percent increase in
    overall pay. As of January 2001, the cumulative gap will have been
    reduced to 10.9 percent. By 2006, it will further decline to 8.3
    percent. While this has been great progress, even if the ``ECI plus .5
    percent'' pay raise adjustments were sustained beyond 2006,
    comparability would not be restored until 2023. The Administration's
    proposal to add $1 billion to military pay in 2002 will take us another
    important step toward pay comparability, and The Military Coalition
    strongly supports that initiative. But, further steps will be needed to
    close the gap and restore full pay comparability.

        The Military Coalition urges the Subcommittee to provide the
    additional $1 billion necessary to address the Administration's
    military pay raise proposal for fiscal year 2002, and strongly
    recommends the Subcommittee support additional increases in annual pay
    adjustments as necessary to eliminate the accumulated pay raise
    shortfalls from previous years, as measured against the Employment Cost
    Index (ECI).

    Basic Allowance for Housing (BAH)
        The Military Coalition is most grateful to the Subcommittee for
    supporting initiatives to reduce out-of-pocket housing expenses for
    servicemembers. Responding to the Congress's leadership on this issue,
    DOD proposed plans to reduce out of pocket expenses to 15 percent in
    2001 and reduce the median out-of-pocket expense to zero by fiscal year
    2005. This aggressive action to better realign BAH rates with actual
    housing costs is having a real impact and providing immediate relief to
    many servicemembers and families who were strapped in meeting rising
    housing/utility costs.
        We applaud this initiative and urge the Subcommittee's funding
    support, but we ask that more be done. Housing (especially utility)
    costs continue to rise, and military pay will remain depressed for the
    foreseeable future. For these reasons, we urge the Subcommittee to
    provide the funding needed to accelerate BAH increases and eliminate
    all out of pocket expenses for servicemembers well before 2005.
        The Military Coalition urges BAH funding as necessary to eliminate
    servicemembers' out of pocket costs as soon as possible.

    Permanent Change of Station Issues
        The Military Coalition is very concerned that servicemembers
    continue to incur significant out-of-pocket costs in complying with
    government-directed relocation orders. Department of Defense surveys
    show the government typically reimburses only two-thirds of the costs
    members actually incur in such moves. By any comparison, the
    servicemember is being short-changed in this area. Federal civilian
    employees receive much more substantial reimbursements in conjunction
    with government-directed moves, up to and including reimbursement for
    house-hunting trips and homeowner closing costs.
        It is an unfortunate fact that permanent change of station mileage
    allowances and per diem rates have not been adjusted since 1986. The
    authorized duration for paying Temporary Lodging Expense allowance
    (TLE) was increased to 10 days several years ago, but the maximum
    amount payable per day has not been adjusted since 1986. These
    important reimbursements are sadly overdue for adjustment, and
    servicemembers are paying an unfair price for this delay.
        We cannot avoid requiring members to make frequent relocations,
    with all the attendant disruptions of children's schooling, spousal
    career sacrifices, etc. But the grateful Nation that requires them to
    incur these disruptions so often should not be requiring them to bear
    so much of the attendant expenses out of their own pockets.
        The Military Coalition urges a comprehensive updating of permanent
    change-of-station reimbursement allowances in the immediate future to
    ease the financial burdens currently being imposed on servicemembers.
    Increases should match the percentage increase in the Consumer Price
    Index (CPI) since the applicable allowance was last adjusted.

                                   CONCLUSION

        The Military Coalition would like to reiterate its profound
    gratitude for the extraordinary work this Subcommittee has done to
    provide personnel program funding in support of recruiting, retention
    and readiness.
        But much work also remains to be done that will require the
    Subcommittee's continued funding support, particularly for health care
    and other compensation programs affecting all members of the uniformed
    services community.
        Mr. Chairman and Distinguished Members of the Subcommittee, in
    closing, we very much appreciate the opportunity to present the
    Coalition's views on these critically important topics.

        Senator Inouye. I thank you very much, Commander, and I can
    assure you we will do our best.
        Mr. Lord. Thank you.
        The committee will stand in recess. I have been summoned to
    vote.
        Senator Stevens [presiding]. Any others who want to
    testify? Where are we? Mr. Mix.

    STATEMENT OF ROBERT R. MIX, EXECUTIVE DIRECTOR OF
                GOVERNMENT AFFAIRS, NONCOMMISSIONED
                OFFICERS ASSOCIATION ON BEHALF OF THE
                NATIONAL MILITARY AND VETERANS ALLIANCE

        Mr. Mix. Yes, sir, Mr. Chairman.
        Senator Stevens. Good morning.
        Mr. Mix. I am Command Sergeant Major Randy Mix, U.S. Army
    retired, Executive Director of Government Affairs for the
    Noncommissioned Officers Association, here to present testimony
    on behalf of the National Military and Veterans Alliance.
        Mr. Chairman, distinguished members of the subcommittee,
    the National Military and Veterans Alliance is most
    appreciative to this subcommittee for both interest in a strong
    national defense and objective concern for the individual
    service members of all uniformed services. The members of the
    alliance salute your past efforts and note that the building
    blocks, programs, and benefits put in place for mission and
    people have been in the right direction, but need to be
    sustained, enhanced, and provided the fiscal resources to
    ensure continued viability.
        The alliance statement focuses on pay and compensation
    issues of those who serve or have served. America's military
    personnel must know that their institutional benefits, such as
    pay, special compensations, health and survivor benefits, are
    secure now and in the future to free them of unnecessary
    anxiety and doubt of promises made should they be placed in
    harm's way.
        There have been extraordinary efforts to restore the value
    of military pay to the comparable standard with the civilian
    sector over the past few years. While across the board pay
    raises need to continue for all personnel, the alliance
    additionally recommends that the targeted pay raise be directed
    at enlisted grades E-4 through E-9 to eliminate pay compression
    in the force structure.
        The alliance also strongly supports the concept of pay
    equity for members of the Guard and Reserve and would ask for a
    top to bottom review to achieve pay parity. Additionally,
    flight pay for Reserve component air crews, thrift savings plan
    participation, heroism pay, and single rate basic allowance for
    housing are addressed in our written testimony.
        Military health care system. While there are many issues
    concerning health care, the alliance simply requests that the
    subcommittee carefully scrutinize the costs of all DOD health
    care delivery systems and ensure that adequate fiscal resources
    are available for these programs that contribute to military
    readiness, keep the promises made to all people who serve long
    and faithful careers.
        Finally, allow me to comment on concurrent receipt. The
    alliance appreciates the efforts of the subcommittee to secure
    necessary appropriations to put in place a special pay program
    for severely disabled military retirees. While you are not
    convened as authorizers, we ask that you aggressively seek
    resolution to the concurrent receipt issue that impacts all
    disabled veterans. It is past time to secure authorization and
    the necessary funding for the program. The alliance pledges you
    its full support to get concurrent receipt off of its annual
    casket ride through the halls of Congress and recorded on the
    rolls of the 107th Congress as a long overdue program
    entitlement.
        Also, Mr. Chairman, in connection with concurrent receipt,
    I would like to mention military widows. Their husbands pay for
    a survivor benefit plan, then when the service member dies of a
    service-connected condition the government offsets the military
    survivor benefit plan dollar for dollar by the amount of
    dependency and indemnity compensation. The alliance would like
    to see an end to that offset and we request you support such a
    proposal if such a proposal and when such a proposal is
    included in the national defense authorization bill.
        Mr. Chairman and members of the subcommittee, the alliance
    is most appreciative of this opportunity to present our
    comments for the record. I would be remiss if I did not
    acknowledge a new member of the alliance who is not listed in
    our written submission, but fully supports the testimony, and
    that is the American World War Two Orphans Network.
        Mr. Chairman, I thank you for allowing us to be here.
        [The statement follows:]

                      PREPARED STATEMENT OF ROBERT R. MIX

                                  INTRODUCTION

        The National Military and Veterans Alliance (NMVA or Alliance) is
    most appreciative to the Subcommittee for both its interest in a strong
    national defense and equally important its objective concern for the
    individual service members of all Uniformed services. Your Subcommittee
    has an admirable record in the development of the annual National
    Defense Act building from year to year those services and benefits that
    ensure readiness of the force and all who have sworn to defend and
    protect the Constitution of the United States. The members of the
    Alliance salute your past efforts and notes that the building blocks,
    programs and benefits, put in place for mission and people have
    aggressively been in the right direction but need to be sustained,
    enhanced, and provided the fiscal resources to ensure continued
    viability.
        The Alliance statement will focuses on pay and compensation issues
    of those who serve or have served and mutually supported by Alliance
    associations. NMVA also recognizes that pay and compensation gains of
    the past coupled with enhanced quality of life contribute to the
    readiness equation and retention of a sharply honed military force.
        Today, the concept of an all-volunteer force is in fact a reality
    as is total force integration of active duty, National Guard and
    Reserve Components. As envisioned, the past decade has seen the
    military force decline by approximately one-third while unforeseen
    operational requirements and military tempo have increased over 300
    percent. Today, Reserve Components routinely augment active forces
    worldwide and have become the force multiplier necessary for military
    contingencies, rotational requirements and peacekeeping missions. The
    interoperability of active and reserve components is nothing short of
    remarkable in planning and execution of missions. The straining points
    and effectiveness of a military force historically seem to be the
    result of reductions in the number of personnel available for world-
    wide operations; redefining the role of the military services for a
    global military strategy as currently underway at the Department of
    Defense; and, compensating members of the varied components differently
    in pay, benefits and health matters.
        America's military personnel must know that their institutional
    benefits such as pay, special compensations, health and survivor
    benefits are secure now and in the future to free them of unnecessary
    anxiety and doubt of ``promises made'' should they be placed in harm's
    way. Honoring the health care promises to retired military personnel
    and their beneficiaries in the past National Defense Authorization Act
    has not only served the military retiree community but has fostered
    greater trust by today's serving military force in their military
    institution.

                              PAY AND COMPENSATION

        Goal: Ensure that America maintains a strong national defense by
    maintaining a high quality, all volunteer force based on competitive
    pay for its active force and inflation protected retired pay for its
    retired force.

    Basic Pay
                Restoration of the military pay scale is essential:
        Year's ago a recurring statement by dedicated military people was
    that they could no longer afford to serve and fight . . .'' That
    statement is no longer valid because of the significant effort to
    restore the value of military pay to some standard of comparability
    with the civilian sector. Across the board pay raises need to continue
    for all personnel. The Alliance additionally recommends that a targeted
    pay raise be directed at enlisted grades E-4 through E-9 to eliminate
    pay compression in the force structure and create specific pay
    enhancement of every promotion earned.
        NVMA recognizes that countless thousands of men and women have
    completed long and honorable careers and retired at pay rates that
    lagged civilian pay comparability by over 10 percentage points. That
    pay ``comparability loss'' dramatically impacted the quality of their
    lives while in the military and now even more with the computation of
    their retirement checks.
        Perceived adequate pay would further strengthen the active force
    belief in the military institution.
        Basic Allowance for Subsistence (BAS).--The criteria for adjusting
    BAS has waffled over the years with implementation of concepts related
    to a 1 percent annual increase, to criteria related to the consumer
    index of food cost, to the amount of the annual military COLA.
        NMVA recommends that BAS and all other special allowances be
    adjusted by the annual percentage in the COLA for federal pay.
        Basic Allowance for Housing (BAH).--NMVA has watched the roller
    coaster like adjustment of BAH over the past few years as regional
    adjustments were envisioned based on survey data that would have
    negatively impacted military families living on the civilian economy.
    NMVA applauds the leadership of the United States Congress and the
    Department of Defense for reviewing the matter and making the changes
    necessary to decrease further personal financial loss by military
    members for housing.
        The Alliance urges this Subcommittee to support the Secretary of
    Defense in adjustment to the BAH. NMVA remains concerned about the
    inequity in BAH that causes military members living in the civilian
    sector an additional out-of-pocket expense that approaches 20 percent
    of their BAH. Those assigned to government housing do not have this
    type of out-of-pocket expense and in the judgment of NMVA neither
    should those not provided government housing.

                            RESERVE AND GUARD FORCES

        NMVA has aligned concerns specifically related to Reserve and Guard
    Forces as a current force issue in recognition of their respected role
    in America's military force.

    Pay Equity
        NMVA strongly supports the concept of pay equity for members of the
    Reserve and Guard and would ask for top to bottom look to achieve pay
    parity.
                Flight Pay for Reserve Component Air Crews:
        Members of the active component and Reserve both are entitled to
    flight pay. A Reserve Tanker crew is awarded flight pay for each day of
    service monthly whereas an active duty tactical crew meets a prescribed
    number of flights and is awarded an entire month's flight pay. NMVA
    deplores this inequity.

                Thrift Savings Plan (TSP):
        Reserve and Guard Personnel were included in the TSP but at a
    different participation rate strategy than their active duty
    counterparts. First, the TSP program enacted authorized a service
    charge different for federal employees (6 percent), active duty (1.5
    percent) and reserve personnel (8.4 percent). Also at issue is the
    authorized reserve member's contribution is limited to 5 percent of
    their monthly reserve earnings, as opposed to the active duty
    participation rate of 5 percent of annual salary. The average reservist
    earns approximately $400.00 monthly which would allow a $20.00
    contribution to the TSP. The Alliance considers this amount for a TSP
    to be absurd
        NMVA recommends that the service charge for active and Reserve
    component personnel be 1.5 percent. Further that reservists be
    authorized to contribute up to 5 percent of what would be their active
    duty annual salary.

                Heroism Pay for Guard and Reserve:
        NMVA will continue to press for the authorized 10 percent benefit
    for certain enlisted people in the Guard and Reserve credited with
    extraordinary heroism (Section 3991, Computation of Retired Pay (a)(2),
    Title 10. There are two cases that illustrate the inequity:
        First, an active person qualifying for heroism retirement pay loses
    it if transferred to the Guard or Reserve. Second, a reservist called
    to active duty performs with valor and qualifies for the heroism pay
    loses the heroism pay when returned to the Guard or Reserve.
        NMVA does not believe that the percentage or amount of heroism pay
    is adequate for any qualifying act of valor for which the payment may
    be authorized, and secondly is appalled that this benefit is not
    authorized for members of the Guard and Reserve.

                Single Rate Basic Allowance for Housing:
        Reservists performing active duty tours, for other than declared
    contingency operations, when billeted in government quarters and have
    no dependents, are not entitled to BAH. These individuals tend to be
    older and own homes in their own right and have mortgage payments to
    make or rental agreements to honor. Conversely, Reservists performing
    comparable active duty tours with similar billeting and whose
    dependents are prevented from occupying those quarters is entitled to
    BAH.
        NMVA strongly 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. BAH would be
    a career incentive and have retention value thereby reducing personnel
    losses due to a career disincentive.

                         MILITARY HEALTH SYSTEM FUNDING

    Adequate Funding:
        Members of the National Military and Veterans Alliance continue to
    voice strong concern that adequate funds are not available for either:
      --The Military Health System
      --TRICARE
      --TRICARE FOR LIFE for military retirees and their eligible
            beneficiaries
      --TRICARE Senior Pharmacy Program
        The fact simply stated is that insufficient funds have been
    appropriated for the health care delivery systems implemented for all
    DOD beneficiaries.
        DOD health leaders have acknowledged a short fall of an estimated
    $1.4 Billion in the current budget year. The Alliance is concerned that
    the short fall may well and substantially exceeds the DOD projection.
        TRICARE FOR LIFE: Restoration of health benefits for over-65
    retirees and their beneficiaries effective October 1, 2001 had limited
    startup funds available AND WAS NOT FULLY funded for fiscal year 2002.
    Retirees are lining up to use this restored benefit. In fact, if the
    participation rate in TRICARE Senior Pharmacy Program is an indicator
    this program may well exceed projections.
        TRICARE Senior Pharmacy Program: This program implemented April 1,
    2001 was also not fully funded. The Office of the Army Surgeon General
    reported recently that in the first 20 (repeat 20) days the cost of
    prescription drugs dispensed was over $37 Million. This program has the
    potential to be an annual budget buster!
        NMVA was also pleased with last year's action to lower the
    Catastrophic Cap in the TRICARE. It's noted that fiscal resources were
    not to offset costs associated with the reduction.
        THE POINT IS CLEAR: NMVA requests that this Subcommittee carefully
    scrutinize the costs of all DOD health care delivery systems and ensure
    that adequate fiscal resources are available for these health care
    programs that both contribute to military readiness and further keep
    the promise made to all people who served long and faithful careers.

                            OTHER HEALTH CARE ISSUES

    Medicare Part B Enrollment:
        TRICARE for Life required all retirees be enrolled in Medicare Part
    B for participation in the program in either the health care or senior
    pharmacy program. Alliance members believe that this program should be
    a stand-alone health care program, but recognizes, reluctantly, the
    imposition of Part B Medicare enrollment. Many senior aged members
    retired years ago when it was accepted that they would have access to
    military treatment facilities. Consequently, they declined
    participation if Medicare Part B when they became eligible for
    enrollment. Years later and after significant closures of military
    installations and DOD health care facilities, these retirees, many of
    whom are in their 70s or older would now have to pay significant
    penalties to enroll in Medicare Part B.
        NMVA recommends that those who relied on former installations for
    health care and were 65 on or before October 6, 2000, the date the
    program was enacted by NDAA for fiscal year 2001 should be allowed to
    participate in TFL without Part B Medicare enrollment.
    DOD Medicare Eligible Retiree Health Care Fund:
        The Alliance continues to be intrigued by the structure of the DOD
    Health Care Fund and how payments on behalf of beneficiaries will be
    worked.
        NMVA believes these funds should be vested in the beneficiary and
    should be disbursed to the healthcare provider dispensing health care
    service.
        The Alliance also rejects any concept that military retirees,
    disabled or not, would have to choose their primary health care
    provider as either the DOD or Department of Veterans Affairs. Such a
    choice is not required of any other healthcare beneficiary.

                         AND LASTLY--CONCURRENT RECEIPT

        The NMVA is grateful that this Subcommittee worked to secure the
    necessary appropriation to put in place a special pay program for
    severely disabled military retirees when it became apparent that
    Concurrent Receipt could not be negotiated and implemented.
        NMVA supported the special pay for the severely disabled military
    retiree with great hesitation. At issue was the need for Concurrent
    Receipt to allow military retirees who also have service connected
    disabilities to:
      --Retain their earned longevity retirement pay from the military.
      --Receive their Disability Compensation from the Department of
            Veterans Affairs without any offset.
        The Alliance recognizes the leadership role of every member of this
    Subcommittee and while your not convened as ``authorizers'' have the
    ability to actively and aggressively seek resolution to the Concurrent
    Receipt issue that impacts all service connected disabled veterans.
    It's past time to secure this authorization and the necessary funding
    for the program.
        The Alliance recognizes a number of entitlement programs, such as
    those noted in this statement that were authorized and inadequately
    funded and yet other entitlements which had ``appropriations assigned''
    pending expected authorization.
        NMVA pledges each of you its full support to get Concurrent Receipt
    out of its annual casket ride through the halls of Congress and
    recorded on the rolls of the 107th Congress as a long overdue program
    entitlement.

                                   CONCLUSION

        Mr. Chairman and Members of the Committee the Alliance is most
    appreciative of the opportunity to present its comments for the record.
        By the way, I would also like to thank you for the authorization to
    present American Flags to those who retire from military service. The
    flags are well received by the retiree and family. You know it's great
    to be able to fly your own special American flag while your still
    alive. Did you know that NO money was appropriated for the purchase of
    these flags? Commanders purchase them out of existing funds, which
    means your entitlement offsets dollars appropriated for other programs.
        Again, the National Military and Veterans Alliance is most
    appreciative to participate in this special hearing.

        Senator Stevens. Thank you very much. Give us a little bit
    more information about that offset you are talking about about
    widows. That does not ring with my memory, but I am happy to
    hear about it. I do not have time to talk about it now.
        Mr. Mix. Glad to do that, sir.
        Senator Stevens. Colonel Partridge.

    STATEMENT OF CHARLES C. PARTRIDGE, COLONEL, U.S. ARMY
                [RETIRED], NATIONAL ASSOCIATION FOR
                UNIFORMED SERVICES

        Mr. Partridge. Mr. Chairman, it is a pleasure to be here.
        Senator Stevens. Nice to see you again, sir.
        Mr. Partridge. I want to take this opportunity to go over
    something you said last year and a couple of years before. You
    said that you wanted to fund military health care and that if
    the authorizers and the Department of Defense would give you a
    plan you would fund it. I want to thank you for doing that.
    That plan is funded and we know there is more money to be
    probably in the supplemental coming up and in the 2002 budget,
    and we very much appreciate your support, because if you had
    said you would not fund it we would not have had the program.
        I would also like to add one point to what Mr. Mix said
    concerning the widows, that it is true that a military retiree
    buys a survivor benefit plan, but if he dies of a service-
    connected disability they offset what the widow's survivor
    benefit by the amount of DIC. What they do is they give her the
    money back----
        Senator Stevens. What is DIC?
        Mr. Partridge. Dependents and indemnity compensation that
    she gets because of taking care of her husband while he was
    ill. It is his--that comes from the Veterans Administration,
    but DOD offsets its share when the widow gets that.
        Senator Stevens. You give me an amendment to straighten
    that out.
        Mr. Partridge. We will give you something to straighten it
    out.
        Mr. Chairman, that concludes my statement.
        Senator Stevens. Nice to see you again, Colonel. Thank you
    very much.
        Mr. Partridge. Thank you.
        [The statement follows:]

                   PREPARED STATEMENT OF CHARLES C. PARTRIDGE

        The National Association for Uniformed Services would like to thank
    the Committee for its leadership in funding landmark legislation last
    year extending the Pharmacy benefit and TRICARE system to Medicare
    eligible military retirees, their families and survivors, making the
    lifetime benefit permanent, establishing the DOD Medicare Eligible
    Retiree Health Care Fund, reducing the catastrophic cap and making
    other TRICARE improvements.
        Your actions in leading the fight for the Military Health Care
    initiative in the National Defense Authorization Act for fiscal year
    2001 have restored the faith of millions of military personnel,
    retirees and their families. They believe that the nation does indeed
    value their service. This legislation also has a readiness impact since
    once again retirees can be counted on to recommend military service to
    the young men and women of our nation and to aid in the military
    services recruiting and retention efforts. In addition, the changes,
    when implemented will result in improved satisfaction of those
    currently serving.
        Enacting the TRICARE For Life (TFL) legislation provides the
    authority for the government to keep the promise of healthcare for life
    to the men and women of the Uniformed Services who dedicated their
    lives in service to our country.
        The Assistant Secretary of Defense (Health Affairs) and the TRICARE
    Management Activity have set up working level and senior level panels
    that include representatives of the Associations and the retiree
    Community, to develop the program and work out problems. It is clear
    that the policy makers and those charged with execution of the TRICARE
    For Life Program and the Pharmacy benefit are working hard to design an
    excellent medical program. In fact, they are glad to be involved in the
    process of rebuilding the military health system rather than continuing
    down the path of deeper funding and personnel reductions. The DOD
    Health Affairs Team has established an unparalleled working partnership
    with us as they implement the Pharmacy and TRICARE for Life
    legislation. As this landmark legislation is implemented, we of course
    need adequate funding. We also need organizational stability so that
    the changes in the Military Health System passed in the National
    Defense Authorization Act, for fiscal year 2001 can be put in place as
    smoothly as possible and implemented on schedule. All of us who have
    gone through the growing pains of TRICARE over the past 10 years do not
    want to revisit those turbulent times, particularly at the same time
    the Department is implementing the new Pharmacy and TRICARE for Life
    benefits.
        The effective date of the pharmacy benefit was 1 April 2001 and is
    working properly. The full TRICARE FOR LIFE benefit is to be available
    1 October 2001. Full funding for both of these programs is needed if
    they are to deliver on the high expectations of the retiree community.
    Unless the chronic underfunding of the Military Health System is
    corrected, the TRICARE for Life program will be built on sand and the
    entire program will be unsatisfactory and a disappointment to everyone.
        The attached chart (Exhibit A) graphically displays the
    longstanding underfunding of the Military Health system. By every
    measure, military health care has been short changed over the past six
    years. The result has been many complaints surrounding the TRICARE
    system, the deterioration of the Military Treatment Facilities physical
    plant and inability to purchase up to date medical equipment.
        DOD faces the difficult challenge of implementing an entitlement
    program and paying for it from the discretionary portion of their
    budget--both in fiscal year 2001 and in fiscal year 2002 until the
    Department of Defense Medicare-Eligible Retiree Health Care Fund
    becomes effective on 1 October 2002.
        We know that you support additional funds for military health care
    this year and adding this to the baseline for fiscal year 2002. You
    have often said that if DOD and the Authorizing Committees will define
    the health care program and tell you what is needed, you will fund it.
    That has finally happened and we want to thank you for supporting
    additional funding in the Budget Resolution for military health care.
    We know that you will see that it is included in the Defense
    Appropriation as well.

                     TRICARE PRIME AND TRICARE SENIOR PRIME

        We understand and support the decision to implement the TRICARE for
    Life Medicare supplemental on 1 October 2001, and then determine how
    TRICARE Prime for seniors will be implemented and the future of TRICARE
    Senior Prime. We are pleased that even if DOD and the Health Care
    Financing Administration cannot reach agreement on Medicare
    reimbursement DOD will continue the TRICARE Senior Prime program at the
    demonstration sites for those currently enrolled and those in TRICARE
    Prime. This is reassuring to retirees enrolled in the program that
    commitments made will be honored.
    Medicare Part B Enrollment
        The law enacting the TRICARE for Life program requires Medicare
    Part B enrollment for participation in the TRICARE for Life program. In
    addition, Part B is required for all retirees reaching age 65 on or
    after 1 April 2001, for them to participate in the new pharmacy
    program. Although we believe in the principle that the military benefit
    should stand-alone and not require Part B participation, the Part B
    will save the TFL program funds. However, we believe requiring Part B
    for participation in the pharmacy program does not result in
    significant savings and creates a hardship for some beneficiaries, and
    it should be eliminated. In addition, some 12,000 retirees residing
    overseas are required to participate in Part B Medicare in order to
    enroll in TRICARE for Life. Since they cannot use the Medicare benefits
    overseas we recommend that this requirement be eliminated for all
    retirees residing overseas.
        Some retirees who lived near military installations did not enroll
    in Part B because they believed they would receive care at the
    hospitals and clinics located on the military bases, which subsequently
    closed. Many are in their 70's and 80's now and to enroll would require
    them to pay huge penalties.
        We recommend that those who relied on these hospitals and were 65
    on or before 6 October 2000, the date enacted by NDAA for fiscal year
    2001, should be allowed to participate in TFL without enrolling in Part
    B Medicare.

                                     FEHBP

        The NMVA supported legislation last year that would provide
    military personnel the option of participating in the Federal Employees
    Health Benefit Program. Currently, a bill introduced in the 107th
    Congress, HR 179, would provide that option. In addition, DOD is
    conducting a demonstration project authorized in 1999 that would allow
    up to 66,000 Medicare eligible beneficiaries to participate in FEHBP at
    up to 10 sites. The demonstration ends on 31 December 2002. As of 26
    February, there are 7,588 participants. The program is very popular in
    Puerto Rico with over 2,700 participants. Many organizations in the
    NMVA believe that FEHBP should be an option for all uniformed service
    beneficiaries. We are confident that the TRICARE program and the
    TRICARE for Life program will be successful. Further, because they are
    an outstanding value for most beneficiaries, they will be the health
    plans of choice. However, in a few cases, the TRICARE/TRICARE for Life
    options may not be the best choice, or may not be available; and for
    that reason, we believe the FEHBP option should be enacted. Certainly
    the FEHBP demonstration should be extended at least until 2005, and the
    geographical limits removed. Further, those who are currently enrolled
    should be allowed to remain in the program for as long as they wish.
    Providing the FEHBP as an option would help stabilize the TRICARE
    program, provide a market based benchmark for cost comparison and be
    available to those for whom TRICARE/TRICARE for Life is not an adequate
    solution.

                               CLAIMS PROCESSING

        Most Medicare eligible military retirees because of lack of access
    to MTFs, have used the Medicare system and are happy with the claims
    process. The Medicare provider files the claim with Medicare, who pays
    the Medicare portion of the claim, forwards the claim to the second
    payer, the Medigap insurance company, and forwards an Explanation of
    Benefits to the patient. The Medigap insurer pays the claim and
    notifies the beneficiary that the claim is paid or that some co-pay or
    deductible is due. The system is fast, efficient and understandable. It
    is essential that the TFL process work just as well and that the
    providers are satisfied. Otherwise, doctors, many of whom are reluctant
    participants in Medicare and TRICARE will be unwilling to accept TFL
    beneficiaries. We have discussed this in the working level panels and
    know that all are interested in making this work efficiently as well.
    This is, however, an area of concern that we will continue to monitor
    and if legislation is needed we will seek your support.
    DOD/VA Beneficiaries
        The VA portion of the President's Budget submission indicated that
    the Administration proposes that military retirees be required to
    select either DOD or VA as their health care provider. This would make
    retirees second-class citizens denying them VA care or forcing them to
    give up their military health care benefit. This test is not applied to
    other citizens and NMVA strongly opposes it. Since VA provides
    treatment of service connected disabilities free of charge, the
    military retiree who obtained most care through the military TRICARE
    system would be required to pay for services previously provided by the
    VA at no cost. We urge this subcommittee to oppose the proposal.

               THE DOD MEDICARE ELIGIBLE RETIREE HEALTH CARE FUND

        NMVA is most interested in the design of the DOD Health Care Fund
    and how the payments will be made.
        NMVA believes that these funds should be ``vested'' in the
    beneficiary. If the beneficiary uses the MTF, then the funds should be
    paid to the MTF. Likewise, if the beneficiary uses other providers,
    then that is where the payment should be made. We believe decisions
    regarding the Health Care Fund can be critical to the success of the
    TFL program and to the quality of the Military Health System.

                                    SUMMARY

        Mr. Chairman and distinguished members of the Committee, we want to
    thank you for your leadership on military health care last year and for
    holding these hearings on implementation this year. You have made it
    clear that military health care continues to be a high priority and you
    have our support in seeing successful implementation of these health
    care initiatives this year.

        Senator Stevens. Mr. Hanson.
    STATEMENT OF MARSHALL HANSON, DIRECTOR OF LEGISLATION,
                NAVAL RESERVE ASSOCIATION
        Mr. Hanson. We would like to express our deepest
    appreciation to your subcommittee for your efforts over the
    last few fiscal years. During times when the footfalls of the
    military seemed precarious because of DOD's end strength cuts
    and recommended budget reductions, Congress and this committee
    provided direction through plus-ups to the recommended defense
    appropriation.
        Coming to the defense of the armed services, you seized the
    initiative and provided needed improvements. Unfortunately, we
    may again be facing similar times. The military associations
    share with you the same frustration of not knowing what DOD is
    going to budget, and speculation is rampant contemplating
    additional end strength cuts.
        As we wait for military transformation, the Naval Reserve
    Association is concerned that--pardon me. As we wait for an
    update to the defense budget, the armed services in general and
    the Navy in particular are challenged at sustaining current
    readiness operations. There is no doubt in my mind that
    procurement accounts are very tempting targets for
    reprogramming actions within the Navy and DOD.
        We are concerned over the future structure of the Naval
    Reserve because of its equipment, ships and aircraft on the
    average being older than that of the active force. With a
    Future Years Defense Plan (FYDP) that does not come close to
    making the procurement needs for the fleet, the Naval Reserve
    requirements for the most part fall off the table.
        We worry for the future structure of the Naval Reserve
    because of the possibility that portions of it may become the
    billpayer to balance the budget. There is no doubt in my mind
    that there are some people in the Navy who have their sights on
    the Naval Reserve hardware units. Redistribution of a reserve
    P-3 patrol wing, a reserve carrier air wing, a reserve CB
    battalion, or a reserve cargo handling battalion would be an
    undesirable way to balance the Navy budget.
        Personnel accounts can also prove too tempting. Reducing
    reserve budgets could provide easy money for the active force,
    but this would not be the first time the baby was thrown out
    with the bath water. As we watch this all unfold, we ask you to
    be sensitive and inquiring when you take future testimony.
        The Naval Reserve Association looks upon the Naval Reserve
    as an insurance policy. The Navy invests about 3 percent of its
    total obligation authority into the resources and people of its
    reserve. For this investment it has a force that can be surged
    with trained personnel and ready equipment. The active force
    gets a further dividend on this investment by using these same
    reservists on a day to day basis as a temporary labor pool.
        But when funding gets tight, the Navy is no different than
    you or I. It will seriously consider cancelling this insurance
    policy.
        Our country embarked on its democratic course as a direct
    result of the militia reserve. The Guard and Reserve have made
    significant contributions in both world wars and more recently
    conflicts. The Reserve component is engaged today in day to day
    operations like no other time in history. The Guard and Reserve
    needs equipment and aircraft to continue to attract young
    Americans and also ensure that we are ready at a time of crisis
    or national need.
        In our written testimony we provide the subcommittee with
    an optimal list of unfunded equipment and programs needed by
    the Naval Reserve. While budget constraints will not permit
    everything, it is requested that elements of this list should
    be given serious consideration. Equipment procurement is not
    only an investment, it is also an endorsement to the troops for
    a job well done.
        Thank you.
        Senator Stevens. Thank you very much. We will read the
    list, I promise you.
        [The statement follows:]

                     PREPARED STATEMENT OF MARSHALL HANSON

                                  INTRODUCTION

        On behalf of more than 86,000 active Naval Reservists, we would
    like to express our deepest appreciation to each of you for your
    efforts over the last couple of fiscal years. During times when the
    pathway for the military seemed dubious because of DOD end-strength
    cuts and recommended budget reduction, Congress and this committee
    provided direction through plus-ups to the recommended defense
    appropriation. Coming to the defense of the Armed Forces, you seized
    the initiative and wrought needed improvements.
        Unfortunately, the military, the Navy and the Naval Reserve can't
    rest with just the successes of the past.
        It appears that the new administration has embarked on reshaping
    the Armed Forces without first establishing a new national security
    strategy, and then opening it to debate. The Naval Reserve Association
    is concerned that while we wait on a supplemental to the Defense
    Budget, the Armed Services in general, and the Navy in particular, are
    challenged at sustaining current readiness and operations with rising
    operations and support costs associated with aging equipment, aircraft
    and ships. There is no doubt in my mind that procurement accounts are
    very tempting targets for reprogramming action within Navy and DOD as
    they have been in the past. Rumors abound, that the inward, downward
    spiral set into motion by a decade of DOD cuts continues unabated and
    that should cause all of us concern for the future.
        We are also concerned over the future structure of the Naval
    Reserve Force because its equipment, ships and aircraft are, on
    average, older than the active force. With a FYDP that doesn't come
    close to meeting the procurement needs for equipment, ships and
    aircraft, the Naval Reserve requirements for the most part fall off the
    table. We cannot count on the once robust National Guard and Reserve
    Equipment (NGRE) Allowance to level the playing field, and last year's
    $5 million appropriation barely scratched the surface of need. If it
    were not for the actions of Congress, the Naval Reserve would not have
    received its sixth C-40A aircraft. These new aircraft will replace the
    aging C-9 fleet that today is operating aircraft that are older than
    the Air Alaska flight that fell from the skies off of California last
    year. The first C-40A was delivered to the Naval Reserve in April.
        We also have concerns for the future structure of the Naval Reserve
    Force because of the possibility that portions of it may become the
    ``bill payer'' to balance the budget for submission. There is no doubt
    in my mind that today there are ``smart'' people in the Navy who have
    their sights on Naval Reserve hardware units. Redistribution of a
    Reserve P-3 Patrol Wing, a Reserve Carrier Air Wing, a Reserve Seabee
    Battalion, or a Reserve Cargo Handling Battalion would be a way to
    balance the Navy budget. Personnel accounts could also prove too
    tempting. It would not be the first time that the baby was thrown out
    with the bath water. As we watch this all unfold, we ask you to be
    sensitive and inquiring when you take future testimony.
        We look upon the Naval Reserve as an insurance policy. The Navy
    invests about three percent of its total obligation authority into the
    resources and people of its Reserve, and for this investment it has a
    Force that can be surged with trained personnel and ready equipment. In
    the process it gets a dividend on its investment by using this very
    Force in day-to-day operations as a temporary labor pool. When funding
    gets tight the Navy is no different than you or I--it will seriously
    consider canceling that insurance policy. We need to be sensitive and
    inquiring about this as well.
        Our country embarked on its democratic course as a direct result of
    militia forces. The Guard and Reserve have made significant
    contributions in both World Wars and more recent conflicts. The Guard
    and Reserve is engaged today in day-to-day operations like no other
    time in history. The Guard and Reserve needs equipment, aircraft and
    ships to not only continue to attract young Americans to serve, but
    also to ensure that we have what is required in time of national need.
        Details of specific requirements have been included in this
    written.
    anticipated fiscal year 2002 unfunded requirements readiness shortfalls
    RPN:
        Funding for Boot Camp and ``A'' Schools for Non Prior Service (NPS)
    personnel who are directly recruited into the USNR.
        Non-Prior Service (NPS) Bonus ($2.4 million).--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.
        Individual Protective Equipment procurement is needed to train and
    outfit reservists who will be going to a theater location where a
    threat of biological or chemical agents could be possible. Currently,
    while active duty members have equipment reservists are sent w/o
    protection. (e.g. Korea)
        Annual Training (AT).--Continued funding to permit the (14) days
    A.T. as outlined by law, and (17) days for OUTCONUS, plus (2) days
    travel.
        Inactive Duty Training Travel (IDTT).--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. Funding should support a minimum of two
    visits per year.
        Active Duty for Training (ADT-FLEET SUPPORT).--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.

    Recruiting Shortfalls
        Reserve Recruiter Support & Advertising.--Aggressive national
    recruiting advertising campaigns needs to be maintained. Advertising
    campaign includes media and market research, and placement of
    advertising in television, print, radio, direct mail, and public
    service announcements. Funding should also provide for additional
    recruiting support, which would allow the NR to build its recruiters
    force to a total of 90.

    OMNR
        Reserve Ship Depot Maintenance.--Includes deferred maintenance to
    meet guidance levels.
        Reserve Base Support, Real Property Maintenance.--Funds are needed
    to arrest growth of critical backlog and hold such backlog at fiscal
    year 2001 level. Most of the buildings were built back in the 1940s/
    50s. Additional funds are need for collateral equipment furnishings and
    vehicles to complete MILCON projects.
      --RPM funding is need for demolition in RESFOR projects.
              continuing naval reserve modernization requirements
        The C-40 aircraft procurement is needed 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 (28) 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 six 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 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 solution would be purchasing three aircraft each year,
    over the next seven 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.
        Money is also being requested for 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 based systems, upgrading its legacy software. 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.
        Funding is needed for the Naval Coastal and Expeditionary Warfare
    Forces, Seabees and MIUW's to provide CESE, communications, and field
    support equipment. Existing equipment is aged, and worn, often being to
    commercial specifications, rather than military. Active units for
    deployment overseas have borrowed some of this equipment. 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.
        Littoral Surveillance System, one is required per year for
    regional/port surveillance. This equipment has the capability to assist
    in waterside security of afloat units.
        Also needed 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.
        Upgrading the Naval Reserve F/A-18A with precision guided munitions
    capability is a requirement. 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.
        The Naval Reserve needs 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 and our deploying
    pilots would be less well trained.
        The Naval Reserve has acquired C-130's over numerous budget years.
    Cockpit configurations differ between airframes. Funding is needed to
    standardize cockpit configuration of all NR/MCR C-130 T aircraft.
        Upgrades for USNR helicopter forces will provide funding for
    infrared FLIR kits.
        Aircrew training is an ongoing requirement. Reduced air hours
    prevent in-flight training. Computer based training to support
    maintenance and aircrew training.

    Projected costs of unfunded equipment and training requirements

                            [In millions of dollars]

    Airlift, C-40A Transport Aircraft (3), replacing aging C-9
        aircraft......................................................181.00
    ADT, Fleet support funding to meet CINC requirements.............. 13.10
    Base Operation Support, collateral equipment furnishings and
        vehicles to complete MILCON projects..........................  6.40
    Coastal/Expeditionary Warfare, upgrade equipment for CB/ELSF/NCW
        units......................................................... 35.10
    CBT, Computer Based Training, to train maintenance/aircrew on NR
        logistics aircraft............................................  7.30
    C-130T Avionics Modernization, to standardize cockpit
        configurations of all N&MCR aircraft..........................  2.35
    Increase C-130T Depot Level Maintenance Funding, funding for (5)
        aircraft not currently funded.................................  1.50
    C-9 Upgrades, to maintain and improve an aging C-9 Fleet..........  1.40
    FLIR Kits (AAS-51Q) for SH-60B, procure forward looking infrared..  7.00
    Funding for Boot Camp and ``A'' Schools for NPS Personnel per year
        recruited directly into USNR..................................170.00
    F/A-18 Mod, ECP 560, upgrade Reserve F/A-18A precision munitions
        capability (6) aircraft....................................... 36.60
    F-5 Global Positioning System, procure for fleet by fiscal year
        2005..........................................................  8.10
    F-5 Avionics Modernization, upgrading the 25 year old F-5 package
        for 12 aircraft............................................... 47.00
    F-5 Radar Upgrade, replace existing radars........................  3.73
    Individual Protective Equipment, to procure IPE and train units in
        gear required for CINC tasking................................  3.40
    IT CNRF Infrastructure, upgrade network infrastructure not
        included in NMCI.............................................. 17.00
    IT Legacy, Reserve sustainment, funding required to operate legacy
        IT systems at minimal levels..................................  6.00
    IT Reserve Modernization, upgrading existing legacy systems to
        perform enhanced & new functions..............................  8.60
    Littoral Surveillance System, procuring (1) system for year for
        regional/port surveillance.................................... 30.00
    NMCI, Naval Marine Corps Intranet, expanding system to SELRES and
        TAR personnel................................................. 45.00
    Non Prior Service Enlistment Bonus, implementing NPS bonus program
        to compete with other RC's....................................  2.48
    Operational Flight Trainer upgrade/mod, to match current P-3C
        configuration.................................................  5.00
    P-3C/BMUP Kits, to achieve commonality with Active P-3C UD III
        squadrons..................................................... 49.90
    P-3C CDU upgrades, to increase counter drug capabilities..........  3.00
    P-3C Synthetic Aperture Radar, (1) aircraft.......................  3.00
    P-3C Update III Simulator, Deployable Embedded Tactical Trainer
        System Units..................................................  1.00
    P-3C ESM Trainer upgrade, to match upgraded equipment included on
        improved aircraft.............................................  4.50
    Reserve Ship Depot Maintenance, funds required to meet guidance
        levels........................................................ 13.90
    Reserve Aircraft Modernization, upgrade various avionics on RN P-
        3C's..........................................................  2.50
    RPM, Funds needed to arrest the accumulating growth in Backlog of
        Maintenance and Repair........................................ 20.30
    RPM Funding for Demolition in RESFOR projects.....................  3.98

    Alphabetical listing, not in order of priority.

        Senator Stevens. Our next witness is Mr. Wolff--Miss Wolff,
    pardon me. Miss Wolff.

    STATEMENT OF LIESEL WOLFF, LEGISLATIVE ASSISTANT,
                PEOPLE FOR THE ETHICAL TREATMENT OF ANIMALS

        Ms. Wolff. Good afternoon, Chairman Stevens. My name is
    Liesel Wolff and I represent the largest animal rights
    organization in the world, PETA, People for the Ethical
    Treatment of Animals. Thank you very much for this opportunity
    to discuss the use of live animals in food procurement
    exercises in military survival skills training. We would like
    to request that the subcommittee include report language
    stipulating that no Department of Defense funds shall be used
    to procure animals for these wasteful and inhumane exercises.
        Each year in training courses around the country, American
    soldiers are instructed to bludgeon, strangle, or decapitate
    chickens, rabbits, goats, sheep, and other animals. Soldiers
    sometimes carry the animals in a backpack for several days
    before killing them. Alternatively, animals are taken by
    vehicle into the woods, where they are let go and then
    recaptured. In these cases, the animal must undergo the extreme
    stress of disorientation upon being released from confinement
    into unknown territory and then the terror if being hunted and
    recaptured.
        The killing methods used ensure that the animals die in
    states of extreme pain and fright. One Army manual says: ``You
    can club small animals or step on them.'' Another Army manual
    instructs soldiers to kill a chicken ``by placing its head
    under a strong stick, placing both your feet on either side of
    the stick, and pulling vigorously until its head is pulled
    off.'' Other reports indicate that animals are bludgeoned by
    hand or with a blunt instrument. All of these deaths are slow
    and agonizing.
        Moreover, training soldiers to kill animals diverts time
    and resources away from teaching more valuable survival skills.
    Will Anderson is a former Air Force sergeant who taught
    survival skills for 3 years at Fairchild Air Force Base. Part
    of that training included killing rabbits and butchering them.
    Sergeant Anderson now strongly objects to these exercises,
    calling them ``completely unnecessary.''
        PETA has also heard from active and retired military
    personnel from around the country who have written to express
    this same sentiment. According to Sergeant Anderson and other
    officers from whom we have heard, teaching soldiers to kill
    animals does nothing to increase their ability to survive and
    diverts time and resources away from teaching the truly
    important skills for survival, namely how to find shelter, how
    to obtain drinkable water, and how to identify edible plants.
        Additionally, because it is a time and calorie-consuming
    activity that requires travel, hunting an animal would be
    unwise in most survival situations.
        Finally, it is pointless for a soldier to practice killing
    docile animals, considering that in a real survival situation
    few soldiers would have trouble doing so if survival truly
    depended on it. After all, soldiers do not practice killing
    other humans in order to be effective in combat situations.
        Several cancellations have shown that killing animals is
    not considered necessary. In 1999, PETA wrote to now-former
    Major General Leo Baxter, who was then commanding General at
    Fort Sill, Oklahoma. He responded that a proposed survival
    skills exercise involving live animals was not approved and
    that ``we are in complete agreement that there is no need to
    utilize live animals for realistic survival skills training.''
    After PETA and members of the public expressed their
    objections, the Maryland Army National Guard cancelled their
    plans to use live animals in the training exercises conducted
    on June 24th and 25th of last year. The Massachusetts Army
    National Guard 26th Infantry Brigade has permanently eliminated
    the use of live animals in their curriculum.
        To summarize, please include report language stipulating
    that no funds for the Department of Defense shall be used to
    purchase animals for military survival skills training.
        Thank you very much for your time and I hope you will
    consider this step to prevent needless suffering.
        Senator Stevens. Thank you very much.
        [The statement follows:]

                       PREPARED STATEMENT OF LIESEL WOLFF

        Chairman Stevens and Members of the Subcommittee, people for the
    Ethical Treatment of Animals (PETA) is the world's largest animal
    rights organization, with more than 700,000 members. We greatly
    appreciate this opportunity to submit testimony regarding fiscal year
    2002 appropriations for the Department of Defense. My testimony will
    focus on the inhumane and wasteful use of live animals in military
    survival skills training.
        We would like to request that the subcommittee include report
    language ensuring that no funds are used for the needless use of
    animals for emergency food procurement exercises in survival skills
    training.
        Each year, American soldiers are instructed to bludgeon, strangle,
    or decapitate chickens, rabbits, goats, sheep, ducks, turtles, and
    snakes with their bare hands, rocks, or blunt instruments.
        In 1998, the Air Force killed more rabbits in its survival skills
    courses than did the entire Department of Defense in all its own
    research facilities combined. Fairchild Air Force Base in Washington
    and the United States Air Force Academy alone use more than 1,600
    rabbits each year at an average cost of more than $10,000. Many
    thousands of animals are used every year in other training courses
    around the country.

    Training soldiers to kill animals diverts time and resources away from
            teaching more valuable survival skills
        Will Anderson is a former Air Force Sergeant who taught survival in
    both classroom and field settings for three years at Fairchild Air
    Force Base. Part of that training included killing rabbits and
    butchering them. Sgt. Anderson now strongly objects to these exercises,
    calling them ``wholly unnecessary.''
        According to Sgt. Anderson, unlike shelter and water, food is not a
    survival issue and does not become one for two to three weeks. Anderson
    has stated that killing domestic animals does nothing to increase a
    soldier's ability to survive, and diverts time and resources away from
    teaching the truly important skills needed for survival, namely, how to
    find shelter, how to obtain drinkable water, and how to identify edible
    plants.
        This was illustrated by Air Force Captain Scott O'Grady, who was
    shot down over Bosnia in 1995. Captain O'Grady subsisted for 6 days in
    harsh conditions on plants and water. In 1999, a hiker made national
    news by surviving for six weeks in the desert by eating plants and
    finding reliable sources of water.
        A soldier is very unlikely to find domestic rabbits or chickens in
    a jungle, desert, or wherever he or she is stranded. Additional
    considerations are that hunting an animal would attract unwanted
    attention if the person is in hostile territory. Also, hunting is a
    time and calorie-consuming activity that requires travel, which is
    unwise in most survival situations.
        Finally, it is pointless for a soldier to practice killing docile
    animals, considering that in a real survival situation, few would have
    trouble doing so if survival truly depended on it. After all, soldiers
    do not practice killing other humans in order to be effective in combat
    situations.

    The exercises cause pain and suffering
        Soldiers sometimes carry their own animals in a backpack for
    several days before killing them. Being crammed in a backpack for days
    on end denies the animal the ability to make any normal postural
    adjustments, or even to stretch a limb, much less have any protection
    from being crushed or pounded by the weight of the pack and the
    constant jarring of the soldier's stride.
        Alternatively, animals are taken by vehicle into the woods where
    they are let go and then ``recaptured.''
        In both cases, the animal must undergo the extreme stress of
    disorientation upon being released from confinement into unfamiliar
    territory and then the terror of being hunted and recaptured.
        The killing methods used ensure that the animals die in states of
    extreme fright and pain. One Army course manual says ``you can club
    small mammals or step on them.'' Another Army manual instructs soldiers
    to kill a chicken ``by placing its head under a strong stick, placing
    both your feet on either end of the stick--and pulling vigorously until
    its head is pulled off.'' Other reports indicate that animals are
    bludgeoned by hand or with a blunt instrument. All of these deaths are
    slow and agonizing.

    Several cancellations prove that killing animals is not considered
            necessary
        In 1999, PETA wrote to (now former) Major General Leo J. Baxter,
    who was then commanding general at Fort Sill, Okla., who responded that
    a proposed survival skills exercise involving live animals was not
    approved and that ``we are in complete agreement that there is no need
    to utilize live animals for realistic survival skills training.''
        Last year, after PETA and members of the public expressed their
    outrage, the Maryland Army National Guard cancelled their plans to use
    live animals in the training exercises conducted on June 24 and 25,
    2000.
        The Massachusetts Army National Guard, 26th Infantry Brigade, has
    permanently eliminated the use of live animals from their curriculum.
        These cancellations are further proof that effective survival
    skills training does not need to include the use of live animals.

                                    SUMMARY

        Thousands of animals suffer needlessly in these pointless exercises
    at the expense of American taxpayers. We request that the subcommittee
    help end this cruel practice by including report language that
    specifically prohibits such animal use. Please include the following
    phrase in the report accompanying the fiscal year 2002 Department of
    Defense appropriations bill: ``No funds for the Department of Defense
    in fiscal year 2002 shall be used to purchase animals for military
    survival skills training.''
        Thank you for your consideration of our request.

        Senator Stevens. Dr. Cunnion.

    STATEMENT OF STEPHEN O. CUNNION, M.D., CAPTAIN, U.S.
                NAVY [RETIRED], GLAXOSMITHKLINE

        Dr. Cunnion. Hello. I am Dr. Steven Cunnion, retired Navy
    Captain. I have been involved with hepatitis B research for
    most of my medical career. Starting in 1970 as an Army medic, I
    cared for Vietnamese who had liver cirrhosis and cancers caused
    by this virus. My first research project in the military was a
    study of hepatitis B among sailors and marines in the Pacific
    fleet. Later when I was Director of Preventive Medicine and
    Occupational Health for the Navy, I was involved in writing the
    Navy's policy on hepatitis B and became well aware of many of
    the competing priorities within the DOD's health care budget.
        I thank you for the opportunity to testify today to support
    funding for immunizing recruits against hepatitis B. Let me
    summarize the risks posed by hepatitis B and state the current
    recommendations. Hepatitis B is a serious, sometimes fatal,
    blood-borne disease that poses a special risk to our military.
    As in the case of HIV, hepatitis B is transmitted through
    contact with contaminated blood of bodily fluids. Because of
    this, our troops are especially susceptible, not only during
    wartime, when bodily fluids are splattered everywhere, but also
    during other than war operations, where hundreds of thousands
    of refugees may come in close contact with our personnel.
        Although hepatitis B is often thought of as a sexually
    transmitted disease, it can be acquired in an occupational
    setting, such as aboard ship or on bivouac when troops share
    razors and other personal gear. When overseas, our forces are
    highly exposed if they become involved in an accident requiring
    a local blood transfusion or involved in sexual activities or
    get a haircut or a manicure, or even go down to the local
    tattoo parlor.
        Hepatitis B is about 100 times more contagious than HIV.
    Worldwide there have been at least 400 million people who can
    transmit this disease. During my hepatitis B study in the
    Pacific, one in every 100 persons became infected in just a 6-
    month time frame.
        The symptoms of hepatitis B may vary, ranging from
    asymptomatic to long-term disabling fatigue. It causes 11,000
    hospitalizations and kills 3 to 4,000 Americans each year.
    Worldwide the death toll is about one million people.
        Not only can hepatitis B be deadly, it can be also very
    costly. In 1991 it was estimated that hepatitis B cost $700
    million in medical costs and lost productivity in the United
    States alone. Chronic hepatitis B can also lead to costly liver
    transplants that numbered over 4,000 in 1997.
        It is a challenge to track the true costs of hepatitis B
    acquired in the military since liver failure does not occur
    until 20 or more years after the initial infection. This is why
    our military health care system spends relatively little for
    treatment. The VA and Medicare end up paying for most of the
    hepatitis B's costly sequelae.
        The point really is these symptoms, deaths, medical costs,
    and lost productivity are all preventable through the use of a
    highly effective vaccine. In 1991 the National Advisory
    Committee on Immunization Practices endorsed a universal
    hepatitis B immunization strategy beginning with newborns. The
    Centers for Disease Control states anyone under 19 should be
    vaccinated. The American College Health Association recommends
    hepatitis B immunizations for all entering college students. If
    we find it important to protect our college students, should
    not our military recruits deserve the same?
        Twelve years ago the Armed Forces Epidemiological Board
    recommended that hepatitis B immunizations become part of the
    basic immunizations for all our military personnel. Frequent
    international travel, often at a moment's notice, to countries
    where hepatitis B is highly prevalent puts our military
    personnel in harm's way unless they are vaccinated beforehand.
        Although recent studies on military populations have shown
    that the rate of hepatitis B is declining, the military rate
    still exceeds that of a comparable civilian population.
        The Centers for Disease Control and the World Health
    Organization (WHO) recommend vaccination for high risk groups.
    These groups include all health care workers, sexually active
    individuals, travelers who need medical or dental procedures
    while abroad, and international travelers spending more than 6
    months in endemic areas, such as Southeast Asia, Africa,
    Eastern Mediterranean, Eastern Europe, and the Pacific Islands.
    These categories describe our military personnel exactly.
        While the service has implemented these high-risk group
    immunizations for health care workers and some travelers, broad
    protection of all recruits has not been feasible due to the
    lack of dedicated funding. Mandating vaccinations without
    ensuring dedicated funding for this immunization at a time of
    other competing needs will not get this job done.
        The Hippocratic Oath states: ``First, do no harm.'' Failure
    to routinely protect our newest military personnel against
    hepatitis B, a protection that is increasingly recommended for
    the civilian population who is at much lower risk than our
    military, must be addressed. The $12 million requested
    appropriation for hepatitis B immunizations for recruits to
    protect them from this preventable disease is simply the right
    thing to do. I urge your support.
        Thank you for the opportunity to speak before you. Thank
    you.
        [The statement follows:]

                      PREPARED STATEMENT OF STEVE CUNNION

        I'm Doctor Steve Cunnion, and am a retired U.S. Navy Captain and I
    have been involved with hepatitis B for most of my medical career.
    Starting in 1970, as an Army medic with the 29th Civil Company, I cared
    for Vietnamese patients with liver cirrhoses and cancers caused by this
    virus. My first large medical research project in the military was a
    study determining the infection rate of hepatitis B among sailors and
    marines in the Pacific fleet. Later, when I was Director of Preventive
    Medicine and Occupational Health for the Navy and Marine Corps, I was
    involved in writing the Navy's policy on hepatitis B vaccination and
    became well aware of the many competing priorities within DOD's health
    care budget to maintain a fit and ready force. I thank you for the
    opportunity to testify today to support funding for immunizing recruits
    in the Armed Forces against hepatitis B.
        Let me summarize the risk posed by hepatitis B to our military
    personnel and state the current recommendations concerning hepatitis B
    immunization.
        Hepatitis B is a serious, sometimes chronic and fatal, bloodborne
    disease that poses a special risk to military personnel. As in the case
    of HIV, hepatitis B is transmitted through contact with contaminated
    blood or bodily fluids. Because of this, our troops are especially
    susceptible, not only during wartime exposure when bodily fluids can be
    spattered everywhere, but also during ``other than war'' operations
    when hundreds of thousands of refugees and displaced persons may come
    in close contact with our personnel. Although Hepatitis B is often
    thought of as a sexually transmitted disease, it can be transmitted in
    industrial occupational settings such as aboard repair ships or in
    bivouac conditions where troops shared razors and other personal gear.
    When overseas, our forces have a high risk of exposure to hepatitis B
    if they get involved in any accident requiring a blood transfusion or
    are involved in sexual activity, or get a haircut or manicure or even
    go down to the local tattoo parlor.
        Hepatitis B is 100 times more contagious than HIV. This disease is
    widespread and infects 300,000 Americans annually. One and a quarter
    million Americans are chronically infected carriers of the disease.
    This disease can infect up to 60 percent of the population on some
    islands in the Pacific. Worldwide, there are at least 400 million
    carriers of this virus. During my study in the Pacific one of every
    hundred persons were infected by the hepatitis B virus in just a six
    month period.
        The symptoms of hepatitis B vary, ranging from an asymptomatic
    infection to long term disabling fatigue. It causes 11,000
    hospitalizations and kills four to five thousand Americans each year.
    Worldwide, the yearly death toll is one million.
        Not only can hepatitis B be deadly, but it is also very costly to
    the health care system. In 1991, it was estimated that hepatitis B cost
    $700 million in medical costs and lost productivity in the United
    States alone. For example, chronic hepatitis B can result in liver
    dysfunction that can lead to costly liver transplants which numbered
    over 4,000 in 1997.
        Ten percent of those with illness develop a smoldering infection
    called chronic hepatitis that will take an average of ten years off a
    patient's life. This makes it a challenge to track the true costs of
    hepatitis B acquired in the military since liver failure doesn't occur
    until 20 or more years after the initial infection. This is why there
    are relatively small expenditures in the military health care system
    for the treatment of hepatitis B among active military personnel.
    However, the VA and Medicare end up expending significant resources
    treating hepatitis B and its resulting complications in retired
    military personnel and veterans.
        The point really is: These symptoms, deaths, medical costs and lost
    productivity caused by hepatitis B ARE all preventable through the use
    of a highly effective vaccine.
        Recognizing this fact, since 1991, the National Advisory Committee
    on Immunization Practices has endorsed a universal strategy, beginning
    with newborns, for hepatitis B vaccination.\1\ Adolescent vaccination
    was recommended in 1994. A new Centers for Disease Control brochure
    clearly states ``everyone under 19 years old should get vaccinated
    against hepatitis B''. This is particularly important because the
    highest rate of hepatitis B infection is seen among teenagers and young
    adults. Indeed, the American College Health Association recommends
    universal immunization against hepatitis B for entering college
    students. If we find it important to protect our college students and
    their families against hepatitis B, shouldn't our military recruits and
    their families deserve the same?
    ---------------------------------------------------------------------------
        \1\ United States Department of Health and Human Services, Public
    Health Service, Centers for Disease Control; MMRW, November 22, 1991;
    Hepatitis B Virus: A Comprehensive Strategy for Eliminating
    Transmission in the United States Through Universal Childhood
    Vaccination, Recommendations of the Immunization Practices Advisory
    Committee (ACIP).
    ---------------------------------------------------------------------------
        Hepatitis B poses a special risk to military personnel even beyond
    those of young adults in the United States who are already recommended
    to receive this vaccine. This was reflected 12 years ago by the Armed
    Forces Epidemiological Board in its recommendation that ``immunization
    against hepatitis B should be planned and become a part of the basic
    immunizations of all military personnel.'' \2\ Frequent international
    travel, often on a moment's notice, to countries where hepatitis B is
    highly prevalent, puts our military personnel in harm's way unless they
    are vaccinated beforehand. Although recent studies on military
    populations have shown that the overall rate of hepatitis B has been
    declining, most likely due to decreased illicit drug use and the
    closures of our overseas bases, the military's hepatitis B infection
    rate still exceeds those in comparable civilian populations.
    ---------------------------------------------------------------------------
        \2\ AEFB (15-1a) 88-6, October 4, 1988.
    ---------------------------------------------------------------------------
        In addition to routine vaccination for all adolescents and young
    adults under age 18, the Centers for Disease Control and the World
    Health Organization recommends vaccination against hepatitis B for
    high-risk groups. These groups include all health care workers,
    sexually active individuals, travelers who may need to undergo medical
    or dental procedures while abroad, and international travelers who plan
    to spend more than six months in endemic areas, such as southeast Asia,
    Africa, the eastern Mediterranean, eastern Europe, and the Pacific
    Islands.\3\ These categories describe our military personnel exactly.
    ---------------------------------------------------------------------------
        \3\ United States Centers for Disease Control and Prevention,
    Health Information for International Travel, 1999-2000, 100; World
    Health Organization International Travel and Health: Vaccination
    Requirements and Health Advice, Jan. 1999, 67.
    ---------------------------------------------------------------------------
        While the Services have implemented these ``high risk group''
    immunization guidelines for health care workers and some traveling
    personnel, broader protection of all recruits has not been feasible due
    to a lack of dedicated funding. Mandating vaccination without ensuring
    sufficient resources for this immunization at a time of other competing
    needs such as expanded retiree care, pharmacy benefits, and TriCare,
    WILL NOT get the job done.
        The Hippocratic Oath states ``first, do no harm''. Failure to
    routinely protect our newest military personnel against hepatitis B, a
    protection that has been increasingly recommended over the past decade
    for all infants, children and young adults in the United States, MUST
    be addressed. Indeed, our military members are at an even much greater
    risk. The $12 million requested appropriation for hepatitis B
    immunization of recruits to provide protection against this known and
    preventable disease is simply ``the right thing'' to do. I urge your
    support. Thank you for the opportunity to speak with you today.

                        ADDITIONAL SUBMITTED STATEMENTS

        Senator Stevens. Thank you very much. If there are any
    other persons here that wish to submit statements for the
    record, they may do so.
        [The statements follow:]

                 PREPARED STATEMENT OF THE UNIVERSITY OF MIAMI

        Mr. Chairman, I thank you and the Members of the Subcommittee for
    this opportunity to submit testimony today on behalf of 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, more than
    2,300 faculty instruct almost 14,000 undergraduate, graduate, and
    professional students in facilities located on four major campuses.
        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.
        In fiscal year 2000 you provided support to launch the National
    Center for Tropical Remote Sensing Applications and Resources. Our
    partnership with the Department of Defense has developed and continued.
    In fiscal year 2002 we hope to continue our joint efforts to move this
    vital project forward. Your small investment in the National Center for
    Tropical Remote Sensing Applications and Resources 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, local 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 on the former United States Naval Observatory/
    Alternate Time Service Observatory in Perrine, Florida will provide a
    unique capability for the Caribbean and southeastern United States
    region. The existing Very Long Baseline Interferometry (VLBI) antenna
    and the existing ancillary hardware and buildings are ideal for this
    purpose. Applications at 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 will
    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 United
    States, 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 United States both directly
    and indirectly. Examples include illegal immigration, reliance on a
    drug economy, and lost market opportunity for United States 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 new National Center for Tropical Remote Sensing at the
    University of Miami would provide a unique opportunity for FSGC to
    begin dedicated education and training of the use of space-based remote
    sensing and imagery. 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. We
    envision the development of a magnet studies program in space science
    that would be modeled after a very successful existing program in
    marine science and technology in collaboration with the University of
    Miami. This partnership would educate first-rate students and help
    produce the next generation of scientists, engineers, and technology
    experts for the nation.
        Mr. Chairman, your previous support to launch this vital remote
    sensing initiative has brought us to an important juncture. Now, we
    need to bring the project to operational status. We hope to continue
    our partnership in fiscal year 2002 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.
                                     ______

    PREPARED STATEMENT OF THE COALITION OF OKLAHOMA INSTITUTIONS OF HIGHER
      EDUCATION CENTER FOR AIRCRAFT AND SYSTEMS/SUPPORTING INFRASTRUCTURE

        Mr. Chairman and members of the Subcommittee, we 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. This testimony will identify the motivating
    national interest in aircraft and systems/support infrastructure, and
    describe the CASI approach to serve those needs.
        We gratefully acknowledge Congress's incremental funding for the
    past year to the Department of Defense in the amount of $1,800,000 for
    CASI infrastructure enhancement. Today we respectfully request an
    additional $6,000,000 in the pending budget. This request consists of
    $5,000,000 for infrastructure enhancement at the three comprehensive
    universities and $1,000,000 to aggressively engage Oklahoma's smaller
    regional universities in supporting the CASI mission. Funding of this
    request will serve to substantially improve and integrate CASI
    coalition resources for the purpose of supporting the Department of
    Defense's air logistics centers.

                         STATEMENT OF NATIONAL INTEREST

        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 United States Air Force Aircraft, the
    committee reported, ``The United States 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 almost 40 years. According
    to recent reports, the C/KC-135 fleet is scheduled for retention in the
    operational inventory until the year 2040, when the average aircraft
    age will approach 80 years. The Oklahoma City Air Logistics Center (OC-
    ALC) at Tinker Air Force Base supports the C/KC-135 and other aircraft
    fleets and systems. Although maintenance costs of these aircraft are
    rapidly increasing, the option of total cost of fleet replacement
    (estimated to exceed $40 billion for the existing fleet of more than
    600 aircraft) is deemed beyond serious consideration. The technical
    challenges of maintaining an aging fleet are comparable to, and in some
    respects exceed, those in development of new aircraft platforms and
    systems.
        The second issue relating to aircraft maintenance and logistics
    centers is the need to comply with increasingly stringent environmental
    regulations. Large-scale industrial repair/rework operations, such as
    the OC-ALC, involve extensive use of solvents and other hazardous
    materials resulting in waste streams that must be minimized and
    managed. The Tinker AFB is located in an urban county that is marginal
    on air-quality non-attainment, and might at some time come under the
    appropriate Control Techniques Guidelines (CTG). In addition, the
    National Emission Standards for Hazardous Air Pollutants (NESHAP)
    provision has recently been enacted. As a result, Tinker AFB has
    inserted a large budgetary request for the procurement, installation
    and maintenance of 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 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 without increasing total emissions for the base.
        The OC-ALC and other military aircraft programs and logistics
    facilities rely extensively on aircraft original equipment
    manufacturers (OEMs) and secondary engineering support firms to
    establish and update aircraft maintenance technologies and practices.
    While continuing private-sector support is a critical aspect of fleet
    sustainment, an independent source of alternative approaches,
    innovations, and new technology insertion is also essential.
    Furthermore, the OEM and engineering support services firms often lack
    the specific expertise needed at the critical time to fully support the
    needs of operations such as OC-ALC. Oklahoma's research universities
    can partner with private-sector firms to provide this timely infusion
    of necessary expertise under the CASI framework and utilizing DOD
    contracting mechanisms. Several firms have already recognized that CASI
    can serve this role and have engaged CASI to provide specialized and
    complementary expertise on teams studying aircraft and support
    infrastructure problems.

                           CASI MISSION AND APPROACH

        The Center for Aircraft and Systems/Supporting Infrastructure is a
    revolutionary, multi-institutional, multi-disciplinary organization
    combining engineering, science, and business programs from Oklahoma's
    institutions of higher education. The CASI mission is to support the
    aviation community (both military and civilian) in developing and
    integrating promising new technologies with economics-based life-cycle
    engineering management methods, to assist aircraft fleet owners in
    substantially lowering maintenance costs, promoting environmental
    compliance, increasing fleet readiness, and improving safety.
        CASI has been organized under the aegis of the State Regents for
    Higher Education in Oklahoma to provide a single point of contact for
    the aviation sector to access expertise at all the Oklahoma
    institutions of higher education. CASI is the first academic entity of
    its type in the nation focusing on the development of a state-wide,
    multi-disciplinary approach for conducting applied research, modeling,
    technology insertion, and engineering support activities for aircraft
    maintenance and sustainment.
        The CASI coalition includes Oklahoma's system of higher education,
    state government, and the military and civilian aviation sectors. The
    Center's faculty, students, and extensive research facilities serve as
    a valuable resource for applied research, technical expertise, and
    insertion of emerging technologies to support aircraft logistics. The
    comprehensive universities primarily responsible for CASI
    administration are the University of Oklahoma System, the University of
    Tulsa, and the Oklahoma State University and A&M System. These systems
    of higher education include main campuses in Norman, Tulsa, and
    Stillwater, respectively; system campuses such as Cameron, Langston,
    and Northeastern Oklahoma A&M Universities; and the University of
    Oklahoma Health Sciences Center. Regional institutions such as the
    University of Central Oklahoma are also involved in CASI. The CASI
    Board of Directors consists of Associate Deans acting on the authority
    of the Vice-Presidents of Research at their respective universities.
    The Board includes Dr. Edward Knobbe of Oklahoma State University
    (Executive Director), Dr. James Sorem of the University of Tulsa (Co-
    Director) and Dr. Thomas Landers of the University of Oklahoma (Co-
    Director).
        CASI is positioning to support aircraft logistics centers and
    maintenance depots across the nation, including the OC-ALC. There are
    numerous expertise areas dispersed 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 such as
            cyclic fatigue analysis and stress-corrosion cracking.
      --Modeling, simulation, and forecasting for reliability/physics of
            failure and logistics.
      --Economic cost-of-ownership modeling and 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.
      --Occupational health and bioengineering.
      --Industrial and manufacturing engineering (e.g., man-machine
            studies, resource allocation, machining and metrology, process
            improvements, material handling and logistics, metrics and
            benchmarking).
      --Information Technology in cyber-security and in the product
            realization and sustainment process, including digital and
            collaborative design, database management, and data mining.
      --Avionics and ground electronics applications such as real-time
            aircraft health assessment, fault isolation and detection, and
            repair verification testing.
        Immediately prior to the past fiscal year, the CASI consortium
    established a cost-share program designed to stimulate the
    collaboration of Oklahoma universities with the OC-ALC and other air
    logistics centers. The Oklahoma Experimental Program to Stimulate
    Competitive Research (EPSCoR) office, the Oklahoma State Regents for
    Higher Education, and the research institutions of Oklahoma all
    provided seed funding for this initiative. The state cost share program
    has fostered several new technology insertion activities with
    collaborating entities at the OC-ALC. During the past year, CASI
    faculty and students have initiated over $1,500,000 in projects
    supporting OC-ALC through contracts managed by firms in the private
    sector. Five projects in summer of 2000 initiated faculty collaboration
    with mission-critical programs at Tinker Air Force Base/OC-ALC in the
    areas of digital design and analysis and in environmental monitoring
    and remediation. Eleven faculty and their student assistants are also
    currently conducting the following nine collaborative projects of
    approximately one-year duration:
      --Corrosion data management
      --Erosion resistant ZnS coatings
      --Hazardous waste treatment plant metals optimization
      --Interactive web-based training of depot maintenance personnel
      --Optimization of building 3001 conveyor material handling system
      --Enhanced CNG (natural gas) powered vehicles
      --Fuel pump test stands
      --Air monitoring technologies
      --Satellite imaging and 3-D visualization for air-pollution
            monitoring
        The summer program for 2001 includes initiation of student
    participation and a four-fold increase in faculty participation,
    compared to Summer 2000. These summer projects have been defined by OC-
    ALC mission organizations to address a wide range of needs, including
    manufacturing, information technology, environmental science, avionics
    engineering, and business processes.
        CASI is also participating in the OC-ALC Science and Engineering
    Career Panel (SECP) to define requirements and develop strategies for
    meeting OC-ALC hiring needs in these critical career fields associated
    with expanding workload and impending retirements during the next seven
    years.
        CASI faculty have begun entering into strategic relationships to
    provide technology support for DOD systems maintained at sites outside
    of Oklahoma, including the Ogden Air Logistics Center (OO-ALC) at Hill
    Air Force Base in Utah and the Warner Robins Air Logistics Center (WR-
    ALC) at Robins Air Force Base in Georgia. Smaller regional universities
    in Oklahoma are also becoming involved in work for the DOD through
    CASI.
        Congressional appropriations are needed to enhance CASI's existing
    infrastructure and sustain the growth begun in the last two years. OC-
    ALC is actively leading the definition and prioritization of
    initiatives to utilize Congressional incremental funding. Plans for
    investment of these funds include an expanded program of summer
    collaborative initiation projects, in-depth problem solving on these
    topics, augmentation of support capabilities at the three comprehensive
    universities, and aggressive expansion of statewide participation by
    regional universities.
                                     ______

                 PREPARED STATEMENT OF FLORIDA STATE UNIVERSITY

        Mr. Chairman and distinguished members of the Subcommittee: Thank
    you for allowing my remarks to be made part of the hearing record.
        Florida State University has four projects that we are pursuing
    through the Department of Defense. In the interest of time, three of
    these projects are detailed in my written testimony. I will briefly
    describe to you today our top priority project--FSU's Center for
    Advanced Power Systems. In addition, I would like to comment briefly on
    the importance of R&D funding within DOD.
        Mr. Chairman, I would like to begin with emphasizing the important
    role defense R&D plays at universities around the country and its
    crucially-important role in preserving our national security.
        It is widely recognized that the DOD's Basic Research (6.1) and
    Applied Research (6.2) accounts provide the building blocks for future
    advances in all defense science and technologies; continuation of a
    healthy science and engineering base is mandatory in keeping our
    military the strongest and best prepared in the world. Since World War
    II, DOD funding of university-based research has produced some of the
    most significant scientific breakthroughs and innovative technologies
    that include telecommunications and computing activities, advanced
    materials, and numerous applications of lasers and radar that have kept
    our Nation at the technological forefront.
        While basic and applied research (6.1 and 6.2) are the linchpins in
    preparing for our future, they also provide us with the ability to look
    beyond today's problems to tomorrow's solutions.
        An excellent example is FSU's work with the Office of Naval
    Research (ONR) on the Center for Advanced Power Systems. I am
    accompanied today by Mr. James Ferner, Acting Director of that Center.
    I addressed this topic last year with this Committee just prior to ONR
    entering into a contract with Florida State University to coordinate
    the research for the development and testing for the next-generation
    propulsion systems for the Navy's fleet. Since that time, this project
    has greatly expanded, and we are in the midst of establishing a
    consortium with several other key research universities to work with us
    on this high priority project.
        The All-Electric Ship Systems Research and Development Consortium
    will bring together a number of ONR-funded programs in the electric
    systems area to establish a team approach to focused projects involving
    end users, equipment suppliers, and academic researchers. A key element
    of the program is the effort to foster ``Dual Use'' technologies by
    structuring the consortium to include Navy, commercial/industrial and
    utility-based participation. The technology problems to be solved in
    both Naval and commercial power systems are similar and related and
    will benefit from a joint approach. It is expected that the consortium
    will become a key technical agent of the Navy in the development of the
    electric ship program.
        Ship propulsion and energy systems are major users of manpower and
    energy and make up a major part of the weight and volume of a ship.
    Hull mechanical and electrical systems, essentially unchanged for the
    past 20 years, are prime candidates for applications of new
    technologies that would achieve weight and volume efficiencies and
    reduce manning costs through automation. Advances in weapons and
    communications technologies are placing new demands on ship electrical
    systems. A system-driven program of research and development in
    advanced electrical power technologies is essential to capitalize on
    the opportunities offered by the all-electric concept. Weight and
    volume reductions, improved reliability and survivability, and reduced
    manning costs are major benefits to be achieved from the all-electric
    ship concept. All-electric systems provide maximum opportunities for
    introduction of new technologies and implementation of automation.
        Recognizing the long lifetime of a ship and the lead times required
    to develop and demonstrate new technologies, the consortium program
    will be focused on long-term programs with phased introduction of new
    technologies to provide the experience necessary to support major
    technology changes. First, the consortium plans to develop a strong
    systems simulation and modeling capability. This capability is
    essential in evaluating existing electric power systems, setting
    standards, developing control strategies, and developing guidelines for
    applications of existing technologies. The next step in the development
    roadmap will be advanced components based on well-understood new
    technologies that can be introduced in place of existing components in
    existing and new systems to achieve significant performance objectives.
    Finally, we will focus on development of new component and system
    advances that require significant research and development and
    prototype demonstration.
        We will be requesting $19,000,000 in fiscal year 2002 to fund the
    activities of this consortium and to further the Navy's goals of
    preserving our Nation's security in the years ahead.
                                     ______

     PREPARED STATEMENT OF THE UNIVERSITY OF MEDICINE AND DENTISTRY OF NEW
                                     JERSEY

        The University of Medicine and Dentistry of New Jersey (UMDNJ) is
    New Jersey's premier senior academic research institution and the
    largest public university of the health sciences in the country. The
    UMDNJ statewide system is located on five campuses and consists of 3
    medical schools, and schools of dentistry, nursing, health related
    professions, public health and graduate biomedical sciences. UMDNJ
    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.
        UMDNJ is home to the International Center for Public Health, a
    strategic initiative that will create a world-class infectious disease
    research and treatment complex at University Heights Science Park in
    Newark, New Jersey; the New Jersey Medical School National Tuberculosis
    Center, one of only three model TB Prevention and Control Centers in
    the United States funded by the Centers for Disease Control (CDC); the
    Center for Emerging Pathogens at the New Jersey Medical School, which
    serves as a focus for infectious disease research; the Environmental
    and Occupational Health Sciences Institute (EOHSI), a joint venture of
    UMDNJ and Rutgers University, recognized as one of a select number of
    national centers of excellence by several federal agencies; and a
    statewide system of Level I and II Trauma Centers.
        In addition, UMDNJ plays a dominant role in providing continuing
    education and outreach in all aspects of emergency preparedness. Basic
    and applied research among the UMDNJ campuses directly addresses the
    biomedical implications of biological and chemical weapons and
    appropriate response in the event of their use.
        No other institution in the nation possesses resources that can
    match our scope in health professions education, research, health care
    delivery, and community service initiatives with state, federal and
    local entities. UMDNJ is an integral part of the Governor of New
    Jersey's initiatives with close ties to state health services and state
    law enforcement. Similarly, UMDNJ is closely tied to the City of Newark
    providing critical EMS services under contract plus involvement at
    other levels. Thus, partnerships are already in place to enable us to
    formulate a comprehensive network approach to emergency preparedness.
        UMDNJ's scientific and academic expertise uniquely positions us to
    develop a comprehensive, statewide program to combat chemical and
    biological terrorist attacks through emergency response training,
    identification of agents, basic research and technology.
        New Jersey is the most populated state in the nation and Newark,
    its largest city, is in close proximity to New York City; linked with
    this metropolis by extensive air, rail and highway commuter services.
    Newark Airport, the 12th largest in the United States, is a
    transportation hub for the entire Northeast (ranking 3rd in
    international trade). Over 30 million passengers travel through Newark,
    making the region a prime target for the possible introduction of
    infectious diseases.
        In the event of a biological attack, our most effective measures
    will rely on early recognition of clusters of cases in local emergency
    rooms, or a sudden increase of cases reported to Public Health
    Departments. Physicians and other health care workers must be prepared
    to recognize the outbreak of disease caused by biological weapons. A
    dual effort is needed to improve the delivery of currently-available
    public health measures and to improve our ability to recognize that a
    biological weapon has been used.
        With the strong support of this committee, UMDNJ has achieved
    $3,200,000 over the past two years to establish a Center for BioDefense
    in New Jersey. That funding will be focused on basic scientific
    research to understand and identify infectious biological organisms,
    and to classify the response to these organisms in order to develop
    diagnostic profiles that will lead to intervention and treatment for
    victims of biological or chemical terrorist attacks. We have submitted
    a proposal to the U.S. Army Medical Defense Research Program that will
    focus on DNA microarrays to identify profiles for a host response to
    infectious agents. We look forward to a positive response to our
    proposal and to beginning this important research that could have a
    large impact on military and civil disaster detection.
        In addition to our scientific expertise, an important component of
    the UMDNJ-Center for BioDefense is our expertise in education and
    training concerning chemical and biological weapons. The nation's
    foremost program in education and training concerning chemical threats
    is located at UMDNJ. Our Center for Education and Training (CET) of the
    Environmental and Occupational Health Sciences Institute (EOHSI) has
    operated as a continuing education center for over 20 years providing
    environmental and occupational safety and health training through its
    Hazardous Materials Worker Training Center. The Center has provided
    training to some 175,000 individuals (police, firefighters, municipal
    and state employees, as well as to physicians, nurses and industrial
    hygienists) in hazardous materials-related topics.
        Additionally, there are several Emergency Medical Services (EMS)
    Regional Communications Centers (RCC) in New Jersey which provide the
    medical dispatch and/or coordination of the state's Mobile Intensive
    Care Units (MICUs). However, there is no coordination of information
    within the 84 acute care hospitals across the state.
        While emergency medical technicians and paramedics maintain state
    certification requirements, these do not include continued education in
    incident command, EMS mass casualty response training and hazardous
    material training.
        The UMDNJ-Center for BioDefense will use the expertise at UMDNJ-
    University Hospital, the state's Level I Trauma Center, and University
    Emergency Medical Services to provide statewide leadership in the
    training of EMS, first responders and other health professionals and to
    coordinate a standard regional response to incidents involving weapons
    of mass destruction, mass casualty, bioterrorism or public health
    threats.
        An Incident Support and Operational Planning (ISOP) team will be
    responsible for training coordinated communications and response. On-
    site ISOP training will be provided to hospitals and EMS teams. The
    unit would also provide technical expertise to assist communities in
    the development of emergency plans and procedures. The ISOP team would
    organize and participate in emergency exercises at all levels of
    government and will become a regional resource to counties and local
    communities within the region.
        ISOP communications would be responsible to track and disseminate
    statewide hospital bed status. This would be accomplished through an
    increase in the current technology at University Hospital's Regional
    Emergency Medical Communications System (REMCS) dispatch center to
    computerize information collection and distribution. Improvements would
    include: designing, implementing and maintaining a secure Internet-
    based status and tracking system; upgrading the existing radio system
    to integrate with the New Jersey State Police, the Office of Emergency
    Management, the Department of Health and the Department of
    Transportation; implementing an alert network to provide public health
    agencies with critical information on potential threats to the public.
        The ISOP response would require hardware, software and trained
    personnel. The team would include individuals highly trained to respond
    and support large-scale incidents and with the knowledge and experience
    to staff various positions for all categories of emergencies. Regional
    response vehicles would be needed including field command vehicles,
    mass casualty response units, mobile decontamination units and
    rehabilitation units.
        As New Jersey's university of the health sciences, UMDNJ is well
    positioned to provide the leadership and expertise to implement a
    statewide medical response system to bioterrorism. As part of our
    Center for BioDefense, University Hospital provides the E-911 EMS
    system for the greater Newark area, as well as the E-911 emergency
    Basic Life Support (BLS) in Camden. Other partners include the Level I
    Trauma Centers at Cooper Medical Center in Camden and Robert Wood
    Johnson University Hospital In New Brunswick, two of the principal
    teaching hospitals of UMDNJ. Members of the UMDNJ Emergency Response
    team participate in federally-sponsored ``Weapons of Mass Destruction''
    education programs and play a leadership role in the City of Newark's
    Metropolitan Medical Response System.
        UMDNJ respectfully requests funding of $2,000,000 for the Center
    for BioDefense to prepare, equip and train EMS personnel and other
    responders who are often first on the scene when a weapon of mass
    destruction has been employed. This funding will assist the Center's
    efforts to develop a coordinated, statewide Medical Response System
    that will strengthen New Jersey's ability to respond to bioterrorism.
        We wish to again thank the Members of this Committee for their past
    support of UMDNJ's initiatives in research, education and training
    concerning all aspects of bioterrorism.
                                     ______

                 PREPARED STATEMENT OF NORTHWESTERN UNIVERSITY

        Senator Stevens, Senator Inouye, and distinguished Senators of the
    Appropriations Committee, thank you for the opportunity to submit
    testimony before your committee regarding Northwestern University's
    efforts to help address defense-related health needs through the
    Institute for Bioengineering and Nanoscience in Advanced Medicine. We
    believe this Institute will foster discoveries in the field of
    nanotechnology that will be important for national security. I would
    also like to thank the committee and subcommittee for providing an
    initial $4,000,000 in the fiscal year 2001 Defense Appropriations bill
    for this center and request continuation funding as I will further
    describe.
        Senator, as you know research and development at the nanoscale
    (i.e., at the level of atoms, molecules, and supramolecular structures)
    is focused upon generating nanostructures that have novel physical,
    chemical, and biological properties. Northwestern, as an acknowledged
    leader in the emerging field of nanotechnology, can make a significant
    contribution by addressing a range of health issues, especially those
    of importance to national security and the Department of Defense.
        In September of 1999, the Interagency Working Group on Nanoscience,
    Engineering, and Technology (IWGN) published a report on its workshop
    held earlier that year. The report recognized the importance of
    nanotechnology to the technological and economic competitiveness of the
    United States; recommended greatly increased funding for nanotechnology
    research and development, especially to support university centers of
    excellence and their related infrastructure; and emphasized, among
    other fields, the importance of nanotechnology for national defense
    health needs. Specifically, the report said:
        ``Nanoscale science and engineering promises to become a strategic,
    dominant technology in the next 10-20 years, because control of matter
    at the nanoscale underpins innovation and progress in most industries,
    in the economy, in health and environmental management, in quality of
    life, and in national security. The consensus of IWGN workshop
    participants and contributors is that nanotechnology will lead to the
    next industrial revolution. (p. xviii)
        Every effort must be made to foster multidepartmental centers for
    nanotechnology on campuses. The most successful research efforts will
    be those that can create new infrastructures (for example, materials
    preparation and characterization facilities) for these centers. (p.
    xix)
        Information and weapons are tools; human performance ultimately
    determines warfare results; improvements in monitors/controls of human
    physiology for performance assessment, casualty care, and
    susceptibility to chemical/biological agents are all important. (p.
    192)''
        In addition, these points echo the June 1998 report of the Defense
    Science Board Task Force for the 21st Century, which recommended
    substantial new investment in ``revolutionary'' technologies, including
    ``biological/chemical technologies for BW/CW defense'' and ``nano-
    technology for computation and sensing devices'' (p. 42). These
    priorities were reemphasized in the June, 2000, Summary of the Defense
    Science Board Recommendations (e.g., p. 4) and in the February, 2001,
    Phase III report of the U.S. Commission on National Security/21st
    Century (e.g., pp. VIII-IX, 3, 16).
        One of the objectives of the proposed Institute at Northwestern is
    to advance through nanotechnology our capabilities to detect, target,
    and manipulate viruses, cells, and other biological agents and to apply
    these capabilities to medicine and healthcare. In addition to improving
    medicine and healthcare generally, these advances will be targeted at
    the Institute to the needs of national security. Miniaturized devices,
    when implanted in the body, could monitor health, diagnose battlefield
    traumas, and deliver controlled-release medications. These
    capabilities, plus the use of micro- and nanoscale devices for non-
    invasive surgery, could allow sophisticated treatment of internal
    wounds in the battlefield. The subsequent repair and rehabilitation of
    battlefield wounds could be greatly enhanced by nanostructured
    materials to control the rejection of artificial implants and to
    stimulate regeneration of damaged tissues. Nanoscale sensors could, in
    principle, detect and identify as little as a single cell or virus in a
    biowarfare agent, and artificial bioskins could protect the military
    from such agents while remaining permeable for respiration.
        Northwestern University is the ideal location for the proposed
    Institute as we have been a leader in the development of nanotechnology
    nationwide. Northwestern faculty have published, patented, and applied
    numerous research discoveries in this field and Northwestern's past
    contributions stem from our history of interdisciplinary research. The
    Institute may be unique as an interdisciplinary configuration as it: is
    located within the Medical School and may draw upon multiple
    departments; and its close links with the Center for Nanofabrication
    and Molecular Self-Assembly, the McCormick School of Engineering, and
    physical and life science departments within the Weinberg College of
    Arts and Sciences. To accomplish the goals of the proposed Institute,
    physical scientists, biologists, and engineers will work side by side
    with clinical researchers in a medical context to develop frontier
    research in nanobiotechnology.
        The facilities for the Institute will require the co-location of
    five major laboratories and state-of-the art equipment. One sector of
    the Institute will consist of a biological clean room facility designed
    simultaneously for electronic and photonic device fabrication and
    biological research involving the culturing of cells and growth of
    tissues in sophisticated bioreactors. A second sector will be a state-
    of-the-art laser physics laboratory with capabilities for the study of
    the interaction of light with biological structures and also the
    manipulation of biological structures and molecules with photons. The
    third is a nonconventional chemical laboratory with simultaneous
    capability for synthesis and also rapid screening of properties in
    novel chemicals and materials using microprobes. The fourth sector will
    be an imaging laboratory, in which all types of state-of-the-art
    microscopes, particularly scanning and electron microscopes, will be
    maintained in order to characterize biological structures, plus
    electronic and photonic devices. The fifth one will be a computational
    laboratory where large-scale simulations can be undertaken, including
    the three dimensional visualization of phenomena being studied.
        These facilities provide a unique infrastructure to support the
    research undertaken not only by Northwestern faculty and students, but
    also by investigators from DOD, federal agency, industrial, and
    university laboratories.
        The cost for construction of the Institute's facilities is
    estimated at approximately $30,000,000, with operating costs estimated
    at $3,000,000 to $5,000,000 per year. These facilities will occupy the
    10th and 11th floors in the first tower of Northwestern's new
    biomedical research building on the Chicago campus and will be
    completed in three phases. Phase one, which involves construction of
    the shell and partial fit out of the laboratories in the first tower,
    will cost approximately $145,000,000. Phase two, which involves
    building out the space that was left shelled in phase one, will cost
    approximately $55,000,000. In addition to this $200,000,000, 12-story
    tower, phase three will add a connected 15-story tower at a cost still
    undetermined. When completed, the three phases will add more than 1,100
    new faculty, staff, and students to the Chicago campus.
        Two extraordinary private gifts totaling $65,000,000 have been
    donated to the building project. In addition, Northwestern Memorial
    Hospital has pledged $25,000,000, and Northwestern University has
    designated $25,000,000 of its own funds. In 2000, Governor Ryan
    committed $30,000,000 ($10,000,000 per year for three years) from the
    State of Illinois, and Northwestern requested an equal amount from the
    U.S. Government ($10,000,000 per year for three years). These federal
    funds would be leveraged more than six times over by non-federal funds
    contributed to the $200,000,000 cost of phases one and two.
        Senators Stevens and Inouye, Northwestern respectfully requests
    $10,000,000 in the fiscal year 2002 Defense Appropriations bill to make
    this facility operational, furthering research and development of
    nanotechnology on behalf of defense-related health needs. We believe
    these federal funds will be an important impetus to help Northwestern
    raise $25,000,000 for the remaining capital costs for phase two and
    more than $100,000,000 in endowment for personnel and operating costs
    associated with phases one and two. We hope the committee and
    subcommittees will continue to fund this important facility.
        Thank you for the opportunity to testify.
                                     ______

    PREPARED STATEMENT OF JAMES L. WILSON, ATTORNEY, WILSON & DREXLER, P.C.

        I very much appreciate your invitation to appear before your
    subcommittee on Wednesday, May 23rd to express my views with respect to
    the Sea Cadet and Junior ROTC programs. Unfortunately it is not
    possible for me to be in Washington on that date. I would very much
    appreciate it if you could bring the substance of this letter to the
    members of your committee.
        Our local high school in Manahawkin, New Jersey, sponsors an Air
    Force Junior ROTC. I have frequent contacts with the High School on
    behalf of organizations in which I participate, and have had many
    opportunities to observe the students. The contrast between those in
    the AFJROTC and the other students is quite marked. The Cadets show a
    pride, personal organization, and general attitude that we would like
    to see in all of our young people.
        My contacts with the Sea Cadets are less frequent, but as a member
    of the Navy League I have become aware of the program, and had an
    opportunity to see its effect. In these days of declining moral and
    personal standards, these and similar programs have a beneficial effect
    on personal organization, leadership ability, and standards, in the
    students themselves, and in their associates.
        As a college student at the outbreak of World War II, I was
    fortunate to participate in the Naval ROTC; then, as a destroyer
    officer, in essentially all of the operations of the Fifth and Third
    Fleets during 1944 and 1945; then for two more years in 1950-52.
    Otherwise, while I am sure I would have entered the armed forces, my
    contribution to the war effort would probably have been negligible. It
    clearly also added to my personal development. I believe both of the
    subject programs give our best young people an opportunity to identify
    themselves at an early age, and that from them many of our fixture
    leaders will come. We should look for every way to maintain and
    encourage these and similar programs. They represent our best hopes for
    the fixture.
                                     ______

     PREPARED STATEMENT OF LT. COL. KEVIN REGAN, U.S. MARINE CORPS RESERVE
               ON BEHALF OF THE OVARIAN CANCER NATIONAL ALLIANCE

        Mr. Chairman and Members of the Committee: My name is Kevin Regan
    and I am a Lieutenant Colonel in the United States Marine Corps
    Reserve. Last December, my 45-year-old wife and mother of my two young
    children, lost her 2\1/2\ year battle with ovarian cancer. Gail was a
    retired Navy Lieutenant Commander who served proudly in the Medical
    Service Corps. In retirement, she continued to serve her Navy and her
    country by participating in Navy health conferences and being selected
    to be a member on the DOD Ovarian Cancer Research Program peer review
    panel. I would like to tell you about our experience with this
    insidious disease and ask that the funding level for the Department of
    Defense's Ovarian Cancer Research Program be increased to $20 million
    for fiscal year 2002.
        During the summer of 1998, we were living in San Diego and Gail was
    feeling great. She did discover though, a tiny pea sized lump just
    under the skin on her sternum. Her doctor was not concerned, but he
    offered to biopsy it. A week later we got the terrible news that it was
    an adenocarcinoma, primary site unknown. At the Naval Hospital in San
    Diego, we immediately got to see a GYN Oncologist. After an exam they
    squeezed her in at the last minute for a CT scan and an ultra sound.
    After nervously waiting through the three day Labor Day weekend, we got
    good news that there were no visible tumors. A few days later we
    received the results of her CA-125 blood test. The CA-125 test can
    sometimes indicate the presence of ovarian cancer. Because her CA-125
    was elevated, her doctor advised doing an exploratory laparotomy. This
    turned into major surgery because he found tumor everywhere. He did a
    complete hysterectomy and oopherectomy (removal of the ovaries). Gail
    immediately began a 9-month course of chemotherapy followed by a 6-week
    course of whole abdominal radiation. She enjoyed 6 months of remission
    before her first and final recurrence.
        As a Marine Officer, I certainly believe that our defense dollars
    should be spent to continually maintain and improve our military's
    readiness. Ovarian Cancer does adversely affect our readiness. During
    our ordeal, I was the only Air Officer for a reserve Marine Battalion
    at Camp Pendleton. Not only did I miss important training exercises,
    but also if my Battalion had been activated and deployed, I would have
    had to stay behind to care for Gail and my children.
        At this time, there is no early detection or screening test for
    ovarian cancer. In Gail's case, even when the doctors knew she had a
    stage IV ``something'' cancer, they were not certain it was ovarian
    until her surgery. According to the American Cancer Society, with early
    detection of ovarian cancer there is a 95 percent chance of survival.
    Unfortunately, only 25 percent are detected early.
        The Ovarian Cancer National Alliance has launched an initiative to
    educate women and health care providers across the nation about the
    symptoms, risks, and treatments of ovarian cancer. Until Gail was
    diagnosed, we did not know the symptoms, if we had, my children might
    still have their mother, I might still have my beautiful wife, and the
    Navy would still have a loyal and proud officer.
        This year it is estimated that there will be 23,000 new cases of
    ovarian cancer and it is estimated that there will be 14,000 deaths.
    The National Cancer Institute has said that the risk of developing it
    increases with age, with most cases occurring in women over 50. Last
    year, while Gail was getting her chemotherapy at Walter Reed, she met a
    young Navy Petty Officer who was diagnosed at 24 years old! Her husband
    is also an active duty Petty Officer.
        In closing, I would like to say that the Department of Defense's
    Ovarian Cancer Research Program is critically important. Among the
    first research grants is a study that is looking for molecular markers
    that can help detect ovarian cancer at an early stage. Other research
    is focusing on prevention, and we are getting results. There is now an
    increased understanding in the role oral contraceptives and the hormone
    progestin found in them play in protecting women against ovarian
    cancer. Because of this research, maybe soon I can tell my daughter
    that she and millions of other women do not have to go through the
    ordeal that Gail and I went through.
        Thank you for your time, Mr. Chairman and committee members, I am
    ready to try and answer any questions you may have.
                                     ______

        PREPARED STATEMENT OF THE JUVENILE DIABETES RESEARCH FOUNDATION
                                 INTERNATIONAL

        Chairman Stevens and the Members of the Subcommittee, thank you for
    the opportunity to submit this testimony in support of $10,000,000 in
    research funding to allow the Department of Defense (DOD) to continue
    and expand research into biosensor technology.
        I am submitting this statement in both a professional and personal
    capacity. My professional interest is due to my background with the
    U.S. military. I would like to speak predominantly about that in
    support of the Committee's action this last year in allocating
    $2,500,000 to support funding to look at noninvasive methods of
    assessing the health of soldiers.
        Before turning to that, let me be forthright about my personal
    involvement. I have a son who has juvenile diabetes. He is one of 16
    million people in the United States who has diabetes. I am very
    concerned for him, and a noninvasive method of assessing blood sugars
    would have an enormous personal benefit to him. People who have
    juvenile diabetes need to prick their fingers some five or six times a
    day. I've determined that my son has done it some 17,000 times in the
    course of the 9 years he has been a victim of this disease. Anything we
    develop technologically that would help him or those other 16 million
    Americans I think would be very wonderful.
        I might add that we spend about one in every four Medicare dollars
    on people with diabetes, so the reward financially for the public more
    broadly is very great.
        This Subcommittee is naturally focused on the question of the
    military, and there my interest arises from my focus on biological
    warfare and on the health of our troops. As members of this body well
    know, the frequency of casualties for us in the military from disease
    is greater than the frequency of battlefield casualties from enemy
    fire. More people have died in our wars from health problems than have
    died from wounds on the battlefield.
        We have now the opportunity, which is immense, to correct this or
    to diminish it by assessing people's health through noninvasive means
    while they are actually on the battlefield or preparing to go there.
    Two enormous technological developments are opening up the
    possibilities for us. We are just missing a third, and this is where
    the committee's funding has been particularly helpful, and I would like
    to encourage an expansion of that funding. On one hand, we have, first,
    a very good increased understanding of the metabolic processes in human
    beings and what is happening in blood systems and how that connects to
    people's health, and, second, we have the development of wireless
    communication technology. Your cell phones are a very good example of
    that technology. They demonstrate that we can get communications from
    soldiers on the battlefield and assimilate that information and see
    what is happening. What we lack is a methodology in the middle that
    connects these two things, that enables us to assess what it is that is
    happening inside someone's body without penetrating it.
        When NASA, for example, sends astronauts into orbit, it frequently
    needs to know what is happening in their bodies. In order to find out,
    they need blood samples. As a result astronauts in space must
    frequently draw blood from one another. This is a twentieth century way
    of dealing with a twenty-first century problem. We can, through a
    variety of methods (ultraviolet detection, analysis of sweat etc.)
    determine better what is happening inside people's bodies, but that
    missing research link is not richly developed.
        The Army is eager to focus on this. Last year's budget allocated
    $2,500,000 for this purpose. The program is just getting started now.
    It has solicitations out for proposals and a workshop is planned from
    September 5 to September 7. I think that will be very illuminating, but
    I would suggest two things.
        First, it is imperative to continue this funding. Second,
    unfortunately, the amount of money available is unduly confining
    inquiry to government sources. Solicitations have only been asked from
    within the government. Because of the diabetes problem and other
    things, a large number of private industries are also interested in
    this research and if funding is available to expand the solicitation so
    that it reached out to private industry as well, I think you would
    accomplish yet more for the military and more broadly for the American
    public. That would cost, I think, something on the order of $10,000,000
    in the year ahead, and I would encourage you to allocate that funding
    if you can find a way to do it.
        Thank you for your consideration.

                              SUBCOMMITTEE RECESS

        Senator Stevens. Thank you very much.
        Our next meeting will be on Wednesday, June 6, to review
    the Air Force programs.
        [Whereupon, at 12:17 p.m., Wednesday, May 23, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    June 6.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                            WEDNESDAY, JUNE 6, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:05 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Daniel K. Inouye (chairman)
    presiding.
        Present: Senators Inouye, Dorgan, Feinstein, Stevens,
    Cochran, and Domenici.
        Also present: Senator Craig.

                             DEPARTMENT OF DEFENSE

                          Department of the Air Force

    STATEMENTS OF:
            HON. JAMES G. ROCHE, SECRETARY
            GENERAL MICHAEL E. RYAN, CHIEF OF STAFF

                 OPENING STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. For some of my colleagues, this may be a
    day of exuberance and celebration, but I wish to tell all of
    you that in this committee it will be business as usual. But in
    a personal sense it is a bit sad, because I have become so
    accustomed to his face sitting here, and he has been a good
    chairman, and I know he will continue to be a good chairman,
    and so if those of you come out with the word chairman and see
    both of our heads turn, do not be surprised. I can assure you
    that we will carry on in the spirit of bipartisanship, as we
    have for many decades now. I have had the privilege and honor
    of working with Senator Stevens from the day he took his oath
    in the Senate, and I see no reason why this should discontinue.
    I can assure you that the spirit of collaboration and
    cooperation will continue, and I hope that this spirit will in
    some way enhance the mission that you are called upon to carry
    out.
        So the committee is pleased to welcome you, Dr. Roche and
    the Chief of Staff, General Ryan. It is always good to see you,
    sir. Dr. Roche, it is my understanding that this is your first
    appearance before the Congress as Air Force Secretary.
        Dr. Roche. Yes, it is, Mr. Chairman.
        Senator Inouye. I trust that this will be one of your many
    productive and enjoyable meetings that you have with this
    committee.
        Today's hearing also initiates the committee's review of
    the military service programs. We are, of course, laboring a
    bit in the dark because the Pentagon's final budget request for
    fiscal year 2002 has yet to be submitted. Nevertheless, Senator
    Stevens and I felt it necessary to begin now to lay the
    foundation for review later this year.
        With that, I can assure you that this committee remains
    mindful of the challenges facing the Air Force. We know of your
    rising operating costs that continue to plague the Service,
    pilot shortages become a norm, mission-capable rates are still
    lower than what they should be, and procurement and research
    and development (R&D) funding continue to get squeezed in the
    process.
        So it is our hope, and I am sure that all of my colleagues,
    that the Department's fiscal year 2002 budget request and the
    Secretary's strategic review will meet these challenges head
    on. The Nation cannot afford to pass up this opportunity to
    fully address our national security needs for now and in the
    future. That is why I strongly urge you, as I will urge your
    counterparts in other services, not to let this opportunity
    slip away.
        Finally, the administration last week submitted a fiscal
    year 2001 supplemental appropriation request addressing many of
    the concerns I just mentioned. While we may have some questions
    today regarding this submission, let me also assure you that
    the committee is fully aware of the pressing need for these
    funds. We will work to achieve a timely resolution of this
    matter.
        Now, if I may, I would like to call upon my cochairman,
    Senator Stevens, for any opening remarks.

                        STATEMENT OF Senator TED STEVENS

        Senator Stevens. Thank you very much, Mr. Chairman, and I
    welcome your comments. I know of no American I trust more with
    regard to the future of our Armed Services than you, Senator
    Inouye, and I am delighted to be able to continue to work with
    you.
        I want to congratulate Charlie Houy, who is now the chief
    of staff of the subcommittee, Steve Cortese who is with me
    here. We will continue to work with you. We have worked
    together for more than a quarter of a century now, and I do not
    think anyone here needs for me to extol, Senator Inouye, your
    background in terms of defense, but we pledge to you we will
    continue to work with you as we have in the past, in a
    bipartisan way.
        I really can tell you that I have never waived in terms of
    my loyalty and support to you in terms of defense matters, and
    it has been reciprocal, so we have a working team that there
    should be no glitch at all in terms of defense policy as far as
    appropriations is concerned.
        I am pleased to welcome you, Mr. Secretary, here for your
    first time, and while we do not have the budget yet before us,
    as the chairman has indicated, we do believe this is a session
    to get some understanding of where you are going and what we
    might foresee, as well as we will have some questions, as the
    chairman has said, on the supplemental request for fiscal year
    2001. General Ryan and I discussed those yesterday a little
    bit.
        We are anxious to get a little of your understanding of the
    job you have taken on, Mr. Secretary, and it is nice to have a
    chance to do this early in your career. You have just come on
    board. There is a great deal of attention being paid to
    tactical aviation programs such as the F-22, the F-18, and the
    Joint Strike Fighter, which we discussed yesterday. General
    Ryan and I discussed the Comanche helicopter, and I think you
    will find that we are interested in a great many programs of
    the Air Force, particularly the tanker and air fleet problem.
        We have a new strategy in our country that demands airlift
    to be a partner with our rapidly deployable forces, and it does
    seem to me we have got a change coming, a sea change coming in
    terms of how we approach defense policies. I will welcome the
    chance to review Secretary Rumsfeld's report, and I hope we get
    it as soon as possible. I commend you both for your willingness
    to serve our Nation.
        I have to confess that my State perpetrated a little
    larceny as far as the Air Force is concerned this year. I was
    one of those who conspired to offer a position to former
    General Pat Gamble when he retired from his post as the
    Commander of the Pacific Air Forces to come home to Alaska. We
    have welcomed him, one of the significant portions of our
    State's economy in terms of transportation, as the head of the
    Alaska railroad. Your loss is our gain, and we are pleased to
    have a chance now to work with General Beggert, the Pacific Air
    Force (PACAF) new Commander. We will have to see if we cannot
    lure him up to Alaska in a little bit.
        Senator Inouye. It is our turn.
        Senator Stevens. He is your guy. All right. We will steal
    him again.
        I do want you to know that I am a little worried, as an ex-
    pilot of the Armed Services, about the status of training and
    our capability to retain pilots into the future.
        So we look forward to working with you on these and other
    matters, and again, Mr. Chairman, my congratulations, and I do
    not need to renew my pledge of fidelity. It is there.
        Thank you very much.
        Senator Inouye. Senator Cochran.

                       STATEMENT OF senator THAD COCHRAN

        Senator Cochran. Mr. Chairman, thank you. Let me first
    congratulate Chairman Inouye on the occasion of his assumption
    of duties as chair of this committee. It has been a pleasure to
    work with him closely over the years, as it has with Senator
    Stevens, who has also chaired this subcommittee.
        It is a pleasure to welcome Secretary Roche and General
    Ryan. We appreciate you being here and cooperating with our
    effort to fully understand the budget requests that are
    submitted to this subcommittee. We know that the supplemental
    will probably have requests for funding. I know the importance
    of the airborne laser program is one that has attracted
    attention from me and my staff. We are interested in hearing
    your thoughts about that program and what the future holds. We
    think it has great potential for protecting the security
    interests of this country.
        We are also very proud, in my State of Mississippi, to be
    the home for two important Air Force active duty bases, Keesler
    Air Force Base in Biloxi and the pilot training facility at
    Columbus Air Force Base. We also have the honor of being the
    State with the first Air National Guard unit to receive the C-
    17s. We are preparing for that. We understand the Air Force is
    fully supportive of this initiative. We hope that you will keep
    us advised closely of any training aides, or any Military
    Construction (MILCON) projects that we need to be aware of so
    we can provide the resources for that unit to do its job as a
    home base for the C-17s.
        Again, thank you for your cooperation with our committee,
    and congratulations to you for your excellent service.
        Senator Inouye. Thank you very much, and now it is my
    pleasure to call upon Secretary Roche.
        Dr. Roche. Thank you, Mr. Chairman, and Senator Stevens,
    Senator Feinstein----
        Senator Inouye. I did not see you come in.

                     STATEMENT OF senator DIANNE FEINSTEIN

        Senator Feinstein. That is all right, Mr. Chairman.
    Congratulations, and welcome, gentlemen. I am very happy to be
    a new member of this committee, and I look forward to
    participating.
        I want to just share with you my initial observations about
    the Air Force. I think Operation Desert Storm, and then
    Operational Allied Force, and the performance of the Air Force
    in Kosovo, really underscored its capabilities for waging high
    technology warfare, and I think looking ahead it is fair to
    conclude that the strategic environment for the next decade,
    and the threats and the challenges that may face the United
    States, are not the same as the last decade.
        Secretary Rumsfeld has suggested that we need a new and
    integrated military posture for Asia, and I think that raises
    questions about what sort of Air Force structure needs to be
    developed and deployed consistent with this new posture and
    also adequate to meet the challenges of the Asia Pacific
    region. Obviously, I am a Californian. We in the West look
    West. People in the East seem to look East.
        Now the Air Force is in the midst of a major modernization
    and transformation effort, including the development of the F-
    22, the Joint Strike Fighter, and the development of stand-off
    smart weapons. How, at what pace, and at what price this
    modernization program proceeds is going to impact Air Force
    capabilities.
        So also, given the importance and, I think, growing
    importance of intelligence in both war and peacetime
    operations, there are significant challenges that face the Air
    Force in assessing the right mix of existing planned, manned
    and unmanned intelligence, surveillance, and reconnaissance
    aircraft to most efficiently satisfy requirements for timely
    and accurate information.
        And then finally, there are the quality of life issues that
    need to be addressed, adequate funding for military
    construction to make sure the Air Force has the highly skilled
    and qualified personnel it needs, and that that personnel is
    able to maintain a very high morale.
        I understand that with the strategic review still not
    complete we may not be able to get all of the answers to our
    questions today, but these are the areas that I want to discuss
    with you, and we have prepared specific questions in each one
    of them.
        Thank you very much, Mr. Chairman.
        Senator Inouye. Thank you very much, and now, Mr.
    Secretary.
        Dr. Roche. Thank you, Mr. Chairman. Mr. Chairman, Senator
    Stevens, Senator Feinstein, Senator Cochran, I am honored to
    appear before you today for the first time as Secretary of the
    Air Force.
        I am also mindful this is the 57th anniversary of Operation
    Overlord in Europe. It is my sincere hope that this first
    hearing will mark the first of many meetings between us where
    we can work the work of the Air Force, and on behalf of the men
    and women who serve the Air Force.
        With your permission, Mr. Chairman, General Ryan and I will
    make some very short remarks, and request that our joint
    written statement be submitted for the record.
        Senator Inouye. Without objection, it will be made part of
    the record.
        Dr. Roche. Thank you, Mr. Chairman.
        Mr. Chairman, I myself will try to answer any questions you
    or the members may have of me to the best of my ability,
    recognizing that I have only been on the job for a few days,
    and I have only been asking the most important questions that a
    former naval person would ask, where is my bunk, when does the
    chow line open, and when do I get paid?
        In all sincerity, Mr. Chairman, although I am the
    tenderfoot in the room today when it comes to developing and
    defending this next year's budget for the Air Force, I do not
    expect to remain so for very long. In the meantime, I have full
    confidence in General Ryan and our truly dedicated and bright
    Air Force team to answer all of your questions, issues, and
    concerns. My pledge to you is that during my tenure, we will
    work until we have provided you with the best possible answers
    we can give.
        Before I turn it over to General Ryan, I want to say how
    excited I am to have this job, to be the Secretary of the Air
    Force, and how honored I am to have a chance to work alongside
    a thorough professional, someone who I enjoy as a person, as
    well as a military leader, and that is General Michael Ryan.
    He, Mr. Chairman, is a class act. I cannot think of a better
    Chief to train a new Secretary of the Air Force.
        Mr. Chairman, I want to thank you for this opportunity. I
    also want to thank you for your support of America's Air Force.
    The relationship between this committee and the Air Force has
    been key to our past successes. Maintaining and building upon
    these relationships I believe will be the core enablers of our
    future accomplishments. I look forward to working with you and
    the members of the committee and your staffs to help shape a
    very bright future.
        Thank you very much, Mr. Chairman.
        Senator Inouye. Mr. Secretary, I agree with you that
    General Ryan is a class act, and with that in mind, General.
        General Ryan. Chairman Inouye, Cochairman Stevens, members
    of the committee, before we get started, I would like to thank
    Dr. Roche for his commitment to serve as the Air Force
    Secretary. Although we have worked together officially for less
    than a week, I want to say how much I appreciate his expertise
    and his thoughtfulness.

                                   READINESS

        I also want to thank the committee for all you have done
    for the men and women in uniform over the past 4 years that I
    have had the privilege of being the Chief of Staff of the Air
    Force. During that time, we have seen a drop in readiness that
    has concerned us all.
        With your help, we have been able to arrest that decline,
    but much more needs to be done to regain our edge across the
    board. We still need your help to attract the highest quality
    individuals into the military service. I am happy to say this
    year we are making our recruitment goals, both in terms of
    quality and quantity. Our major challenge is retaining our best
    and brightest to stay with us for a career. Your help over the
    past years on pay, retirement, and health care, has been much
    appreciated.

                                QUALITY OF LIFE

        Quality of life issues are terribly important to attract
    and retain great people, but also so is quality of service, and
    when I speak of quality of service, that addresses the need to
    assure that we give our airmen the proper tools to do the tough
    jobs we ask them to do in places like Kuwait and Saudi Arabia
    and Turkey, and the no-fly zone enforcement, where combat
    occurs on a daily basis, and the same is true in the Balkans
    and Korea.
        Quality of service is not just about equipment with which
    they operate, but the hangars and buildings and shops in which
    they must work. We all know quality begets quality, and as you
    know we have underfunded our capital equipment and our
    infrastructure for too long, and we must turn the aging problem
    around.
        In summary, I look forward to working with Dr. Roche,
    Secretary Rumsfeld, and the Congress as we work our way through
    the ongoing strategic review, the quadrennial defense review,
    and the budgets we will submit to you in the coming months. I
    know together we can make a great difference for this Nation as
    we continue to rebuild your Air Force to meet the challenges of
    the 21st century.
        Thank you, sir.
        [The statement follows:]

       JOINT PREPARED STATEMENT OF HONORABLE JAMES G. ROCHE AND GENERAL
                                MICHAEL E. RYAN

        Mr. Chairman, members of the committee, we thank you for the
    opportunity to come before you on behalf of the dedicated men and women
    of the finest aerospace force in the world. Over the past year, your
    Air Force has continued to protect our nation's interests across the
    full spectrum of operations. From contingency operations to
    humanitarian assistance, aerospace power has been crucial to theater
    commanders for providing quick and decisive actions in support of our
    national interests. It has been almost two years since we instituted
    the Expeditionary Aerospace Force--the EAF--allowing us to continuously
    assign and deploy Aerospace Expeditionary Forces (AEF) around the
    world. Today, we have almost 87,000 airmen serving overseas, to ensure
    the security of the United States.
        Although we have the highest quality force in the world, we have
    significant concerns for our future. Recruiting and retaining the
    people we need is difficult in today's competitive economy. Aging
    aircraft and infrastructure have challenged our readiness. And, we must
    evaluate our future organization, concepts of operation, and
    capabilities in consideration of the changing global security
    environment. To address these challenges, we must recapitalize and
    modernize our force through emphasizing science and technology,
    improving our partnerships with industry, expanding our capabilities in
    space, and becoming more efficient in all of our efforts.

                                     PEOPLE

        Everything we do depends on the integrity, selflessness, and
    excellence of our people. Maintaining the right mix of both our
    uniformed and civilian personnel is essential to our success and our
    future. Your continuing support of our recruiting initiatives has
    helped us meet our recruiting goals without lowering our standards.
    That support included bonuses, adjusted pay initiatives, retirement
    reforms, and improvements in medical benefits, which helped us achieve
    our fiscal year 2000 recruiting goals, and has kept us on track again
    this year.
        Although recruiting is important to the Air Force, we are primarily
    a retention-based force because we rely heavily on our highly skilled
    and technically experienced people. Consequently, our enlisted
    retention goals are the highest among the Services. With your support
    we have extended reenlistment bonuses, increased housing allowances,
    and expanded the Montgomery GI Bill benefits, helping us successfully
    turn the corner on first-term enlisted airmen retention--rates have
    been at or above our 55 percent goal for seven consecutive months.
    However, we must focus on achieving our second-term and career
    reenlistment goals. Shortfalls in these two categories have produced
    gaps in experience that reduce both the ability to perform our day-to-
    day mission and the capacity to train new recruits. We believe the
    stability and predictability provided by our AEF rotation schedule,
    together with initiatives in pay and benefits, will move us closer to
    our retention goals.
        We've made progress on retaining our officers as well. In January,
    we were short by over 2,200 officers, but we are now on track to reduce
    that shortfall to 1,600 by September. Additionally, the aviation
    continuation pay program you supported, along with an overall reduction
    in our requirements for rated staff officers, has kept our pilot
    shortage at 1,200, even though the airlines have stepped up an already
    aggressive hiring campaign.

                                   READINESS

        We want to again thank the administration, Congress, and especially
    this committee for responding to the most crucial needs of the Air
    Force. You increased our funding to address some of our most immediate
    readiness concerns this past year, enabling us to arrest our recent
    readiness declines. Your support of the fiscal year 2001 supplemental
    will further help us maintain our readiness levels. However, we still
    need your continued support to improve our readiness.
        Your United States Air Force is currently operating and maintaining
    the oldest fleet in our history. On average, our aircraft are about 22
    years old, and getting older. An aging fleet costs more, both in effort
    and dollars, to operate and maintain. Last year, while we flew only 97
    percent of our programmed hours, they cost us 103 percent of our
    budget. Over the past five years, our costs per flying hour have risen
    almost 50 percent.
            aging infrastructure and physical plant recapitalization
        Maintaining our infrastructure and physical plant is another
    significant challenge. Over the past decade, constrained resources and
    competing requirements have forced us to use infrastructure as a bill
    payer. Your military construction budget adds have helped, but still
    leaves our plant replacement rates far short of the industry standard.
    Today, our military family homes average 37 years old, while our plant
    facilities are 40, and we have a real property maintenance backlog of
    $5.6 billion. The growing repair costs of our aging facilities directly
    affect our ability to provide a quality work environment for our
    people, further contributing to our retention and readiness challenges.

                                 MODERNIZATION

        As noted above, our aircraft are getting older. In fact, in just 15
    years their average age will be nearly 30, even if we execute our
    planned modernization program. Old aircraft need more frequent and
    substantial repairs, driving up readiness costs. This, in turn, reduces
    the number of aircraft available for missions, making higher demands on
    the remaining fleet. Our space-based systems, space launch systems, and
    space ranges are caught in a similar vicious cycle.
        Pending the results of Secretary Rumsfeld's strategic review, we
    need to aggressively modernize our capabilities. Advances in continuous
    global surveillance, directed energy, and unmanned aerial vehicles will
    be coupled with our ongoing aircraft, precision-guided munitions,
    information, and space initiatives to radically enhance the application
    of aerospace power. The Air Force of the future will continue our
    tradition of innovation to assure we can meet and exceed the
    expectations of the nation.

                                   CONCLUSION

        In the short-term, we are challenged by the problems of recruiting
    and retaining a quality workforce in a competitive economy and
    improving our readiness impacted by an aging fleet and decaying
    infrastructure. In the long-term, working with you, the Office of the
    Secretary of Defense, and the other Services, the Air Force will
    evaluate the most appropriate aerospace strategy for the evolving
    security environment. We will find better ways to organize, while
    improving the effectiveness and efficiency of our processes, including
    leveraging the best business practices found in both government and
    industry. Finally, the Air Force must pay special attention to the
    shrinking military-industrial base and evaluate ways to improve its
    current acquisition processes.
        The statements made in this testimony are contingent upon the
    results of Secretary Rumsfeld's strategic review. We ask you consider
    them in that light.
                                     ______

                   BIOGRAPHICAL SKETCH OF DR. JAMES G. ROCHE

        Dr. James G. Roche is the 20th Secretary of the Air Force. In this
    role, he is responsible for the affairs of the Department of the Air
    Force, including the organizing, training, equipping, and providing for
    the welfare of its nearly 355,000 men and women on active duty, 180,000
    members of the Air National Guard and the Air Force Reserve, 160,000
    civilians, and their families. As head of the Department of the Air
    Force, Secretary Roche is responsible for its functioning and
    efficiency, the formulation of its policies and programs, and the
    timely implementation of decisions and instructions of the President of
    the United States and the Secretary of Defense. With an annual budget
    of approximately $71 billion, he ensures the Air Force can meet its
    current and future operational requirements.
        Prior to this appointment, Secretary Roche held several executive
    positions with Northrop Grumman Corporation, including Corporate Vice
    President and President, Electronic Sensors and Systems Sector. Prior
    to joining Northrop Grumman in 1984, he was Democratic Staff Director
    of the U.S. Senate Armed Services Committee.
        Secretary Roche's previous military service spanned 23 years in the
    United States Navy, retiring with the rank of captain in 1983. As a
    naval officer, his assignments included Principal Deputy Director of
    the State Department's Policy Planning Staff; Senior Professional Staff
    Member of the Senate Select Committee on Intelligence; and Assistant
    Director for the Defense Department's Office of Net Assessment. He
    commanded the U.S.S. Buchanan, a guided missile destroyer, and was
    awarded the Arleigh Burke Fleet Trophy for the Navy's most improved
    combat unit in the Pacific in 1974.
        Secretary Roche has served as a member of the Secretary of
    Defense's Policy Board and is a member of the Council of Foreign
    Relations and the International Institute of Strategic Studies. Dr.
    Roche has been awarded various campaign ribbons and military medals,
    including the Legion of Merit.

                                   RECRUITING

        Senator Inouye. I thank you very much. General, one would
    expect the committee to begin its inquiry with weapons systems,
    but Mr. Secretary, we believe that the most important element
    in the Air Force would be the personnel.
        In fiscal year 1999, we had problems in reaching the mark.
    In fiscal year 2000, we did meet our mission, but at extra
    cost. I note that in the budget there is a request for $33
    million. Can you tell the committee what sort of new program
    you may have in recruiting and retention?
        Dr. Roche. Mr. Chairman, I will defer to General Ryan on
    what may be in the budget. I can tell you that my second goal--
    when I was confirmed I had four principal goals, one was to
    work with the Air Force to adapt a strategy for this
    millennium. This is the first year of the new millennium. The
    second was careers, because I believe if we can work on the
    retention problem we will also be helping our recruiting
    problem.
        We are losing people in mid-career, and that means that we
    have to address that. This committee and the Congress has
    helped in financial terms. I think there is more we can do in
    terms of career planning, mentoring, a number of other things,
    and General Ryan and I are of one mind on this. We are both
    seized with the fact that we invest an enormous amount of time
    and money in these very high caliber people. We cannot have
    them leave us. We just cannot have them leave us the way they
    are leaving us, and so we intend to make this a major effort
    for the Air Force in the next couple of years.
        Principally on retention, we believe a force that retains
    is a force that will attract.
        Senator Inouye. General.

                          SUPPLEMENTAL APPROPRIATIONS

        General Ryan. Yes, sir. In speaking directly to the
    question on supplemental increases we asked in the area of
    personnel, people programs, was a very large request in that
    supplemental--$400 million to take care of our health shortages
    that we had this year, payment for health needs.
        Also on the people side, it went toward our basic allowance
    for housing (BAH) that we need to continue to fund, along with
    offering bonuses to many of our folks that we have a hard time
    retaining--quite honestly, using those budgets to supplement
    their incomes to attract folks to stay for a second and third
    tour in the United States Air Force.
        We also had upped the number of recruiters and recruiting
    programs. So that is primarily where that money is focused.
        Senator Inouye. I was just advised that the joint
    leadership of the Senate wants all of us to assemble in the
    Senate by 11:15. I believe there is an important announcement
    on reorganization, but we will continue here.

                                      F-22

        May I inquire about the F-22, General? It is still the
    cornerstone, I believe, of Air Force modernization. We have had
    cost problems, test problems, uncertainty as to the total
    number. What is the present situation? I realize we do not have
    the budget request before us, but what do you believe we can
    anticipate?
        General Ryan. Yes, sir. Currently, the program is
    structured around the buy of 339 aircraft, F-22s. We are
    studying in this strategic review the number of those kinds of
    capabilities that we need for the future, and what will meet
    those needs.
        As you know, the F-22 is a huge leap in capability, an
    airplane that can supercruise at well above 1.5 mach, has very
    good legs, has stealth capabilities that are revolutionary, so
    the need for this airplane I think is very clear. The numbers
    will be the question as we go through this review.
        It is in testing right now, as you know, and doing very
    well. In fact, its signature, its capability to supercruise,
    its avionics capability, and its aerodynamics capabilities are
    right on the mark, as we predicted them, in fact, are better.
        We are behind in testing, but testing is something you do
    not want to rush. It is not something that you put a time line
    to. What you do is, you put events to, get through events so
    that you do this very structured way, and so I think the
    program is in very, very good shape. We are behind in testing,
    but we are not going to rush that at the expense of safety, or
    missing something as we develop this airplane.
        Dr. Roche. If I may, Mr. Chairman, I absolutely agree with
    General Ryan, the F-22 has the character of really altering
    war. It is the first time we have had the capability to be over
    an enemy's territory for any length of time, and because of
    supercruise and dramatic avionics, to be able to clear the
    skies. We think that will be important for the long run. Also,
    it will have the capacity to do certain attack missions which
    will be rather unique.
        The test program has been reviewed because of the cost caps
    in the Engineering and Manufacturing Development (EMD) part of
    the program, and once reviewed, an outside group was brought in
    to take another look at it, and we felt, and General Ryan and I
    completely agreed, to add back different tests in order to make
    sure that this system is exactly the way it ought to be for the
    price that we are paying for it and for the program in general.

                              F-22 TESTING PROGRAM

        Senator Inouye. Not wishing to rush the testing program,
    but about how long do we have to wait?
        General Ryan. Well, we will probably be delayed in our EMD,
    which was supposed to end its testing in the November time
    frame. We think we are going to be 6 to 7 months delayed to get
    through all the test points that we thought were important to
    make sure it was ready to go into operational test and
    evaluation. That is about the magnitude of the slip.
        Part of that is due, quite honestly, to the fact that we
    received the aircraft late for a number of producibility
    reasons, but that is the reason that you go through the
    engineering and manufacturing stage, to make sure you nail
    those before you bring this airplane on in production, and we
    think we have it pretty well nailed now. We just want to make
    sure this testing is done to the degree that we have great
    confidence that the airplane will be produced as the great war
    machine it is going to be.
        Senator Inouye. Thank you. Senator Stevens.
        Senator Stevens. Thank you, Mr. Chairman.

                                      C-17

        As I indicated in my opening statement, I am a little
    worried about the C-17. We originally thought we were going to
    get 210. I think we have got somewhere around 80 now. We had a
    procurement rate for this fiscal year of 2002 that we are
    working on, 15, but I am told that the outyear profile
    indicates just 9 for 2003, 4 for 2004, and then back up to 8 in
    2005. The stability of that line, it worries me a great deal,
    and I wonder about that.

                          MOBILITY REQUIREMENTS STUDY

        My staff tells me that the mobility requirements study for
    fiscal year 2005 established a 54.5 million ton mile per day
    requirement, against a Department of Defense (DOD) capacity at
    the present time of 49.7, if it had 127 C-17s. In fact, the
    outside study says that probably we would require another 50 in
    addition to the 120.
        Further, I am informed Boeing has offered to sell the Air
    Force 60 C-17s on a multiyear procurement at a rate of $152
    million per aircraft, a favorable rate compared to the past.
        Have you got currently, General, an estimate of the
    requirements in this period of time that we are talking about,
    fiscal years 2002 through 2005? What do you think the
    requirement really should be?
        General Ryan. Yes, sir. The number you quoted out of the
    mobility requirement study 2005 was derived by looking at two
    major regional contingencies and then seeing what kind of
    airlift requirement during the search periods were required to
    be able to fight those regional contingencies with a high
    expectation of winning.

                             MULTIYEAR PROCUREMENT

        The number of aircraft we currently have in the program are
    120 on a multiyear procurement and then another 15 that we have
    added to the budget but have not been able to go forward yet
    and get a multiyear procurement on, and the reason we have not,
    and we need to do that this year, is the additional requirement
    that driving us from the 49.7 to the 54.5 million ton miles per
    day has produced.
        Quite honestly, that number is almost independent of two
    near simultaneous, because we do not have an airlift force
    structure that can do two wars at once. We have a one airlift
    force, and so whether in our strategic review we change the
    paradigm from two major contingencies to one, and a series of
    smaller conflicts, will probably not make much of a difference
    in the demand for airlift at the high end and high time during
    these conflicts. So as we work our way through here, we are
    looking at how many more C-17s we would need to meet that
    requirement. For every, about 0.1 million ton miles per day,
    you can add a C-17, so 50 is not off the mark if you want to
    meet the total requirement.
        We do not meet the total requirement in a lot of other
    places where we have specified it, so this will be, for us,
    during the strategic review and then during the Quadrennial
    Defense Review (QDR) that follows, one of the main topics of
    how much more airlift can we afford, how much more do we need,
    and what are the risks between those two?

                         MULTIYEAR PROCUREMENT SCHEDULE

        Senator Stevens. Have you had a chance yet, Mr. Secretary,
    to take a look at this question, and what we should do about
    the offer of Boeing on the multiyear procurement schedule?
        Dr. Roche. With respect to this particular offer from
    Boeing, Senator Stevens, I have not, but I have looked at the
    C-17 program in general, and it is a very good program. The
    plane is doing very, very well.
        One of the things that Secretary Rumsfeld is having us try
    to think through is, if we go and look at just the two Major
    Theater Wars (MTW's) it tells you one thing, but in fact our
    forces are being used in other ways, as well as having to be
    prepared for that, and the sizing criteria may be more
    appropriately done if we pick up some of these other
    requirements to be in Northern Watch, Southern Watch, Kosovo,
    et cetera.
        My sense is that airlift will be something that will not be
    shunted in this. It is one of those capabilities that is in
    great demand, and our sense is the C-17 is a winner, and I
    think that we would like to look for more of them.

                    AIRLIFT REQUIREMENTS OF OFFSHORE STATES

        Senator Stevens. Gentlemen, the chairman and I come from
    the Pacific. By just our geographical location we are concerned
    about the Pacific. We provided in fiscal year 2001 $3.5 million
    for planning and site assessment for both Hawaii and Alaska
    major air bases just before stationing C-17 in support of the
    rapidly deployed forces in both Hawaii and Alaska.
        Mr. Secretary, have you looked at that in terms of this
    current strategic review with regard to the airlift
    requirements of the off-shore States?
        Dr. Roche. No, sir, I have not yet, but clearly as we go
    through the Quadrennial Defense Review and if, I believe we
    will give the rebalancing to the Pacific that has been
    discussed, then certainly that will be an issue and we will be
    looking at, and getting back to you on it.
        Senator Stevens. Well, General, can you give us an update,
    if you do not have it now, for the record, anyway, of the
    initiative that was in the 2001 defense bill, and the
    infrastructure requirements for the future that would be
    necessary for carrying out that initiative?
        General Ryan. Yes, sir, and I will get back to you on the
    record on what we have done to do the surveys that were in that
    request.
        Senator Stevens. It seems that our forward-deployed forces
    would be stranded forces unless we have C-17 capability. I know
    of no other airlift that would be available in the future to
    take the forces there on a forward-deployed status into the
    Pacific region to meet crises, unless we have C-17s. Do you
    agree with that statement?
        General Ryan. Yes, sir. How quickly we can--we can get the
    C-17s to most locations before the forces can be generated, so
    I agree with the statement that we do need to be able to
    rapidly move our forward-deployed forces into the areas that we
    have planned for them to fight.

                                      C-5

        Dr. Roche. But I think the General will agree, Senator,
    that it is not just the C-17. We have other assets like C-5s.
    We will put personnel in 747s. The whole lift is a large
    portfolio of capabilities, but the C-17 is clearly a winner in
    this portfolio.
        Senator Stevens. The C-5s are not on either Hawaii or
    Alaska, either. They would come in from Nebraska.
        Dr. Roche. But they would be bringing a lot of stuff from
    CONUS going forward, too, sir.
        Senator Stevens. But our forces are in Hawaii and Alaska,
    forward-deployed to go out to the crisis first.
        Dr. Roche. Yes, sir.
        Senator Stevens. Unless we have some airlift, what is the
    use of having them there?
        Dr. Roche. We agree, sir.

                                 KC-135 TANKERS

        Senator Stevens. On tankers, I am also a little worried
    about the tanker situation. We currently have 550 KC-135
    aircraft, about one-third of that fleet is in the depots for
    maintenance repair, one-third of the fleet is nonmission
    capable on any given day because of the ages of the 135, both
    age and corrosion and depot-time and costs are exceeding the
    Air Force's projections now by a factor of three. It really
    means we are spending more on these aged aircraft, on keeping
    them going, than we would spend if we started a line to procure
    new tankers.
        Boeing again--and I am no stockholder in Boeing. They used
    to be my neighbor. They are moving now, as a matter of fact,
    but they are offering the 767 tanker, which has a great
    potential for the future. What about that, General Ryan? What
    is the challenge of the KC-135 maintenance, and aging
    situation, and what do you think about a commercial derivative
    tanker?
        General Ryan. Yes, sir. First of all, the aging issue. The
    average age of our KC-135 fleet is 38\1/2\ years old. They were
    built over approximately a 10-year period. That means that as
    we come to the time when they become no longer viable, it will
    happen over a 10-year period. Tankers will be a requirement for
    the foreseeable future. I see no technologies out there that
    will allow us to decrease the amount of tanker force we need to
    project power around the world.
        Our 135 fleet is costing us more to put through depot. It
    takes us almost three times as long as it used to, because
    every time we open the airplane up we find some structural
    problems that we need to fix, and we have a vanishing vendor
    base for putting onto the airplane older systems that they have
    on them today. That is why we have upgraded the airplane in
    many ways over the years with a modification we call Compass
    Radar and GPS (Pacer CRAG), which did the avionics in it.
        We have reengined most of them with the CFM-56 engine, but
    this airplane eventually is going to have to be replaced, so we
    are looking out in about the next 15-year time frame to begin
    that replacement. We have an offer from Boeing that was given
    to us on a 767 derivative, which we are evaluating.

                                    BOMBERS

        Senator Stevens. Mr. Chairman, I could go on and on on this
    problem. The bomber situation is the same. We are still
    maintaining the B-52s that Harry Truman fought the Congress
    over and bought, and we have cut down our B-2 line to a
    perilously low figure. I think it is closed now almost, is it
    not?
        Dr. Roche. It is closed.
        Senator Stevens. No new production, and yet it is clear
    that the cost of trying to maintain these aging aircraft across
    the board for our Air Force are eating our lunch. We are not
    getting anything new, and it is costing more and more to repair
    the old ones.
        I hope that this review that the Secretary has going on
    really emphasizes, really looks at and emphasizes the problem
    of aging aircraft, and our readiness capability. One-third of
    the tankers cannot get off the ground, and you do not have
    enough to start with. I think that is probably--the aging
    problem for our Air Force is, next to the pilot retention
    problem, the two greatest problems for the Air Force. I hope we
    can work together on it.
        Thank you, Mr. Chairman.
        Senator Inouye. Thank you. Senator Cochran.

                             AIRBORNE LASER PROGRAM

        Senator Cochran. Mr. Chairman, thank you. I mentioned my
    interest in the Air Force's Airborne Laser Program, and I would
    like to have your reaction to the importance of that program to
    our Nation's security. I also note that the supplemental has a
    request in it for $153 million for the program. In part it is
    to pay for additional costs that were sustained because of a
    technical problem that has now been overcome, I am told, and
    also in part to pay for work that has been moved forward on the
    schedule.
        They are projecting an intercept effort in fiscal year 2003
    time frame to keep that program on schedule. I understand that
    we need to try to make up for some of the cuts that had been
    imposed on that program in the last administration. Some $500
    million had been removed from the outyear budget projections.
        What is the need, as you see it, for our support for this
    program to keep it on schedule and to help make sure that it
    maintains the goals that have been set for it by the
    programmers?
        General Ryan. Yes, sir, as you know, we did in the
    supplemental put in 153 more for the airborne laser. We think
    it is a revolutionary capability. We think to be able to put a
    high-powered laser, to be able to acquire, track and destroy
    missiles in their ascent phase is terribly important to future
    capabilities in defense and force protection.
        We also think it may have some other capabilities, too,
    that we have not really addressed, and so far we think we know
    the physics of all this. It is the engineering that we are
    struggling with as we build the first prototype to be able to
    have the shoot-down that you mentioned in, we say calendar year
    2003. That gives us a little more wiggle-room on the back end,
    but we certainly want to do that and hold to that schedule, and
    hence that is the reason that we put more money into it.
        We think this is revolutionary capability, and it also
    helps us with other kinds of applications of directed energy,
    because the pointing, tracking focus of the energy can lead us
    down a lot of paths that will revolutionize some of the ways we
    wage war.

                                X-33 SPACE PLANE

        Senator Cochran. There is another program that has been
    supervised and operated by the National Air and Space
    Administration (NASA) up to now--it is the X-33 program. It is
    the space plane, so-called by some--the engine testing occurs
    down at the Stennis Space Center in Hancock County,
    Mississippi. It seems to me that this is a program that affords
    the Air Force an opportunity to assume stewardship of a
    program. NASA has not got a proposal for continuing this
    program, even though it is 75 percent complete. Ninety-five
    percent of the parts for the space plane have been delivered.
    The investment to this point is $1.3 billion.
        What I want is your reaction to having the Air Force assume
    stewardship of this program, and carry it forward. Mr.
    Secretary, do you have any opinion about that at this point?
        Dr. Roche. I have two preliminary opinions, Senator. One is
    that in capability, this could be a very interesting system.
    This is the sort of research you do now that you work on for a
    very long time in order to develop a capability. It is an
    investment in the long term future. It has to trade against
    other priorities. Mr. Goldin and I are going to be meeting on
    this, and I am sure this will be one of his main topics in the
    next couple of weeks.

                              PILOT TRAINING BASES

        Senator Cochran. My last question has to do with pilot
    training bases. When we went through the last base closure
    round, Base Realignment and Closure (BRAC), we were told that
    the base at Columbus, Mississippi, was the number one pilot
    training facility in the country, according to the Air Force,
    and there are now three bases being used by the Air Force for
    training pilots. I am told that there is a shortage of pilots,
    that we have classes that are full. The special under graduate
    pilot training bases are operating at maximum capacity right
    now.
        What occurs to me is, if we have a base closure round,
    would the Air Force consider suggesting that there be certain
    classes of facilities that would not be included in the request
    for closure?
        I mean, if we know going in that we have a shortage of
    facilities for trained pilots, why would you put a pilot
    training facility at risk for having to go through the agonies
    that these communities go through to say this is an important
    facility, the community supports it and all the rest, when we
    already know all that? Why go through the business of the
    stress and strain of base closure with those facilities? Could
    you not just exclude them as a class?
        General Ryan. First, you are absolutely correct, Senator,
    that we are in a pilot deficit in the United States Air Force
    to the tune of about 1,200 pilots, about 9 percent short. We
    are at mass production now on pilots, with the infrastructure
    that we do have in our training bases. We will continue to
    produce pilots, because it is not only an Air Force need, I
    believe it is a national need, and Senator Stevens and I have
    had this conversation about the national requirement for
    pilots.
        On the base closure side, I think that we need to look at
    not just the present, but well out in the future, if we do have
    a base closure round, to make sure that the bases that we have
    meet all the requirements we need for the future, and that is
    nonencroachment by housing, places to operate the aircraft in
    air space that is near the air base, having ranges that are
    close by that we can operate in and that we can figure for the
    next 50 or so years we will be able to operate those bases, so
    we take all that into account as we look at the training bases.
    The training bases, for sure, are very, very important to us.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Inouye. Senator Feinstein.
        Senator Feinstein. Thank you very much, Mr. Chairman.
        Mr. Chairman, if I might, I have got 22 questions. I would
    like just to submit them to you and perhaps the General could
    answer them at his convenience, which hopefully will not be too
    long off.

                            NEW THREATS AND MISSIONS

        General, let me ask you this question. How do you
    characterize the new security environment, the new threats, the
    missions that the Air Force might face in 2015, 2020, using the
    last decade as a frame of reference? What additional
    capabilities, what additional changes in posture or structure
    do you feel will be necessary to assure that the Air Force can
    perform at high level?
        General Ryan. First of all, if you go back 15 years, you
    would find it very hard to find any consensus on the prediction
    of what would happen in the next 15 years.
        Senator Feinstein. But take the Balkans, take the Middle
    East as examples of use in a regional conflict.
        General Ryan. Right. I would say that we lost our reliable
    enemy against which we force-structured during that time, the
    fall of the wall, the crash of the curtain. We never predicted
    that we would be in a major theater war in the desert. We
    certainly did not predict that we would have two major air
    operations that occurred right in the middle of Europe, in both
    Bosnia and Kosovo. We never thought that we would be in those
    locations still.
        So predicting what is going to happen in 2015, I think
    takes a lot more than a ouija board and looking back on the
    past decade, but the past decade does give us some clue about
    the kinds of capabilities that we will need for the future.
        I think there is no question that this Nation of ours will
    be involved worldwide globally in its economy, and our
    prosperity will depend on the stability of this world, that of
    not only the United States but our allies and our friends and
    trading partners, and that we, the superpower, will be called
    on in the future, in a very uncertain future, to try and quell
    conflicts and fight wars, if necessary, and so our ability to
    move rapidly is, I think, the first piece of a capability-based
    strategy for the future, and our ability to have systems that
    can operate across the spectrum, from humanitarian operations
    all the way to major theater wars are terribly important.
        Our ability to reach far will be important, our ability to
    have vigilance around the globe will be important, so it is
    those kinds of systems that we are looking at in this
    Quadrennial Defense Review we are about to enter in the
    strategic environment. I think that aerospace power will play a
    very large role in that future world no matter where the
    challenges come from.

                                   TERRORISM

        Senator Feinstein. Let me ask you to include in that an
    asymmetrical threat, irregular force, militias, terrorists--I
    serve on the Technology and Terrorism Committee, and on
    Intelligence--and one of the issues that has been emerging in
    reports is a very deep concern about the impact of terrorism in
    the future in the United States. What role do you see the Air
    Force playing to prepare for such a thing?
        General Ryan. I think that we do have a huge threat that is
    very hard to define, because we are an open Nation. Our
    security precautions are balanced against the rights of the
    individual in this Nation to have the freedoms that this
    Congress has given them.
        I think that it will be terribly important that we in the
    future are able to focus on groups, and provide information on
    these groups around the world, to be able to have the tell-tale
    signs that something is going to occur. I think that those
    kinds of abilities, and then dealing with them as the event
    approaches, moving rapidly to stop it, to prevent it, to deter
    it, will be issues that we have to put a lot of thought to
    because of the balance against the freedoms that we have in
    this Nation.
        The Air Force's involvement in that will probably be, quite
    honestly, in the rapid movement to different areas, whether it
    is to deter it, to quash it, or to deal with the consequences
    of a terrorist act in this Nation.
        Dr. Roche. Senator, if I may.
        Senator Feinstein. Please, Mr. Secretary.
        Dr. Roche. I agree with General Ryan. It is interesting,
    the number of questions you have asked, and the last two
    questions, are key ones that Secretary Rumsfeld has been asking
    both of us and our colleagues to grapple with, including the
    asymmetric ones and terrorism, and this is terrorism outside,
    this is terrorism inside. What do you do if something happens
    inside the United States? What is the role of the military in
    what is otherwise thought of as a police action? How can we
    support other agencies?
        But it is clear that the business of the Air Force is
    global reconnaissance and strike, and while we do not talk
    about it very much openly, our space programs, and the Air
    Force space programs, and now we are the executive agent for
    the building, for the Pentagon in space, we will be providing a
    lot of intelligence, a lot of situational awareness to
    ourselves and to the other services and to decisionmakers, so
    the Air Force's role in this subject is, in fact, going to be
    an increasing one, not a decreasing one, and then we will have
    situations where the strike part of global reconnaissance and
    strike may be called upon by the President and we will be
    prepared to take that action, too.

                                      B-2

        Senator Feinstein. One last question and then I will
    desist. I followed the B-2 with some interest, and followed its
    work in Operation Allied Force. What is your assessment of the
    performance of the B-2, and has this assessment in any way
    changed the way the Air Force is thinking about the role that
    the B-2 may play in the future?
        General Ryan. Our assessment was, the aircraft performed
    almost flawlessly. It was able to perform a mission 32 hours in
    duration, flying a round robin from the United States to Kosovo
    and back, and executing very, very well. It is a centerpiece,
    quite honestly, of our capability to project power now, and it
    will be in the future.
        Senator Feinstein. The reason I asked is, you know, when I
    came to the Senate, it was: ``the silver bullet,'' and then
    that dropped way to the bottom shelf, and maybe cost was part
    of that assessment, but it no longer was a priority for the Air
    Force. Are you saying that it has become a priority for you?
        General Ryan. It is a centerpiece of our current force. We
    have 21 B-2s operating in the force today. They are in every
    operation that we conceive in the future, where we have major
    combat. It will be part of that force.
        Dr. Roche. And, ma'am, there are extensive upgrades being
    planned for the B-2 both in avionics, and also to put smart
    munitions on board.
        It is in the not-too-distant future where 10 of these
    aircraft can drop an enormous amount of weaponry in one pass,
    each weapon being very, very accurate, and then we have plans
    going even beyond that to smaller, even more accurate weapons,
    which will make each B-2 sort of like an aircraft carrier in
    the sky in terms of what it can do.
        Senator Feinstein. Thank you. Thanks very much, Mr.
    Chairman. I appreciate it.
        Senator Inouye. Thank you. Senator Craig.
        Senator Craig. Mr. Chairman, thank you very much.
        Let me ask unanimous consent that my full statement be a
    part of the record.
        Senator Inouye. Without objection.
        [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 congratulate Dr.
    James Roche for being newly confirmed as Air Force Secretary,
    and thank Air Force Chief of Staff, General Michael Ryan for
    the support the Air Force has given not only Mountain Home Air
    Force Base, but the research and development initiatives at
    Idaho's various universities. I believe that Idaho's shares a
    unique partnership with all military men and women, who are
    committed to our nation's defense and make daily sacrifices in
    the service of their country.
        However, our status as a super power shouldn't make us
    complacent. Our nation must consider future vulnerabilities. As
    national centers of academic excellence in information
    assurance, the University of Idaho and Idaho State University
    look forward to working with the Air Force in preventing
    cyberbased disruption and attacks.
        But, let us not forget the accomplishments of our
    ``gunfighters'' of the 366th wing. We in Idaho our proud of the
    Air Force's premier Air Expeditionary Wing, and want you to let
    us know if there is anything that we can do to support the
    base.
        I believe that Mountain Home is key to the Air Force being
    able to implement the expeditionary aerospace force structure.
    As the home of the Aerospace Expeditionary Forces Battlelab and
    the enhanced training range, they are critical to achieving
    operational readiness, which is essential to air superiority.
    Because of the battlelab, they able to identify and rapidly
    proves the value of innovative ideas for the aerospace
    expeditionary forces throughout the full spectrum of warfare.
    The enhanced training range provides realistic, flexible, and
    efficient training scenarios while minimizing environmental
    impacts associated with readiness training. I feel that our
    training range is a premier air combat range which is
    efficient, cost effective, and most importantly, will allow the
    men and women of this nation's military to prepare to fight the
    next war, not the last, with fewer combat losses through
    improved training.
        I commend the Air Force for 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 are
    addressed and effectively handled. I encourage you to let me
    know if there is anything that I can do to assist the Air Force
    with any issues that might come up.
        As I have mentioned to Gen. Ryan, in our meeting a few
    weeks ago, I am pleased to see that Mountain Home Air Force
    Base is being considered for the beddown of the F-22 raptor. I
    hope that the Air Force would consider us for the next beddown
    location. As the home of the expeditionary aerospace force,
    which is the first to deploy anywhere in the world when a
    conflict erupts, the battlelab, and the newest and best day-to-
    day training range in the United States, Mountain Home Air
    Force Base is the most logical choice for bedding down an F-22
    unit.
        As both of you gentlemen know, the global strategic
    landscape is constantly changing. Not only are American forces
    required to project themselves further and faster than ever
    before, but the threats they encounter are changing as well.
    Regional powers such as Libya, Iran, Iraq and North Korea
    continue to update their arsenals with new technologies, which
    could pose a threat to our forces and to our allies in the
    future. U.S. military technology must meet the challenges that
    these regional threats could pose.
        This is particularly evident in the areas of surface-to-air
    missile (SAM) technology and fighter aircraft technology, the
    best of which is designed by the Russian Federation and then
    sold to some of these regional threats.
        That is why it is so important that we support the
    production and deployment of the F-22. With its superior flight
    characteristics and stealth technology, the F-22 will enable us
    to maintain our air superiority, which will serve as an
    additional deterrent to potential regional threats. And while
    the new Joint Strike Fighter will be a valuable asset in the
    years to come, it should not be viewed as a substitute for the
    F-22. Therefore I urge my colleagues not to short-order vital
    equipment like the F-22.

                          MOUNTAIN HOME AIR FORCE BASE

        Senator Craig. General Ryan, it is good to see you again,
    and congratulations, Mr. Secretary. I am pleased you are in
    front of us today as our confirmed Air Force Secretary and I
    want to invite you to come sit down with me and the Idaho
    congressional delegation along with General Ryan in order to
    put the final touches on what we think and what I know you know
    is a premier training range that has just been expanded in
    Idaho at Mountain Home Air Force Base.
        We really have not finalized all of the details in working
    with some of our Federal land agencies. I want to get those
    complete, get the new Director of the Bureau of Land Management
    (BLM) in to make sure that it is complete, and that there is no
    attempt at further encroachment into that facility, because, as
    I think we all know, it is really a grand opportunity both in
    air space and good weather flying time, and now with their new
    high tech facilities, the capability of the Air Force can
    expand through that training. I want to do that, and do that as
    soon as possible.
        I was at the base last weekend to meet our new commander
    and to look at the facilities, to look at the 366 Air
    Expeditionary Wing, and all of its flexibility, and I think we
    are all pleased with the performance of that facility and that
    wing.

                                  F-22 BEDDOWN

        I must also tell you that we are preparing to make a very
    good case for the next bed-down location for the F-22s. We will
    keep putting that on the record as we work with all of our
    colleagues, because we see that as a valuable mission and
    resource for the Air Force, and I am pleased that you think we
    can compete for that mission effectively.
        Mr. Chairman, I do have to get to the floor, but I do want
    to thank both of you. I look forward to working closely with
    you, Mr. Secretary, and getting to know you better, and getting
    to have you know the only major military installation in the
    entire State of Idaho, Mountain Home Air Force Base, and how
    much we appreciate its presence there.
        But we thank you and, General, thank you for being here.
        General Ryan. Thank you, Senator.
        Dr. Roche. Thank you.
        Senator Inouye. Thank you very much. Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman. I
    understand that I missed a marvelous pledge of bipartisanship
    that you all have made on behalf of this committee towards the
    defense of our country, and I thank you both for that spirit,
    and hope that I can be one who is a team player on board.
        Mr. Secretary, I do not know you very well, but welcome.
        Dr. Roche. Thank you very much Senator.
        Senator Domenici. General, it is good to see you again.

                               BUDGET INFORMATION

        Mr. Chairman, have we asked the witnesses when we might
    expect the budget information that would permit us to do our
    work?
        Senator Inouye. Not specifically.
        Senator Domenici. Might I ask?
        Dr. Roche. Senator, I came to this hearing from another
    meeting at the Pentagon. We are trying to put together the
    amended budget so as to show Secretary Rumsfeld when he returns
    from Europe. I certainly cannot speak for the whole Department
    as to when it will come over. I know that there is intensive
    work on it right now, for the amended 2002 budget.
        Senator Domenici. You understand that the way the budget is
    now, that is, the budget plan, you are currently plugged in for
    the President's number, but this committee can wait for you to
    present the new approaches, at which time they have authority
    to accept it all in toto, or sum, and it would be added to
    their allowance. That is the way we are expected to do things.
        So it seems to me that while it is very important to
    rethink the entire military from top to bottom, or whatever is
    going on, it is pretty important that we know what is expected
    of the Congress this year at a reasonable time.
        Dr. Roche. Yes, sir, I understand, and we have a couple of
    things going in parallel. We have the supplemental, and the
    philosophy the Secretary has asked us to follow is to use the
    supplemental to just try and stop any bleeding that there might
    be in maintenance, to try to restore the flying hours, deal
    with our contractual operations for the most part.

                            FISCAL YEAR 2002 BUDGET

        His philosophy that he has instructed us to work on so far
    on the amended 2002 budget is to try to get to a position where
    we will not be managing by supplementals year after year after
    year, but to try and put things right so as to be on a solid
    business foundation for the 2002 budget, and then as to whether
    or not there will be decisions associated with the longer run
    on programs in the 2002 amended budget, or wait until the 2003,
    is something he has not yet decided, but we are striving to put
    this on a businesslike basis so that when we come forward with
    an amended 2002 budget, we will not have to worry about hitting
    you with a supplemental, unless real reasons for a supplemental
    come about, sir.
        Senator Domenici. Mr. Chairman, I have a summary that I
    would like to put in the record, and some questions I would
    like to put in the record, and I would assume that with the new
    Secretary this has been an opportunity for Senators to brag
    about their States in reference to being partners with the Air
    Force.
        Dr. Roche. Properly so, Senator.
        Senator Domenici. I just want to say that I do not want to
    do that today, because I would have to take up too much time of
    the committee.
        I do want, however, to remind both of you that not only do
    we have Air Force bases for America here, but we have Air Force
    bases where we train Singapore pilots with airplanes.
        Dr. Roche. I know.
        Senator Domenici. We have a wonderful base where we also
    train the Germans.
        Dr. Roche. I know.
        Senator Domenici. And I am just wanting to lay before you
    that when you have got a good thing, do not change it.
        When you have got a good thing, if there is more of it, go
    ahead and put it where it already is.
        Dr. Roche. Senator, I can see that from my days working for
    Scoop Jackson, that your persuasiveness has remained as intense
    as ever, sir.
        Senator Domenici. Yes, and they say I have gotten older,
    but that is probably right. I cannot avoid that, but I have
    learned a little bit along the way, too.
        General, it is nice to see you, and we welcome you when you
    visit New Mexico, and look at our three air bases that are
    there, plus our laboratories, all of whom work in behalf of the
    defense of our Nation.
        Thank you, Mr. Chairman.
        Senator Inouye. Thank you very much. Ordinarily, as we all
    know, these hearings would continue until about noon or
    thereafter but, because of the circumstances of this day, we
    have been requested to be present in the chamber for the
    reorganization. With that in mind, Mr. Secretary,
    congratulations on your first appearance, and we look forward
    to working with you, sir, and General, it is always good to see
    you here.
        Senator Stevens. Mr. Chairman--General Ryan, unless we call
    you up again, it is your last shot at us.
        Senator Inouye. Oh, really?
        General Ryan. Yes, sir. My 4-year tour will be over 1
    October.
        Senator Inouye. Do you want another hearing, because this
    was abbreviated.
        General Ryan. Sir, you have made up for it in the past.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Inouye. We will have another Ryan hearing. How is
    that?
        General Ryan. Okay, sir. I will be glad to meet with you.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                     Questions Submitted to James G. Roche

                Questions Submitted by Senator Dianne Feinstein

                            NEW SECURITY ENVIRONMENT

        Question. The past few years have seen a troubling proliferation of
    advanced aircraft defense systems as well as advanced combat aircraft
    around the world, including to many ``states of concern.''
        What is your assessment of the ability of states of concern to
    deploy and use these systems to deny the Air Force access to certain
    regions or areas?
        Answer. Advanced air defense systems and combat aircraft are highly
    sought after by many nations. High cost is the major reason why we have
    not witnessed a massive export of these systems. The ability for
    ``states of concern'' to use or employ advanced air defense systems is
    good. The automation and high reliability designed into these systems
    allows for relative ease of use. In contrast, concerning combat
    aircraft, ``states of concern'' are typically much slower in
    integrating the capabilities provided by modern fighter aircraft into
    their tactical operations. Technologically, there are or soon will be
    combat aircraft and associated weapons that are comparable or better
    than the F-16 and F-15, however, most of the ``states of concern'' do
    not provide the quality or quantity of pilot training required to take
    advantage of advanced capabilities in a freeflowing combat engagement.
        Question. What is your assessment of what sort of anti-access
    capabilities they may posses ten years from now? Twenty years from now?
        Answer. Ten years from now, anti-access capabilities will increase.
    Many nations place a high premium on improving their ground-based air
    defenses. In the future, advanced surface-to-air missiles (SAMs) will
    be more lethal due to increased mobility, better and redundant sensors,
    and the capability to conduct multiple target engagements. Ground based
    air defense radars will be more difficult to detect and jam and more
    capable of engaging low-observable targets. We expect to face SAM
    systems that will be capable of engaging conventional aircraft out to
    200 nautical miles (NM). These factors will greatly enhance anti-access
    capabilities for an adversary equipment with the next generation of
    state-of-the-art SAMs.
        Twenty years from now, anti-access capabilities will increase
    worldwide. The systems that became operational in the previous 10 years
    and follow-on SAMs will probably have found wide-spread export markets
    in areas of concern. Further, advances in radar development may
    challenge today's low-observable aircraft. In contrast, concerning
    combat aircraft, ``states of concern'' are typically much slower in
    integrating the capabilities provided by modern fighter aircraft into
    their tactical operations. Technologically, in the next 10 and 20
    years, new advanced aircraft that will be equal to or superior to the
    F-16 and F-15 will become operational. These aircraft will be more
    technologically capable and lethal with extended ranges, multi-role
    mission capability, enhanced air-launched weapons, and multiple target
    engagement capability. Advances in sensor technologies will enhance
    detection capabilities and provide the enemy with a ``first-look''
    advantage over U.S. pilots. Advances in fire control will provide the
    enemy with a ``first-shot'' and launch and leave capability. Enemy
    first-look and first-shot capabilities will put U.S. pilots at a deadly
    disadvantage. Despite these technological advances, most of the
    ``states of concern'' do not provide the quality or quantity of pilot
    training required to take advantage of advanced capabilities in a free-
    flowing combat engagement.
        Question. What sort of impact will this have on the Air Force's
    ability to maintain strategic and/or tactical superiority?
        Answer. The development and proliferation of advanced defense
    systems and combat aircraft present challenges to the Air Force as well
    as joint and coalition operations. Highly decentralized, internetted
    defense systems coupled with advanced ``double-digit'' surface-to-air
    missiles (SAMs) such as the SA-10, SA-12, and SA-20 create a formidable
    wall to our current, non-stealthy aircraft. Penetration of such a
    barrier requires large force packages, multiple axes of attack, and
    continuous pressure to establish even localized air superiority. From
    an airman's perspective, this is a force-on-force symmetrical battle
    that costs lives, time, and money.
        In addition, advanced combat aircraft around the world continue to
    prove worthy against the Air Force's aging combat fighter force, some
    exceeding 25 years of service. The Su-27, which became operational in
    1986, is in some significant ways, a generation ahead of our F-15 air
    superiority fighters. Even more capability is realized in the Su-37, a
    modernized version of the Su-27. The French Rafale and Europe's
    Eurofighter will arguably prove to be a generation ahead of the Su-27.
    The F-22 will skip this generation of aircraft, maintaining a U.S.
    technological edge.
        To maintain strategic and/or tactical superiority in the face of
    this proliferation, the Air Force must leverage the nation's
    technological asymmetric advantages of stealth, precision, stand-off,
    information and space. Constructs such as the Global Strike Task Force
    (GSTF), enabled by a robust modernization effort, will provide a new
    asymmetric capability to meet our toughest near-term challenges and
    future emerging threats.
        The F-22's unparalleled combination of stealth, advanced avionics,
    supercruise and internal carriage of air-to-air and air-to-ground
    weapons, will reduce both ground/air threats, plus protect other
    assets, enabling air dominance. The F-22 will be able to gain entry to
    battlespace protected by double-digit SAM systems and for the first
    time, enable 24-hour stealth operations. With F-22s and B-2s, the GSTF
    will enable the joint team's capability to overcome enemy attempts to
    deny access. The GSTF will strike targets such as double-digit SAMs,
    theater ballistic missiles, weapons of mass destruction (WMD) launch,
    production and storage sites, as well as shore missile batteries. B-2s
    in concert with standoff weapons, such as sea and air-launched cruise
    missiles, will deliver the first strikes against these high-value
    targets.

                              ASIA-PACIFIC REGION

        Question. Secretary Rumsfeld has suggested the need for a new and
    integrated military posture in Asia.
        What is your assessment of the Asian-Pacific strategic environment,
    threats, and current Air Force capabilities in the region?
        Answer. [Classified].
        Question. Looking ahead, what sort of Air Force force structure
    needs to be developed and deployed to meet these challenges?
        Answer. The Asian-Pacific region presents significant challenges
    for the U.S. Air Force. The great distances in this region imply a
    force structure capable of sustaining long-term, long-range engagement
    from dispersed bases. Our desired future force structure must enable us
    to overcome anti-access threats such as integrated air defense systems,
    cruise missiles, theater ballistic missiles, and weapons of mass
    destruction. The Air Force will be spearheaded by long-range stealthy
    strike platforms escorted by stealthy multi-role fighter aircraft
    supported by a robust air refueling capability, high altitude stealthy
    unmanned aerial vehicles, robust mobility forces, and robust air and
    space based surveillance, communications and navigation capabilities.
    To increase lethality, reduce risk to our crews, and preserve combat
    capability, our ``shooters'' must be equipped with standoff and direct
    attack precision weapons.
        To produce the National Command Authorities' desired effects we
    will require robust Intelligence, Surveillance and Reconnaissance (ISR)
    capabilities combined with a Command and Control infrastructure that
    provides near real time ``decision quality'' information to commanders.
    As technology allows, we expect ISR and strike capabilities will
    migrate from manned aircraft to unmanned platforms and space vehicles.
    The transition to space will provide a genuine ``deep look'' capability
    that will enhance all facets of ISR as well as providing new options
    for fighting at long distances. The Air Force will continue its
    aggressive program of building directed energy weapons to enhance
    aerospace control against missiles and other threats. As we develop the
    capability to process and use tremendous amounts of data, we need to
    protect our information infrastructure by engaging in aggressive and
    effective Information Operations (IO). Finally, the nation requires
    sufficient numbers of forces to establish a rotational base capable of
    sustaining regional engagement in Asia as well as elsewhere around the
    world over the long haul without ``burning out'' the force.
        Question. Some analysts have suggested that operations in the Asia-
    Pacific region, if for no other reason than geographic space, dictate
    the need for longer range platforms for future force planning such as
    heavy bombers and ``arsenal planes'' that could be loaded with a large
    number of standoff smart weapons and high speed long range strike
    aircraft.
        What is your assessment of this force planning issue?
        Answer. In general, we agree with this assessment and we continue
    to pursue promising technologies for development of precision standoff
    munitions and the platforms that could employ these munitions. Part of
    this effort is determining the best mixtures of aerospace supremacy and
    strike platforms, along with the refueling assets that provide longer
    range to all refuellable aircraft as well as the combination of air and
    space based Command and Control (C\2\), and the Intelligence,
    Surveillance, and Reconnaissance (ISR) necessary to efficiently impact
    the right targets with our precision munitions. It is important to
    recognize that smaller aircraft have significant advantages in stealth
    over larger platforms, yet combined with air refueling can be used over
    ranges traditionally thought of as only achievable with bombers. In
    addition we are using our various wargame activities to study the
    effectiveness of various concepts of operations (CONOPs) that better
    exploit both old and new capabilities. One example of this is the
    Global Strike Task Force CONOPs--the Air Force component of the Joint
    anti-access Global Reconnaissance-Strike CONOPs.
        The key to providing Theater Commanders-in-Chief (CINCs) and/or
    Joint Task Force (JTF) Commanders the greatest range of possible
    options is to leverage longer range platforms and ``arsenal planes''
    within new CONOPs tailored to exploit them along with our forward
    presence/forward deploying forces and emerging stand-off capabilities.
        Question. What current aircraft meet these requirements?
        Answer. Our current fleet of heavy, long-range bombers (B-1s, B-2s,
    and B-52s) meets these requirements. Our bombers provide the capability
    to project combat airpower from the continental United States to
    anywhere in the world, as aptly demonstrated by B-2s flying strike
    missions from Whiteman AFB in Missouri during Operation ALLIED FORCE.
    If necessary, bombers are readily deployable to forward operating
    locations in theater. In the Asia-Pacific region, our bombers would
    most likely deploy to secure locations as far forward as prudent to
    eliminate long transit times.
        As you know, our bombers are all capable of delivering a large and
    varied munitions payload as well. All three currently drop the Joint
    Direct Attack Munition (JDAM), used with great success by the B-2 in
    Serbia. Other current or planned bomber standoff weapons include the
    Conventional Air-Launched Cruise Missile (B-52 only), the Joint
    Standoff Weapon (JSOW), and the Joint Air-to-Surface Standoff Missile
    (JASSM). The Air Force is also developing the 500-lb JDAM and the Small
    Diameter Bomb (SDB). The capability to upload each bomber with hundred
    of SDBs and engage numerous targets per mission will go a long way
    towards realizing the vision of an ``arsenal plane'' in the very near
    future.
        Question. What future aircraft is the Air Force planning on
    developing and deploying that will meet these needs?
        Answer. As for the near future, the Air Force will initiate the
    concept of the Global Strike Task Force (GSTF). B-2s, escorted by F-22s
    and supported by tanker aircraft, will launch on short notice and fly
    anywhere to ``kick down the door'' of any potential adversary. After
    the first strikes, the GSTF will land at forward operating locations
    and commence sustained operations. Joint Strike Fighters and upgraded
    legacy systems will join the fray until the conflict is successfully
    resolved.
        For the distant future, the Department of Defense (DOD) and Air
    Force constantly review National Military Strategy and update aircraft
    requirements accordingly. Air Combat Command is using the Future Strike
    Aircraft Study to determine what the next generation attack
    ``aircraft'' will be--options are not limited to manned air-breathing
    bombers. Solutions may include hypersonic trans-atmospheric vehicles,
    unmanned combat aircraft or the ``arsenal plane'' you mentioned.
    However, the current bomber fleet will fill our long-range strike needs
    until 2037. This requires investment in research and development for a
    suitable replacement to continue for the next 10 or 15 years before we
    settle on a definitive design.
        Question. What is your assessment?
        Answer. Guam is an excellent support base and contributes
    significantly to our operational capability in the Asia-Pacific region,
    but we should not view it as a ``silver bullet,'' quick fix solution to
    our basing challenges in the region. Creating a hub would locate
    critical capabilities on a single island, could create a single point
    of failure and also a large, hard-to-ignore target for missile-capable
    adversaries. We would, therefore, have to make a considerable number of
    force protection investments in order to defend this hub.
        Additionally, a site's distance from the Asian landmass remains an
    inescapable and fundamental criterion for determining its usefulness
    for U.S. forces. Given this criterion, Japan and Korea remain much
    better situated for our needs, and are therefore key to our military
    posture in Asia. Only if our position is sharply reduced in these two
    nations do we see the value of establishing Guam as a hub for our
    operations in the region.
        Finally, we need to strengthen the ``ties that bind'' in Asia, and
    we need Congress' support to ensure that forward basing remains
    politically viable in Asia.
        Question. What are the Air Force's current forward deployment
    basing requirements in the region?
        Answer. The Air Force currently relies on numerous key air bases in
    the region. We rely on these bases to provide a capability to carry out
    peacetime engagement operations as well as respond to a crisis in the
    region. Forward basing is and will remain the corner stone of the
    regional Commanders-in-Chief (CINC's) ability to rapidly respond to any
    threat to U.S. interests or those of our allies and friends. We are in
    the process of supporting the Secretary of Defense in his review of
    national military strategy and will incorporate those findings into our
    Quadrennial Defense Review which will be sent to Congress later this
    year.
        Question. What are your projections for future needs?
        Answer. To deal with potential contingencies in the Pacific Rim, we
    need to augment our current facilities and complement them with
    ``satellite bases'' that could provide transient, base-of-the-day
    capabilities for limited, quick-turn strike operations, or that hold
    prepositioned war reserve materiel for future contingencies. To
    accomplish these goals, the United States Air Force might have to tap
    into up to 350 staging areas already available throughout the Asia-
    Pacific basin. In many cases, these areas are inactive airbases that,
    with congressional support, can be brought back to contingency/
    operational-level status. Lastly, in addition to new investments in
    added infrastructure, we expect our force protection requirements to go
    up considerably, especially since we expect to confront asymmetric
    anti-access strategies when we attempt to project military power in the
    area.
        Question. How does Guam fit with these needs?
        Answer. As the western-most U.S. territory in the Asia-Pacific
    region, Guam provides both the guaranteed access and infrastructure
    facilities we need to stage military operations in the area. So,
    although Guam may not warrant ``hub'' status except under appropriate
    circumstances, as explained in Question #6, we could certainly augment
    its capabilities.
        The Apra Harbor, is frequently used by the Navy and can handle
    ships as large as aircraft carriers. Andersen Air Force Base, in turn,
    is a significant forward operating location. The base is ideal for
    forward basing bombers, fighters and/or transport aircraft. Finally,
    Air Force and Navy weapons storage facilities are present on the island
    and offer significant holding capacity.
        Impressive as these capabilities are, improvements are certainly
    possible. Congressional support to upgrade underground infrastructure,
    such as sewage, water, and power distribution capabilities, would
    certainly augment Guam's ability to support contingency operations in
    this part of the world.

                               TACTICAL AIRCRAFT

        Question. What are the Air Force requirements for the new
    generation of tactical aircraft given the new security environment?
        Answer. Air Force requirements for next generation fighter aircraft
    are primarily driven by the threat environment.
        The future threat environment drives the design and capability of
    the F-22 and Joint Strike Fighter (JSF). In addition to all the current
    threats around the world, there will be an expansion of ``advanced
    technology'' surface-to-air and air-to-air threats. The proliferation
    of these advanced systems will make the future battlespace far more
    dangerous.
        Aerospace supremacy is the foundation of any joint, allied, or
    coalition operation. To achieve this supremacy in the face of future
    threat systems requires advanced technologies not available on today's
    ``legacy'' platforms. Characteristics such as low observability,
    advanced sensors, and information superiority systems are essential in
    the new security environment due to threat intensity, mobility, and the
    tempo of warfare. The highly maneuverable and supercruise capable F-22
    is optimized for the air-to-air fight, ensuring its dominance over any
    projected threat aircraft while still retaining substantial air-to-
    ground capabilities. With the JSF, joint and coalition forces will have
    an affordable stealthy penetrator capable of attacking any heavily
    defended enemy surface target. Employing next-generation multi-spectral
    sensors and advanced situational awareness technologies, the JSF will
    be cheap enough to procure in quantity. These two extremely lethal and
    highly survivable aircraft will rapidly reduce the threat, enabling
    joint forces freedom from attack and freedom to attack.
        Question. The F-22, for example, was originally conceived during
    the Cold War, and designed, at least in part, to counter advanced
    aircraft to be deployed by the Soviet Union. What is the threat
    baseline used to determine what capabilities are needed for the next
    generation of tactical aircraft?
        Answer. The worldwide proliferation of multiple surface-to-air
    missiles (SAMs) and air-to-air aircraft constitutes a significant
    challenge to air dominance. The F-22 must be able to survive in and
    dominate a wide range of threat environments, from the solitary
    shoulder-mounted man portable SAM to the sophisticated integrated air
    defense system of an advanced adversary.
        The surface threat includes the SA-10, SA-20, HQ-9, as well as
    proliferated, legacy surface-to-air missiles such as the SA-2, SA-3,
    SA-4, SA-5, SA-6, and SA-8, Roland, and Crotale as well as their naval
    variants.
        In the air-to-air environment, the F-22 will have to gain air
    supremacy in encounters with Su-35s, Su-37s, Typhoons, and Rafales, as
    well as other legacy Eastern and Western fighters.
        A detailed and classified baseline of the threat environment may be
    found in the F-22 System Threat Assessment Report (STAR).
        Question. How do the capabilities of the F-22 fit in with current
    and future threat assessments?
        Answer. The capabilities of the F-22 will not only dominate current
    threats, but more importantly, restore our aerial advantage for at
    least the next 20 years. Surface threats we faced during the Gulf War
    and Allied Force are being replaced by increasingly lethal systems like
    the SA-10, SA-20 and HQ-9, have longer range, better resistance to
    electronic jamming, multiple target tracking capability, and are more
    mobile than their predecessors. Russia and China are exporting these
    systems to Third World nations, and National intelligence organizations
    predict that by 2005, the number of countries possessing advanced SAMs
    will increase eight-fold.
        Our current air superiority fighter, the F-15C, has lost most of
    its advantages over current threat aircraft. At best it is at parity,
    and in many cases at a disadvantage, to these threats. The F-15C will
    be at a disadvantage to all follow-on fighters. American air
    superiority can no longer be taken for granted.
        The F-22 regains and will maintain our advantage over the next
    generation of surface and air threats. It combines stealth technology,
    supercruise, and advanced avionics in a highly maneuverable, lethal,
    and survivable aircraft. The F-22 is an integral component of ensuring
    American air dominance, the foundation of all our current and future
    military endeavors.
        Question. The F-22 is intended to become the Air Force new air
    superiority fighter, with some air to surface capabilities as well.
        How does it stack up against current tactical aircraft fielded by
    other nations?
        Answer. The F-22 is far superior to all currently fielded fighters.
    First, there is no fielded, low observable adversarial aircraft. Other
    fighters will be unable to detect or track the F-22 until it is within
    visual range. Second, no other fighters can supercruise. The
    combination of supercruise and high altitude allows the F-22 to cover
    much more of the battlespace and significantly increases its missile
    range over slower and lower aircraft. Additionally, the F-22's
    advanced, integrated avionics give it greater situational awareness and
    informational dominance over all other fighters. The adage, knowledge
    is power, holds true in aerial warfare.
        Finally, all of these advanced characteristics are woven into a
    highly maneuverable airframe. These lend the elements of surprise,
    survivability and lethality to the F-22. While any current fighter
    would be greatly improved by having just one of these characteristics,
    the F-22 combines them all into a truly dominant fighter aircraft.
        Question. What sort of tactical aircraft capabilities do we expect
    other nations to develop or deploy in the next decade (two decades)
    which the F-22 will face?
        Answer. The threat environment for the F-22 will vary considerably.
    Many countries will produce or import new or upgraded aircraft,
    missiles, and other weapon systems. This availability means that the
    United States could face extremely capable weapon systems in a regional
    conflict.
        In the next two decades, many air forces will be smaller, cutting
    inventories of combat aircraft by 20 to 30 percent. The savings will
    enable air forces to buy small numbers of sophisticated combat
    aircraft. By 2010, countries like Iraq and Iran will have fewer
    aircraft, but with a higher percentage of fourth-generation (F-15 or F-
    16 class) fighters. Advances in avionics will also increase older
    aircraft's lethality and ability to penetrate defenses. For example,
    Romania upgraded 1960s era MiG-21 fighters with multi-mode pulse
    Doppler radars and improved cockpit situation displays, significantly
    increasing the aircraft's effectiveness.
        Foreign tactical aircraft will focus on improved electronically
    scanned phased array radars capable of multi-targeting, reduction in
    infrared and radar detection, and integration of onboard sensors.
    Aircraft like the Su-27 FLANKER, which are in the inventory of
    approximately 10 air forces have had design improvements integrating
    new technology to improve lethality. The design improvements have
    manifested themselves in the Chinese Su-30MKK or the Indian Su-30MKI.
    These FLANKER derivatives have much better range and maneuverability
    and have even more advanced air-to-air munitions. Russia is expected to
    build FLANKER variants that integrate new technologies to suit customer
    needs. While the Russian Air Force may not be modernizing at their own
    desired pace, they continue to field significant fighter technologies,
    some examples of which include: electronic warfare, within visual range
    infra-red missiles, and thrust vectored engines.
        France is producing upgraded variants of its older Mirage 2000
    fighter and developing the Rafale. Upgrades to the Mirage 2000 include
    an improved cockpit display, newer radar, and integration of more
    advanced air-to-air missiles, laser-guided bombs, air-to-surface
    missiles, and a long-range air-to-ground capability. The Rafale will
    have a smaller radar cross section than current fighter aircraft along
    with a very capable multimode, and a pulse-Doppler electronically
    scanned radar. The Rafale is expected to reach initial operating
    capability in 2002 for the naval version and 2005 for air force
    version.
        The Eurofighter's digital quadruplex flight control system allows
    the aircraft to perform in either an air-to-air or air-to-ground role
    through on-board programming and system reconfiguration. It carries an
    all-aspect, multimode pulse-Doppler radar, an infrared search and track
    set, data link system, and, depending on the member nation, an
    extensive electronic warfare suite.
        China's ``next generation'' F-10 fighter will be comparable to the
    F-16C Block 30 aircraft and is expected to reach IOC after 2005. China
    is also working on an ``advanced'' air superiority fighter that
    incorporates signature reduction techniques.
        Advanced air-to-air missiles integrated with emerging fighters and
    the proliferation of precision munitions will increase the defensive
    and strike capabilities of air forces globally. Finally, even inferior
    aircraft armed with superior missiles may be able to defeat current
    U.S. aircraft and missiles, posing an even deadlier threat to high
    value assets such as Airborne Warning and Control System (AWACS) and
    Joint Surveillance Target Attack Radar System (JSTARS).
        Question. How does it stack up against these projected competitors?
        Answer. The F-22 will be far superior to all projected fighters.
    First, while several fighter aircraft are being designed to have
    elements of low observability, none comes anywhere near matching the F-
    22's ``stealth.'' Other fighters will be unable to detect or track the
    F-22 until it is within visual range. Second, no other fighters will be
    capable of maintaining supercruise. The combination of supercruise and
    high altitude allows the F-22 to cover much more of the battlespace and
    significantly increases its missile range over slower and lower
    aircraft. Additionally, the F-22's advanced, integrated avionics give
    it greater situational awareness and informational dominance over all
    other fighters. The adage, knowledge is power, holds true in aerial
    warfare. Finally, all of these advanced characteristics are woven into
    a highly maneuverable airframe. These attributes yield the elements of
    surprise, survivability and lethality to the F-22--``First Look, First
    Shot, First Kill!'' While any fighter, current or projected, would be
    greatly improved by having just one of these characteristics, the F-22
    combines them all into a truly dominant fighter aircraft.
        Question. According to a recent GAO report, the F-22 is slipping
    further behind schedule, with deliveries of test aircraft delayed and
    only 500 hours of flight testing completed. The report, entitled ``F-22
    Aircraft: Development Cost Achievable if Major Problems are Avoided,''
    is the most recent in a series of GAO studies of the program. It states
    ``that while the Air Force has experienced delays in the delivery of
    test aircraft and the completion of flight and ground testing, it has
    not extended the . . . completion date of the development program and
    therefore may not be able to complete development flight tests before
    the development program is scheduled to end.'' That end date remains
    August, 2003. What is your assessment of the GAO report and the
    criticisms it has raised about the F-22 program?
        Answer. Flight test to date has exceeded 1,200 hours with
    exceptional results matching or exceeding predictions. However, late
    deliveries of test aircraft did delay our ability to generate flight
    test sorties. In preparation for the Low Rate Initial Production (LRIP)
    Defense Acquisition Board (DAB), we are reviewing the flight test
    program and believe some additional test time will be required prior to
    the start of Dedicated Initial Operational Test and Evaluation
    (DIOT&E). We will complete all necessary testing prior to the start of
    DIOT&E to ensure that we can safely and effectively enter operational
    test.
        Question. Some critics of the F-22 program argue that the Air Force
    can maintain air superiority with upgrades to the F-15 and F-16, and
    that at $62 billion for a 341 plane program the money for the F-22
    would be better spent developing the ``generation after the next
    generation'' weapons systems. How do you respond to this criticism?
    What capabilities does the F-22 get you that upgraded F-15 and F-16s
    can't provide?
        Answer. The F-22 is the planned air superiority replacement for the
    F-15C. The need for the F-22 is driven by the air superiority force
    structure required to realize Joint Vision 2020 and the predicted total
    threat picture. The F-22 is the force enabler for Joint Vision 2020.
    The F-22's unique attributes of next generation stealth, supercruise,
    maneuverability, and integrated avionics will guarantee rapid air
    dominance, ensuring protection of strike aircraft, naval surface units,
    and ground forces from air attack while continuing the advantage U.S.
    forces have held since 1953. In addition, the F-22 will permit, for the
    first time, 24-hour stealth operations and enable around-the-clock
    employment of our F-117, B-2, and JSF fleets.
        The development and proliferation of advanced SAMs, such as the SA-
    10/12, will provide enemies sanctuary because existing fighters such as
    the F-15 are unable to operate in this environment with acceptable risk
    without protracted, asset intensive, defense suppression efforts.
    Twenty-five countries are forecast to possess advanced SAM systems by
    2005. In addition, the F-15 is at rough parity today with current
    fighters such as the Su-27 and MiG-29. The F-15 will soon be at a
    disadvantage with the fielding of the advanced fighters such as the Su-
    35, Typhoon, and export versions of the Rafale and the proliferation of
    advanced air-to-air missiles such as the AA-11, AA-X-12, and MICA. Even
    with upgrades, the F-15 cannot deliver stealth, supercruise, affordable
    integrated avionics or the air dominance U.S. forces will require to
    survive against emerging threats.
        Question. What is the current thinking in the Air Force about the
    development and deployment of the Joint Strike Fighter?
        Answer. The successful development and deployment of the Joint
    Strike Fighter (JSF) remains critical to the Air Force's
    recapitalization of its aging fighter force. Serious fighter inventory
    shortfalls will exist after 2010--even if JSF is brought in on time--so
    timely completion of JSF's development and deployment is vitally
    important to the United States Air Force (USAF).
        Our legacy fighters have served us well, but their military value
    is in decline. The F-16s and A-10s that the JSF will replace were
    designed and first fielded almost 30 years ago. Today, their
    warfighting effectiveness is being threatened by the proliferation of
    advanced air defense systems: fighters, air-to-air weapons, and
    surface-to-air missiles. To counter this continuing improvement in the
    worldwide threat, the Air Force must maintain an edge. In the air-to-
    air arena, that edge is the F-22. In the air-to-ground arena, it's JSF.
    The Joint Team has cooperated exceptionally well in achieving a JSF
    design that meets or exceeds all of our requirements at an affordable
    cost. For the Air Force, that means we'll get the JSF we need--a Day
    One fighter that can attack every enemy target, including advanced
    threat systems, at a price the nation can afford.
        The Air Force position is that JSF is the only realistic option for
    meeting our need for an effective, affordable replacement for the F-16
    and A-10. We have stretched the lifetimes of most of our legacy
    fighters to the maximum possible, making replacement necessary without
    delay. Replacing legacy fighters with new legacy aircraft does not meet
    our warfighting needs and saves no money. Restarting research and
    development on a new fighter program wastes the investment the nation
    has already made and the tremendous progress achieved. The coinciding
    delay will result in large force structure gaps as current aircraft
    reach the end of their service lives. If the Air Force mission remains
    to fight and win the nation's wars, we must have JSF.

                               STRATEGIC BOMBERS

        Question. All three U.S. strategic bombers--the B-52, B-1, and B-
    2--were used in NATO's Operation Allied Force.
        What are the lessons learned about the capabilities and
    complementarity of the bombers from Allied Force?
        Answer. The bomber force was an integral part of Operation ALLIED
    FORCE. B-52s fired opening salvoes with long-range Conventional Air-
    Launched Cruise Missiles--a key enabler in any conflict. B-2s used
    stealth and GPS-aided precision weapons to strike high-value, heavily
    defended targets--denying enemy sanctuary. B-1s used speed and the
    largest payload of any United States aircraft to integrate with United
    States and North Atlantic Treaty Organization (NATO) forces--daily
    hammering of Serbian targets.
        Each of our bombers has unique and, as you state, complementary
    capabilities. While all of our bombers share the common characteristics
    of large payload, long range, long endurance, and precision strike,
    each also has some mutually exclusive capabilities. The Air Force
    considers each of the bombers as part of an overall warfighting scheme.
    A B-2 is not interchangeable with a B-1 or a B-52. The Air Force will
    continue to upgrade our bomber fleet to highlight their complementary
    capabilities and effectiveness over the next four decades.
        Question. How are these lessons being applied to future mission
    planning and force structure?
        Answer. Bomber mission planning is designed to maximize weapons
    effects and minimize threats to the aircraft. As the bomber fleet is
    upgraded with more modern weapons--to include the Joint Standoff Weapon
    (JSOW), the Joint Air-to-Surface Standoff Missile (JASSM), the Wind
    Corrected Munition Dispenser (WCMD), and the EGBU-28 Deep Penetrator--
    mission planning and bomber employment will continue to evolve. The Air
    Force concept of bomber operations will always exploit the aircraft/
    weapon combination that is most efficient and effective in achieving
    our combat objectives.
        Force structure is dependent on National Military Strategy and
    individual weapon system capabilities. We are constantly assessing
    force structure needs and replacement timelines for follow-on strike
    aircraft.
        Question. Did the Air Force's experience in Allied Force reveal any
    shortcomings or gaps in the capabilities of our strategic bomber
    forces?
        Answer. The Air War Over Serbia (AWOS) did two things. First, it
    validated our bomber concept of operations and, second, it reiterated
    the need to continue aggressive modernization of the bomber fleet. The
    superior performance of bombers in AWOS confirms the value of our
    bomber force--each bomber filled its warfighting niche as advertised.
    However, the Air Force is also very aware that current capabilities are
    soon overcome by constantly emerging threats. All three bombers are
    structurally sound and will not reach the end of their service lives
    for another forty years. But, without modernization, the bomber force
    will become more vulnerable and less effective. Upgrades are designed
    to increase survivability, lethality, and situational awareness. The
    number one lesson ``re-learned'' in AWOS was the need for bombers to
    have long-range (beyond line-of-sight) secure communications and
    datalink.
        Question. Although the emphasis has shifted from nuclear to
    conventional missions since the end of the Cold War, some long range
    bombers maintain nuclear war-fighting capabilities. Although still on-
    going, what is your expectation of how the Administration's review of
    U.S. nuclear posture will impact on the nuclear and conventional
    missions and the strategic bomber force structure?
        Answer. As you know, Secretary Rumsfeld is conducting a broad
    review of defense strategy and force structure with an eye toward
    transformation. Simultaneously, the Department of Defense (DOD) is also
    conducting the congressionally-mandated Quadrennial Defense Review
    (QDR) and Nuclear Posture Review (NPR). Since these reviews are
    ongoing, we cannot estimate the impact of their findings. However, the
    Air Force believes there is a possibility of taking unilateral steps to
    tailor U.S. nuclear forces to meet the current threat environment.
    Nuclear strategy and guidance must preserve the essential elements that
    have made deterrence work over the past several decades. All force
    structure considerations should reflect the needs of the warfighter to
    meet national military objectives. Any strategic reductions must not
    result in a loss of conventional bomber capability. The current
    inventory of nuclear-capable bombers consists of 94 B-52Hs and 21 B-2s.
    Congress mandates 18 excess B-52H attrition-reserve aircraft each year
    in the Defense Authorization Act. The Air Force's desired end-state to
    meet operational requirements is 76 B-52Hs and 21 B-2s.
        Question. With the closing of U.S. bases overseas--there were some
    25 U.S. bases with 850 aircraft in Europe in 1990, for example, and
    only 6 bases with 174 aircraft in 1999--some analysts have suggested
    that the United States needs to place greater emphasis on long range
    bombers, with their large payloads, long range, and quick response
    time, for power projection. What is your assessment? Do our current
    forces provide sufficient capabilities for power projection missions or
    are additional long range bomber forces necessary?
        Answer. Over the past 10 years, the Department of Defense and
    independent research organizations have completed several long-range
    airpower studies. These studies have reached a common conclusion--the
    most cost-effective way to provide long-range combat capability is to
    modernize the current bomber force, not procure a new, long-range
    aircraft. Modernization includes: integrating precision and standoff
    weapons, including the Small Diameter Bomb; improving situational
    awareness and connectivity, and enhancing survivability. Modernizing
    the existing bomber force also gives the Air Force the time needed to
    push and acquire the technology needed for the next generation long-
    range airpower capability.

              INTELLIGENCE, SURVEILLANCE, AND RECONNAISSANCE (ISR)

        Question. What is your assessment of the mix of existing and
    planned manned and unmanned Intelligence, Surveillance, and
    Reconnaissance (ISR) aircraft that can most efficiently satisfy
    requirements for timely and accurate information?
        Answer. In the low altitude regime, Predator Unmanned Aerial
    Vehicle (UAV) is a highly desired commodity by theater Commanders-in-
    Chief (CINCs) for low-altitude surveillance. Theater requirements for
    this system are growing as CINCs become more familiar with its
    capabilities so it is difficult to assess the proper mix.
        For high altitude, the U-2 provides high-quality, multi-INT ISR and
    Global Hawk UAV provides long duration, IMINT ISR with a follow on
    SIGINT model planned. Global Hawk will complement overall ISR coverage
    and help fill currently unmet CINC requirements.
        The RC-135 fleet provides timely, robust, and highly capable
    intelligence collection. Currently, there are insufficient aircraft to
    meet collection requirements with no funding programmed to increase the
    fleet and no UAV alternative to mitigate the collection shortfall.
        Overall, current ISR capabilities are insufficient to fulfill
    worldwide theater requirements. However, the programmed ISR mix has
    been planned to optimize existing as well as new capabilities to
    maximize worldwide ISR collection efforts.
        Question. Do these requirements shift from peacetime to wartime?
        Answer. The Predator Unmanned Aerial Vehicle (UAV) system is in its
    infancy. Theater Commanders-in-Chief (CINCs) are employing this system
    in new and unique roles that will continue to evolve as CINCs become
    more familiar with its capabilities. It is likely that wartime
    requirements could exceed the 10 combat systems programmed for
    procurement.
        During wartime, the U-2 pilot shortage issue would be resolved by
    closing the Flying Training Unit (FTU) and utilizing instructor pilots
    to fly operational missions (this was done during DESERT STORM).
    Additionally, during wartime, primary U-2 limitations shift from pilots
    to a number of sensors. Unlike other platforms, the U-2 has a modular
    payload capability that allows sensors to be interchanged (usually
    within 24 hours) to support unique mission requirements. However, the
    U-2 lacks enough sensors to provide full coverage in a 2 Major Theater
    War (MTW) scenario. Global Hawk is currently programmed to fill the
    shortfall by the end of fiscal year 2005.
        As with peacetime, Tasking, Processing, Exploitation, and
    Dissemination (TPED) manning and infrastructure to properly exploit the
    volume of intelligence in a 2 MTW scenario remains a problem
    programmatically.
        Similar to the U-2, during wartime, RC-135 FTU training ceases and
    programmed depot maintenance inputs are managed to provide maximum
    capability (also done during DESERT STORM). Currently, there are
    insufficient RC-135s to meet wartime collection requirements under the
    2 MTW scenario.
        Question. How does the Air Force work to integrate aerial ISR with
    information and analysis gained by other U.S. intelligence assets?
        Answer. The Air Force Distributed Common Ground System (AF DCGS) is
    the primary weapon system utilized to integrate aerial ISR with
    information and analysis gained by other U.S. intelligence assets. It
    provides multi-intelligence Tasking, Processing, Exploitation and
    Dissemination (TPED) capabilities for the Joint Task Force and below.
    National, theater and tactical collection sources are, or soon will be
    supported by AF DCGS. In order to effectively manage ISR assets, the AF
    will field ISR management tools at core AF DCGS sites and Air
    Operations Centers (AOC). These ISR management tools will provide
    automated capabilities to synchronize the operational employment of ISR
    assets, fuse intelligence/sensor data and to perform Command and
    Control (C\2\) of ISR.
        Question. Some analysts have stressed the need to build additional
    ISR capabilities given the importance of precise information if
    precision guided munitions (PGMs) are to be effective.
        What is your assessment of the role that PGMs have played in recent
    Air Force activities and in future Air Force war-fighting plans?
        Answer. Since their introduction in Vietnam, PGMs have increasingly
    become the weapons of choice for the Air Force. In Vietnam, multiple
    sorties and a great deal of munitions had to be expended to ensure the
    destruction of high-value targets due to a severely limited PGM
    capability. During Operation Desert Storm, and increasingly so in
    Operation Allied Force, the Air Force was able to approach a one
    target/one weapon goal through use of PGMs. Increased emphasis on
    limiting civilian casualties and reducing collateral damage, as well as
    reducing the risk for American aircrews, have made PGMs the preferred
    weapons for the air campaign. In short, PGMs allow a conflict to be won
    in less time, with fewer sorties, and with fewer casualties. All air-
    to-ground weapons currently being developed are guided munitions. The
    clear thrust of development is toward improving accuracy across the
    board. While unguided munitions are and will continue to be in
    inventory, it is clear that the importance of precision munitions will
    continue to grow.
        Question. What is your assessment of the nexus between ISR
    capabilities and effective use of PGMs?
        Answer. One of the most critical aspects of the ISR/PGM nexus is
    the ratio between the inventory of available ISR systems and the number
    of PGMs being employed. Since PGMs have stringent requirements for
    accurate intelligence products, the link between the ISR and weapons
    communities is a strong one. The more PGMs we employ, the greater the
    demand for high fidelity, accurate ISR. Lessons from recent campaigns
    have highlighted the need to compress those timelines wherever
    possible. Once the campaign has moved to the operational phase, the
    battlefield picture is constantly in a state of flux requiring dynamic
    reassessment of certain ISR information in order to plan for proper
    employment of PGMs. Current ISR systems are strained to provide
    adequate planning information for even a small-scale contingency action
    like the Air War Over Serbia. It is critical that more ISR systems be
    procured, fielded, and manned with properly trained personnel in order
    to meet a major regional conflict requirement. The increasing use of
    PGMs and other guided weapons will place an even greater burden on our
    ISR capabilities.
        Question. What additional capabilities does the Air Force need to
    develop to be able to fully leverage PGMs?
        Answer. Effective employment of PGMs requires that accurate
    information about potential targets be made available to the warfighter
    in a timely manner. Ideally, the Air Force needs to develop
    Intelligence, Surveillance, and Reconnaissance (ISR) capabilities for
    real-time transmittal of pertinent information to the weapon platform
    and/or weapon in flight. This will permit the immediate targeting/
    retargeting of PGMs based upon the latest battlefield picture, and
    result in the most efficient use of PGMs. To achieve this, current PGM
    weapons need to be upgraded, and future PGMs need to be designed to
    allow the weapon to receive and react to real-time information
    transmittal. In addition, ISR systems must be upgraded/designed to
    permit this interface with weapon platforms and PGMs.
        One of the most critical aspects of an ISR/PGM upgrade is the ratio
    between ISR systems and the number of PGMs being employed. An increased
    number of ISR systems must be procured, fielded, and manned with
    properly trained personnel in order to meet a major regional conflict
    requirement. The Small Diameter Bomb, Joint Direct Attack Munitions,
    and other guided weapons, which significantly increase the number of
    targets that can be engaged with PGMs, will place an even greater
    burden on our ISR capabilities. Without significant upgrades, our ISR
    infrastructure will not be able to support the growing need for timely
    and accurate targeting.
        Question. Given recent events with manned U.S. military
    surveillance aircraft, there is a growing interest in replacing manned
    aircraft, where possible, with unmanned vehicles such as the Global
    Hawk platform.
        What is your current thinking on how to best introduce the Global
    Hawk platform? At what pace?
        Answer. The Global Hawk demonstrated military utility during the
    Advanced Concept Technology Demonstration that finished last year, and
    we intend to field an initial version, with minor improvements,
    starting in 2003. These improvements incorporate operational
    requirements not addressed in the previous demonstration phase, such as
    provisions for emerging air traffic management standards. The initial
    version will address unmet intelligence needs, augment existing
    surveillance aircraft, and reduce the burden on low density, high
    demand systems such as the U-2. Fielding the Global Hawk in the near
    term will also help develop a greater understanding of the unique
    challenges and broad operational potential of long-endurance unmanned
    aerial vehicles.
        While the initial version will satisfy some operational
    requirements, there is a need for greater sensor performance. We have
    begun development of this improved capability and will draw upon
    sensors developed under other programs, such as the Multi-Platform
    Radar Technology Insertion Program to meet the full requirement by
    2009.
        Our current plans include production of two Global Hawk aircraft
    per year from 2002 to 2008 and four per year thereafter.
        The fiscal year 2002 budget request initiates an accelerated
    program approach that will provide full capability for most sensors by
    2005 and increase production to four in 2003 and six per year
    thereafter. The accelerated approach fields more capability sooner and
    further accelerates the transforming influence of unmanned systems on
    military aviation.
        Question. What is your thinking on how to phase-in the Global Hawk
    with current U-2 operations?
        Answer. The U-2 is a highly capable system that is filling real-
    world needs today. It has played a key role in every major U.S.
    military operation in recent history. It is, however, a low-density,
    high-demand asset that has been operating at a tempo that can reduce
    the effectiveness of people and equipment. We have to manage collection
    requirements carefully. Some requests go unmet, while the need for
    information continues to grow rapidly. The Global Hawk will help meet
    these needs and reduce the U-2 operations tempo to a more manageable
    level. Global Hawk will build on the experience base of the U-2. In
    fact, the Global Hawk will feed the same intelligence analysis systems
    as the U-2 systems that will also evolve to address growing information
    needs. We plan to base the Global Hawk alongside the U-2 at Beale Air
    Force Base in California to capitalize on the benefits of shared
    experience and infrastructure. Over the longer term, Global Hawk is
    expected to replace the U-2 as we experience losses through attrition.
        Question. What additional capabilities does Global Hawk bring to
    the table?
        Answer. The main advantage that Global Hawk brings is the ability
    to operate for long periods of time. This allows a single Global Hawk
    to provide a more sustained presence than other airborne systems, such
    as the U-2. But more importantly, it offers much greater range that can
    overcome the challenge of increasing limited access to forward basing
    needed to effectively address U.S. interests around the world. Global
    Hawk also brings additional collection capability. The initial
    configuration employs low-cost sensors that provide good capability.
    Over the longer term, we plan to install higher performance sensors
    that meet or exceed the capability of current systems such as the U-2.
        Question. What are the implications of the cost of full development
    and deployment of Global Hawk on other Air Force operational
    capabilities?
        Answer. The Air Force follows a budgeting process that balances
    program priorities to deliver and maintain required operational
    capabilities at the lowest possible cost. Each program is addressed on
    its own merit and funding changes in different programs are not linked
    to one another. Global Hawk will augment other operational capabilities
    such as the U-2. It will address operational needs that currently go
    unmet and relieve the stress on low-density/high-demand systems. Over
    the long term, Global Hawk will be capable of replacing the U-2.
    However, the U-2 continues to provide important operational
    capabilities and the Global Hawk will not assume U-2 missions until it
    has proven capable of satisfying mission requirements.

                   LESSONS OF OPERATION ALLIED FORCE (KOSOVO)

        Question. Although there was much to commend about air operations
    in Operation Allied Force, a recent GAO Report concluded that ``the
    kind of ad hoc basing of combat forces that occurred during Operation
    Allied Force demonstrates that the lack of at least some planning has
    the potential to result in unnecessary problems and inefficiencies.''
        How would you characterize the basing, logistics, and coordination
    problems identified by the GAO?
        Answer. Per 22 June 2001 memorandum for JCS/J7, Air Force concurs,
    with two substantive comments, with the GAO report ``Kosovo Air
    Operations: Combat Aircraft Basing Plans are Needed In Advance of
    Future Conflict.''
        The two substantive USAF comments are repeated here:
        ``USAF-1 SUBSTANTIVE: GAO comment #5 (responding to JCS comment #3,
    10 May 2001): `As noted in our draft report, because Operation Allied
    Force did not fit into the definition of conflicts for which NATO had
    prepared combat plans, NATO's structure did not apply to Operation
    Allied Force, and the United States prepared plans for its own
    participation in the operation after the conflict arose.' GAO comment
    reflects incomplete research. GAO failed to fully consider that a NATO
    operation was being evaluated, not a U.S. operation. GAO consultations
    with NATO, in addition to EUCOM, would have been appropriate. GAO
    wording implies that NATO and the United States started the operation
    without a plan. In fact, significant NATO and U.S. planning occurred
    prior to the start of Operation Allied Force (OAF). Initial planning
    was modified to reflect political constraints imposed by member states
    prior to the start of OAF. Once it became apparent that a 72-hour
    campaign would not achieve the desired result, NATO and U.S. planners
    made significant alterations to the operational plan.
        ``UDAF-2 SUBSTANTIVE: GAO comment #7 (responding to JCS comment #5,
    10 May 2001): `We expect that, as part of its effort to create a
    database of available airfields, EUCOM will make use of already
    available resources to minimize or eliminate any duplication of
    effort.' GAO comment reflects incomplete research. In addition to U.S.
    logistics planning aids (e.g., Automated Air Facility Information
    File), NATO has established the Reaction Forces (Air) Staff (RFAS) in
    Kalkar GE, whose mission is `. . . to support the Strategic Commanders
    and the Director Combined Joint Planning Staff with central air
    expertise and . . . is responsible for deployment related (emphasis
    added) aspects of strategic and operational air planning throughout the
    full range of NATO operations . . .' Again, consultations with NATO
    officials would have provided a more complete picture of changes made
    in light of OAF.''
        Question. What steps have been taken by the Air Force to address
    these issues?
        Answer. As the GAO report alludes to on page 12, the Air Force is
    in the process of standardizing and partially automating its
    contingency site survey processes and beddown feasibility analysis. To
    this end, the Air Force fielded and is in the midst of refining the
    Logistician's Contingency Assessment Tools (LOGCAT). LOGCAT provides an
    automated employment-driven planning capability that accurately and
    rapidly identifies resources at potential beddown locations, allows
    rapid capability and limiting factor identification at beddown
    locations, and allows units to rapidly tailor deployment packages based
    on assets identified at the deployment location. The LOGCAT system
    includes two subsystems, Survey Tool for Employment Planning (STEP) and
    Beddown Capability Assessment Tool (BCAT). STEP provides a system
    capability for collecting site survey information, and provides the
    capability to transfer and store site survey data in a central database
    known as the Employment Knowledge Base (EKB). BCAT is a robust decision
    support tool that analyzes aircraft beddown feasibility from the
    standpoint of aircraft sortie production, POL, munitions, billeting,
    messing, and aerial port operations. These systems will aid the
    deliberate planning for future conflicts, and provide the ability to
    quickly respond to expeditionary taskings with informed combat aircraft
    beddown decisions.

                             QUALITY OF LIFE ISSUES

        Question. Concerns have been raised in recent years that, given the
    tempo of operations, the Air Force has faced difficulties in retaining
    sufficient skilled personnel, maintaining high morale, and so forth.
        What is your assessment of the current personnel situation?
        Answer. Our expeditionary mission and complex weapon systems
    require a seasoned force--we depend on retaining skilled people to
    maintain our readiness for rapid global deployment. Recently, TEMPO, a
    robust economy and military/public sector pay inequities have affected
    our ability to recruit and retain technologically adept, mid-career
    airmen, officers, and civilians. This is true for the Total Force--
    active duty, Air National Guard, Reserve, military and civilians. We've
    made progress recruiting the numbers of people with the skills needed,
    and we are actively pursuing initiatives that will eliminate barriers
    to attracting the right candidates for our jobs. However, retention of
    highly trained people remains challenging.
        There is not one ``silver bullet'' that will turn the tide on
    retention; if we take care of people and their families, many of them
    will stay with us despite the ``push'' of increased TEMPO and ``pull''
    from the private sector. To combat the ``push'' from within, we've
    implemented structural and cultural changes via the Expeditionary
    Aerospace Force concept to enhance responsive force packaging, as well
    as providing more stability and predictability in deployment station
    scheduling. We must continue to address the ``pull'' from the private
    sector by focusing on our core quality of life programs: upgrade
    neglected workplace environments, provide safe and affordable living
    accommodations, adequately compensate our people, enhance community and
    family programs, provide educational opportunities, provide affordable
    health care, and reduce out-of-pocket expenses for housing, travel and
    medical expenses. Quality of life initiatives are critical to our
    future. They affect the welfare of our men and women and are crucial
    factors to our overall readiness.
        Question. What more needs to be done to assure that the Air Force
    has highly skilled and qualified personnel?
        Answer. We know that there is not one ``silver bullet'' that will
    turn the tide on retention; our strategy is based on the premise that
    if we take care of people and their families, many of them will stay
    with us despite the ``push'' of increased TEMPO and ``pull'' from the
    private sector. We must continue to focus on our core quality of life
    programs to upgrade neglected workplace environments, provide safe and
    affordable living accommodations, adequately compensate our people,
    enhance community and family programs, provide educational
    opportunities, affordable health care, and reduce out-of-pocket
    expenses for housing, travel and medical expenses, as well as provide
    adequate manpower to balance resources and requirements.
        We have implemented structural and cultural changes via the
    Expeditionary Aerospace Force (EAF) concept to enhance responsive force
    packaging and to provide more stability/predictability in deployment
    and home station scheduling.
        For our civilian workforce, we are pursuing a multi-faceted
    approach to help retain our critical skills and attract the best and
    the brightest for the future. However, more needs to be done in the
    areas of accession planning, force development, and retention/
    separation management. For fiscal year 2002, we increased funding for
    force-shaping by doubling our intern program, increasing civilian
    leadership training, and funding selective use of the Voluntary
    Separation Incentive Program (VSIP). For the future, near-term and
    long-term, we must continue to address civilian workforce shaping,
    particularly as it relates to attracting, developing, and retaining the
    high-tech skills we need for our aerospace mission.
        We also need to focus on quality of life related issues for our
    civilian workforce, such as pursuing funding for civilian tuition
    assistance for college, allowing civilians excused absence for exercise
    activities during the normal duty day, and for programs such as the
    Employment Assistance Program.
        Question. What are your top priorities in addressing quality of
    life issues?
        Answer. The Air Force continually reviews quality of life to ensure
    our eight core priorities address current requirements. First, we must
    ensure adequate manpower as updated wartime planning factors and real-
    world operations validate increased manpower requirements. Second, we
    must improve our workplace environments, which have been neglected.
    Third, fair and competitive compensation and benefits are important to
    our people and are key to maintaining the all-volunteer force. Fourth,
    we must continue to address force-wide balanced TEMPO issues with
    manning, infrastructure and equipment, training, recruiting and
    retention, and mission requirement assessments. Fifth, quality health
    care is essential for our members and their families--full funding for
    Defense Health Program is needed. Sixth, our people want safe,
    affordable housing. Seventh, with more than 62 percent of our force
    being married, enhanced family and community programs are very
    important. Eighth, improved educational opportunities are a must for
    individual and professional development. A significant challenge is
    executing multiple improvements with our current resources--it is
    imperative we balance resources to meet requirements. Every dollar we
    invest in quality of life positively impacts our Total Force readiness.

                        TRANSFORMATION AND MODERNIZATION

        Question. A joint Boeing and Air Force Research Lab study suggested
    that fighter aircraft production costs could be cut in half by
    aggressively incorporating commercially proven technologies and
    processes throughout military aircraft development and production.
        What is your assessment of this study?
        Answer. The joint Boeing/Air Force Research Laboratory 21st Century
    Affordable Aircraft Thrust study can be assessed in two parts. The
    first part identifies manufacturing and process technologies and
    Reduced Total Ownership Cost (R-TOC) advancements, which could accrue
    to the benefit of future aircraft developments and procurements. The
    second part of this study addresses procuring new F-15C-equivalent
    aircraft to replace the Air National Guard's current F-15 aircraft.
        The first part of the study came to the conclusion that new design
    techniques and manufacturing procedures and processes could reduce the
    R-TOC (life cycle cost) of future aerospace vehicles. New manufacturing
    processes such as Virtual Manufacturing have the potential to reduce
    cost by employing three-dimensional, computer-aided design and
    manufacturing techniques to practically eliminate rework in structural
    assemblies. Also, open system architectures for aerospace vehicle
    avionics could reduce operations and support costs, as well as greatly
    reduce integration time, facilitate avionics upgrades, and maintain a
    competitive environment. If successful, we believe these efforts could
    make a significant contribution in achieving lower total ownership
    cost.
        The second part of the study focused on developing cost estimates
    for replacing Air National Guard F-15 aircraft with a new less
    expensive model. As the Air Force Chief of Staff stated last year in a
    letter to Congress, we do not have a requirement for additional F-15s.
    Our current F-15 force structure is sufficient to sustain the fleet
    through its projected service life. The F-22, along with the Joint
    Strike Fighter, is the correct ``sight picture'' for our future.
        Question. What actions, if any, have been taken or are planned to
    incorporate its findings and recommendations in Air Force development
    and production?
        Answer. The Air Force is pursuing some of the recommendations
    identified in the joint Boeing/Air Force Research Laboratory 21st
    Century Affordable Aircraft Thrust study in the development and
    production of future aerospace vehicles. The Air Force is relying on
    Reduced Total Ownership Cost initiatives to achieve aerospace vehicle
    affordability goals. For example, the joint Air Force/Defense Advanced
    Research Projects Agency Unmanned Combat Air Vehicle advanced
    technology demonstration is demonstrating affordable manufacturing and
    assembly techniques and processes to an 80 percent cost confidence
    level. The successful demonstration of affordable processes through
    these and future programs could validate the cost estimating
    relationships identified in the 21st Century Affordable Aircraft Thrust
    study.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                              JOINT STRIKE FIGHTER

        Question. I understand that both Joint Strike Fighter demonstrators
    are meeting or exceeding performance and cost targets. Can you explain
    the capability differences between the F-22 and JSF and is the 339 F-22
    to 1,763 JSF mix the best cost versus capability trade-off possible?
        Answer. Both the F-22 and JSF are exceptional aircraft and their
    differences are significant. These differences stem from the objectives
    used to design the aircraft at their inception. The F-22 was designed
    to be the next generation air superiority fighter which contrasts with
    the JSF objective to develop an affordable, multi-role strike aircraft
    capable of meeting the needs of the Air Force, Navy, Marine Corps as
    well as our allies. In short, they were designed for different
    missions. These objectives influenced the design decisions yielding
    different, yet complementary aircraft.
        The F-22 and the JSF continue the ``High/Low'' combination
    currently fulfilled by the F-15 and the F-16. The F-22/JSF ``High/Low''
    combination is the Air Force solution to countering emerging threats.
    The F-22, the ``Force Enabler,'' is optimized for our toughest air-to-
    air missions. The F-22 will dominate future battlespace from day one,
    while protecting and enabling the remainder of the Joint Force. The
    JSF, the ``Bulk of the Force,'' is optimized for multi-role air-to-
    ground precision attack of high value, heavily defended targets. The
    JSF's stealth, large internal payloads, and integrated multi-spectral
    avionics holds mobile and hard targets at risk. The JSF's low cost
    allows deployment of large numbers against future threats. The JSF/F-22
    Force balances affordability and capability and is the most cost
    effective solution to meet emerging threats.
        The F-22 is the planned air superiority replacement for the F-15C.
    The need for the F-22 is driven by the air superiority force structure
    required to realize Joint Vision 2020 and the predicted total threat
    picture. The F-22 is the ``Force Enabler'' for Joint Vision 2020. The
    F-22's unique attributes of next generation stealth, supercruise,
    maneuverability, and integrated avionics will guarantee rapid air
    dominance, ensuring protection of strike aircraft, naval surface units,
    and ground forces from air attack while continuing the advantage U.S.
    forces have held since 1953. In addition, the F-22 will permit, for the
    first time, 24-hour stealth operations and enable around-the-clock
    employment of our F-117, B-2, and JSF fleets.
        The JSF will provide large numbers of capable aircraft necessary to
    destroy a wide range of targets required to stop a well-armed
    aggressor. The capabilities of the JSF were balanced by cost to bring
    about a ``best value'' design. The resulting design is one that can
    carry a staggering range of air-to-surface weapons and deliver them
    precisely. Some of these will be carried internally to maintain the
    aircraft's radar cross section. For example, the JSF will be able to
    attack mobile targets as well as those in close proximity to friendly
    forces in any weather condition. As the Air Force's replacement for the
    F-16 and the A-10, the JSF was designed to excel at the wide range of
    missions previously accomplished by those two aircraft.
        Although the Air Force needs sufficient F-22's to support the
    directed National Military Strategy (10 Air Expeditionary Forces), the
    1997 Quadrennial Defense Review (QDR) reduced the F-22 buy to 339. The
    initial JSF inventory requirement of 2,036 was based on replacing the
    F-16 and A-10 force structure approximately 1:1. Today, however, the
    JSF inventory objective is 1,763, a number which provides sufficient
    airframes to replace the F-16 and A-10 fleets with required capability
    (vs. numbers) for 2010 and beyond. The current relationship of 339 F-
    22s and 1,763 JSFs is based on certain assumptions; platform baseline
    cost estimates, projected warfighter capabilities, available funding,
    and the 1997 Quadrennial Defense Review (QDR). The current QDR is
    examining requirements for the new force structure (10 AEFs) and long
    term plans for the F-15E and F-117. The Air Force will continue to
    assess the complementary nature of the F-22 and JSF programs, as their
    cost and capabilities are better understood.

                                      B-1

        Question. Since the B-1 has been taken out of the nuclear
    deterrence mix, what are the Air Force's future plans with the bomber?
    Do you plan to transfer more to the Reserves or Air National Guard? Are
    there plans to consolidate B-1 basing?
        Answer. The Air Force is in the middle of an aggressive
    modernization program to keep the B-1 effective and viable for the next
    forty years. Current upgrades are designed to increase lethality,
    survivability, and situational awareness.
        The B-1 consolidation plan will reduce the B-1 fleet from 93
    aircraft to 60 and the five main operating bases will be consolidated
    from five to two. The savings incurred from partial fleet retirement
    will be used to modernize the remaining B-1s. The intent is to have a
    leaner, more capable, more survivable B-1 force.
        Two Air National Guard (ANG) bases (Robins Air Force Base, Georgia
    and McConnell Air Force Base, Kansas) and one active base (Mountain
    Home Air Force Base, Idaho) were selected as the best candidates for B-
    1 drawdown. Each of the three B-1 squadrons is small and each of the
    bases has other missions and other aircraft assigned. No bases will
    close, ANG personnel will be provided with other missions, and active
    personnel will be reassigned to fill other critical needs. The Air
    Force is working to mitigate impacts on the personnel and bases
    involved.

                                 WEAPON SYSTEM

        Question. During the CINC's testimony they voiced concern over the
    lack of preferred munitions for training and operations. Which weapon
    system purchases do you believe need to be increased? Would you assess
    to what degree a lack of these weapons affects your force's readiness?
        Answer. This is not an issue of purchasing more of one weapon, or
    set of weapons. We have a significant shortfall in training and War
    Reserve Materials (WRM) requirements. Major new weapons acquisition
    programs are well funded, but budget constraints prevent the Air Force
    from purchasing the quantity required by our defense strategy.
    Additionally, funding shortfalls in legacy munitions/consumables such
    as GBU-10/12's, flares, cartridges, rockets and practice bombs are
    having an impact on readiness. Legacy munitions have been underfunded
    over the last decade, resulting in a $2 billion Future Years Defense
    Plan (FYDP) shortfall. Unfunded training requirements and the necessity
    to continue training at the expense of the WRM stockpile have created a
    $451 million bow wave as well as a $1.6 billion shortfall in testing/
    training munitions over the FYDP to replenish the WRM stockpiles used
    for training. The $186 million increase for training munitions
    contained in the fiscal year 2002 President's Budget will stop the
    undesirable use of War Reserve Munitions for warfighter training in
    fiscal year 2002. However, we will need sustained increases in training
    munitions in future years or we will once again have to use War Reserve
    Munitions for training. We need to fully support our current legacy
    weapons and consumables programs while continuing to fund future
    weapons.
        Air Force readiness is affected in two ways by shortfalls in legacy
    munitions and consumables. First, current funding allows us to support
    one Major Theater War (MTW), but we are accepting some risk supporting
    a second. The second theater will be forced to rely primarily on
    unguided munitions to achieve CINC objectives. Second, the lack of
    preferred weapons in a theater will result in an increase in the
    duration of the conflict, with a corresponding increase in attrition
    and greater potential for collateral damage.

                            CLOSURE OF COMMISSARIES

        Question. I received notice that the Commissary at Brooks AFB was
    being closed. I am puzzled by this decision as usage of this
    consistently profitable commissary has in fact increased recently,
    since the commissary at Kelly was closed.
        Why would the Air Force sign-off on the closure of commissaries
    that are providing a service to active, reserve and military retirees
    and are not losing money?
        Answer. At the outset it must be understood that there is no profit
    in the operation of commissaries. The challenge is to balance the
    quality of life needs with the business case in order to make decisions
    on commissary establishment and closures. In the case of the Brooks AFB
    Commissary, it was a pretty clear decision. The presence of full
    service commissaries at a reasonable distance from Brooks AFB provided
    enormous capacity to deliver the commissary benefit in a first class
    manner. The Brooks AFB store sales had reduced 44 percent since fiscal
    year 1995 and reduced 11.3 percent between October 2000 and May of this
    year. Additionally, the appropriated dollar costs to dollar of sales
    ratio at Brooks AFB Commissary was about triple to that of the
    surrounding San Antonio stores--and growing. It was estimated that we
    could save about $1 million per year by having the Brooks AFB people
    shop at other close by stores. The Brooks AFB store had become a
    grocery convenience store--and a very expensive one to operate.
        Question. Was any assessment conducted to see if the other San
    Antonio commissaries could absorb the patrons, before the decision was
    made to close Brooks'?
        Answer. Yes, the capacity of other San Antonio area commissaries
    was evaluated and considered in the business case developed by the
    Defense Commissary Agency (DeCA). As you know there are several large
    commissaries available in the Brooks AFB commuting area. They include
    Fort Sam Houston (10 miles), Lackland AFB (11 miles), and Randolph AFB
    (23 miles). Fort Sam Houston Commissary is a fairly new facility
    completed in 1994, Lackland AFB Commissary recently received a major
    upgrade which increased the sales floor by approximately 10,000 square
    feet, and Randolph AFB Commissary's sales area was expanded. These
    commissaries can more than adequately handle the patron base that the
    closing of Brooks AFB Commissary will generate. In addition, these
    larger stores offer many more features, more variety, and a larger
    product selection, all of which provide a greater opportunity to save.
        Question. Could you discuss the effects of deferred Real Property
    Maintenance funding on Air Force readiness and quality of life?
        Answer. The immediate impacts of deferred facility Operation and
    Maintenance (O&M) funding are reduced productivity on the flight line,
    in the maintenance shops and in the office administrative areas as a
    result of unreliable and degraded facilities and infrastructure.
    Quality of life not only implies dormitories and family housing, but
    also includes community support and the workplace. Lack of adequate
    funding leads to Band-Aid fixes and less than required day-to-day
    sustainment.

                                      BRAC

        Question. I am not sure that we have actually realized any cost
    savings from the last few rounds of BRAC due to environment clean-up
    and other turn over costs. It also worries me to see the Air Force
    close a training base only to discover that you cannot meet your
    training requirements. Does the Air Force require another round of
    BRAC? If so, will you maintain enough facility growth capacity for
    surges or if overseas units had to redeploy to the United States?
        Answer. The Air Force needs additional rounds of Base Realignment
    and Closure (BRAC) to realign its force structure to meet current and
    projected requirements and properly size its infrastructure consistent
    with the force structure plan. The Air Force will work to evaluate and
    ensure that it has the right amount of infrastructure to accommodate
    potential contingency and redeployment situations.

                               GUARD AND RESERVE

        Question. The Reserves and National Guard have greatly increased
    their active duty support and deployment schedules. Is the Air Force
    providing adequate support and funding to the Reserves and National
    Guard to maintain this pace?
        Answer. You are correct; the rate at which the Air Force Reserve
    supports the active duty is at an all-time high. In fiscal year 2000,
    the average unit reservist performed 89.75 paid days, far beyond the
    one-weekend-a-month, two-weeks-a-year of the past. Our Reservists are
    currently performing mandays at a rate not seen since the peak of
    Operation Desert Storm in 1991.
        Although we face certain challenges in the realm of funding, we
    feel that the Air Force provides adequate funding to support our
    increased contribution to the Total Force. The Air Force pays for
    manday support through Military Personnel Account (MPA) funding and
    also fully funds our flying hour program.
        The Air National Guard (ANG) completed a review of full-time and
    traditional ANG manpower requirements to support the Air Expeditionary
    Force (AEF). The results of this effort validated a requirement of
    2,048 additional full time manpower resources. Historically the ANG has
    had limited full time manpower to operate and maintain facilities,
    repair aircraft/equipment, and train the drilling force. Now with a
    formalized AEF construct and increasing support requirements, the ANG
    must be resourced properly for both training and increased Operations
    tempo. We have funded 1,151 of this requirement through internal
    offsets and funding received from the Air Force, leaving an unfunded
    requirement of 897 full-time positions in logistics, communications,
    air traffic control, combat communications, and airlift/air refueling
    aircrews.

                                  V-22 PROGRAM

        Question. I am concerned that a significant portion of the
    Department's rescissions were financed at the expense of your service's
    participation in the V-22 program ($240 Million of $505 Million). Does
    this signal a weakening of the Air Force's commitment to this leap-
    ahead technology or only the reprogramming recommended by the Blue
    ribbon panel?
        Answer. The requested rescission of $240 million reflects a change
    in acquisition strategy and not a change in the Air Force's commitment
    to the V-22 program. The CV-22 is still the best weapon system to
    modernize our Special Operations vertical lift forces and we still
    intend to field the aircraft. However, the V-22 Program needs to
    address known deficiencies, especially those highlighted by the Blue
    Ribbon Panel, before the Air Force begins full-scale production of the
    CV-22. In the interim, we are committed to continue the CV-22 flight
    test program, and will assist the Navy in correcting deficiencies in
    the common V-22 baseline and to prepare for CV-22 operational testing.
        The Air Force remains fully committed to fielding the CV-22. The
    Air Force is working with our partners to reduce the program's risk and
    to get the warfighter the best aircraft possible.
        Question. As you may know, on March 15th the Commerce Committee, of
    which I am a member, reported out S. 361, which prohibits an air
    carrier from using the services of a person as a pilot who is 65 years
    or older. Currently, a pilot cannot be 60 years or older.
        What is the Air Force's opinion of this legislation?
        Answer. We do not believe it would be appropriate to voice an
    opinion on this issue, and have no data on pilots flying at that age.
    In our view, the issue focuses on civil aviation medical and safety
    issues for which the Air Force is not in a position to expertly
    comment.
        Question. How would raising the mandatory retirement age for pilots
    impact the Air Force's pilot shortage?
        Answer. There is genuine uncertainty over the level of benefit to
    the Air Force. While raising the mandatory retirement age could be
    viewed as an incentive for pilots to remain in the military until
    retirement eligibility and would also increase the national inventory
    of civilian pilots (and thus reduce near-term airline hiring demand by
    some amount), these positive effects could be offset to some degree by
    the negative retention effect (on mid-career military pilots) created
    by higher potential ``paper'' career earnings generated by the
    additional five years spent as a senior airline pilot in the highest
    wage brackets.

                                   BRAC ISSUE

        Question. As you may know, the 1996 BRAC resulted in the closure of
    Kelly Air Force Base. At the end of that painful process, it became
    clear that many of the best facilities from Kelly Air Force Base had,
    in fact, been realigned to Lackland Air Force Base. This unusual
    division of property has made it more difficult for the community of
    San Antonio to adjust to the new circumstances. Would you please
    examine this situation and report back if any of the previously
    realigned facilities could now be declared surplus and conveyed to the
    community?
        Answer. As recommended by the Base Relignment and Closure (BRAC)
    Commission, the airfield and all associated support activities and
    facilities at Kelly Air Force Base (AFB) were realigned by law to
    Lackland AFB. The Air Force has authority to dispose of the remaining
    1,879 acres. However, many of the facilities located on the remaining
    acres are currently still needed by the Air Force. Congress recognized
    these types of situations could be harmful to long-range planning and
    development opportunities to the local communities affected by BRAC and
    granted Military Departments a property conveyance authority called a
    leaseback (Public Law 104-106). A leaseback allows the Department of
    Defense to transfer nonsurplus BRAC property by deed or through a lease
    in furtherance of conveyance to the Local Redevelopment Authority
    (LRA). The transfer requires the LRA lease the property back to the
    Federal Department or Agency for no rent. When the Federal Department
    or Agency no longer requires use of the facilities, the lease can be
    terminated. The Air Force and the LRA for Kelly AFB have agreed to
    enter into leasebacks for all the facilities currently used by the Air
    Force.
                                     ______

                 Questions Submitted to General Michael E. Ryan

                Questions Submitted by Senator Daniel K. Inouye

                                      F-22

        Question. Has a decision on the future of the F-22 been made, what
    options are you looking at, and when will a production decision be
    made?
        Answer. The F-22 is ready for a Low Rate Initial Production (LRIP)
    decision pending completion of the Defense Strategic Review.
        Question. Operational testing of the F-22 may be delayed up to nine
    months, and that the congressional cost cap on full scale development
    will likely be exceeded. Is this true?
        Answer. Flight test to date has exceeded 1,200 hours with
    exceptional results matching or exceeding predictions. However, late
    deliveries of test aircraft did delay our ability to generate flight
    test sorties. In preparation for the Low Rate Initial Production (LRIP)
    Defense Acquisition Board (DAB), we are reviewing the flight test
    program and believe some additional test time will be required prior to
    the start of Dedicated Initial Operational Test and Evaluation
    (DIOT&E). The additional test time will require EMD cost cap relief. We
    will complete all necessary testing prior to the start of DIOT&E to
    ensure that we can safely and effectively enter operational test.
        Question. Do you see a ground attack mission similar to the F-15E
    in the F-22's future? Would this new mission require additional buys of
    the F-22?
        Answer. An advantage of the F-22 is its inherent air-to-ground
    capability. The baseline aircraft at initial operational capability
    will be able to employ two 1,000 lb global positioning system guided
    weapons. This gives the F-22 an all-weather, near-precision ground
    attack capability. Unlike all current fighters, the F-22 doesn't
    sacrifice its characteristics of low observability or supercruise when
    loaded for ground attack, because all ordnance is carried internally.
    This makes the F-22 survivable and lethal against both the surface and
    air threat, while employing air-to-ground weaponry. The Air Force is
    also pursuing the acquisition of small diameter bombs, which will
    increase the F-22 payload to at least eight near-precision weapons.
        The number of aircraft needed is a force structure decision, and is
    based on a strategy choice of how we will employ the aircraft.

                                 AIRBORNE LASER

        Question. The fiscal year 2001 Supplemental Appropriations request
    includes $153 million for the Airborne Laser program. Would you explain
    to us why you need an additional $153 million for this program? Is this
    program cost growth or program acceleration? And is there sufficient
    funding in your outyear budgets for the program?
        Answer. The $153 million request, for the Airborne Laser (ABL) was
    driven by a number of factors. A contractor Estimate at Completion
    (EAC), performed in January, determined that fiscal year 2001 funding
    is short $98 million if the ABL is to remain on track for a calendar
    year 2003 missile shootdown demonstration. A continuing EAC performed
    by the contractor identified an additional $55 million required for
    cost growth and risk reduction activities. Of the $153 million total,
    $64 million is needed to pull forward to fiscal year 2001 work
    originally planned for fiscal year 2002. This out-of-phase work will
    have the added effect of reducing overall costs to the program by
    reducing the need to redesign systems again during the Engineering and
    Manufacturing Development phase of the program. An additional $64
    million is attributable to cost growth created by industrial base
    issues, technical complexity, and system component test failures. The
    remaining $25 million is required to reduce overall risk to the program
    by purchasing additional spares and installing a secure information
    network across all ABL test facilities.
        Current contract funding was completely expended on 23 March 2001.
    The ABL contractors are committed to the program and say they will
    continue operating at risk while awaiting resolution of the fiscal year
    2001 funding shortfall.
        As to whether or not there is sufficient outyear funding for ABL,
    beginning in fiscal year 2002, all ABL funding will transfer to the
    Ballistic Missile Defense Organization (BMDO). It is expected that BMDO
    will address ABL outyear funding as part of their overall missile
    defense strategy to be submitted with their fiscal year 2003 budget
    request.
        Question. Is the Airborne Laser affordable with all the other
    funding priorities in the Air Force?
        Answer. Beginning in fiscal year 2002, all Airborne Laser funding
    will transfer from the Air Force to the Ballistic Missile Defense
    Organization (BMDO).

                           B-2 SPIRIT STEALTH BOMBER

        Question. On the matter of the B-2, if it were affordable would you
    support restarting B-2 production or would you place priority on
    improving the capabilities of the existing B-2 bombers?
        Answer. The Department of Defense and the Air Force are currently
    examining the National Military Strategy. Force structure and
    modernization priorities, including alternatives to restart B-2
    procurement or improve B-2 capability, are being considered as part of
    that analysis. Recommendations resulting from this review will be made
    available to Congress upon completion.
        Question. The B-2 contractor has made an unsolicited proposal to
    restart B-2 production. Are you familiar with the details of this
    proposal and how do you assess its affordability?
        Answer. The Air Force is familiar with Northrop Grumman's Letter of
    Offer for additional B-2C procurement and characterizes it as
    unaffordable in the current budget environment.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy

                                     KC-135

        Question. Can you please confirm reports that well over one-third
    of the KC-135 fleet is currently not operational, either resting in
    depots or off-line due to spare part shortages?
        Answer. Yes. There are 546 aircraft in the KC-135 tanker fleet. At
    the beginning of June there were 151 depot possessed tankers undergoing
    programmed depot maintenance, major upgrades and modifications or
    unscheduled depot level maintenance. In addition, 99 aircraft were not
    mission capable for a variety of reasons. About half of these 99 not
    mission capable aircraft were undergoing isochronal inspections,
    preventive maintenance, or unscheduled repairs. The other half were not
    mission capable awaiting parts. Therefore, a total of 250 aircraft of
    the total fleet size of 546 are either depot possessed or not mission
    capable at field units. That is about 46 percent of the fleet not
    readily available to perform the mission.
        Steps are being taken to reduce the total number of aircraft that
    are depot possessed. We expect to have that number down to 122 by the
    end of this fiscal year and improve upon that next year.
        These numbers reflect our peacetime maintenance and modification
    programs. When we actually need to go to war, we can stop modifications
    and delay heavy maintenance to rapidly return aircraft to service. We
    conservatively estimate that we can reduce depot possessions by
    approximately 47 percent within 90 days if needed for contingency
    operations. Use of contingency inspections and waiver of peacetime
    isochronal inspections would also increase the availability of mission
    capable aircraft at the units.
        Question. What percentage of the O&M costs are comprised by the KC-
    135E fleet versus the fleet of KC-135R's?
        Answer. There are 547 KC-135 tankers in our inventory.
        KC-135Es account for 25 percent of this fleet, and drive 28 percent
    of the O&M costs.
        KC-135Rs account for 75 percent of this fleet, and drive 72 percent
    of the O&M costs.
        Question. Can you please describe KC-135 maintenance in detail,
    including percentages of work completed in depot and base support.
        Answer. Maintenance technicians at our active duty and air reserve
    component units perform daily inspections, repairing aircraft systems,
    servicing aircraft, preventive maintenance, isochronal inspections,
    aircraft washes, fuel cell maintenance, and some component repair.
        The KC-135 is programmed for depot maintenance every five years.
    While it is in depot, it undergoes intense inspections and heavy
    maintenance. In fiscal year 2000, this process took an average of 389
    days to complete, excluding outliers which were either set-aside while
    awaiting hangar space or that required more extensive repairs than
    usually encountered. So far in fiscal year 2001, we have driven average
    flowdays down to 364 days. Over the five-year programmed depot
    maintenance cycle, depot work accounts for approximately 60 percent of
    scheduled maintenance requirements.
        Aircraft are also depot possessed when they undergo major upgrades
    and modifications like Pacer CRAG. Pacer CRAG upgrades or replaces the
    compass, radar and global positioning system (GPS) among other
    components. The modification is performed by depot or contract field
    teams at a number of locations. On any given day there are about 35
    aircraft being modified with Pacer CRAG and it takes approximately 60
    days to complete the modification. An additional 3 aircraft are usually
    in depot status for other modifications such as the reengining program.
                                     ______

                  Questions Submitted by Senator Thad Cochran

                            JACKSON C-17 CONVERSION

        Question. Last month the Guard and Reserve Component Chiefs
    appeared before this Subcommittee. During testimony, Major General
    Weaver indicated there are funding concerns associated with the Jackson
    C-17 conversion. I understand the shortfalls are in excess of $170
    million in Air Force funding and another $130 million in Air National
    Guard funding. With conversion and construction already underway, how
    do you plan to address these funding shortfalls?
        Answer. The Air Force has recognized a shortfall at Jackson and has
    incorporated it into the overall C-17 program requirement. While most
    of the shortfall has been identified and is being worked in the fiscal
    year 2003 Amended Program Objective Memorandum (APOM), the exact amount
    of the shortfall is pending a final decision on exactly how the
    aircraft will be operated. We will continue addressing the Jackson
    shortfall in the fiscal year 2004 Program Objective Memorandum (POM) as
    operational details firm up.

                                 C-17 AIRCRAFT

        Question. It is my understanding that General Robertson, Commander
    of Air Mobility Command, and former Secretary of the Air Force Peters
    made visits last year to the Jackson Air National Guard Base. At that
    time, they both indicated that the 6 aircraft programmed for Jackson
    were not ideal to fully meet the mission requirements and that 8 C-17
    aircraft would be preferable; I should note that Major General Weaver's
    testimony not only supported 8 aircraft but also suggested additional
    aircraft would be beneficial. Do you support these assessments?
        Answer. The United States Air Force C-17 basing plan is predicated
    on the Defense Acquisition Board decision to procure 120 aircraft. Of
    those 120 aircraft, 6 will be based at Jackson Air National Guard Base
    with the first aircraft scheduled to arrive in July 2004. At this time
    we are analyzing the results of many studies to determine future
    airlift requirements to include an option for additional C-17s. In
    fact, we are presently programming for 17 additional aircraft above the
    120 buy to support our training and special operations requirements,
    bringing our total to 137 C-17s. To accommodate these current and
    emerging requirements, the Air Force is examining contractual,
    programmatic, and budgeting issues associated with additional aircraft.
    We will continue to readdress our basing options, to include the Air
    Reserve Components, based on future procurement of additional C-17s.
    Please be assured we will consider our Total Force options in this
    process.

                             AIR FORCE WAY (AFWAY)

        Question. I understand that the Air Force is in the process of
    reorganizing its computer purchasing method into a single, more
    efficient vehicle entitled ``Air Force Way'' or ``AFWAY.'' I have been
    briefed that the vendor selection will be made shortly and that the
    expected mix of vendors will consist of large companies and a small
    number of disadvantaged businesses. While I applaud you for your
    efforts in streamlining information technology purchases, I am
    concerned that mid-sized companies, such as Howard Computers in Laurel,
    Mississippi, may be overlooked as possible vendors. What are you doing
    to ensure mid-sized companies are considered and included in this
    effort?
        Answer. The Commercial Information Technology Information Product
    Area Directorate (CIT-PAD) is presently in the process of merging its
    operations with Air Combat Command's ACC Way program. The combined
    entity, which will take advantage of the best elements of both
    programs, will be entitled ``AF Way.'' The Air Force will comply with
    all governing procurement laws, and is committed to adopting a vendor
    selection process that will ensure all businesses are given the fair
    opportunity to compete for a position on the AF Way roster.
        To that end, an acquisition review panel chaired by the Principal
    Deputy Assistant Secretary (CIO-Business Information Management) met on
    9 July to discuss all of the key issues surrounding the merger. Issues
    included the selection of vendors that will be available for use by AF
    Way customers, etc.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

                                FORCE STRUCTURE

        Question. Thus far, the Rumsfeld review has been consumed by
    speculation. Now I understand that his strategic review will be rolled
    into the ongoing Quadrennial Defense Review (QDR).
        Answer. We believe that will be the case for some of the studies.
        Question. What, if anything, can you tell me at this stage in the
    game regarding force structure changes within the Air Force.
        Answer. The increasing importance of aerospace power to the nation,
    which escalated in the post Cold War world, should provide the basis
    for Quadrennial Defense Review (QDR) force structure decisions. Yet, we
    are concerned that while the aerospace demand grows, corresponding
    budget share remains stagnant. Fielding a force structure that
    capitalizes on our asymmetrical advantages in space, stealth, long
    range, unmanned vehicles, and precision will require vision and
    statesmanship on the part of both the Department of Defense (DOD) and
    Congress.
        Significant force structure changes will be conducted internally by
    the Air Force. Transformation is a process that the United States Air
    Force (USAF) has continued from its inception. Yet our ability to
    address the heightened national requirement for aerospace capabilities
    is largely dependent legislative and executive support. Space control
    is critically important, and as the national stewards of the vast
    majority of space assets we would like to see support for space based
    radar concept development. Our future force structure also must enable
    us to overcome the anti access threats of advanced surface to air
    missile systems (SAMS), advanced fighters, Theater Ballistic Missiles
    (TBM), cruise missiles, and Weapons of Mass Destruction (WMD). The Air
    Force will address this by continuing the revolutions of stealth and
    precision with stealthy combat platforms like F-22 and Unmanned Combat
    Aerospace Vehicles (UCAV) that punctuate our strong belief that only
    stealthy aircraft will be survivable and lethal in the future air
    combat environment.
        Additionally, we expect technology to allow migration of
    Intelligence Surveillance and Reconaissance (ISR) and strike
    capabilities from manned to unmanned platforms and then to space
    vehicles. Transition to space will provide a genuine ``deep look''
    capability and offer new options for fighting at long distances.
    Aggressive programs to field directed energy weapons (the Airborne
    Laser and Space-Based Laser) and developing the capability to process
    and use tremendous amounts of data while developing information
    operations will remain at the forefront of our research efforts.
    Finally, the critical shortages in our mobility capabilities will be
    addressed in the near term. In short, the nation requires sufficient
    forces to modernize our ten Aerospace Expeditionary Forces (AEFs) into
    fully capable, balanced AEFs, optimized for the future security
    environment and a new U.S. military strategy.
        Question. Do you assume that the Aerospace Expeditionary Force
    concept as implemented will remain in place?
        Answer. Yes. The Expeditionary Aerospace Force (EAF) is an integral
    part of our transformation. It is designed to help manage the rotation
    schedule for steady-state operations while preserving crisis response
    capability. The EAF construct helps us manage our limited resources by
    maximizing predictability and stability for our airmen while meeting
    the needs of theatre Commanders-in-Chief. Predictability increases
    quality of life and, therefore, retention. The Air Force will use the
    EAF construct during future crises to assess the build-up of forces,
    the most effective redeployment flow, and follow-on capabilities the
    Air Force can provide during force reconstitution. In addition, future
    concepts and programs will be framed by the EAF to ensure our ability
    to conduct expeditionary operations and meet challenges in the future.
        Question. While I realize that many hard decisions remain to be
    made, I would like to request that you provide me with any information
    regarding proposed changes as soon as they are available.
        Answer. As the Defense Review progresses, the Air Force will
    continue to provide you updates to force structure constructs based on
    emerging strategy and guidance. Our final force structure construct is
    dependent on the results of the Secretary of Defense's (SECDEF's)
    Strategic Defense Review.

                         SCIENCE AND TECHNOLOGY BUDGETS

        Question. As I'm sure you know, I'm a big fan of Directed Energy
    technologies. I have heard, and last week's Pentagon briefing
    confirmed, that Secretary Rumsfeld will seek to substantially increase
    the research budgets of the Pentagon.
        Over the past several years, the Air Force has underfunded its
    science and technology endeavors. There are several reasons for this,
    which I'm sure you know, but I've been extremely concerned that the Air
    Force was sacrificing its future technological edge in order to meet
    immediate needs.
        What can we expect for the Air Force science and technology budgets
    in 2002 and 2003?
        Answer. The Air Force recognizes the historical value of Science
    and Technology (S&T) contributions to superior warfighting capabilities
    and shares Congress' concerns regarding the level of funding for S&T.
    In recognition of these concerns, the fiscal year 2002 President's
    Budget (PB) shows a marked improvement in the S&T funding compared to
    the fiscal year 2001 PB with a total increase of over $150 million for
    core S&T efforts. This increase includes gain of almost $120 million in
    the 6.1, Basic Research, and 6.2, Applied Research, technology base.
    Our 6.3, Advanced Technology Development budget activity on the whole
    is slightly lower due to the transfer of the Space-Based Laser program
    from the Air Force to the Ballistic Missile Defense Organization. The
    Air Force is continuing to work the fiscal year 2003 and outyear
    budgets for S&T.
        Question. Given the recent increased attention on directed energy,
    especially high energy lasers, do you anticipate increased investment
    in this technology area in the near future?
        Answer. I am also a big fan of directed energy technologies. I
    stated in the Forward to the recent Air Force Directed Energy Master
    Plan that broad directed energy science and technology (S&T)
    investments will provide opportunities for revolutionary changes in
    future military capabilities. Thus, the department has requested an
    increase of $15 million over last year's request in the Air Force's
    core directed energy S&T programs. Also, the Air Force received over
    $13 million this year from the Joint Technology Office for high energy
    laser research and we are developing proposals for additional efforts
    for fiscal year 2002.
        Question. In light of Secretary Rumsfeld's emphasis on space, do
    you anticipate substantially increased budgets in the research
    endeavors related to protecting and fielding space assets?
        Answer. In fiscal year 2002, there is increased funding within the
    S&T Program for protecting and fielding space assets. Specifically, we
    have increased research efforts in nanosatellites, super energetic
    propellants, plasma dynamics, materials engineering, and quantum
    computing.
        In Applied Research and Advanced Technology Development, new
    initiatives include nanostructural materials for space and spacelift
    technologies for hypersonic flight. There also is increased emphasis on
    programs such as radiation-hardening of satellite components,
    ionospheric forecasting, space threat warning technologies, and rocket
    propulsion.
        In addition, increases to Defense-wide S&T accounts could also
    apply to space. The University Research Initiative and High Energy
    Laser Research programs could support several relevant space-based
    technology efforts. Both the Defense Advanced Research Projects Agency
    and the Defense Threat Reduction Agency, have also received increases
    that could support space technology efforts.
        The fiscal year 2002 President's Budget request reflects Secretary
    Rumsfeld's high-emphasis on space and will enable the Air Force to
    affordably launch and maintain our nation's military space assets.

                              SUBCOMMITTEE RECESS

        Senator Inouye. Our next hearing will be on June 13, at
    9:30 in the morning. At that time we will hear from the
    Secretary of the Army and the Chief of Staff of the Army.
        Ladies and gentlemen, thank you very much. The subcommittee
    will stand in recess.
        [Whereupon, at 11:05 a.m., Wednesday, June 6, the
    subcommittee was recessed, to reconvene at 9:30 a.m.,
    Wednesday, June 13.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                            WEDNESDAY, JUNE 13, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:39 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Daniel K. Inouye (chairman)
    presiding.
        Present: Senators Inouye, Dorgan, Stevens, Cochran,
    Specter, Bond, and Shelby.

                             DEPARTMENT OF DEFENSE

                             Department of the Army

    STATEMENTS OF:
            THOMAS E. WHITE, SECRETARY OF THE ARMY
            GENERAL ERIC K. SHINSEKI, CHIEF OF STAFF, UNITED STATES ARMY

                 OPENING STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. The committee is pleased to welcome the
    Secretary of the Army, the Honorable Mr. White, and the Army
    Chief of Staff, General Shinseki. Gentlemen, I thank you very
    much for being here with us today.
        As you can imagine, today is one of those crazy days. We
    have 15 meetings going on at the same time, and there will be
    another vote coming in about 10 minutes.
        Secretary White, I believe this is your first appearance
    before the Congress as Army Secretary, and we look forward to
    working with you over the coming months. I trust that this will
    be one of the many productive meetings you will be having with
    our committee.
        This morning's hearing is the second of our committee's
    review of military services. We, of course, have not received
    the Pentagon's final budget request for fiscal year 2002, and
    unfortunately, this limits our ability to fully engage the
    Army's needs for the coming year. However, Senator Stevens and
    I felt it necessary to begin to lay the foundation for our
    upcoming review. So, we are hoping for a full discussion of the
    status of Army programs this morning.

                           TRANSFORMATION CHALLENGES

        This committee is fully mindful of the bold and challenging
    course the Army has chosen. This course known as
    ``Transformation'' is the Army's solution to meeting today's
    national security threats and planning for tomorrow. The Army's
    transformation plan is bold because it envisions a force to
    meet future threats and takes concrete steps now to build that
    force. This plan is challenging because it must balance the
    need to maintain a strong and ready force today with the need
    to build that future force. And it is risky because it could be
    crippled by a lack of sufficient resources or a lack of
    commitment by the Department of Defense.
        The road ahead is long and formidable, but I can assure you
    that you have the full support of this committee. Moreover, it
    is my hope, and I am sure that of my colleagues, that the
    Department's fiscal year 2002 budget request and the
    Secretary's strategic review will meet these challenges head on
    because we believe that the Nation cannot afford to pass up
    this opportunity. And that is why I strongly urge you, Mr.
    Secretary, as I have urged your counterparts in other services
    not to let it slip by.
        Finally, the administration recently submitted a fiscal
    year 2001 supplemental appropriations request. We may have some
    questions today regarding this submission, but let me also
    assure you that the committee is fully aware of the urgent need
    for these funds.
        As I indicated, Senator Stevens at this moment is at
    another hearing, but upon his arrival, I will call upon him to
    make any remarks that he may wish to provide this committee.
        So, it is my great pleasure and high privilege to call upon
    the Hon. Thomas E. White, the new Secretary of the Army. Mr.
    Secretary.

                       SECRETARY WHITE'S OPENING REMARKS

        Secretary White. Thank you, Mr. Chairman. I am deeply
    honored to appear before you today. This is my first appearance
    before the U.S. Senate as the 18th Secretary of the Army since
    my nomination hearing last month. Mr. Chairman, I sincerely
    appreciate your very kind introduction and I look forward to
    working with you and the committee. With your permission, I
    will submit a statement for the record and keep my opening
    remarks short.
        Tomorrow the Army celebrates its 226th birthday. Throughout
    all of those years, American soldiers have faithfully answered
    our Nation's call to duty and have selflessly performed every
    mission that the American people have asked of them. I am proud
    to say that the soldiers still stand ready to answer our
    Nation's call.
        The Army has a non-negotiable contract with the American
    people to fight and win our Nation's wars and to be ready for
    any contingency. I intend, with your help, to honor that
    contract.
        Almost 2 years ago, General Shinseki announced his bold
    plan to transform the Army. I fully support that plan. I can
    report to you today that we have made great progress in
    Transformation. Thanks to the aggressive support of the
    Congress last year, we were able to fund two Interim Brigade
    Combat Teams at Fort Lewis and step up our efforts in research
    and development.
        In the short time that I have been Secretary, I have met
    with the leaders who are graduating from many of our fine
    institutions, our top non-commissioned officers academy, the
    Sergeants Major Academy at Fort Bliss, our Command and General
    Staff College graduating class, our company grade officers
    school at Leavenworth and this year's West Point class. As I
    told them, everyone in the Army must embrace Transformation in
    order to make our vision a reality. Now, at a time of relative
    peace, is the time to embrace sweeping change.
        Mr. Chairman, for almost 226 years, the Army has served our
    Nation faithfully. We are making use of every opportunity to
    maintain our commitment to our people to be ready for any
    mission. Transformation is the most important link between the
    great capabilities we have today and our ability to meet future
    demands.
        I thank you for the opportunity to testify today. I look
    forward to working with the committee and I stand ready for
    your questions. Thank you.
        Senator Inouye. Thank you very much, Mr. Secretary.
        Senator Stevens. My apologies, Mr. Chairman.
        Senator Inouye. Good timing.
        Senator Stevens. Good morning, gentlemen.
        Senator Inouye. I now call upon the vice chairman of the
    committee.

                        STATEMENT OF Senator TED STEVENS

        Senator Stevens. I do join you in welcoming the Secretary
    and General Shinseki. I will not take the time to read my
    statement because I know I am late.
        But I think this transformation process we have underway,
    that was your vision, General Shinseki, should have our
    complete support and we particularly are interested in seeing
    what it is going to do as far as our forces in the Pacific,
    which the chairman and I are both very interested in, as you
    know. I think the strategy towards Asia and the Pacific, the
    whole presence of our forces in the Pacific, is going to be
    dominated by what happens to the Army. It is my hope that you
    will continue to take a lead role with regard to that national
    strategy. I look forward to working with you and the chairman
    and with our staffs cooperating with you in every way possible.
        I was pleased to visit with you yesterday, Mr. Secretary. I
    appreciate your courtesy in coming by. We look forward to
    giving you an opportunity to do a little marine research in
    Alaska with me one of these days.
        Secretary White. Yes, sir.
        Senator Stevens. That is a very essential capability that
    must be developed in all Secretaries. So, we will get at that
    quickly.
        I do want to note that one of our new appointees is
    appearing before the Government Affairs Committee this morning,
    Mr. Chairman. I will have to leave here in about an hour.
        Thank you very much, and I appreciate your courtesy.
        Senator Inouye. I thank you very much.
        General Shinseki, as you can imagine, the matter foremost
    in our minds is Transformation. In the last go-around this
    committee, in order to demonstrate our support, appropriated an
    additional $600 million. Can you give us an overview of what
    has happened in Transformation to date?

                       GENERAL SHINSEKI'S OPENING REMARKS

        General Shinseki. Sir, I will.
        Mr. Chairman and Senator Stevens, let me begin by
    congratulating you, Mr. Chairman, on your new role. Our many
    dealings with this subcommittee have shown the great
    partnership between you and Senator Stevens is, in fact, a co-
    chairmanship. It does not matter where you sit. As Senator
    Stevens has reminded me on more than one occasion, if you have
    talked to one, you have talked to both. So, we look forward to
    working with both of you and members of this subcommittee as we
    continue our efforts to assure the readiness of the force and
    also to take better care of our people.
        It is also an honor for me to appear today with our new
    Secretary. Secretary White is no stranger to the Army, as you
    both know, having had a long and distinguished career in
    uniform. He and I both patrolled the interzonal German border
    together during the Cold War, at times even together. It is
    great, once again, to be serving side by side with him.
        Let me respond to your question, Mr. Chairman, by reporting
    that that magnificent Army that we talked to you about, those
    soldiers on point today, about 122,000 stationed overseas,
    every day about 30,000 soldiers are on deployment away from
    their home stations. We are mighty proud of all of them, and it
    is their selfless service that guarantees the freedoms we all
    enjoy.
        The Army's fundamental purpose, to reiterate a statement
    here by the Secretary, is to conduct prompt and sustained land
    combat operations, in other words, to be ready to fight and win
    our Nation's wars decisively. Now, this kind of readiness is
    what provides our National Command Authorities and the
    warfighting Commander in Chiefs (CINCs) with the flexibility to
    respond to and resolve crises as they occur.
        In order to better meet our warfighting commitments, the
    Army is, as you have noted, Mr. Chairman, transforming itself
    into a force that will be more strategically responsive and
    just as dominant across the full spectrum of military
    operations as our force is today. Over the past 2 years, thanks
    to this subcommittee and the generous bipartisan support of the
    entire Congress, we have built sustainable momentum for that
    transformation.
        Transformation, as we have discussed in the past, includes
    three broad initiatives: the readiness of the current force,
    the Legacy Force we talk about; the science and technology
    effort to achieve the Objective Force before the end of this
    decade, that future capability; and then finally, the creation
    of an Interim Force to bridge the operational gap that exists
    today in our capabilities.
        As you know, we have started standing up two Interim
    Brigade Combat Teams at Fort Lewis, Washington, and in
    conjunction with this initiative, we have also conducted other
    experimental exercises, one called the Advanced Warfighting
    Experiment with the 10th Mountain Division at Fort Polk,
    Louisiana, another with the 4th Infantry Division in a Division
    Capstone Exercise at the National Training Center, in a force
    on force, contested exercise to see what kind of capabilities
    we derive. We will conduct phase two of that Division Capstone
    Exercise with the 4th Infantry in October at Fort Hood, Texas.
    These exercises have demonstrated that we have, in fact,
    increased our combat effectiveness through advanced
    technologies and improved leader development and warfighting
    concepts.
        We are also moving forward with the Objective Force. Thanks
    to the members of this committee, the fiscal year 2001
    appropriations bill generously funded our science and
    technology effort. We have focused well over $500 million of
    that investment on developing Future Combat Systems
    technologies that will allow us to make decisions and begin
    research and development on those discoveries in the 2003-2004
    time frame.
        The third vector in our Transformation campaign is focused
    on combat readiness of our current Legacy Force, today's Army
    that you see when you go and visit our operations. Today our
    major combat systems are aging. Seventy-five percent of them
    exceed their expected half-life. Aging equipment means
    increased operations and maintenance costs. Those costs have
    grown 30 percent in the last 4 years alone. Aviation safety of
    flight messages have gone up over 200 percent since 1995.
        To combat these spiraling costs, we have identified 21
    systems that must be recapitalized in order to extend their
    useful readiness. So, as we pursue future technologies for the
    Objective Force we seek, we look for your continued support in
    helping us to also maintain current readiness by recapitalizing
    our aging fleets.
        We are grateful for this committee's commitment to
    improving also the well-being of our soldiers and their
    families. Your efforts to tackle health care improvements,
    increased pay, improved educational benefits, and invest in our
    facilities is making a difference in the lives of our soldiers,
    civilians, retirees, and their families. Still, our
    infrastructure is decaying. We hope that the budget will
    address this challenge, but I want you to know that we are
    aware of the problem and we are committed to fixing it.
        The President has submitted a supplemental appropriations
    request that covers our most critical needs for the remainder
    of this fiscal year. It provides the majority of our executable
    operations and maintenance requirements in fiscal year 2001.
        We are working closely with the Department of Defense to
    identify alternatives for any remaining shortfalls. Among the
    options under consideration is an increase in obligational
    authority for the Army and an omnibus reprogramming. I am
    confident that these efforts will be successful.
        We understand that you are working quickly to mark that
    supplemental and we thank you for that help. We have taken your
    counsel and we are not curtailing operations. We trust that you
    will pass the supplemental quickly, as you did last year, so
    that we can maintain the readiness of the force.
        Mr. Chairman, this Army vision is about an investment in
    future Army leadership and security at home and abroad.

                               PREPARED STATEMENT

        Thank you for your invitation to appear before this
    subcommittee today, and I look forward to your questions.
        [The statement follows:]

        JOINT PREPARED STATEMENT OF THOMAS E. WHITE AND GENERAL ERIC K.
                                    SHINSEKI

        Mr. Chairman and distinguished members of the Committee, we thank
    you for this opportunity to report to you today on the United States
    Army's readiness to provide for our Nation's security today and in the
    future.
        The Army exists for one purpose--to serve the Nation. For over 225
    years, American Soldiers have answered the Nation's call to duty,
    faithfully and selflessly performing any mission that the American
    people have asked of them.
        Throughout that time, The Army--active component, Army National
    Guard, U.S. Army Reserve, and Army civilians--has maintained its non-
    negotiable contract with the American people to fight and win the
    Nation's wars decisively. Indeed, The Army stands ready to go into
    harm's way whenever and wherever we are asked. Today, The United States
    Army is the most formidable land force in the world, a fact that
    reassures allies and deters adversaries.
        Today, The Army must also be capable of executing the broader
    requirements of the National Security Strategy and National Military
    Strategy across the full spectrum of operations. The commitment and
    dedication of Army soldiers and civilians, coupled with the support of
    the Administration and Congress, are allowing The Army to meet its
    requirements as the decisive landpower component of the U.S. military.
        The bipartisan support of Congress during the past two years has
    helped The Army build much needed momentum for its Transformation. We
    want to talk to you today about where we are in achieving The Army
    Vision. In our testimony, we will describe the magnificent work the
    Army has done in recent months and identify the challenges we still
    face. There is much work to be done, but The Army has moved out. It is
    transforming in comprehensive and profound ways to be the most
    strategically responsive and dominant land force of the 21st Century--
    decisive across the entire spectrum of military operations.
        Today, The Army's active component ``go-to-war'' force is forward
    stationed, deployed, or in the field--advancing our national interests,
    supporting theater engagement plans, and training for tomorrow's
    warfight. But, our Army is one-third smaller, deploys more frequently,
    and is more likely to conduct stability and support operations than its
    Cold War predecessor. Accelerating operational and deployment tempos
    have strained Army capabilities, and over-stretched resources have
    leveraged our warfighting readiness on the backs of our Soldiers and
    their families. Indeed, our tempo creates a demand for forces that
    increasingly can only be sustained by committing the reserve
    components. When we speak of The Army--active and reserve components,
    soldiers, civilians, family members, retirees, and veterans--we are
    acknowledging a single force with common missions, common standards,
    and common responsibilities.
        The Army has competing requirements that are in constant, daily
    tension. First is The Army's requirement to have a trained and ready
    force to fulfill its non-negotiable contract with the American people
    to fight and win our Nation's wars decisively. That mission is
    significantly enhanced by being fully engaged around the globe with our
    allies, partners, and sometimes our potential adversaries to promote
    stability, to gain influence, and to ensure access in times of crisis.
    Further, as contingency operations become long-term commitments, our
    mission tempo--both training and operational--increasingly strains our
    force structure. Second, but most important, The Army must transform
    itself into a force for the 21st Century, strategically responsive and
    dominant at every point on the spectrum of military operations and
    prepared to meet a growing spectrum of requirements including threats
    to our homeland. The mismatch between strategic requirements and
    operational resources forces us daily to prioritize among support for
    our people, the readiness demanded by the Nation, and the
    transformation necessary to continue our global preeminence.
        More than ten years ago, during the buildup of Operation Desert
    Shield, The Army identified an operational shortfall--a gap between the
    capabilities of our heavy and light forces. Our heavy forces are the
    most formidable in the world. There are none better suited for high-
    intensity operations, but they are severely challenged to deploy to all
    the places where they might be needed. Conversely, our magnificent
    light forces are agile and deployable. They are particularly well
    suited for low-intensity operations, but lack sufficient lethality and
    survivability. There is, at present, no rapidly deployable force with
    the staying power to provide our national leadership a complete range
    of strategic options. The requirements dictated by the rapidly evolving
    world situation increasingly underscore that capability gap; therefore,
    The Army is changing.

    The Army Vision
        To meet the national security requirements of the 21st Century and
    ensure full spectrum dominance, The Army articulated its Vision to
    chart a balanced course and shed its Cold War designs. The Vision is
    about three interdependent components--People, Readiness, and
    Transformation. The Army is people--Soldiers, civilians, veterans, and
    families--and Soldiers remain the centerpiece of our formations.
    Warfighting readiness is The Army's top priority. The Transformation
    will produce a future force, the Objective Force, founded on innovative
    doctrine, training, leader development, materiel, organizations, and
    Soldiers. The Vision weaves together these threads--People, Readiness,
    and Transformation--binding them into what will be The Army of the
    future.

    Achieving the Army Vision
        Last year, The Army took the initial steps to achieve the Vision.
    One step was the continued realignment of our budget priorities,
    generating investment capital by canceling or restructuring eight major
    Army procurement programs. Unfortunately, The Army has had to eliminate
    or restructure 182 programs over the past decade and a half. It is not
    that these systems and capabilities were unnecessary; rather, our
    resource prioritization made the programs unaffordable. Joining with
    the Defense Advanced Research Projects Agency in a cooperative research
    and development effort, we began to streamline our acquisition process
    to focus and accelerate the development and procurement of enabling
    technologies for our Objective Force. To reduce the risk from the
    capability gap between our heavy and light forces, The Army developed a
    concept and began to organize an interim capability until the 21st
    Century Objective Force is fielded. The Army also completed a
    comprehensive study of how it trains Soldiers and grows them into
    leaders, knowing that the capabilities of a transformed Army will
    reside in competent, confident, adaptive, and creative people.

    People
        The Army is people, the core of our institutional strength. The
    well-being--physical, material, mental, and spiritual state of
    soldiers, families, and civilians is inextricably linked to The Army's
    capabilities, readiness, and its preparedness to perform any mission.
    To improve well-being, we are offering technology-based distance
    learning opportunities; working to improve pay and retirement
    compensation; working with the Department of Defense to guarantee that
    TRICARE meets the needs of our soldiers, retirees, and their families;
    improving facilities maintenance; and modernizing single soldier and
    family housing. The health care provisions in the Fiscal Year 2001
    National Defense Authorization Act for our soldiers, retirees, and
    family members represent the types of significant improvements The Army
    will seek for the force's well-being. Sustained Congressional support
    for important well-being initiatives helps us recruit and retain a
    quality force. Indeed, the pay raise, pay table reform, and retirement
    reform, as well as diligent efforts by leaders at all levels of The
    Army helped us exceed our recruiting and retention goals in fiscal year
    2000. Attention to the well-being of our people will keep trained and
    qualified Soldiers and civilians in The Army in the years to come.

    Manning
        In fiscal year 2000, we started a four-year effort to increase
    personnel readiness levels. The Manning Initiative redistributed
    soldiers to fill all personnel authorizations in every active component
    combat division and cavalry regiment, but in doing so, we accepted some
    risk in the institutional base. This effort exposed the serious gap
    that has existed in the aggregate between manning requirements and
    authorizations. It is possible that we will need to increase personnel
    authorizations to meet all requirements, dependent upon ongoing reviews
    of overall Army missions. Meeting the requirements with the active
    component, however, is not enough. As mission demands necessitate
    increased use of our reserve components, we must bolster their full-
    time support requirements to better keep them ready and available.
    Manning the entire force will reduce operational and personnel tempo
    and improve both readiness and well-being.

    Global Engagement
        Readiness is a top priority. It means we must be prepared to
    execute strategic missions across the full spectrum of operational
    requirements around the globe. Our military formations must be able to
    conduct a range of activities from engagement to stability and support
    operations to warfighting. On any given day, The Army has nearly
    125,000 soldiers and 15,000 U.S. civilians forward stationed in over
    100 countries around the world. In fiscal year 2000, on a daily
    average, we deployed more than 26,000 additional soldiers for
    operations and military exercises in 68 countries--from East Timor to
    Nigeria to the Balkans. In Bosnia, the Texas Army National Guard's 49th
    Armored Division assumed the mission for the Multinational Division
    (North), the first time since World War II that a reserve component
    division headquarters has led active component forces in an operational
    mission. In both Europe and Korea, Army Soldiers continue a successful
    security commitment made 50 years ago. In Southwest Asia, The Army
    continues its support of United Nations sanctions against Iraq,
    stability operations in the Persian Gulf, and peacekeeping efforts in
    the Sinai. No other military service works as frequently, as
    continuously, or on as many levels to deter aggression, operate with
    allies and coalition partners, and to respond at home and abroad with
    support to civil authorities.

    Civil Support
        The Army provides military support to civil authorities, both
    domestically and around the globe, for crisis response and consequence
    management. Army support after natural disasters ranged from personnel
    and equipment to suppress wildfires to logistical and medical support
    following the disasters in the South African, Central American, and
    Asian Pacific regions. Last year, within the United States, the U.S.
    Soldier and Biological Chemical command trained over 28,000 people and
    conducted crisis response and consequence management exercises in 105
    cities with federal agencies, state and local governments, and non-
    government organizations in support of the Domestic Preparedness
    Program. The Army Corps of Engineers prevented an average of $21.1
    billion in damages through flood control management projects including
    383 major flood control reservoirs and 8,500 miles of flood control
    levees as part of its flood fighting authority and the Federal Response
    Plan. The Army supported civil law enforcement agencies in more than
    380 counter-drug operations in 41 states. Finally, as part of a joint
    program, The Army led the development and testing of a fixed, land-
    based National Missile Defense system that offers the most mature
    technology for a near-term deployment decision. The Army stands ready
    to respond to the full breadth of security requirements in the homeland
    and abroad now and in the future.

    Readiness
        Measuring the readiness of The Army to respond to the Nation's call
    requires accuracy, objectivity, and uniformity. Our current standards
    are a Cold War legacy and reflect neither the complexity of today's
    strategic and operational environments nor other important factors.
    Near-term factors encompass the overall capability of units to deploy
    and include training enablers such as training ranges, institutional
    support, and depot maintenance; full time support for our reserve
    components; and installation support. Long-term readiness factors
    affect The Army's ability to fight in the future and to retain quality
    personnel. We are re-examining how to measure Army readiness in the
    near-term, the long-term, and across the range of missions we may be
    expected to undertake. This new reporting system will provide timely
    and accurate information on the status of The Army's readiness, with
    measurements that are relevant and quantifiable, to enhance the ability
    of commanders to make the best possible employment decisions. It will
    also give the American people a more accurate assessment of how ready
    their Army is to do what it is asked to do.

    Installation Readiness
        Installations are an essential, but often overlooked, part of our
    warfighting readiness. They support Soldiers and their families,
    enhance the rapid deployment of The Army, and provide efficient and
    timely support to deployed formations. Funding facility Sustainment,
    Restoration and Modernization (SRM, formerly termed Real Property
    Maintenance, or RPM) accounts is one of The Army's greatest concerns
    this year. We must maintain, modernize, and transform the training
    platforms and ranges that prepare the force; the depots and arsenals
    that maintain and equip the force; and the power projection platforms
    and information infrastructures that support the force when deployed.
    Only by taking care of installation infrastructure now can The Army
    secure readiness for the future also.
        In the past, we paid other bills at the expense of facilities
    upkeep or masked these costs by migrating funds from operating tempo
    accounts--a practice we have stopped. The Army would prefer to divest
    itself of excess infrastructure and receive full funding to maintain
    installations and repair critical facilities. The Army's current goal
    is to sustain facilities to a level that prevents further deterioration
    and to improve both the quality and the quantity of facilities to meet
    validated deficits in strategic mobility by fiscal year 2003, barracks
    by fiscal year 2008, and family housing in fiscal year 2010. However,
    even with this significant investment, our overall infrastructure
    condition continues to decline. Previously, we have funded SRM at only
    60 percent, and we still cannot afford to fund at 100 percent, so
    conditions are getting continually worse. We currently have an unfunded
    SRM backlog of $17.8 billion and an unfunded facilities deficit of $25
    billion. The solution requires a 30-year commitment to fully fund and
    focus SRM funding on selected facility types, in ten-year increments.
    Army installations will take on a greater role as we attempt to reduce
    the deployed logistical footprint and rely on reach-back links for
    enhanced command and control capabilities. Transformation of our
    operational force without a concurrent renovation of the installation
    infrastructure will create an imbalance that will impinge on advantages
    gained by a transformed force.

    Transformation
        The third thread of the Vision requires a comprehensive
    transformation of the entire Army. This complex, multi-year effort will
    balance the challenge of transforming the operational force and
    institutional base while maintaining a trained and ready force to
    respond to crises, deter war and, if deterrence fails, fight and win
    decisively. Transformation is far more extensive than merely
    modernizing our equipment and formations. It is the transformation of
    the entire Army from leader development programs to installations to
    combat formations. All aspects--doctrine, training, leaders,
    organization, material, and Soldiers--will be affected.
        Transformation of The Army's operational force proceeds on three
    vectors--the Objective Force, the Interim Force, and the Legacy Force.
    All are equally necessary to our Nation's continued world leadership.
    The Objective Force is the force of the future and the focus of The
    Army's long-term development efforts. It will maximize advances in
    technology and organizational adaptations to revolutionize land-power
    capabilities. The Interim Force will fill the current capability gap
    that exists between today's heavy and light forces. Today's force, the
    Legacy Force, enables The Army to meet near-term National Military
    Strategy commitments. Until the Objective Force is fielded, the Legacy
    Force--augmented or reinforced with an interim capability--will
    continue to engage and respond to crises to deter aggression, bring
    peace and stability to troubled regions, and enhance security by
    developing bonds of mutual respect and understanding with allies,
    partners, and potential adversaries. It must remain ready to fight and
    win if necessary, giving us the strategic hedge to allow
    transformation.
        As The Army works to develop and acquire the technologies for the
    Objective Force, the Legacy and Interim Forces will guarantee Army
    readiness. Our most pressing concerns this year include the
    modernization and recapitalization of selected Legacy Force systems.
    Legacy Force Modernization & Recapitalization
        We must judiciously modernize key armored and aviation systems in
    the Legacy Force to enhance force capabilities. We will further
    digitize the Abrams tank to increase situational awareness and
    remanufacture early model Bradley infantry fighting vehicles to improve
    lethality, situational awareness, and sustainability. We will procure
    new systems like the Crusader howitzer to increase force effectiveness,
    reduce friendly casualties, ease logistics support requirements, and
    improve deployability. Crusader will maximize the total capabilities of
    the Legacy Force. Fielding the Patriot Advanced Capability-3 missile
    defense upgrade and the Theater High Altitude Area Defense system will
    significantly increase our in-theater force protection. Current legacy
    forces will benefit from upgrades and enhancements to proven systems.
    Interim forces will demonstrate the power of developmental and off-the-
    shelf communications and intelligence capabilities. The Army has made
    the hard decisions for selective modernization to sustain combat
    overmatch. What is needed is continued support for our prudent
    investment strategy to keep our force strong and credible.
        Concurrently, The Army will selectively recapitalize Legacy Force
    equipment to combat the rapid aging of our weapons systems. The Army
    has determined that we preserve readiness best and most cost
    effectively when we retire or replace warfighting systems on a 20-year
    Department of Defense modernization cycle. Today, 12 of 16 critical
    weapons systems exceed this targeted fleet average age. As systems age,
    they become more costly and difficult to maintain in peak warfighting
    condition. They lose combat overmatch with respect to an adversary's
    modernized systems. The Army has established a selective
    recapitalization program that will restore aging systems to like-new
    condition and allow upgraded warfighting capabilities for a fraction of
    the replacement cost. We must maintain the readiness of the Legacy
    Force until the Objective Force is operational. As the Legacy Force
    maintains our strategic hedge and the Interim Force bridges the
    capability gap, The Army will build the Objective Force and complete
    the Vision for a trained and ready 21st Century Army.

    The Interim Force
        The fielding of the Interim Force fills the strategic gap between
    our heavy and light forces and is an essential step toward the
    Objective Force. The key component of the Interim Force is the Interim
    Brigade Combat Team (IBCT), the first of which is being organized at
    Fort Lewis, Washington. Its primary combat platform, the Interim
    Armored Vehicle (IAV), will fulfill an immediate requirement for a
    vehicle that is deployable any place in the world arriving ready for
    combat. The IAV will consist of two variants, a mobile gun system and
    an infantry carrier with nine configurations. The IAV will achieve
    interoperability and internetted capability with other IBCT systems by
    integrating command, control, communications, computer and
    intelligence, surveillance, and reconnaissance systems. Congress
    supported the IBCT concept with an additional $600 million in the
    Fiscal Year 2001 Defense Appropriations Act for IAV procurement and
    organizing the second IBCT. The Army will program resources to field
    six to eight IBCTs.
        The Army will train and test Soldiers and leaders in the doctrine
    and organization of these new units to ensure that they can respond to
    operational requirements. An IAV-equipped battalion-sized element will
    undergo training and initial operational testing and evaluation to
    guarantee system suitability and effectiveness. Innovative applications
    and technology insertion in supporting forces will complete the IBCT
    package and enable full operational capabilities for the first IBCT in
    2005.

    The Objective Force
        The Army's ultimate goal for Transformation is the Objective Force.
    Operating as part of a joint, combined, and/or interagency team, it
    will be capable of conducting rapid and decisive offensive, defensive,
    stability and support operations, and be able to transition among any
    of these missions without a loss of momentum. It will be lethal and
    survivable for warfighting and force protection; responsive and
    deployable for rapid mission tailoring and the projection required for
    crisis response; versatile and agile for success across the full
    spectrum of operations; and sustainable for extended regional
    engagement and sustained land combat. It will leverage joint and
    interagency reach-back capabilities for intelligence, logistical
    support, and information operations while protecting itself against
    information attacks. It will leverage space assets for communications;
    position, navigation, and timing; weather, terrain, and environmental
    monitoring; missile warning; and intelligence, surveillance, and
    reconnaissance. The Objective Force will provide for conventional
    overmatch and a greater degree of strategic responsiveness, mission
    versatility, and operational and tactical agility. With the Objective
    Force, The Army intends to deploy a combat-capable brigade anywhere in
    the world in 96 hours, a division in 120 hours, and five divisions in
    30 days. Our ability to quickly put a brigade-size force on the ground,
    with the balance of a division following a day later, fills a current
    gap for credible, rapid deterrence. The Objective Force will offer real
    strategic options in a crisis and changes the strategic calculations of
    our potential adversaries. The Army with Objective Force capability
    will provide the National Command Authorities with a full range of
    strategic options for regional engagement, crisis response, and land
    force operations in support of the nation.

    Science and Technology
        Advances in science and technology will lead to significantly
    improved capabilities for the Objective Force. The Army is programming
    over $8 billion for science and technology efforts to begin fielding
    the Objective Force by the end of the current decade. This effort seeks
    to resolve a number of challenges: how to balance sustained lethality
    and survivability against ease of deployability; how to reduce
    strategic lift requirements and logistical footprint required in-
    theater; how to mitigate risk to our support forces and to forces in-
    theater; and how to ensure digitized, secure communications to provide
    battlefield awareness at all levels of command. The Army will find the
    best possible answers while maintaining the ready, disciplined, and
    robust forces our Nation demands, our allies expect, and our
    adversaries fear.
        Future Combat Systems (FCS), a system of systems, is one of the
    essential components for The Army's Objective Force. To accelerate
    development of key technologies, The Army partnered with the Defense
    Advanced Research Projects Agency in a collaborative effort for the
    design, development, and testing of FCS while simultaneously
    redesigning the force. Forces equipped with FCS will network fires and
    maneuver in direct combat, deliver direct and indirect fires, perform
    intelligence, surveillance, and reconnaissance functions, and transport
    Soldiers and materiel. Over the next six years, The Army will
    demonstrate and validate FCS functions and exploit high-payoff core
    technologies, including composite armor, active protection systems,
    multi-role (direct and indirect fire) cannons, compact kinetic energy
    missiles, hybrid electric propulsion, human engineering, and advanced
    electro-optic and infrared sensors.
        Equally essential to the Objective Force is the fielding of the
    Comanche helicopter beginning in 2006. Comanche is the central program
    of the Army aviation modernization plan and a prime example of existing
    modernization programs with significant value for Objective Force
    capability. Although Comanche will be fielded as part of the Objective
    Force, its digitization will be compatible with Legacy and Interim
    Force systems. Comanche will provide a lethal combination of
    reconnaissance and firepower.

    Institutional Transformation
        As the combat formations are being transformed, The Army's
    institutional base--schools, services, facilities, and installations--
    must also change to support both the Objective Force and current
    mission requirements. The U.S. Army Training and Doctrine Command
    produces tactically and technically proficient Soldiers and leaders and
    the doctrine and concepts for operational success. The Army must train
    Soldiers--in simulations, on ranges, and in exercises--and grow them
    into leaders who are capable of executing rapid and seamless
    transitions between missions throughout the spectrum of operations.
    Training must continuously improve and respond to emerging
    technologies. We must recapitalize and modernize ranges, distance
    learning centers, Army schools, and combat training centers to keep
    pace with changes in force structure, technology, and the global
    environment. We must address the increasing challenge to readiness
    posed by encroachment to our ranges and training areas while
    maintaining our environmental stewardship of these same lands.
        Army doctrine and concepts must also transform to keep pace with
    our changing operational force and growing technological advantages. As
    foundations for the Transformation, the two conceptual baselines for
    Army doctrine, Field Manuals, FM-1, The Army, and FM-3, Operations,
    will be published June 14, 2001. The Training and Doctrine Command is
    revising and developing doctrine for organization and operation of the
    Interim Force and validating concepts for the Objective Force. We are
    also developing the concepts to integrate the capabilities of space and
    information operations to provide support across the entire spectrum of
    military operations. At every level, The Army is integrating emerging
    joint and multinational doctrine to develop the concepts that will
    field a force, grounded in doctrine, that is capable of providing the
    National Command Authorities a range of options for regional
    engagement, crisis response, and sustained land force operations.

    Army Training and Leader Development
        Key to transformation is the training and leader development
    necessary for producing adaptive Soldiers and leaders who can lead and
    succeed in both joint and combined environments while capitalizing on
    the latest battlefield technologies. The Army Training and Leader
    Development Panel (ATLDP) has concluded its in-depth study of issues
    affecting The Army's culture and its training and leader development
    doctrine. The ATLDP surveyed and interviewed over 13,500 officers and
    spouses. Follow-on studies of the noncommissioned officer and warrant
    officer corps will be conducted over the next six months. The primary
    objectives of the panel were to identify skill sets required of
    Objective Force leaders and to assess the ability of current training
    and leader development systems to cultivate those skills. Study
    participants addressed issues that included well-being, job
    satisfaction, training standards, and the officer education system.
    This study represents a candid self-assessment by The Army; it seeks to
    restore faith with Soldiers and set a course for improving all aspects
    of The Army's culture by bringing institutional beliefs and practices
    in line. To that end, some steps have already been taken, including
    adapting the Officer Education System to meet the needs of the
    transforming Army; eliminating non-mission compliance tasks that
    interfere with war fighting training; allocating full resources to our
    Combat Training Centers; and protecting weekends for the well-being of
    soldiers and their families. It is a testament to the strength of any
    organization when it is willing to take such a candid look at itself,
    and this kind of healthy introspection characterizes a true profession.

    Logistical Transformation
        We will transform logistical services and facilities to enhance
    readiness and strategic responsiveness. Today, logistics comprises
    approximately 80 percent of The Army's strategic lift requirement,
    creating a daunting challenge to deployability. Prepositioning stocks
    and forward presence solves only part of the problem. Currently, The
    Army has seven brigade sets of equipment forward deployed on land and
    at sea with an eighth brigade set being deployed in fiscal year 2002.
    As we fundamentally reshape the way The Army is deployed and sustained,
    we will ensure logistics transformation is synchronized with the needs
    of the operational forces and supports Department of Defense and Joint
    logistics transformation goals. The Army is examining how to reduce the
    logistical footprint in the theater of operations and to reduce
    logistical costs without hindering warfighting capability and
    readiness. Approaches already being explored are recapitalization,
    common vehicle chassis design, a national maintenance program, and an
    intermediate basing strategy for force protection. We are synchronizing
    the critical systems of the institutional Army with our operating
    forces to ensure the Transformation of The Army is holistic and
    complete.

    Conclusion
        The Army has embarked on a historic enterprise. Recognizing that
    the forces we can provide to the combatant commands are becoming
    obsolescent in a changing strategic environment, The Army is
    transforming. With the support of the Administration and Congress, The
    Army has charted a course that will better align its capabilities with
    the international security environment, enhancing responsiveness and
    deterrence while sustaining dominance at every point on the spectrum of
    operations. The Army Transformation is the most comprehensive program
    of change in a century and is already underway. It comes at a
    propitious moment. We live in a time of relative peace. Our Nation's
    economic strength has given us a period of prosperity. A decade of
    post-Cold War experience has provided us strategic perspective and
    American technological power gives us tremendous potential. We have
    seized this opportunity to guarantee our strategic capability and our
    non-negotiable contract with the American people well into this
    century.
        Mr. Chairman and distinguished members of the Committee, we thank
    you once again for this opportunity to report to you today on the state
    of your Army. The statements made in this testimony are contingent upon
    the results of Secretary Rumsfeld's strategic review. We ask you to
    consider them in that light. We look forward to discussing these issues
    with you.

        Senator Inouye. Thank you very much, General.
        Before proceeding, Senator Specter.

                         ARMY MUSEUM AND GRIZZLY SYSTEM

        Senator Specter. Thank you very much, Mr. Chairman. I
    wanted to join you in welcoming the Secretary and the Chief of
    Staff and to state my cooperation in working on the
    supplemental.
        I am going to be submitting two questions for the record,
    but I will briefly reference the issues. I have already talked
    to Secretary White about the museum in Carlisle where we have
    had a commitment from the Department and the last Secretary. As
    is the case in Washington, nothing ever seems to be settled,
    and this is part of an effort to have something outside of the
    Washington, D.C. area. We have talked about it. We would like
    to move ahead on this project because it is a matter of great
    concern.
        One other parochial matter, on the Grizzly program where we
    put in $15 million last year, I will be submitting a more
    extensive question for the record.
        I join my colleagues in thanking you for your service, and
    we will be helping.
        Thank you very much, Mr. Chairman.
        Senator Inouye. Thank you very much.
        I notice there is a vote going on. So, let us get down to
    business right away.
        When will the Interim Brigade be ready for combat and what
    will be the primary mission?

                      INTERIM BRIGADE COMBAT TEAM FIELDING

        General Shinseki. Well, an exact date on that Interim
    Brigade Combat Team is subject to the fielding plan that we are
    in the process of developing. As you know, there was a hold on
    production until a protest was resolved. Right now, it appears
    that at the earliest a full fielding of that Interim Brigade
    Combat Team occurs in the spring of fiscal year 2003.
    Correction: in the spring of calendar year 2003, shortly before
    I depart, in the May timeframe, where it would go for a full
    initial operations capability shake-out. At that point, all
    things working, as I trust they will, it would be ready for an
    operational deployment.
        That operational deployment could be for a scenario that
    had a light force going in early with this brigade coming in to
    reinforce it and follow it by a heavy tank brigade behind it.
    So, it would be part of a larger deployment if it involved a
    warfight scenario. If it were for a contingency, that brigade
    should be able to go on its own and handle a wide range of
    missions.
        Right now, the spring of calendar year 2003 is when the
    fielding plan comes together. We are working very hard with the
    production folks to try to move that as far to the left as we
    can. I will have a better date here sometime this summer.
        Senator Inouye. Mr. Secretary, transformation obviously
    calls for a change in just about every aspect of Army life,
    everything from infrastructure on to training. With your vast
    corporate management experience, do you have any ideas on how
    this management transformation can be carried out?
        Secretary White. Mr. Chairman, I think that, first, we have
    to decide what the core and the non-core activities of the
    Department are, just like any business. And for those
    activities that we decide are non-core, we have to make
    decisions as to whether we continue to do those in-house or
    whether we seek partners in the private sector who can bring a
    better value proposition, better service at a lower price. I
    think the initial indications are that we are being very
    successful in family housing privatization, for example. I
    think utilities privatization is another area. I think there's
    a whole range of what I would deem to be non-core activities
    that we should seek help and support with from the private
    sector, and that is what I intend to pursue.
        Senator Inouye. General Shinseki, do you have anything to
    add?
        General Shinseki. I would only add that in terms of the
    transformation efforts at fielding equipment, we have very
    aggressively challenged the processes that we have in place
    today, both for acquisition and testing and evaluation and
    fielding. There seems to be a time factor applied to the
    process that I need to understand a little better because it
    also involves an extended fielding period. It also involves
    increased costs. I think along with the Secretary's interest
    about deciding what are core Government operations and what can
    be privatized, I think we also want to look at efficiencies in
    how we acquire, produce, and field equipment. I think there is
    good reason to take a review of those processes.
        Senator Inouye. I have many other questions, but Senator
    Stevens.
        Senator Stevens. We do not have much time on this first
    vote.
        As you stated, General, we provided I think $300 million
    for weapons and combat vehicles and $200 million for the other
    procurement account for your transition. Is that enough money
    to proceed and keep the schedule you just outlined?
        General Shinseki. That will take care of the brigades that
    are identified for production, the first two. As you know, we
    have a requirement to fulfill a comparison evaluation before we
    can have a decision to go to the third brigade. We are now
    trying to cost that test, but that money does not fully meet
    our requirements for fielding those brigades. We will be
    looking for additional help.

                            OBJECTIVE FORCE FIELDING

        Senator Stevens. Is 2008 still your target for the total
    Objective Force for the mark for completion of that transition?
        General Shinseki. Yes, sir. Again, this is a mark on the
    wall. It is the near side of that time frame, 2008-2010, where
    we are intending to look at fielding that future Objective
    Force before the end of the decade. Our intent is to begin that
    process in 2008. Right now, a 2008 date is, I would say, front
    soft because we are at this point investing in finding the
    technologies that would give us the capabilities to produce the
    hardware. So, that is a mark on the wall for us.
        Senator Stevens. Secretary White, I was a little facetious
    with you, but I was pleased to learn yesterday Mark Hamilton,
    our distinguished President of our University of Alaska now and
    former general, was your classmate.
        Secretary White. Yes, sir.
        Senator Stevens. Have you had occasion yet to find out if
    we are going to get support from Office of Management and
    Budget (OMB) for the Apache AH-64 for a multiyear acquisition
    program that we initiated?
        Secretary White. Senator Stevens, I am not sure. I know if
    it is a 2002 budget issue, those discussions are still going on
    today, as a matter of fact, with OMB, and hopefully they will
    be concluded shortly.

                 ACTIVE COMPONENT/RESERVE COMPONENT INTEGRATION

        Senator Stevens. We are quite interested here in this
    committee also in the AH-64 transition for the Army Guard. I
    have been very pleased with the way the Army, under General
    Shinseki, has welcomed the new total force partnership with the
    National Guard. Do you concur in those opinions?
        Secretary White. I most certainly do, Senator. We have one
    Army. I must say as the new guy, being gone 11 years, when I
    look at the relationship between the Guard and the Reserve--
    and, of course, General Shultz and General Plewes are with us
    today. They will be promoted this afternoon to a 3-star rank,
    reflecting the importance of those components of the total
    Army. I am very encouraged by the way the Guard and the Reserve
    and the active are integrated today, and it is my intention to
    promote that.

                                DEFERRED FUNDING

        Senator Stevens. I guess we ought to go, but one of the
    last questions I would ask is when we went after the balanced
    budget concept in the late 1990's, many people made statements
    that once we stopped paying so much interest on the national
    debt, that we would have available money to catch up with the
    things we deferred at that time. We have deferred for several
    years the proper funding of the real property and equipment
    operation and maintenance funds for the Army. I think more than
    any other service it has been underfunded in terms of the costs
    of maintenance of particular facilities and their vehicles.
        Have you had an opportunity to look into that problem, the
    level of it and the gigantic size of this unfunded liability
    that we have? Have you?
        Secretary White. Yes, I have, Senator, in a preliminary
    sense. And I agree with you. If you look at real property
    maintenance, if you look at spares, we have not adequately
    funded those, and I am hopeful that the 2002 budget revision
    will reflect a strong commitment by the Secretary and the
    President to fixing this readiness issue.
        Senator Stevens. Well, I hope so because some people around
    here where we live cannot seem to remember what they said when
    we balanced the budget by deferring accounts. And it is true we
    did. The difficulty is that we have not been able to go back
    and catch up now using the money that otherwise would have been
    used to pay interest and not fulfill any mission as far as the
    military is concerned. I hope that you will be a voice in that
    series of meetings with the Secretary to ensure that we have
    sufficient funds for catching up with that major issue of
    operations and maintenance.
        Secretary White. I will, Senator, and I must say in all the
    discussions we have had to date, that Secretary Rumsfeld is
    intensely interested in this subject.
        Senator Inouye. If I may, Mr. Secretary and General, call a
    short recess. We will have to go to vote. We will be right
    back.

                           LEGACY FORCE MODERNIZATION

        General Shinseki, you have indicated in your testimony that
    one of the most pressing concerns is modernizing the Legacy
    Force. As you know, your Army is the most capable ground force
    in the world. One of our concerns is that in your effort to
    modernize the Legacy Force, would it mean that you would take
    away resources from the transformation program?
        General Shinseki. No, Mr. Chairman. Of course, you never
    have enough to do both. So, for the Secretary and me, we have
    to balance the requirements. But our priority is on
    transformation, and that is where we intend to put our energy
    both in science and technology investments, driven at a faster
    acquisition pace. I look to the Secretary to help, with his
    business background, how we do that better, faster, and more
    efficiently.
        Getting to that future Objective Force that we are trying
    to transform is a matter of time and dollars. We have said we
    are going to do that before the end of this decade, and we have
    invested very heavily in science and technology so that in
    about 2003-2004 we have the answers to the questions we have
    asked that will lead to research and development to get to that
    Objective Force capability. The luxury of having the time to do
    that right, to come out with the right answers, the luxury of
    that time rides on the readiness of the legacy force today. So,
    there is an amount of funding, resourcing that needs to be
    invested in that Legacy Force to make sure that it can meet
    that non-negotiable contract with the American people every day
    for the next 10, 12 years, however long it takes us to begin to
    pick up momentum in Transformation, that today's Army can fight
    and win wars and allow us the opportunity to get this right.
        We have focused our recapitalization efforts. We have
    focused our modest modernization investments into a single
    core, one of four that we call the counter-attack force, and
    that is where we are going to put, for the next 10 years or so,
    our primary focus in terms of keeping us ready to do the
    Nation's business and at the same time invest in that future
    Objective Force so we get as much energy going there.

                                FORCE STRUCTURE

        Senator Inouye. In balancing the needs of the military,
    does that also include reduction of the force structure?
        General Shinseki. It is not a consideration on my plate. I
    have testified, I believe both before this committee and
    others, that today for the profile of missions the Army is
    asked to perform, we are not big enough to handle that mission
    profile without a significant operational tempo (OPTEMPO)
    impact on our people. And you see the impacts of that, great
    youngsters who go out there and do not mind doing the heavy
    lifting, but then show the effects of that significant OPTEMPO.
        Some of our ways of mitigating it are we have passed some
    of those operational missions to our Reserve component who do
    some of those missions very, very well. In Bosnia today, over
    2,000 of the soldiers on the ground handling the Bosnia mission
    are out of our Reserve component. In Kosovo, over 700 of our
    soldiers on the ground there are out of the Reserve component.
    So, we mitigate some of that tempo that is caused by an active
    component force that is smaller than the mission profiles we
    are asked to perform, and then the resourcing of that force has
    been less than we would like.
        There is a finite amount of going to the Reserve component
    to mitigate that OPTEMPO that we can account for. Beyond a
    certain point, these great citizen soldiers do have other
    careers that are full-time for them, and so going to them too
    often creates a burden on them as well. It is a very delicate
    act of balancing that the Secretary and I do in this regard.
        Senator Inouye. I have many other questions, but Senator
    Stevens has another engagement.
        Senator Stevens. Well, thank you very much, Mr. Chairman. I
    just have a couple of questions.

                                 FAMILY HOUSING

        Secretary White, when the Secretary of Defense was here
    earlier, he indicated that he believed that we should set a
    goal to eliminate all inadequate family housing and inadequate
    barracks for single people by 2010. When Admiral Blair, the
    Commander in Chief of the Pacific, was here, he outlined for us
    the substantial backlog and really inadequacy in housing and
    military facilities in Alaska. That is very worrisome to me
    because unless there is substantial military construction
    monies allocated to Alaska in this period of time between now--
    it is only 8 years in the bill we are looking at now--the basic
    facilities for the military in Alaska will be left behind
    again.
        As a matter of fact, the Senator and I share part of our
    ``pork'' titles because we constantly have to add to the
    budgets prepared by the Department of Defense and the
    administrations, whether they are Republican or Democrat,
    monies to ensure the quality of life for the military people
    that are assigned to our State.
        Is this part of the program that you are working on with
    the Secretary? I am not asking you to comment on it, but is it?
    Are we going to get, as part of this plan, some indication of
    how the Department of Defense can catch up in this critical
    area? Operations and maintenance is critical in and of itself.
    But I believe the impact on families has a lot to do with the
    drop-off in reenlistment rates. Unless we get these facilities
    really modernized and do it in the near term, we are going to
    start losing more and more people who have families and are
    going to be assigned either to Hawaii or Alaska.
        What can we do about this backlog?
        Secretary White. Senator, number one, I absolutely agree
    with you on the importance of this. My wife and I raised a
    family in military housing and on military installations, so I
    have a personal appreciation for this.
        It has been a central topic of discussion in our budget
    deliberations with the Secretary and his staff, as we have
    looked at fiscal year 2002 and going forward. We are committed.
    I think without prejudging the outcome of where the fiscal year
    2002 budget comes out to rectifying this, I think it is a
    perfect example of a public/private partnership where we can
    accelerate this process by bringing in private developers, as
    we have at Fort Carson, so that we stick to the commitment of
    getting this fixed by 2010. I know that the Secretary shares
    our concern, as do all the services. So, we are putting an
    emphasis on this.
        Senator Stevens. We have supported privatization of the
    offshore States, but privatization will not do it all in areas
    where it is not economically feasible to achieve housing of the
    types needed for our military families in the short term. I
    would hope that we can find some way to deal with this.
        There are Fortress America type people in the military who
    believe that the two offshore States are overseas. As a matter
    of fact, some of your people still refer to assignments in
    Alaska and Hawaii as being overseas. That reflects into their
    judgments as to how they allocate money for even things like
    housing. If they continue in that, then our bases will be those
    readily available for base closures because they are
    inadequate. I think the Century of the Pacific calls for an
    increased emphasis on forward deployed forces in Alaska and
    Hawaii.
        There are two critical elements as far as I am concerned.
    One is the backlog in maintenance per se in the bases, but the
    other one is in the backlog in modernization of the facilities
    for the families. That includes not just housing but also the
    basic facilities for family life on bases.
        I would urge you to take a look at it because I have got to
    tell you, on my watch I am not going to see bases closed in
    Alaska because we failed to get the proper housing for people
    or proper facilities so their families can enjoy life in our
    two States. I am serving notice. I am going to try to amend the
    budget to make sure that housing has the priority it must have
    in this critical time of maintaining the forces on a volunteer
    basis.
        Secretary White. Senator, I agree entirely with that
    priority. I think it is critical to us, as you touched upon. We
    may recruit soldiers, but we retain families. This is a central
    issue to support them, and it is receiving, from the Chief of
    Staff and me and from the Secretary of Defense, top
    consideration, and we will continue to do so.
        Senator Stevens. Thank you very much, Senator.
        Senator Inouye. For the record, I will be supporting the
    Stevens amendment.
        Senator Stevens. I will be supporting the Inouye amendment.
    It will go further now.
        Senator Inouye. Senator Bond.
        Senator Bond. Mr. Chairman, thank you very much. Let me
    note for the record that I am totally on board with it because
    I think that Alaska and Hawaii deserve the utmost
    consideration.
        Just count me as a very strong supporter of that.
        Senator Inouye. You got your project.
        Senator Bond. I have to go join Chairman Mikulski in
    opening another hearing. I wanted to extend a welcome to
    Secretary White. We had a good visit yesterday. We talked about
    our interest in readiness, and I asked some questions about the
    Army aviation modernization plan and some problems we had
    there. I just wanted to ask one question, if I could.

                   ARMY NATIONAL GUARD ROLE IN TRANSFORMATION

        In light of the Transformation and making the Army a more
    strategically responsive, full-spectrum force, I would be
    interested in the role you envision for the Army National Guard
    in the Transformation. Do you think their role will take on new
    dimensions, be reduced, or remain relatively unchanged?
        Secretary White. Senator, first of all, I appreciated very
    much our visit yesterday.
        I view, as does the Chief of Staff, both the Guard and
    Reserve as critical components to one Army. As the Chief stated
    a few minutes ago, they are actively involved in missions today
    that 10 or 15 years ago they probably would not have been
    undertaking, the 49th Armored Division in Bosnia, the 29th
    Infantry Division about to depart.
        General Shultz is behind us. We will promote him to 3-star
    this afternoon, as General Plewes on the Reserve side will also
    be promoted.
        I think, as we transform the Army, the Guard and Reserve
    will continue to represent critical components to our
    capability and they will receive the priority that is
    consistent with that importance.
        Senator Bond. Thank you, Mr. Secretary. Thank you, Mr.
    Chairman.
        Senator Inouye. Thank you.

                              DEPLOYMENT DURATION

        General Shinseki, in response to my last question, you
    mentioned the Balkans and the use of Reserve forces. If my
    mailbag is any indication of concern, I believe most of my mail
    referring to the Army would touch upon the Balkans. My question
    is from your background and experience, can you give us any
    appraisal as to how much longer our troops will have to be
    deployed in Kosovo and Bosnia? I know it is not a fair
    question, but I need some response.
        General Shinseki. Well, Mr. Chairman, this is really a
    policy question. Recall we went there in 1995 at the signature
    of the Dayton Peace Accords initially for a year, which was
    extended to 18 months and then subsequently extended to now
    with an open time frame based on setting conditions for our
    resolving our mission there and coming home. I do not have a
    good time line.
        But I will tell you that Bosnia and Kosovo are better
    places today because of our presence primarily. Our soldiers
    who go there encounter some turbulence because when you are in
    a location for 5 years, there is constant turnover of having
    troops there. We mitigate that turbulence by using Reserve
    component formations who have been marvelous in performing that
    mission. But we also mitigate some of that impact by limiting
    the length of the rotation to about 179 days. But the mission
    performed there by our soldiers is magnificent.
        When I am there to speak to them, they feel they are doing
    a meaningful job. They are doing it well. They do make a
    difference. They do provide a living model of what a democratic
    Army inside a civilian controlled enterprise, government, ought
    to look like, sound like, act like. I think there are some
    additional benefits that come from our presence. So, there is
    good work being done there and our soldiers feel job
    satisfaction from performing those missions.
        But as to the timeline to meet the conditions for resolving
    that crisis, I do not have a good answer for you.
        Senator Inouye. I have been told that the morale among the
    troops in the Balkans is a bit higher than the morale in
    Continental United States (CONUS). Is that correct?
        General Shinseki. Well, I would not make any comparisons
    because today the Army is reenlisting at above our targets. We
    are reenlisting right now at about 105 percent. In past years
    we have been as high as 109 percent, but the highest of our
    reenlistment rates comes out of soldiers who are either on
    operation of deployment in the Balkans or have recently
    returned. That sense of job satisfaction has a pretty
    significant impact on their decisions about whether they want
    to stay with the force or find something else to do.
        Senator Inouye. I have many other questions, but I would
    like to recognize Senator Cochran.
        Senator Cochran. Mr. Chairman, thank you very much. I am
    pleased to be here today to welcome the Secretary and
    congratulate you on your new position as Secretary of the Army.
        Secretary White. Thank you, sir.
        Senator Cochran. General Shinseki, it is a pleasure to see
    you again.
        General Shinseki. Good to see you again, sir.

                         RESERVE COMPONENT PERFORMANCE

        Senator Cochran. I was fortunate to be able to go down to
    Camp Shelby, Mississippi recently, and I thank the National
    Guard troops who were assembling there for training in
    preparation for their assignment in Bosnia. About 500
    Mississippians are undergoing this training in preparation for
    a 6-month deployment as peacekeepers in that theater. I can
    assure you they seemed to be excited about the opportunity to
    go on this mission, and I am curious to know your reaction to
    whether or not you think it is still a good idea to have
    National Guard forces, Reserve forces deployed in this theater
    and what their performance has been to date, and if we have the
    funds in the training programs that will help ensure that they
    are trained and can capably handle the mission and come back
    safe and sound.
        Secretary White. Senator, as General Shinseki just said, we
    have had several deployments of National Guard forces into
    Bosnia, the 49th Armored Division and the 29th Infantry
    Division is about to go with the Mississippi contingent. I view
    the deployment of Guard forces side by side with active forces
    in Bosnia and other places as to be the true test of one Army,
    that in fact we have one Army. If we are smart about how we
    organize the missions for the Guard in terms of the lead time
    and the training and all the other pieces that go along with
    it, that they can be extremely effective and that they're
    excited about that mission and that we should continue to do
    it.
        I think it shows how far we have come in integrating the
    active component with the Reserve component that we are able to
    do this. I think your sensing of it from visiting the soldiers
    who will deploy is what I have gotten from talking with the
    49th Armored Division soldiers and others, which is, this is a
    great mission so long as we structure it properly, and we are
    going to continue to do it.
        Senator Cochran. General, do you have any other comments?
        General Shinseki. I would love to add to that, Senator
    Cochran. In our profession, in this ground force profession, so
    much of our effectiveness in any of our missions, but if you
    were to take the most intense of our missions, warfighting, a
    key factor here is cohesion of units and the small unit
    leadership where non-commissioned officers and junior leaders
    are comfortable in their responsibilities.
        In a mission like Bosnia, a 6-month tour there does wonders
    in developing that small unit leadership, that if you were to
    put the same unit in a peacetime training scenario back here in
    the Continental United States, an active unit or even more
    explicitly a Reserve component unit, just the time to be
    together to learn how to go through their processes and their
    procedures and to learn the art of leadership, 6 months in
    Bosnia is an excellent leader development opportunity for non-
    commissioned officers and junior officers. Our components are
    going to be well served in future years as they grow up in the
    profession for whatever crisis comes along.
        Secretary White. Let me just say one other thing, Senator,
    if you do not mind. The 29th Infantry Division is the division
    that is about to deploy. Last week we celebrated the dedication
    of the D-Day Memorial in Bedford, Virginia, the home territory
    of the 29th. They, of course, were a lead division at Omaha
    Beach in 1944. A lot of their veterans that were present at
    that ceremony came up to me and said it was great that the 29th
    had a mission side by side with the actives like they had on D-
    Day. So, it is a big deal for us.

                            NATIONAL TRAINING CENTER

        Senator Cochran. I recall the last mobilization of
    Mississippi National Guard units in numbers like this occurred
    in Desert Storm. I recall going out to the National Training
    Center in California at Fort Irwin to thank the troops who were
    out there doing what they needed to do to be prepared for
    deployment to that theater.
        I was very impressed with the National Training Center, and
    I am curious to know whether or not you still think that is a
    valuable resource for training. Is it being used? Are the funds
    in the budget request that will be submitted sufficient to keep
    it operating in a way that you think it is helpful to the Army?
        General Shinseki. I would just comment that the National
    Training Centers (NTC) are, for the Army, what makes our Army
    different from all the others and put us at the head of the
    line. It is where we go into full contact, force on force, both
    sides trying to have the better day with a professional
    opposing force that may be the best trained regiment in the
    world out at the NTC or down in Fort Polk. It is a centerpiece
    of our training programs. We do need to put money in there to
    modernize them, as we modernize the rest of the force, because
    when we go out there to train, our ability to get accurate data
    on resolution of how those mock battles play out are very much
    dependent on our ability to collect information.
        You remarked the last time that the 155th Armored Brigade
    stood up was in Desert Storm. The 155th stood up one other
    time, Senator. In 1999, shortly after I became the Chief, we
    mobilized them for an exercise and sent them to the National
    Training Center. In July 1999, I had the opportunity to be out
    there with General Shultz, and we watched the 155th Mississippi
    go through its paces, much as you did. I will tell you that the
    difference in their capabilities is significant. I am mighty
    proud of that National Guard Brigade. It used to be my
    counterpart Brigade when I commanded the 1st Cavalry Division.
        Secretary White. Senator, let me make one other comment,
    and that is I view the National Training Centers as critical to
    support Transformation because as opposed to the transformation
    of the Army after Vietnam, what the NTC and our other training
    centers give us is the opportunity for high fidelity
    experimentation and testing. As we bring the Interim Brigades
    in, as we start to get new ideas coming out of the tech base,
    it gives us a high fidelity test platform in those training
    centers to try out new ideas as we shape the Objective Force.
    So, not only for current readiness and training, as the Chief
    talked about, but supporting Transformation will be a vital
    activity to go on at the NTC.

                          155 MM LIGHT-WEIGHT HOWITZER

        Senator Cochran. There is a new howitzer that I am advised
    about, a 155 millimeter howitzer, lightweight, and the plans
    are to develop, produce, and then test this at Camp Shelby,
    Mississippi. I am curious to know whatever information you can
    give me about that program. Can you tell us how it compares to
    your existing legacy system in terms of survivability and
    mobility, and does it support your Transformation requirements
    as well?
        General Shinseki. I would like to provide a more complete
    answer for the record, Senator, about the programmatics that go
    along with the lightweight 155 system. But it is one that we
    focused on to provide for our interim capability that we are
    standing up with brigades out at Fort Lewis, Washington, an
    artillery capability that we currently lack. It went through a
    competition and it was the system chosen. I am comfortable then
    that it is the right answer.
        In terms of how it is performing, I would probably have to
    give you a better answer. But I think it meets our requirements
    for the Interim Force, and I think the Marines are also
    interested in it.
        [The information follows:]

                      155 MILLIMETER LIGHTWEIGHT HOWITZER

        The Joint Lightweight 155 millimeter Towed Howitzer will
    replace all howitzers in the Marine Corps and most of the M198
    howitzers in the Army. The Lightweight 155 is an integral part
    of the Army's Transformation, as it will be fielded to our
    Interim Brigade Combat Teams and light forces.
        The Lightweight 155 program is a joint development with the
    Marine Corps. The program management office is jointly manned
    and supervised by both Services. The Marine Corps funds
    development of the basic, optical fire control howitzer and
    leads in production. The Army funds the development and
    integration of digital fire control for the howitzer and
    follows in procurement. The Marine Corps plans to procure and
    field 413 Lightweight 155 howitzers between fiscal year 2003
    and fiscal year 2007. The Army plans to procure and field 273
    Lightweight 155 howitzers between fiscal year 2004 and fiscal
    year 2009. Additionally, the Lightweight 155 is an
    international cooperative program with the governments of Italy
    and the United Kingdom. Each of these countries indicates they
    will procure from 60 to 70 Lightweight 155 howitzers.
        The prime contractor for development of the howitzer is BAE
    Systems of the United Kingdom. The BAE Systems formed a team to
    produce about 80 percent of the Lightweight 155 in the United
    States. The current plan is for a member of the team, United
    Defense, Limited Partnership, to perform the final assembly and
    testing of the howitzer in Mississippi.
        The Lightweight 155 is a substantial improvement in
    mobility, survivability, and combat effectiveness over the
    current M198 howitzer. At 9,000 pounds, the Lightweight 155 is
    42 percent lighter than the M198. The reduced weight and
    innovative design increase cross-country mobility by 23 percent
    and reduce the time to occupy and displace by 74 percent. The
    digital fire control improves accuracy and allows the howitzer
    to adopt shoot-and-scoot tactics similar to those of the
    Paladin self-propelled howitzer. The net result is that
    survivability improves by 70 percent which, when combined with
    the increase in mobility, significantly improves the combat
    effectiveness of the fire support for our Interim Brigade
    Combat Teams and light forces.

        Senator Cochran. Thank you.
        Mr. Chairman, I have some other specific questions about
    other systems that we have an interest in in our State, and I
    will be glad to submit those for the record.
        Senator Inouye. Without objection, they will be submitted.
        Senator Dorgan.
        Senator Dorgan. Mr. Chairman, thank you very much.
        Mr. Secretary, congratulations.
        Secretary White. Thank you, sir.
        Senator Dorgan. You and I have not had the opportunity to
    spend time to visit, but I hope we can do that at some point.
        General, thank you for appearing again.

                 DEPLOYED TROOP MORALE, TRAINING, AND READINESS

        Let me ask a question that follows on something that
    Senator Cochran or Senator Inouye may have asked about, and
    that is troop morale and training and readiness and so on.
    Senator Daschle and myself and some others were in Skopje,
    Macedonia, and we were going to go up into Kosovo and the
    weather would not allow that. But we met a number of the troops
    and General Ralston was there. One of the points he made to us
    was interesting. It was interesting to me because there is this
    discussion going on that these kinds of operations really are
    not good for morale, number one, and number two, take away from
    training and readiness.
        General Ralston made the point that he felt that it was
    excellent training. He said nowhere in the Army are officers
    and soldiers on the ground having real-time activities and
    decision making opportunities like that. He said, frankly, it
    does not injure readiness or training. In fact, he said it is a
    contributor to good training.
        Can you respond to that?
        General Shinseki. Sure. Senator, I would echo General
    Ralston's observation. As I remarked earlier, so much of our
    profession is really tied to training and leadership, leader
    development. We have few opportunities to take a good unit and
    put them in an operational scenario where they have to learn
    how to work together and, not in a totally benign environment,
    have to deal with some pressures out there where they have to
    go out on a patrol and young leaders take over. They do not
    have the opportunity to have a colonel or a senior officer
    standing over and helping give advice.
        Every day in Bosnia, when I commanded there, something on
    the order of 180 U.S. patrols would go out, executed for the
    most part by non-commissioned officers, in some cases by junior
    officers. They would mission brief. They would go out, execute
    the control. Whatever happened out there they handled and then
    came back and mission debriefed. I would suggest to you that
    the fact that you did not see a lot of coverage of those 180
    patrols going out tells you that they did those missions quite
    well.
        In the process, they grew in their leadership skills. They
    created cohesive units that knew each other better, trusted one
    another, and this is a lot of what our profession is about.
    Yes, the tools are important. The tools will always be
    important, but they do not substitute for good, cohesive units
    that have strong leaders, and that is the training piece that
    comes out of General Ralston's explanation.
        There are some down sides. You miss the opportunity to fire
    your big weapons systems and maneuver them, but we compensate
    for that by getting all that work done before they deploy. They
    are gone for 6 months. As soon as they come back, we get back
    on that training schedule so that within about 6 to 9 months,
    they are back in top notch readiness and we accommodate that.
        Senator Dorgan. General, thank you very much.

                                  BASE CLOSURE

        Secretary White, I want to say on the issue of a base
    closing commission you have been on record publicly saying you
    would support one round or an additional round. I wondered do
    you understand--you perhaps do--why there is some push-back on
    base closing commissions?
        Secretary White. Certainly.
        Senator Dorgan. When we go into a commission, if we do not
    have some notion of targeting where the excess capacity is
    before you go in, every single military installation in America
    essentially has a bull's-eye on the gate that says this might
    be closed. In those communities, those smaller communities
    especially, 30,000, 50,000, 80,000 people, there is nobody
    going to invest in those communities until that is resolved.
    They are not going to go build a 12-plex apartment unit or move
    a new business in because base closing commissions may close
    this base, and therefore you'll have double digit unemployment
    in that region. It puts at risk a whole series of installations
    that are probably never going to be closed and never even on
    the cusp, but you dry up the economies.
        It seems to me if there is a base closing commission--I am
    not certain there will be another one at this point. I am not
    certain that the Senate would support it, but if there is a
    base closing commission, would it not be better to have some
    basic targeting of where the over-capacity is and have a
    commission that focuses only on that?
        Secretary White. Absolutely, Senator. I think the cart is a
    little bit before the horse.
        The first thing we have to nail down is what the national
    military strategy is, and of course, in the Quadrennial Defense
    Review (QDR) process we are about and the Secretary of Defense
    is about figuring out what that is. That is step one.
        Step two is sizing the force against the strategy and that
    will also flow out of the exercise that is currently ongoing.
        And then the third step will be what is the most efficient
    basing for that force, and only at that stage of the game, when
    we try to figure out the most efficient way to base the force
    and to support it from a business perspective, will we get into
    the business of which infrastructure is excess or not.
        This has got to be a strategy-driven exercise, and that is
    the way the Secretary of Defense has set it up.
        Senator Dorgan. Let me mention one other issue, and that is
    dealing with trailers that the Army purchases.
        I think the Army is a great organization. I have deep
    admiration for it. I have spent a little more time working with
    the Air Force because we have two large Air Force installations
    in my State. But we have an Army National Guard, which I am
    very proud of, and I will not ask questions about that except
    based on your previous answers, I understand you know the
    contribution they make and the significance of it.

                              ELIMINATION OF WASTE

        I ran into an issue of some trailers here a while back, and
    it reminded me again how terribly bureaucratic things can be at
    the Pentagon, but probably all through Government. Someone
    produced for you about 5,500 trailers and the brake actuator
    hitch did not work, and so they have been warehoused now for I
    think 3-4 years sitting in warehouses. As I looked at that, I
    thought what a waste of money. How does this happen? As I
    tracked it through, I realized we have entrenched bureaucracies
    that protect what they do and make it very difficult for new
    ideas to seep in.
        Mr. Secretary, I was intrigued by the comments you made
    about ``stupid'' waste. I suppose by definition most waste is
    stupid, but perhaps some more stupid than others.
        Secretary White. Yes, sir.
        Senator Dorgan. But I like the attitude that much of what
    we do is very important, but bureaucracies can also produce a
    kind of a byzantine result from time to time. To the extent
    that you can look into that and tackle that, I think you will
    have the support of members of this subcommittee. We want the
    investment in defense to be an investment in muscle and
    strength and security, not in waste. So, I appreciate that
    attitude that you bring to this job.
        I just want to tell you the only recent example I have seen
    is a little example about trailers, and I will talk to you
    about that some other time.
        Secretary White. But it is a great example, and I think it
    would qualify as stupid.
        Senator Dorgan. That is what I said.
        Secretary White. Right. Yes, sir.
        Senator Dorgan. But anyway, thank you all for being here. I
    look forward to working with you. Let me just say, as I
    conclude, I think the National Guard which you have referenced,
    while it is not a substitute for active forces, we need active
    duty forces and we need them well equipped and well armed with
    modern weapons and supported well. We also need the National
    Guard, and we get a terrific bang for the buck, as they say
    with this National Guard. The men and women who are citizen
    soldiers in our State and, as Senator Cochran said, Mississippi
    and every other State in the country are a terrific complement
    to what you do. I appreciate your support for them as well.
        Mr. Chairman, thank you very much.
        Senator Inouye. Senator Shelby.
        Senator Shelby. Thank you, Mr. Chairman. I apologize for
    missing part of this, but I was in another appropriations
    subcommittee meeting.

                                 ARMY AVIATION

        General, I have talked with you at some length about the
    Army's Transformation. And this may have been asked and I
    apologize if it has because I was not here. I am pleased to see
    in your testimony that you and Secretary White mentioned the
    important role that the Army aviation, specifically the
    Comanche, will play in the Transformation effort. You talk
    about its role with the Transformation effort and its
    operational capabilities, but could you for a minute also talk
    about the current status of the program and discuss the
    facilities and training components being developed with the
    Comanche?
        General Shinseki. For the Comanche?
        Senator Shelby. Yes.
        General Shinseki. Well, we are still a few years out from
    fielding the Comanche, as you know, Senator, 2008. So, some of
    the specifics of those decisions are----
        Senator Shelby. But we have to start planning and building
    whatever we need.
        General Shinseki. Absolutely.
        Senator Shelby. I have talked to Secretary White about
    this.
        General Shinseki. And the fielding plan will dictate where
    we go first. But in the case of the Comanche, not only is it a
    far more capable aviation platform and, therefore, its reach is
    significant, it is also a very capable weapons platform. In
    terms of training ranges that we need to develop that will
    allow it to train safely, considerable work is underway to
    figure out whether or not our current ranges can accommodate
    them. Where can we shoot the Comanche with all of its
    capabilities so you can train to its maximum potential? A
    pretty significant question, and that is part of why we are in
    the process of trying to decide whether our home stations are
    adequate for training these new systems with greater
    capabilities or whether we have to go some other special place
    to do something like this, maybe out to the National Training
    Center where today we primarily put ground forces and not a lot
    of aviation units or some other place. But these are the kinds
    of issues for long-term decisions that we are wrestling with in
    order to make sure that when the Comanche arrives, those
    questions----
        Senator Shelby. That we will be ready.
        General Shinseki. Yes, we are ready.

                           COMANCHE SOFTWARE SUPPORT

        Senator Shelby. General, the Comanche platform contains
    several million lines of software code in its operating system.
    As the premier software development and support facility and
    the only Government center to achieve a level 4 rating by the
    Software Engineering Institute, the United States Army Aviation
    and Missile Command (AMCOM) Software Engineering Directorate
    (SED) could achieve significant software life cycle support
    cost savings for the Comanche, as well as other systems with
    similarly complex software operating systems. In other words,
    the future.
        Has the Army considered--and if you have not, will you--
    assigning the Comanche software life cycle support to a
    Government facility like the SED facility at AMCOM in order to
    determine cost savings which might be derived from their
    support capabilities, as well as the potential to leverage
    aviation research and development? If you have not, will you?
        General Shinseki. We are certainly going to look at it. I
    did not have all those qualifiers for AMCOM, but if they are
    the most capable center, certainly. We would go where the
    capability is. Frankly, I do not know the answer to your
    question, but I will get you one for the record.
        Senator Shelby. Talk with me about it.
        General Shinseki. Yes, sir.
        [The information follows:]

                           COMANCHE SOFTWARE SUPPORT

        U.S. Army Aviation and Missile Command (AMCOM) Software
    Engineering Directorate (SED) personnel are currently working
    within the Comanche office. The Comanche Program Manager's
    office (PMO) is very familiar with the excellent capabilities
    and expertise of the AMCOM SED. The Comanche program currently
    plans for the Boeing Sikorsky team to maintain software for
    three years after initial fielding, under management control of
    the PMO and SED. This will be followed by a gradual transition
    to the SED. At the end state, we anticipate that the AMCOM SED
    will maintain the majority of all Comanche software.

        Senator Shelby. General, would you discuss briefly the
    importance--if you have, I will get it from the record--of the
    compact kinetic energy missile technology as it relates to the
    future combat systems and the importance of increasing science
    and technology funding for basic scientific research at the
    Army Aviation Missile Command?
        General Shinseki. Yes, we are interested.
        Senator Shelby. I know I am asking you some complex
    questions. You might want to expand on it for the record.
        General Shinseki. I will expand on it for the record. But,
    Senator, I would say, yes, we are interested in it. A larger
    version of that vehicle has proved out to have significant
    capabilities. We are interested in a smaller package and this
    is what we are interested in. We do have a program identified
    to pursue the future technology here.

                              UNEXPLODED ORDNANCE

        Senator Shelby. Lastly I want to get into unexploded
    ordnance. Has it been talked about today?
        General Shinseki. It has not.
        Senator Shelby. Secretary White, more than 700 formerly
    used defense sites and 1,000 of current military training
    ranges contain conventional unexploded ordnance--we all know
    the history of it--that pose a potential hazard. Contained
    detonation chambers, such as the Donovan chamber, have been
    built by the Army to safely destroy this unexploded ordnance.
        What is your position, Mr. Secretary, on open burn, open
    detonation methods to destroy conventional unexploded ordnance?
        Secretary White. Senator, I am not familiar with the
    specifics of the issue. I will have to get back to you.
        Senator Shelby. Will you get back with me?
        Secretary White. I will do that.
        Senator Shelby. For the record.
        Secretary White. Certainly.
        [The information follows:]

                              UNEXPLODED ORDNANCE

        The Army position is that open detonation is a safe and
    environmentally sound method for destroying conventional
    unexploded ordnance (UXO). Unexploded ordnance are used
    military munitions that have been through all or a portion of
    their firing sequence and are, therefore, assumed to be armed.
    For this reason, the Department of Defense (DOD) has adopted an
    open detonation policy for UXO, particularly when located in
    areas like operational ranges or formerly used defense sites,
    in which they do not present an immediate and certain risk to
    the public, to include DOD personnel, or critical assets. In
    such situations, open detonation exposes personnel, normally
    DOD personnel who are trained and experienced in explosive
    ordnance detonation, to the least risk of an unintended
    detonation. Open detonation also allows the immediate
    elimination of an explosives hazard.
        The Army, through initiatives underway at the Center of
    Excellence and Demilitarization, Huntsville Engineering Support
    Center, and other organizations is searching for alternate,
    safe technologies for the elimination of UXO. These efforts
    include the development of improved detection technology, use
    of robotics, and investigation of alternatives to open
    detonation. The Donovan chamber is but one example of a
    technology that might be used as an alternative to open
    detonation of some munitions. Use of alternative destruction
    technologies is usually premised on the assumption that
    unexploded ordnance are safe to move. This often is not the
    case because of the inherent explosive hazards of moving
    unexploded ordnance.
        Alternative technologies also have limitations. For
    example, the Donovan chamber has specific limitations on
    munitions configuration, size, and net explosive weight. Large
    munitions or those with net explosive weight above 6.5 pounds
    cannot be detonated in the transportable Donovan chamber.
        Open burning and open detonation are essential methods of
    destroying conventional UXO. Contained detonation technology is
    being developed as a piece of the overall UXO elimination
    toolbox. However, personnel safety and technology limitations
    prevent it from being the solution to all UXO elimination.
        In the case of DOD's industrial demilitarization program
    for excess and obsolete munitions, the Army has made a
    concerted effort to reduce its reliance on open burning/open
    detonation (OB/OD). Over the past decade, the Army has
    significantly reduced its reliance (from almost complete
    reliance to less than 40 percent reliance) on OB/OD in its
    industrial munitions demilitarization operations and has
    focused on reuse, resource recovery, and recycling. However,
    the Army must continue to rely on OB/OD for unstable, excess,
    and obsolete munitions for which no safe alternative
    technologies currently exist, while ensuring minimal
    environmental and public health impact. The Army performs OB/OD
    in compliance with environmental regulations and permits.
        Some of the actions that the Army takes to optimize and
    monitor the use of OB/OD as a means of industrial-scale
    munitions demilitarization include adherence to stringent
    standing operating procedures that outline the weather and
    other conditions under which OB/OD is prohibited; installing
    air quality and noise monitors to record the impact of OB/OD on
    the surrounding communities; environmental sampling as a part
    of the health risk or public health assessments performed by
    the Army and/or the Agency for Toxic Substances Disease
    Registry; close cooperation with the local, state, and federal
    regulatory agencies; and out-reach programs.
        With regard to industrial demilitarization, the Army
    currently is conducting a study of a number of alternative
    demilitarization technologies as directed by the Congress.
    These include contained detonation, supercritical water
    oxidation, biodegradation, incineration, and others. The House
    Report 106-754 requires DOD to report back to the Congress by
    September 30, 2001, on the possibility of phasing out OB/OD in
    favor of alternative technologies. We will provide a report to
    Congress on our findings.

        Senator Shelby. And what technology you all will support
    here. I know this is a problem not just in some of my State,
    but I guess everywhere we have had training.
        Mr. Chairman, I have some other questions, but I will
    submit them for the record. And I thank you.
        Senator Inouye. Without objection.

                                    CRUSADER

        General and Secretary, I would like to ask my final
    question. The Crusader field artillery system has come under
    significant scrutiny, and some of the critics have even
    suggested its elimination. I would like to hear your appraisal
    and your reasons for continuing the program.
        General Shinseki. Let me just say for the Crusader program,
    the requirement is valid. The challenge of the Crusader is it
    was designed heavier than it should have been. But the Crusader
    in all of its other aspects satisfies the requirement that we
    have had since the Cold War ended.
        As we set ourselves up to fight successfully during the
    Cold War in Europe, we anticipated fighting essentially a
    defensive battle in which the other side would attack, and as
    they continued to come after us, would fall under our arc of
    fires. So, we designed artillery systems to take advantage of
    that. They did not have to be very fleet. They did not
    necessarily have to have long reach because defending against
    an attacking force, they generally come into your arc of fires.
        The Cold War ended in November of 1989, and literally a
    year later we were off to Desert Storm. Not much time to gather
    ourselves from 40 years of looking at our warfighting
    responsibilities one way and, in less than a year, presented
    with a new mission requirement. Desert Storm required us to go
    on the offense, and when you go on the offense, your artillery
    guns have to keep up with your tanks. If they do not, your
    tanks stop until they can catch up so that you can get that arc
    of protective fire.
        Then you find out that the artillery range on your guns are
    outmatched by the other side. In fact, the other side has more
    guns and they can fire more accurately.
        We understood that in 1991 we had to do something about
    this, and so the Army took 25 percent of its artillery out of
    the force, took the risk of doing without 25 percent of its
    needed artillery, not very good, but needed artillery, and went
    after some technology that would correct those shortcomings,
    technologies like longer range, technology like higher volume
    of fire, 10 rounds in a minute, where our standard artillery
    pieces probably shoot 1 round a minute. So, what that means is
    with a single artillery platform, you can now mass fire in a
    way that you needed 8 or 9 or 10 guns to get the same kind of
    volume, an artillery piece that is more accurate. So range,
    rate of fire, and mass, more accurate, and a vehicle that could
    now keep up with your tanks and your infantry fighting
    vehicles. So, you did not have this break in warfighting
    momentum.
        We even went so far as to take 25 percent of our tanks and
    our infantry fighting systems out of our warfighting battalion
    formations. So, we went from tank battalions with 58 tanks to
    tank battalions with 44 tanks; infantry battalions with 58
    Bradleys to 44. Twenty-five percent degradation, accepting risk
    because there was not a war on the horizon, betting on the
    outcome that our systems would provide us an artillery piece
    that would compensate for taking that risk.
        Well, that artillery system ended up being Crusader. I
    think the problem with Crusader is it ended up being bigger
    than it probably should have been. We have taken significant
    steps to reduce it from the 55-ton artillery piece to about 40
    tons, and we constantly look for ways to make it even lighter.
        We have taken the risk, and if we decide that we do not
    need the Crusader, we will go for the next 10 to 15 years until
    we find in the objective force a fix or a back-fill for that
    capability that will extend our risk window far more
    significantly in the future. That is why I say the requirement
    for the Crusader is a valid requirement, and I have testified
    to that.
        Secretary White. Let me add to that, Mr. Chairman, in that
    we in the United States Army have had a long and time honored
    tradition of being outgunned by our potential adversaries,
    particularly in regard to anyone equipped with Soviet
    equipment. As a former maneuver commander in Europe, that was
    always, as General Shinseki talked about, our principal
    concern.
        We never fixed it during the big five transformation of the
    1980's. We retained the 109A-2, which was the companion
    artillery piece of the M60 tank. We have now product improved
    it up through Paladin, and that is about as far as you can
    stretch that rubber band.
        The Crusader comes in to fill the gap that we have already
    paid the bill for and is a carrier for technologies that we
    will very much want in the Objective Force, i.e., robotics and
    digitization. So, from both a Transformation perspective and a
    current readiness challenge, capabilities challenge with the
    existing force, Crusader appears to be the answer, if it does
    what it is billed to do.
        Now, having said that, we have a Quadrennial Defense
    Review. A National Military Strategy will flow from that
    review. Against that strategy, all of the major programs of the
    Department, not just Crusader but the fighter programs and so
    forth, will have to be balanced against that. So, we will argue
    that case as a part of whatever role land power plays in this
    new strategy. It is just that we have to make that case, but
    from where I sit right now, Crusader is an answer to a
    longstanding problem with the Army that we have not fixed in
    previous years.
        Senator Inouye. If I may ask a further question. You spoke
    of the range of the Soviets. What is the comparable range
    between the anticipated Crusader range versus the Soviet range?
        Secretary White. I think Crusader, Mr. Chairman, against
    comparable sized artillery will outgun what we expect to see on
    the Russian side. We can, with extended projectiles, get out to
    40 kilometers roughly, which is more than double the range of
    the 109A-2 and should give us a range advantage so that we can
    take full advantage of the family of precision guided munitions
    that we expect to field that would significantly improve this
    footprint of indirect fire coverage to support the maneuver
    force. That footprint will be very consistent with the enhanced
    maneuver capability we expect to build in the Objective Force.
        Senator Inouye. What is the range of the Soviet gun?
        General Shinseki. They have a range of artillery pieces, so
    there are different ranges that are provided by different
    categories of artillery. But the Crusader would range the best
    of what they have now.
        There are rockets that would exceed the range of artillery
    pieces. Let me qualify that, Senator. There are some artillery
    pieces that would challenge the range of the Crusader. There
    are some that exceed it.
        But, again, what the Crusader gives you is a volume of fire
    that is 9 or 10 times the rate of fire of our current systems
    so that you make up a considerable difference here with the
    rate of fire that the Crusader provides.
        Plus, I would echo a good point that the Secretary
    provides. It is a technology carrier for future systems and
    what that might open up in terms of increasing, improving range
    and advantaging ourselves of this technology.
        Senator Inouye. Senator Cochran.
        Senator Cochran. Mr. Chairman, thank you.

        THEATER HIGH ALTITUDE AREA DEFENSE (THAAD) PROGRAM ACCELERATION

        Mr. Secretary, in the joint statement which you supplied
    the committee with General Shinseki, under the title Legacy
    Force Modernization and Recapitalization, there is a statement
    as follows: ``Fielding the Patriot Advanced Capability-3
    missile defense upgrade and the Theater High Altitude Area
    Defense system will significantly increase our in-theater force
    protection.''
        I know that when we saw the original schedule for the THAAD
    program, it was to be in the field in 2002, but because of
    program delays and an exhaustive testing program, which has
    proved to be very encouraging, that target date for putting
    THAAD in the field is now 2007. We understand from some of the
    program officials that if we had more funding in the program,
    we could move that date up, perhaps as much as a year or 2.
        Do you support adding funds to the budget to reduce the
    delay in bringing the Theater High Altitude Area Defense system
    to the field?
        Secretary White. Senator, I will have to defer either to
    the Chief of Staff or get back to you for the record for that.
    I have not examined that issue in great detail at this point.
        General Shinseki. I would like to provide an answer for the
    record as well, Senator. I am always surprised when we say we
    want to accelerate, and when I get into it, you cannot do it
    and it is not a question of money. Sometimes it is a question
    of other technology that has to be achieved. But I will get
    into THAAD.
        I am a bit frustrated with all the promise that is there,
    both between PAC-3 and THAAD. We have taken the harder route on
    missile defense. As you know, there are two schools. One says
    you can fire a missile that, when it explodes, provides a blast
    fragmentation effect and it blows the other missile out of its
    trajectory so that you keep it from hitting its target. As a
    result of our Desert Storm experience with one of those
    episodes in which a Scud missile warhead was not neutralized,
    tumbled out of control, hit a warehouse, and killed a number of
    youngsters I believe from Pennsylvania, one of our fine Reserve
    component units, we decided that blast frag was not good enough
    for a ground force that would always be living under the
    effects of fallout.
        So, we took the harder route and went the point kill
    approach, and that said we are going to hit a speeding bullet
    with a speeding bullet and destroy it positively in order to
    assure ourselves that we would not suffer the same kind of
    consequence.
        That approach has contributed to a tougher testing scenario
    and, in part, is maybe contributing to the timeline. But we
    have achieved through testing, demonstrating to ourselves and
    to others who were a bit skeptical about whether or not this
    was too hard to do, harder than hitting a major league fast
    ball, first of all, seeing that incoming missile traveling at
    thousands of kilometers per minute, and then hitting it at the
    exact point of intercept within millimeters of where we said we
    needed to hit the warhead in order to neutralize it up there in
    altitude. We have done that and done that several times now. We
    are comfortable that we can do this and demonstrated it.
        Whether or not we can accelerate that capability back from
    2007 or 2008 this way, I will have to get into it and provide
    you a better answer.
        [The information follows:]

        THEATER HIGH ALTITUDE AREA DEFENSE (THAAD) PROGRAM ACCELERATION

        We have had several opportunities for program acceleration
    over the last two years because we were in the design phase of
    engineering and manufacturing development (EMD) when resources
    could be effectively applied to this program. Unfortunately,
    additional funding was not available during this period and
    program acceleration opportunities have diminished. We are now
    beginning the component fabrication phase of THAAD EMD hardware
    where disciplined, high-quality hardware assembly, software
    coding, and testing take a fairly standard time to accomplish.
        Today, we have one viable low-risk acceleration option.
    THAAD first unit equipped (FUE) and early operational
    capability (EOC) could be accelerated one year. This would
    accelerate not only FUE and EOC, but also all testing and
    production so that all THAAD units are fielded a year earlier.
    We adopted this acceleration strategy because if FUE is
    accelerated, we assumed that the rest of the program would be
    accelerated following FUE.
        THAAD schedule acceleration can be achieved by concurrently
    conducting missile design trades and tests and by compressing
    the test schedule by five months. Lead times for tests,
    analysis, and modifications will be somewhat reduced and lead
    time for test hardware will occur earlier. System critical
    design review (CDR) would be accelerated by six months.
        To complete this acceleration option, the program requires
    an additional $191 million beginning in early in the first
    quarter of fiscal year 2002, and a total of $736 million
    through fiscal year 2007. Additional funding in fiscal year
    2002 to fiscal year 2004 will provide additional test hardware
    for incremental design tests, pulling software builds forward,
    and additional up-front manpower. Additional funding in fiscal
    year 2005 to fiscal year 2007 will allow earlier procurement of
    production hardware, ultimately cutting a year off production.
        These schedules allow earlier design decisions, long-lead
    time, and low cost, schedule, and technical risk while saving
    $379 million in acquisition cost through fiscal year 2012. The
    scope of work and technical content of the program will remain
    unchanged. The Army supports additional funding to the budget
    to accelerate fielding of THAAD as an effective upper-tier
    theater missile defense land-based system.

                               FUNDING CHALLENGES

        Senator Cochran. One of the funding challenges is that in
    the Ballistic Missile Defense Office, they take the funds that
    we appropriate and actually develop the systems, but then when
    they are ready to be put in the field and managed, the funding
    goes through the individual services, like the THAAD program
    would.
        Does this present a problem because it is competing with
    other priorities and other interests that the service has, and
    would it be more effective and would we get the systems
    developed and in the field earlier if the funding went through
    the Ballistic Missile Defense Organization (BMDO) rather than
    the service?
        Secretary White. Senator, that is probably a question
    better answered by the Secretary of Defense. I am sure with his
    publicly stated interest in ballistic missile defense, that
    that issue will get a thorough review.
        Senator Cochran. Where generally are these missile programs
    in your order of priorities? Can you tell us anything about
    what your views are?
        Secretary White. It is a little early for me to form an
    opinion on that, Senator, but I will defer to the Chief on that
    question, if it is okay.
        General Shinseki. Missile defense for tactical ballistic
    missile issues has always been a high priority for a force that
    is on the receiving end of these things. So, yes, in balance
    with lots of other things we are asked to do, Senator, theater
    missile defense is of high priority with us.
        In fact, regarding your question about THAAD and PAC-3,
    much of that work is done inside of the Ballistic Missile
    Defense Office with an Army lead. So, we have been part of the
    real success story here in providing that kind of scientific
    insight, intellectual energy to go get it. We are mighty proud
    of the successes in those two programs, and the return will be
    protection of soldiers on the ground. So, it is a high priority
    with us, but there are other things we also pay attention to.
        Senator Cochran. Well, I think you have every right to be
    very proud of your success in this area. It is commendable, and
    I congratulate you for it.
        Senator Inouye. Senator Shelby.
        Senator Shelby. I have no more questions.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Inouye. Then, once again, Mr. Secretary, General
    Shinseki, thank you very much.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                     Questions Submitted to Thomas E. White

                   Questions Submitted by Senator Tom Harkin

                           IOWA ARMY AMMUNITION PLANT

        Question. The Iowa Army Ammunition Plant (IAAAP) presents some
    unusual issues because for many years an Atomic Energy Commission (AEC)
    nuclear weapons plant and an Army ammunition plant coexisted at the
    same facility. Recently the Department of Energy, as at other nuclear
    weapons facilities, has taken important steps to address the health
    concerns of former workers, including testing for chronic beryllium
    disease and a health study conducted by the University of Iowa that has
    highlighted a number of other exposures of concern. Yet those measures
    have only included the AEC side of the plant.
        Workers on the Army side worked at the same plant, for the same
    contractor, and sometimes in the same buildings or areas. They were
    exposed to many of the same dangers, including beryllium, depleted
    uranium, and toxic explosives. And they were equally committed to our
    national security. In fact, the health study started with a card
    catalog of workers throughout the plant and has had a hard time
    separating out those who happened to work on the AEC side. I can't
    explain to my constituents why only some workers are included.
        Secretary White, would you support similar health studies and
    testing for those who have worked on the Army side of the plant, so
    they can know whether their health has been harmed by their work at the
    plant?
        Answer. The Army has been and remains committed to protecting the
    health of its workers. I would support epidemiological health studies
    and appropriate testing to determine if there is an association between
    the workplace and illnesses at IAAAP during the period in question. We
    will recommend that the Office of the Secretary of Defense consider a
    collaborative effort with the Department of Energy, where appropriate.
        Question. Because of the joint facility, the Pentagon's secrecy
    policies have also discouraged workers from talking to officials about
    incidents and possible exposures at the plant, or even from talking
    with their own medical providers about their health concerns. Last year
    I was able to include in the Defense Authorization bill a provision
    requiring the Secretary of Defense to review the secrecy policies, to
    notify affected workers of how they can talk about these issues, and to
    report back to Congress by May 1st. Not only has the report not been
    delivered, but there seems to be an internal squabble over who is
    responsible for it.
        Would you intervene at least to make sure that someone in the Army
    talks to the workers to help them talk about these issues without
    revealing any current national secrets? Do you see any danger to
    national security in saying where nuclear weapons were in the United
    States 30 years ago?
        Answer. Nothing prevents the Army from discussing health issues as
    long as the presence of nuclear weapons is neither confirmed nor
    denied. There should be no impediment to any federal employee, service
    member, or contractor from discussing exposure to any materials with
    their health care professionals or other officials as long as they do
    not affirm or deny the presence of nuclear weapons at a specific
    location or specific time.
        The locations of former nuclear weapon storage sites within the
    continental United States are unclassified, but the location and
    confirmation of nuclear weapons at current sites is classified. The
    neither confirm nor deny (NCND) policy is a national policy stating
    that the U.S. Government will not confirm or deny the presence of
    nuclear weapons at any specific site or location, independent of the
    classification. As long as the specific locations of nuclear weapons
    remain classified, we must continue to protect these locations through
    consistent and unyielding NCND responses. The NCND policy only protects
    current and future locations by being consistently applied 100 percent
    of the time to all locations, including former sites.

                              ROCK ISLAND ARSENAL

        Question. I would like to turn now to the Army's arsenal organic
    base. The Army's arsenals, like some contractors, have suffered due to
    the reduction in forces over the past decade. Yet preserving the
    arsenals' unique capabilities is critical for current needs, for
    occasional emergencies, and for possible wartime requirements. I am
    very pleased that recent efforts by the Army Materiel Command to use
    the arsenals' capabilities have resulted in the first significant hire
    of workers at the Rock Island Arsenal in over a decade. These efforts
    preserve needed skills and capabilities at the arsenals and reduce
    excessive overhead costs for other work there.
        Secretary White, will you encourage efforts to allow the arsenal to
    compete fairly for workload?
        Answer. Yes. I agree that fair competition will play a critical
    role in the arsenal's future. Further, we will continue to use Rock
    Island Arsenal's experience and unique expertise during heavy gun
    development, especially producibility and manufacturing planning. Rock
    Island Arsenal has personnel with advanced metalworking skills who are
    on an equal footing with American industry when considering experience
    in working with titanium, lightweight, high-strength alloys, and
    composite materials.

                        HIGH MOBILITY TRAILERS AND WASTE

        Question. Secretary White, you have been quoted as being eager to
    get rid of ``stupid'' waste. I have been fighting waste and abuse at
    the Pentagon for years, so I applaud your determination. Can you give
    any examples of steps you will take to eliminate waste or of waste you
    want to eliminate?
        Answer. The Auditor General as a member of the Secretary's staff is
    responsible for identifying ways to improve Army mission capabilities
    and management practices and eliminate fraud, waste, and abuse. The
    Army Audit Agency, under the direction of The Auditor General, conducts
    over 500 audits and reviews annually that focus on improving the Army's
    operational effectiveness and management practices and eliminating
    waste. The Agency, on average, identifies over $1 billion in potential
    savings for the Army annually.
        Some recent examples of these audits include: use of rail cars for
    transporting equipment to combat training centers; energy savings
    performance contracts; the Army lodging success program; the Army
    Morale, Welfare, and Recreation program, Europe; and equipping Interim
    Brigade Combat Teams.
        In the installations area, we are looking at things like
    privatizing family housing and utilities when it makes sense to do so.
    These are areas which are non-core to the Army mission. We want to turn
    these functions over to private entities that can provide the services
    more efficiently than the Army. Another area is our leasing program,
    where I believe we can get out of high-cost leases and onto government
    installations with some up-front construction funding. We also need to
    take a look at the contracting of firefighters and security guards.
    Current law denies us the opportunity to contract these functions.
    However, we believe that we could provide the services in a more
    economical while ensuring the safety of our soldiers, their families,
    and civilians.
        Other areas of consideration include, but are not limited to,
    improving the efficiency and effectiveness of transportation, financial
    management systems, working capital revolving funds, video
    teleconferencing and telecommuting, system action review council data.
        The continued evolution of The Army Plan and the concomitant
    Transformation Campaign Plan will ensure we eliminate waste by
    achieving unity of effort among force, resource, and modernization
    requirements and not squander scarce resources. The reengineering
    process continues to shift emphasis in Army planning from threat-based
    planning to capabilities-based planning and the establishment of
    performance standards that focus on the future and how much of that
    capability is needed. Capabilities-based planning is required to
    mitigate risks associated with the long-term challenges of
    Transformation and to hedge against mid-term strategic surprise. The
    end result is an Army document that selects, develops, and resources a
    portfolio of key military capabilities to prevail over current
    challenges, while transforming the effectiveness of the Army to meet
    the evolving, less certain security challenges of the future.
        Question. One of the programs I have followed with great interest
    is the purchase of high mobility trailers for the high-mobility,
    multipurpose wheeled vehicles (HMMWV) humvees. The program office
    believes they have finally figured out how to fix these trailers, which
    sat unusable in warehouses for years. How many of these trailers are
    now in use in the field? How many humvees have been modified to pull
    them? Have there been any problems with the trailers that are in use?
    What are your plans for purchase of additional trailers that I
    understand are still needed?
        Answer. Approximately 695 high-mobility trailers have received the
    fixes and are in the process of being fielded. For every high-mobility
    trailer that a unit receives, two HMMWVs are retrofitted with the
    cross-member upgrade kits. There are no reports of any problems with
    the modified system. The Army has an acquisition objective of 25,112
    trailers. We will pursue a competitive procurement to meet this
    objective as we develop our program and prioritize our requirements.
    Future procurements will benefit from the improvements developed in the
    current fixes and be included in the technical data package for future
    buys.
                                     ______

                  Questions Submitted by Senator Arlen Specter

                                    GRIZZLY

        Question. Secretary White, in fiscal year 2001 the President's
    budget terminated United Defense's Grizzly obstacle breaching system.
    However, the Appropriations Committee restored $15 million for the
    Grizzly program in the fiscal year 2001 defense appropriations bill
    through an amendment offered during the subcommittee markup.
        Although the Army still has a requirement for a mine-clearing
    vehicle, the Army has not requested that this funding be released by
    the Office of the Secretary of Defense. Do you plan to request this
    funding?
        Answer. No. The decision not to fund the Grizzly program was based
    on Army Transformation priorities and an assessment of affordability.

                                  ARMY MUSEUM

        Question. Secretary White, last year former Secretary of the Army
    Louis Caldera stated that the Army plans to build two new museums: one
    in Carlisle, Pennsylvania, and another in Washington, DC. He agreed
    that the Army would support a ``first class'' museum in Carlisle even
    though that site would not be ``the official National Army Museum.''
        To that end, what active steps has the Army taken to provide
    assistance in planning and coordinating the project with the Military
    Heritage Foundation and others in Carlisle? Further, what are your
    plans with regard to the creation of a National Army Museum?
        Answer. To facilitate rapid collection acquisition, the U.S. Army
    Center of Military History (CMH) granted the Army Heritage Museum (AHM)
    in Carlisle provisional museum status on September 29, 2000. CMH is
    continually reviewing the storyline and collection requirements of the
    AHM. To help with property accountability and planning, CMH conducted a
    staff visit and review of operations at the AHM with special emphasis
    on future needs. This provided a road map for future planning. To help
    with the automation of records management, CMH provided the universal
    site artifact management system (USAMS) for computerized inventory of
    historical artifacts in the collection. In addition, one member of the
    staff was invited to participate and successfully completed the
    combined USAMS/Basic Curatorial Course in February 2001. The CMH
    conservator has conducted an assessment of the existing collection to
    identify requirements and ensure the long-term protection of the
    collection. The CMH is currently preparing a statement of work to
    provide contract support for data entry into the USAMS.
        The Chief of Military History briefed me regarding site selection
    for a National Army Museum in the National Capital Region (NCR). I have
    decided to have a museum of national scope in the NCR and am reviewing
    the alternatives. I plan to make a decision well in advance of the
    Congressionally directed report date of October 30, 2001.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                          CONUS HOUSING PRIVATIZATION

        Question. I was very happy to announce on June 1st that the Army
    was finally moving forward with the privatization of housing at Fort
    Hood. I commend the Army's lead in ensuring that our soldiers and their
    families have safe and adequate housing. At what other facilities are
    you planning similar, total privatization efforts?
        Answer. The Army has awarded community development management plans
    at four pilot sites--Fort Carson, Fort Hood, Fort Lewis, and Fort
    Meade. Pending OSD and Congressional concurrence, the Army plans to
    solicit 25 additional privatization projects between fiscal year 2001
    and fiscal year 2003. The candidates are for fiscal year 2001, Fort
    Bragg, Fort Campbell, Fort Stewart/Hunter Army Air Field, and Fort
    Polk; for fiscal year 2002, Presidio of Monterey, Fort Irwin/Moffett
    Federal Airfield/Camp Parks/Fort Hunter-Liggett, Picatinny Arsenal,
    Fort Detrick, Walter Reed Army Medical Center, Fort Hamilton, Fort
    Belvoir, Fort Eustis/Fort Story, Fort Shafter/Schofield Barracks, Fort
    Riley, Fort Leonard Wood, and Fort Leavenworth; for fiscal year 2003,
    Fort Sam Houston, Fort Bliss, Fort McPherson, Fort Gordon, Fort
    Benning, Fort Rucker, Redstone Arsenal, Fort Drum, and Fort McCoy.

                         OVERSEAS HOUSING PRIVATIZATION

        Question. Is the Army pursuing any similarly innovative housing
    initiatives overseas? For example, has the Army discussed with the
    Germans, Japanese, or Korean governments the possibility of those
    foreign governments could construct housing for use by American service
    members, which could revert back to control of the host nation in, say,
    50 years?
        Answer. Yes, the Army looks for host nation funding whenever
    possible. In Korea, Republic of Korea funded construction (ROKFC) funds
    can be used for construction of Army family housing. The ROKFC program
    provides the funds to the U.S. Government for Corps of Engineer design
    and construction. The Eighth U.S. Army's family housing master plan
    calls for the construction of 96 ROKFC funded units per year between
    fiscal year 2001 and fiscal year 2010. In Germany, limited residual
    value funds are available. Current projections estimate that
    approximately $15 million will be available by fiscal year 2003 to fund
    family housing renovations. In addition, U.S. Army, Europe is looking
    at finding private investors to build family housing where feasible and
    rent back to the Army. In Japan, the Japan facilities improvement
    program (JFIP) provides limited funds for operating Army family housing
    utilities and replacement construction. However, the schedule of JFIP
    is at the discretion of the government of Japan.

                                   WELL BEING

        Question. In addition to providing more adequate family housing,
    what other quality of life issues need to be addressed today?
        Answer. The Army needs to stay on track to finish building barracks
    to the 1+1 standard for permanent party soldiers by 2008. Beyond that,
    we need to improve physical fitness training centers for our soldiers
    and improve Army National Guard and Army Reserve facilities.
        The percentage of enlisted soldiers who have some college education
    has doubled since 1985. This provides them with lucrative employment
    opportunities in the civilian sector. To retain these soldiers, we need
    to increase their salaries to compete with civilian wages.
        Army warrant officer recruitment is seeing a downward trend since
    last year's pay table reform, which raised pay for E-5 to E-7s. Warrant
    officer pay should be proportionally increased to keep pace with raises
    in NCO salaries. Failure to do so would further compress the pay table
    and there would be no incentive to become a warrant officer.
        The Army is experiencing a greater than historical captain's
    attrition. This attrition increase alone would not be significant, but
    when combined with smaller year groups assessed during the draw down
    and decreasing end strength targets, each captain loss has a much
    greater impact. The O-3 pay cell is the only grade in the pay table
    where the Army and other Services are currently having problems with
    retention.
        The Surgeon General has identified for fiscal year 2002
    requirements in excess of funding for the direct-care system of $675.1
    million, including $347.4 million identified as critical. This
    shortfall is in addition to any potential shortfalls identified by the
    TRICARE management activity related to private sector care through the
    Managed Care Support Contract.
        Personnel tempo (PERSTEMPO) is one of the primary quality of life
    factors impacting unit readiness. Key concerns are military
    occupational specialty (MOS) retention rates; non-availability rates of
    personnel resulting from the Army's deployment stabilization policy;
    the number of training days a unit requires after a deployment to
    achieve combat readiness; the skill tempo by MOS and the deployment
    tempo of units that fall into the high-demand/low-density category.
    Although studies show that some level of deployment is acceptable, when
    the length and frequency of deployments increase, it negatively affects
    the Army's ability to retain soldiers and man the force.

                                  BASE CLOSURE

        Question. Secretary White, an article ran in this Monday's Defense
    Daily indicating that you would support at least one additional round
    of base closure. I am not sure that we have actually realized any cost
    savings from the last few rounds of Base Realignment and Closure (BRAC)
    due to environmental clean-up and other turnover costs. I am also
    concerned by the way Department of Defense (DOD) presently manages its
    infrastructure. How can the Congress confidently grant base closure
    authority, given that the Department currently does a sub-par job of
    managing its facilities? If granted such authority, how would the Army
    maintain enough facility growth capacity for surges or if overseas
    units had to redeploy to the United States?
        Answer. The Army manages its facilities professionally and to the
    best of our abilities within the resources provided. We managed the
    previous four BRAC rounds successfully. We reduced our real property
    inventory by approximately 21 percent and were able to realign selected
    installation functions to gain synergy that would not have been
    possible otherwise. Estimated savings from the previous BRAC rounds
    combined is $944 million per year, which includes savings from military
    construction, family housing, operations and maintenance, and
    personnel. The break-even year of savings greater than costs was 1997.
    Environmental cleanup costs to date have been $2 billion with estimated
    remaining costs of $1.07 billion. The Army's remaining BRAC
    environmental liabilities can be paid with slightly more than one year
    of savings. However, we recognize that we still have excess facilities
    that can best be corrected through comprehensive BRAC authority to
    close and realign our bases to fit the missions and requirements of the
    transforming Army.
        Previous BRAC analyses followed a formalized process. Part of the
    process established the military value of our installations. BRAC
    analyses included evaluation of installation capacity to support all
    military requirements including contingencies, redeployments, and force
    structure surges. If new BRAC authority is granted, the next BRAC
    analysis process should include similar evaluations that can address
    potential facility-growth capacities for changing Army missions or
    restationings.

                             INSTALLATION SECURITY

        Question. I understand the necessity of improving security on our
    Army bases, in light of today's increasing threat of terrorism.
    However, as many facilities are considered an integral part of the
    communities in which they are located, I hope the Army will coordinate
    its efforts with state and local leaders, and will publicly explain the
    rationale behind its moves. Will you commit to making such efforts?
        Answer. As you mention, the threat to our military installations is
    increasing. To address these risks, we are taking positive steps to
    increase security measures to protect the people and property on our
    posts worldwide, including limiting access to our facilities. We
    recognize that the communities in which we live and work are an
    integral part of our Army. As such, we coordinate all of our security
    efforts with community leaders. Our provost marshals maintain constant
    liaison with local and state leaders and police agencies in the
    coordination of security matters, including sharing criminal and police
    intelligence, especially in police response operations. We have
    undertaken an aggressive campaign to inform the communities of our
    actions in controlling access to Army installations. The Army requires
    that commanders coordinate with local, state, federal, or host country
    officials to ensure integrity of restricted access and to reduce the
    effect on surrounding civilian communities. Our access control measures
    are consistent with applicable law and consider statutory and local
    labor-relation obligations. Persons not associated with the performance
    of the installation mission, i.e., visitors, will be required to obtain
    a temporary visitor pass to gain access to the installation.

                         RESERVE COMPONENT UTILIZATION

        Question. As was mentioned in your joint statement, the 49th
    Infantry Division, a National Guard unit from Texas, was deployed to
    Bosnia last year. This was the clearest demonstration yet of our
    nation's growing reliance on the Guard and Reserve to conduct even day-
    to-day military operations, a trend that concerns me greatly.
        What insights has the Army gained as a result of that deployment?
    Has that assignment, or the prospect of returning to Bosnia this
    October negatively impacted retention rates in the 49th? What do
    members of other Guard units from around the country think of this new
    practice? How do routine, six month-long overseas deployments fit in
    with the American public's view of the National Guard as our nation's
    ``minutemen?''
        Answer. As overseas commitments continue to increase, there is a
    greater reliance on Reserve component (RC) forces to integrate with the
    active component (AC). The 49th Armored Division's contributions, as
    well as those of other RC organizations, in support of operations in
    Bosnia have provided greater flexibility to the AC by allowing units to
    be reassigned to other critical missions and by reducing AC personnel
    tempo (PERSTEMPO) and operational tempo (OPTEMPO).
        While AC PERSTEMPO and OPTEMPO have been reduced through the use of
    the RC in this instance, increases in RC PERSTEMPO and OPTEMPO and
    employer sentiments to extended deployments offer certain challenges.
    The 49th Armored Division launched an aggressive employer support
    campaign that provided early notification to employers and educated
    employers of the vital role of their citizen-soldiers for peacekeeping
    operations. After arrival in theater, employer relations were
    maintained by allowing executive visits to Bosnia. Additionally,
    soldiers were provided the means and encouraged to stay in touch with
    employers. Other significant insights include improved unit readiness,
    realistic training, improved staff-level command and control execution,
    and individual soldier readiness and preparedness.
        The plan to integrate AC and RC forces was truly manifested into
    reality under the command and control of the 49th Armored Division.
    Other Army National Guard units will also be given command and control
    responsibility for six out of the next seven scheduled Stabilization
    Force rotations for Bosnia. the Army continues to transform, new
    methods of utilizing the RC in an ever-changing operational environment
    will be explored to take full advantage of RC capabilities.
        It is still too soon to tell the impact on retention that the
    rotation had on the 49th; however, current indications are that there
    was no negative impact. The Guard and Reserve have each conducted
    studies that concluded that there does not appear to be a significant
    difference in attrition rates within units that have mobilized and
    units that have not mobilized.
        Our capability to expand the active force rapidly and efficiently
    through mobilization is essential in deterring potential enemies. Our
    Reserve components soldiers see opportunity to serve using their skills
    in ways that they can see the impacts. However, we must be careful
    that, as we call on the RC to meet the Army's global requirements, we
    ensure our practices allow the greatest amount of lead time in
    notification to allow for adequate preparation.
        On the whole, traditional soldiers approve of the Reserve
    component's new mission, but do not like the current training and
    mobilization process. We serve our soldiers, their families, and
    employers best when we first federalize a unit and then train all unit
    members on mission specifics. Deployment follows only after this is
    complete. Not only is this a more effective and efficient deployment
    process, it adds to the continuity of training for the soldier, and to
    the continuity of the planning process for the soldier's family and
    employer. The end result is a proficient soldier prepared to conduct
    the mission.
        The Guard and Reserve are following rotational policy guidance of
    179 days in theater for Balkan operations. We have discussed shorter
    rotations such as 120 days or 90 days for the Balkans. The Army
    National Guard currently deploys units on shorter rotations to
    Southwest Asia and has reduced rotational lengths for medical
    personnel, lawyers, and aviation assets. Discussions continue on the
    feasibility for shorter Balkan rotations and the potential impacts on
    units, families, and employers, as well as the potential impacts on
    funding such as added transportation requirements for personnel and
    equipment and training site usage. As the RC takes on more of a role,
    we will continue to work toward better solutions that will reduce the
    tempo for all components of the Army.
                                     ______

                Questions Submitted to General Eric K. Shinseki

                Questions Submitted by Senator Daniel K. Inouye

                                  LEGACY FORCE

        Question. Some have argued that the Army cannot afford to maintain
    readiness, modernize the Legacy Force, build the Interim Force, and
    develop the Objective Force all at once without cutting force levels.
    What is the possibility that the Army will be faced with having to cut
    forces to meet its Transformation goals? Has the Army considered
    cutting force structure and, if so, where would the cuts most likely be
    made?
        Answer. The transformed Army may have the ability to execute its
    missions at lower force levels in the future, but we are not prepared
    to make that assumption today and believe it to be an imprudent
    approach to securing the vital interests of the Nation. The Army is
    clearly too small today for its current mission profile. Cuts should
    only be considered in conjunction with the defense strategy and review
    of all forces required to support a new National Security Strategy and
    National Military Strategy.
        Numerous studies and Congressional testimony from the Army, other
    Services, and Office of the Secretary of Defense (OSD) document the
    serious strategy-to-resource mismatch under which we currently operate.
    The Quadrennial Defense Review process, as it has emerged to date,
    clearly appreciates that without a change to the strategy and/or
    current force levels and attendant capabilities, our Armed Forces will
    continue to decline in both relative and absolute terms. Inevitably,
    this will degrade the Nation's security.
        The Army must balance Legacy, Interim, and Objective Force
    requirements. All three are necessary to transform the force and
    maintain current readiness for future capabilities. In the interim, and
    pending definitive proof that transformed capabilities are adequate to
    supplant current Legacy and Interim Forces, the Army must maintain
    readiness in existing Legacy and developing Interim Forces.
        The Army needs more forces today to execute current missions, and
    force cuts place the remaining forces at too high a tempo. The Army has
    consistently maintained that 12-plus active divisions and their
    supporting forces are required to accomplish ongoing missions, sustain
    readiness, and transform the force. Current active component forces are
    already two-plus divisions short and rely heavily on reserve component
    forces to meet commander-in-chief needs. However, growing concern among
    reserve component members, their families, and employers for frequent,
    lengthy tours outside of the United States indicates that we cannot
    continue this approach indefinitely to meet operational needs.
        The Army plans to invest in Transformation to revolutionize the
    ground component of future war. The current Program Objective
    Memorandum fully funds procurement of over 2,000 Light Armored
    Vehicle's to equip six Interim Brigade Combat Teams, funds
    approximately $8.5 billion in science and technology for Objective
    Force experimentation and Transformation, and provides funds to
    recapitalize the Counter-Attack Corps. The Army has accepted
    significant risk with the current force through internal force
    reductions and partial funding of modernization programs.
        The Army has removed 25 percent of its main battle tanks, infantry
    fighting vehicles, and artillery systems in anticipation of fielding
    enhanced capabilities in Comanche, Crusader, and numerous digitized
    systems.

                                 INTERIM FORCE

        Question. The Congress last year added funds to enhance your
    efforts to build your Interim Force. Can you give us a status report on
    how those funds have been used and how this program is proceeding?
        Answer. Congress' support for the Interim Force last year was
    critical to the Army's ability to begin establishing an interim
    capability at Fort Lewis, Washington. In the Fiscal Year 2001 Defense
    Appropriations Act, Congress added $150 million for research,
    development, test and evaluation (RDTE), $400 million for weapons and
    tracked combat vehicles (WTCV), and $200 million for Other Procurement,
    Army (OPA) to expedite fielding of the Interim Force.
        A total of $258 million for fiscal year 2001 RDTE was appropriated.
    The bulk of this funding was awarded to provide integration engineering
    efforts required to marry ten mission equipment packages with ten
    platform configurations. The remainder was issued for government
    support and engineering, modification of training devices, test
    planning, and seven Mobile Gun System prototypes. Carryover funding
    will be applied to the contract integration engineering efforts and
    fiscal year 2002 requirements, to include testing.
        A total of $928 million for fiscal year 2001 WTCV was appropriated.
    The bulk of this funding was obligated against delivery orders for the
    procurement of vehicles for the first Interim Brigade Combat Team
    (IBCT), equipment for production and fielding of these vehicles,
    integrated logistics support for the vehicles, and program management
    support. The remaining funds will be obligated in early fiscal year
    2002 to procure vehicles for the second IBCT, along with equipment,
    logistics support, and training devices.
        The Army used the additional $200 million OPA to purchase a wide
    range of equipment and support systems for the IBCTs. Chief among the
    items purchased were a range of command, control, communications,
    computers and intelligence systems, various wheeled tactical vehicles,
    night vision devices, and other combat support and combat service
    support equipment and systems.
        The Army awarded the Interim Armored Vehicle (IAV) contract to
    General Motors/General Dynamics Land Systems Defense Group Limited
    Liability Company in November 2000. United Defense, Limited Partnership
    (UDLP) filed a protest with the GAO in December 2000 for an examination
    of the source selection process for the IAV program award. In April
    2001, GAO notified UDLP and the Army of its decision to deny UDLP's
    protest. The GAO's decision was released on May 2, 2001. UDLP has not
    pursued further action, and delivery of the first vehicles is scheduled
    for February 2002.

                           TRANSFORMATION CHALLENGES

        Question. General Shinseki, in your testimony you note that
    Transformation will affect all aspects of Army life: training,
    logistics, supply systems, base infrastructure, and so on. Changes to
    these areas likely will provoke some controversy and significant costs.
    In which of these areas do you expect change to create the greatest
    challenge?
        Answer. Transformation is far more extensive than just modernizing
    equipment and the physical construct of the posts, camps, and stations
    we operate in. Certainly, the Army will see changes in doctrine,
    training, leaders, organizations, materiel, and soldiers as we continue
    to move from the Legacy Force to the Objective Force. Our biggest
    challenge in this process is continuing to look at the emerging
    strategic environment we will be asked to operate in and shaping the
    training and leader development that will be required of our Objective
    Force soldiers and leaders.

                             TRANSFORMATION MODELS

        Question. Are there any models of corporate business transformation
    that may shed light on the Army's plan?
        Answer. The Army has taken and continues to pursue from industry
    and the corporate world, business practices and innovative approaches
    that would be appropriate for our use in improving our efficiencies and
    effectiveness as we transform the Army. We have already adopted many
    business practices that allow us to reduce costs and realize savings
    that ultimately makes more funds available for readiness,
    modernization, and well-being programs for our most critical assets--
    our people and their families. These elements are all essential to our
    efforts to transform the Army.
        We have gone to several of our Nation's leading industry firms and
    looked at how they have transformed to meet tomorrow's challenges and
    adopted what was appropriate for our use. We are already challenging
    the manner we have used to acquire, test, and evaluate our equipment
    and have implemented new and improved business practices in our
    approach to procure the Infantry Carrier Vehicle and the Mobile Gun
    System.
        Additionally, we are adding emphasis within the Army Transformation
    Campaign Plan for addressing better business practices across all of
    the proponents responsible for Transformation and, at Secretary White's
    direction, are looking at what more we can do to ensure we are using
    the most effective and efficient means available to assist in the
    Transformation of the Army.

                                    CRUSADER

        Question. The Crusader system has been criticized as not being a
    ``leap-ahead'' technology. How do you respond?
        Answer. Crusader not only provides a leap ahead to the force it
    supports, but also provides a more efficient and effective
    developmental path for the Army's future combat systems. Crusader
    provides a significant leap ahead in combat power over our current
    M109A6 Paladin and the latest howitzers being introduced by other
    countries. Crusader employs more than two dozen cutting-edge
    technologies for the first time in a ground combat vehicle. Some of the
    technologies include a state-of-the-art cockpit that includes embedded
    command, control, and training; fully automated ammunition handling,
    including inventory management, recognition, transfer, loading, and
    docking; vulnerability and susceptibility reduction that incorporates
    integrated composite armor, detection avoidance, and remote operated
    secondary armament; electronics architecture that employs a new real-
    time common operating environment and fault management, fully
    integrated combat knowledge and decision aids; and a revolutionary new
    cannon assembly with an actively cooled cannon and gunmount, laser
    ignition, and projectile tracking system that improves accuracy. This
    is just a partial list of some of the new technologies being introduced
    in Crusader.
        The technologies in Crusader allow the Army to employ tactics and
    doctrine for the first time that rely on cockpit automation, robotics,
    and information exploitation in lieu of soldier performed tasks.
    Crusader also provides unmatched synergy within the force as it
    capitalizes on advanced technologies to integrate with manned and
    unmanned ground and aerial platforms that employ information-dominant,
    network-centric warfare. Crusader equipped battalions will provide the
    commander with continuous, immediate, all weather, 360-degree precision
    fires at an unprecedented 50 kilometer range, assisted and a sustained
    rate-of-fire in excess of 11 rounds per minute. The new technologies
    employed in Crusader make it strategically deployable with enhanced
    lethality, mobility, sustainability, and readiness.
        Question. Given the cost of this system, would the Army be better
    served to invest in smaller, more mobile and potentially more lethal
    artillery systems?
        Answer. No. We need the improved lethality, strategic and tactical
    mobility, sustainability, and reliability that Crusader will provide to
    our force now. We do not believe that we could have a smaller, more
    mobile, and more lethal system that could perform Crusader's role in
    time to support the requirements of our transforming Army. The market
    survey and analysis done before we embarked on Crusader supports this
    position, as does the continuing monitoring and assessment of emerging
    new systems and technologies. We believe that Crusader is the best
    cannon artillery system to support Army Transformation.

                           ARMY TRAINING AND MANNING

        Question. How has your initiative to fully man the Army's combat
    units influenced training this year?
        Answer. The Army manning initiative is a deliberate effort to
    ensure that our warfighting forces have the personnel they require. The
    initiative to fully man our combat units has had a positive effect in
    several ways and is reflected in higher unit readiness. Division
    training level indicators are at their highest levels in the past four
    years. Personnel manning for these units is at the highest level in the
    last five years. This is due to the priority for personnel these units
    received from the manning initiative. With increased personnel, units
    are more capable of conducting individual and collective training and
    executing the Combined Arms Training Strategy.
        Question. What are your plans to fully man the supporting
    institutions of the Army?
        Answer. The Army's ability to fill all units to 100 percent of
    authorizations depends on balancing a number of factors, such as
    synchronizing force structure with Congressional mandates, attrition,
    retention, and recruiting.
        During fiscal year 2000, we increased the manning of our divisions
    and armored cavalry regiments to 100 percent. We will fill the rest of
    the force during the next three years. In fiscal year 2001, we will
    continue to fill the 10 active component divisions and the armored
    cavalry regiments to 100 percent. We will also fill the early deploying
    units above division level to 100 percent of authorizations. In fiscal
    year 2002, we will fill the remaining table of organization and
    equipment (TOE) units to 100 percent. In fiscal year 2003, we will fill
    the remaining TOE units and the Department of the Army approved table
    of distribution and allowance to 100 percent.

                                 TRANSFORMATION

        Question. Programs that recently suffered difficulties after
    fielding were approved for full rate production based on passing
    Operational Testing and Evaluation (OT&E). What is being done to
    improve upon the accuracy and reliability of Army testing and to avoid
    these costly failures in the future?
        Answer. The purpose of Army test and evaluation (T&E) is not to
    pass or fail systems, but to characterize in a realistic operational
    environment that systems are effective, suitable, and survivable. The
    U.S. Army Test and Evaluation Command (ATEC) strives to conduct the
    highest quality developmental and operational testing and
    experimentation possible to provide information to support Army
    evaluation and milestone decision authority requirements within the
    available time and funding. Tests and experiments are designed to
    provide specific data to support evaluations as input to full rate
    production and materiel release decisions.
        Unfortunately, overall reductions in the Army's T&E infrastructure
    over the last 10 to 12 years, reduced T&E funding, and acquisition
    streamlining initiatives have impacted the robustness of ATEC T&E. The
    impact of these constraints is seen in reduced environmental tests,
    test duration, sample size requirements, and size of operational units
    employed during tests. This increases the risk that important
    information that might preclude fielding of a system with problems is
    not identified during testing.
        ATEC is undertaking a number of initiatives to reduce these impacts
    and working to increase the rigor and realism of tests to determine if
    systems and equipment meet user requirements. An ATEC system team is
    formed for every program to bring together the principal T&E personnel
    to discuss and coordinate T&E activities. Risk mitigation factors are
    considered for each test or experiment as a means of reducing impacts.
    The findings of these efforts are then presented to program managers as
    T&E strategies are developed.
        ATEC is increasing the use of modeling and simulation to
    investigate system and equipment performance in conditions outside
    typical test environments. Modeling and simulation capabilities are
    incorporated where possible to increase and improve the operational
    environment simulation, to provide for increased interactions within
    the simulated environment, and to create simulated organizational
    structures for improved realism and increased information flow.
    Modeling and simulation tools are being developed to extend test data
    and provide repetition of test events.
        ATEC is striving to modernize the T&E infrastructure; however, with
    current budget shortfalls, this will require an extended period of
    time, and in the interim, will cause a decreased ability to support T&E
    needs. This modernization will help better equip testers with tools to
    enhance accuracy and reliability. Such tools are in their infancy now.
    Further development is ongoing and will require future funding.
        ATEC is launching an educational campaign with the Army's senior
    leaders, program executive officers, and others regarding the benefits
    of T&E and the valuable aid it provides in getting systems and
    equipment fielded faster. ATEC is also enlisting the aid of the
    National Academy of Science to ensure all possible means of mitigating
    the risk of not finding significant system performance deficiencies are
    explored.
        The Army recognizes that some systems have demonstrated lower than
    required reliability during operational type tests over the last
    several years. In response, the military deputy (MILDEP) to the
    Assistant Secretary of the Army for Acquisition, Logistics, and
    Technology directed that a reliability, maintainability, and
    supportability workshop be conducted to identify problems and develop
    recommendations for their resolution. Initial recommendations were
    presented to the MILDEP in January 2001 and centered around the premise
    that reliability could be significantly improved by focusing on two
    main areas: to design in reliability up-front and to validate that we
    have reliable systems and components. Also, the recommendation included
    the identification of enablers for this improvement. These enablers are
    ensuring that government requirements are properly stated and
    translated during the contracting process, resourcing for execution of
    the process, and measuring the results. The MILDEP directed additional
    work on the refinement of the recommendations. This work is currently
    ongoing. The next update to the MILDEP is scheduled for July 31, 2001.

                         ARMORED SECURITY VEHICLE (ASV)

        Question. Last year the Congress provided additional monies to
    support the Army's equipping military police units with Armored
    Security Vehicles or the ASVs in fiscal year 2001. To date, those funds
    have not yet been obligated and the vehicles have not been purchased
    despite the fact we are rapidly approaching the last quarter of the
    fiscal year. Please comment on the status of complying with the
    legislative direction provided in the fiscal year 2001 Appropriations
    Bill, what is causing the delay in purchasing these vehicles for our
    military police units and what your plan is to address this problem.
        Answer. The ASV program received a $1.4 million Congressional plus-
    up to procure an additional vehicle for fiscal year 2001. The Army has
    every intention to comply with the fiscal year 2001 Appropriations
    Bill. The approximate contract award date for the vehicle is scheduled
    for July 27, 2001. This option will be an additional vehicle to the 20
    vehicles procured under the fiscal year 2001 contract awarded in
    November 2000. In addition to another vehicle, the funding expedited
    the fielding of 12 ASVs to a military police company in Kosovo.
                                     ______

                   Questions Submitted by Senator Tom Harkin

                           UNUTILIZED PLANT CAPACITY

        Question. Unutilized Plant Capacity (UPC) funds are critical to the
    arsenals to pay for capacity that is maintained for national wartime
    requirements, not for current contracts, and thus to keep overhead
    rates reasonable. Last year Congress directed the Department to include
    full UPC requirements in the budget. Yet we continue to hear rumors
    that once again full UPC funding will not be in the budget. Will you
    follow Congressional direction and include full funding for unutilized
    and underutilized plant capacity in the budget for fiscal year 2002?
        Answer. While we have tried to comply with the recommendations of
    the Congress, budgetary constraints precluded the full funding of the
    Industrial Mobilization Capacity program formerly known as UPC.
    However, the fiscal year 2002 budget justification does show we have
    provided partial funding.

                      155 MILLIMETER LIGHTWEIGHT HOWITZER

        Question. The 155 millimeter Lightweight Howitzer is a program that
    has been of significant local interest and that is becoming more and
    more of a national problem. You agreed that there is a need for this
    howitzer for the interim brigades, to form a lighter, more mobile
    force. But a recent update to a General Accounting Office (GAO) report
    on the program found that it continues to be significantly over budget
    and behind schedule, that proposed fixes to old technical problems have
    not been fully tested, and that there are newly discovered problems.
    The titanium that keeps the howitzer light weight turns out to be prone
    to cracking, and the new aiming system does not yet exist. I am
    concerned that it may be time to terminate this program and look at
    other options for this capability. General Shinseki, will you look at
    this program and consider whether it is time to cut our losses so they
    do not impede the Army Transformation?
        Answer. The Lightweight 155 millimeter Howitzer (LW155) is a joint
    program with the United States Marine Corps developing the howitzer and
    the Army developing the digital fire control. The Army continues to
    assess the LW155 and our other developmental systems for their
    continued relevance to Army Transformation.
        There is a critical and urgent need for a lightweight, highly
    mobile and deployable fire support system to support our brigade combat
    teams and the Marine Corps' expeditionary forces. The engineering
    analysis and preliminary testing suggests that the LW155 will meet or
    exceed its design requirements. We believe it is essential that the
    weapon complete its current test phase so that sufficient data can be
    obtained to support a production decision late next year.
        The July 2000 GAO report raised concerns over three specific
    technical issues--spade size, saddle, and titanium welds. As reported
    in the April 2001 GAO follow-up report, the spades are now properly
    sized and being installed onto the prototypes. The GAO report also
    noted that the new saddle was successfully field tested. The one small
    crack observed in the titanium weld during initial firings of the first
    engineering and manufacturing development prototype weapon 10 months
    ago was repaired and has since been subjected to over 800 rounds
    without a recurrence.
        The four technical issues identified in the April 10, 2001, GAO
    report was minor, and remedies have already been incorporated into the
    LW155 design. First, the spade crack discovered was addressed by a
    spade design iteration. The latest spades have been reinforced to
    withstand worst-case conditions. Second, a new spade latch has been
    incorporated that provides greater robustness and protection to the
    hinge area from sand, grit, and moisture. Next, a new two-position
    damper to replace the single-setting damper was incorporated into the
    design to optimize weapon stability in all soil conditions. And
    finally, the optical sight, which experienced retention problems, has
    been redesigned to withstand greater shock loading.
        The current howitzer was selected after an extensive live-fire
    shoot-off in which it was determined to be the winner over two other
    prototypes. Identifying and resolving technical issues such as those
    described above are commonplace and the very reason for this stage of
    development. The LW155 program is on track for the September 2002 full-
    rate production decision.
        The Marine Corps delayed the program's full-rate production
    decision to September 2002 based on problems with the manufacture of
    the initial engineering and manufacturing development weapons which
    have since been resolved. The $20.2 million cost growth is driven not
    only by the delay in the program, but also by adding a pilot production
    run to enable the U.S. manufacturers to gain experience with building
    weapons before the start of production. There has been no increase to
    anticipated production costs of the LW155, as the first two years of
    production are covered by fixed-price contract options.
        The acquisition plan for the LW155 has always planned for the
    development of the Army's portion of the program, the digital fire
    control system, to lag behind the Marine Corps' development of the
    basic howitzer. This delay minimizes the risks associated with
    integration of the fire control onto the howitzer. Initially, only the
    Army's LW155 howitzers were going to be equipped with the digital fire
    control. After reviewing the Army's experimentation with digital fire
    control on towed howitzers, the Marine Corps decided to include digital
    fire control on their howitzers.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                             TRANSFORMATION STATUS

        Question. General Shinseki, what is the status of your efforts to
    ``Transform'' the Army? Your vision would seem to dovetail nicely with
    Secretary Rumsfeld's desire to transform the Department of Defense. How
    have your ideas been received by the Pentagon's new senior leadership?
        Answer. We have moved out and made significant progress this past
    year in a number of areas. Our efforts are in line with Secretary
    Rumsfeld's desires and we have synchronized The Army Vision and the
    supporting Transformation Campaign Plan with the National Security
    Strategy, the National Military Strategy and Joint Vision 2020. Two key
    documents, Field Manual 1, ``The Army,'' and Field Manual 3,
    ``Operations,'' have been written and recently published. We are now in
    the process of completing several of the organization and operational
    designs for the new organizations and have stood up a task force to
    facilitate the accelerated fielding of the Objective Force this decade
    by integrating and synchronizing its warfighting capabilities and
    technologies.
        Two Interim Brigades have been formed at Fort Lewis, Washington,
    with surrogate and loaned equipment while we undergo procurement of the
    Interim Armored Vehicle. Simultaneously, to ensure the readiness of the
    force, the Army has manned the 10 divisions and two armored cavalry
    regiments to 100 percent and reduced the headquarters manning
    accordingly. Panels on well-being, turbulence, readiness, leader
    development, and training have been established to assist in our
    transition. The information gained from these panels has been
    integrated into our overarching Army Transformation Campaign Plan. We
    have also introduced a number of key recruiting and retention
    initiatives based on information obtained from these panels.
        The Army has aligned spending in science and technology (S&T) to
    develop the operational capabilities of the Objective Force to allow
    the Army to have its first operational capability in 2010 following
    certification of the first Objective Force unit of action. The S&T
    funding currently is 97 percent of the requirement.
        Our efforts to transform the Army have been briefed to many of the
    Pentagon's new senior leadership, and we continue to receive superb
    support as we move down the path of Army Transformation.

                                  DIGITIZATION

        Question. What is the status of the ``digitization'' of the III
    Corps at Fort Hood?
        Answer. The Army remains committed to equipping III Corps with
    essential digital capabilities as the Army transforms its forces. The
    Army is focused on the Objective Force as the first priority and the
    Interim Force as the near-term solution to today's needs. However, the
    Army remains fully committed to recapitalizing and modernizing the
    Legacy Force beginning with III Corps. To date, the Army has
    successfully fielded essential digital systems to the 4th Infantry
    Division at Fort Hood and successfully conducted the first phase of the
    division capstone exercise at the National Training Center in April
    2001. The Army is continuing to develop, test, acquire, and field key
    digital systems to the 1st Cavalry Division in 2002 and 2003 and the
    remainder of the 4th Infantry Division, followed by the 3rd Armored
    Cavalry Regiment and Corps elements in subsequent years. The Army's
    efforts to equip III Corps with digital capability will not only
    enhance the combat power of III Corps, but will also enable
    Transformation to take shape with the focus on the Objective Force.

                             ENVIRONMENTAL CONCERNS

        Question. General Shinseki, members of this Subcommittee have
    become increasingly aware of the growing impact environmental concerns
    have on the Army's ability to thoroughly and realistically train its
    forces. Some of my colleagues in the House are so concerned about the
    matter, they are considering a legislative remedy. Would you please
    describe the impact environmental constraints are placing on the Army's
    ability to train?
        Answer. In the Army, we use the term encroachment to refer to all
    external influences threatening or constraining testing and training
    activities required for force readiness and weapons acquisition. Such
    encroachment stems from environmental, social, and economic influences.
    Impacts include, but are not limited to, restrictions on available
    testing and training locations; restrictions on available times and
    duration for testing and training; reduced effectiveness of testing and
    training activities; and restrictions on weapons systems, equipment,
    and munitions used during testing and training.
        Unit commanders have not reported lowered training ratings solely
    due to encroachment issues. However, several units reporting reduced
    readiness ratings have provided comments on their unit status reports
    identifying training constraints. Instead of allowing these constraints
    to reduce unit training status, commanders have developed ``work-
    arounds'' to continue training to maintain their readiness posture and
    to accomplish the mission. Although these work-arounds must support
    training requirements based on doctrinal standards, they make the
    training experience sub-optimal. When training combines a number of
    work-arounds, the adverse impacts on training are magnified and
    cumulative.
        The Army's primary encroachment concerns are urban sprawl,
    threatened and endangered species, and restrictions that impact our use
    of munitions. Urban sprawl and unchecked residential and community
    growth may present conflicts with our neighbors over noise, dust, and
    other effects of Army training. In some areas, it triggers a
    competition for natural resources. When our installations were
    established, they generally were in rural areas, remote and isolated
    from populations where public awareness of live training activities was
    minimal. That has changed. The sum effect has been that Army
    installations, once far from public view, are now often in the midst of
    large urban areas. Population and urban growth around installations
    have caused ranges and training lands to become ``islands of
    biodiversity,'' increasing their natural resource value. Our training
    practices bring noise, dust, the expenditure of munitions, and ground
    activities that can be viewed as a nuisance and annoyance to those who
    have become our neighbors.
        Managing endangered species in accordance with existing regulations
    has been, and continues to be, a great challenge. As a land-based
    force, we need land to train. Our important training installations are
    large and are needed to accommodate air and ground maneuver using our
    increasingly mobile weapons systems. Endangered species regulations
    have required us to review our training activities to ensure that they
    do not jeopardize the continued existence of an endangered or
    threatened species. In some cases, we must modify our training
    activities to meet that requirement. One salient example is a $24
    million range complex on the island of Hawaii that has never been used
    for the training for which it was designed and built due to extremely
    restrictive mitigation measures designed to preserve endangered plants.
    As the number of listed plants and animals increases, the amount of
    land available to us for unmodified training activities may decrease
    further.
        Our concerns about munitions focus on the future. At one of our
    ranges, the Army National Guard's Massachusetts Military Reservation
    (MMR), we have encountered regulatory actions that impacted our
    operations. For the first time, the EPA has administratively stopped
    our live-fire weapons training by exercising authority under the Safe
    Drinking Water Act. The use of environmental regulations to curtail
    training activities must have a scientific basis. Given the fact that
    our units employ a large number and type of weapons and that we train
    with those weapons on literally thousands of ranges, the potential for
    cessation of live fire training is of great concern to us. All Army
    installations with training areas and ranges are vulnerable to
    imposition of environmentally based restrictions on live fire training.
    The potential impact of further administrative cease-fire orders cannot
    be measured, other than to say that major training and training
    readiness investments would be affected. The regulation of munitions is
    a complex issue that requires deliberate measures in the areas of
    environmental research and development, risk assessment, range design,
    and range management. Unilateral orders to stop firing while we
    investigate these challenging issues will impact readiness. A more
    balanced approach is warranted. Such an approach should ensure that
    policy makers weigh national security concerns, as well as
    environmental stewardship interests.
        As currently written, several statutes contain broad discretionary
    enforcement thresholds that are based on the assessment of the
    regulatory authority as to whether a given condition presents a
    potential risk or imminent hazard to human health or a particular
    natural resource. While the Army is not seeking to avoid our
    responsibilities to the American people or seeking relief from
    compliance with environmental statutes, the lack of consistent and
    measurable assessment and enforcement standards limits the Army's
    ability to plan, program, and budget for the necessary compliance
    requirements. In light of the Secretary's current strategic review, it
    would be premature to discuss specific proposals, but I look forward to
    working with other federal agencies and Congress.

                             ACTIVE DUTY DIVISIONS

        Question. A number of articles have appeared recently which assert
    that the number of active duty divisions may be cut from ten to eight.
    Are either of you aware if Secretary Rumsfeld is even considering such
    dramatic restructuring of the Army as part of his ``strategic review?''
    What are your thoughts about such a proposal? How would such cuts
    affect the Army?
        Answer. Force levels to support 2001 Quadrennial Defense Review, to
    include restructuring, are now being considered. The Secretary of
    Defense has not yet made any decisions with respect to the strategic
    review, so it would be premature to comment on the specifics of any
    pending changes in Army organization or force structure. The Army
    leadership is committed to providing the Secretary of Defense and his
    staff with our very best professional judgment, advice, and analysis
    regarding force structure requirements to implement the new defense
    strategy.
        We have been heavily engaged in making our requirements known,
    based on a strategy of what this Nation's interests are and what we see
    as requirements for the Army to meet the National Security Strategy.
    While the future security environment is uncertain, the Army believes
    that winning the Nation's wars is an enduring requirement and that
    challenges to our security and well being will continue. Both will
    demand landpower, with the capability to assure allies, deter conflict,
    dissuade adversaries, and conduct sustained and decisive operations
    across the full range of military operations. This includes the
    capability to win decisively--defeating both the adversary's ability
    and will to fight or wage war--with victory being incontrovertible and
    significant military threats eliminated.
        The Army's future capabilities must include the ability to deter or
    preclude conflict, and if that fails, decisively win war; conduct a
    broad array of smaller-scale contingencies concurrently; sustain
    acceptable personnel and operational tempo; and meet current and
    anticipated homeland security challenges. Simultaneously, the Army must
    have sufficient forces and resources to experiment and transform to
    meet tomorrow's joint force requirements. Our Nation's security
    requires these capabilities.
        Army experience and analyses continue to show today's force
    structure is too small to meet those requirements. An adequately sized
    force ensures a rotation base of trained and ready forces to conduct a
    full spectrum of operations within acceptable tempo. The force must
    also possess a full array of capabilities necessary for decisive
    victory in war. This includes a structure with sufficient operational
    depth to ensure appropriate span of control, economies of scale and
    sustained campaign capability. Today's Army works hard to meet these
    vital requirements as it implements an imperative, comprehensive
    experimentation and transformation plan. Given the uncertain and
    growing range of challenges we know we will face in this century, Army
    force structure of at least today's size appears warranted and prudent.
        As we conduct the Defense review, the Army believes it is essential
    that we not attempt to predict the future and then optimize a force
    consistent with our predictions. The consequences of guessing wrong are
    too severe--we cannot break our non-negotiable contract with the
    American people to fight and win the Nation's wars. Instead, we should
    recognize the uncertainties and potential for dramatic change
    associated with our future security requirements and preserve the key
    military capabilities that provide our Nation's leaders with a robust
    set of options in times of crisis. We believe strongly that the
    American soldier will continue to be a centerpiece of our Nation's
    Armed Forces in the decades to come.

                              INFORMATION SHARING

        Question. General Shinseki, this month's Janes IDR reports that the
    Army and the Marine Corps are close to signing an information sharing
    agreement covering each Services' efforts to develop and field new
    families of armored vehicles. While I applaud the move, I am concerned
    that the agreement may not be broad enough to cover more than a few
    common items such as fuel cells. What stands in the way of applying the
    Joint Strike Fighter model to armored vehicles? Why can't the Army and
    the Marine Corps jointly develop new armored vehicles that are at least
    85 percent common? After all, both services share the goals of
    replacing the M1A1 tank and variants of the Light Armored Vehicle.
        Answer. Nothing stands in the way of the Army and Marine Corps
    maximizing our cooperation in the development of new armored vehicles.
    The degree to which our vehicles could be made common would be
    dependent upon our individual Service stated requirements.

                              AGING INFRASTRUCTURE

        Question. I am very concerned about the aging infrastructure of our
    military posts. What is the shortfall of your Sustainment, Restoration,
    and Modernization account for the Army? Does the proposed supplemental
    budget from DOD address those shortfalls adequately?
        Answer. Due to the extended period of facilities sustainment
    underfunding, Army facilities have deteriorated to a C3 installation
    status report level. The current unfunded backlog to bring facilities
    to C1 is $17.8 billion. The Army's request of $126 million for
    additional sustainment funding in fiscal year 2001 would be a welcome
    step towards achieving the needed level of annual sustainment funding
    and would assist installations in returning from an ``emergencies
    only'' mode to a prudent level of support. The Senate's higher amount
    provides an increased recognition of the importance of halting
    deterioration and brings fiscal year 2001 capabilities closer to a full
    sustainment level.

               FAMILY OF MEDIUM TACTICAL VEHICLES (FMTV) FUNDING

        Question. I have read press reports indicating that the Army's
    fiscal year 2001 supplemental request to OSD included $33 million in
    funding for the Family of Medium Tactical Vehicles (FMTV). Yet the
    supplemental request I read does not include funding for FMTV. Please
    describe how including FMTV funding in the fiscal year 2001
    supplemental will help enhance the readiness of the Army.
        Answer. The funds identified for FMTV in press reports would have
    procured vehicles to replace those shifted to the formation of the
    first Interim Brigade Combat Teams at Fort Lewis, Washington, the
    Army's highest priority. Original planned allocation of vehicles to the
    Army Reserve and National Guard would have been restored, thus keeping
    those modernization efforts on schedule.

                              SUBCOMMITTEE RECESS

        Senator Inouye. The subcommittee will stand in recess until
    June 20. At that time we will hear from the Secretary of the
    Navy and the Chief of Naval Operations. Thank you.
        [Whereupon, at 11:20 a.m., Wednesday, June 13, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    June 20.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                            WEDNESDAY, JUNE 20, 2001

                                           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. Daniel K. Inouye (chairman)
    presiding.
        Present: Senators Inouye, Stevens, Cochran, and Bond.

                             DEPARTMENT OF DEFENSE

                             Department of the Navy

    STATEMENT OF HON. GORDON R. ENGLAND, SECRETARY OF THE
                NAVY

                 OPENING STATEMENT OF Senator DANIEL K. INOUYE

        Senator Stevens. The committee is pleased to welcome the
    Secretary of the Navy, the Honorable Gordon England; the Chief
    of Naval Operations, Admiral Vernon Clark; and the Commandant
    of the Marine Corps, General James Jones. Gentlemen, I thank
    you for being with us this morning. I want to especially
    welcome the new Secretary because I believe this is your first
    appearance before any Congressional committee.
        Mr. England. Yes, sir, it is.
        Senator Inouye. We look forward to working with you, sir.
        Mr. England. Thank you.
        Senator Inouye. Let me note for the record that I think you
    made a bit of history here. All three of the service
    secretaries made their first appearances before this committee,
    so I thank you very much, sir.
        Mr. England. Thank you, sir.
        Senator Inouye. Today's hearing is the final in a series of
    committee reviews of the military service programs. As all of
    us are aware, we have not received the Pentagon's final budget
    request for fiscal year 2002. Unfortunately, this will limit
    our ability to fully engage on the Navy and Marine Corps needs
    for the coming year. Nonetheless, Senator Stevens and I felt we
    should begin to lay the foundation for our upcoming fiscal year
    2002 review. But we are hoping for a full discussion of your
    programs as we prepare for what could be a long summer.
        Some could argue that the Navy and Marine Corps are at a
    crossroads. Many of your most viable, visible, and critical/
    modernization programs have come under fire, such the Osprey,
    the DD-21 destroyer, and the aircraft carrier replacement
    program, and the Joint Strike Fighter. In addition, the Navy
    has struggled in recent years to maintain ready forces and both
    services are saddled with aging infrastructure and an
    underfunded shipbuilding program that pulls resources away from
    modernization and readiness programs.
        This committee is fully aware of the challenges facing our
    naval forces and it is clear that there are some tough choices
    to be made about which path the Navy and Marine Corps will
    follow. But may I assure you, sir, that this committee will
    work diligently to provide you with the adequate resources you
    will need to modernize and support the greatest naval forces in
    the world today.
        My colleagues and I hope that the Department's fiscal year
    2002 budget request and the Secretary's strategic review will
    meet these challenges head-on. We cannot afford to pass up this
    opportunity. That is why I strongly urge you, as I have urged
    your counterparts in other services, not to let it slip away.
        Finally, the administration recently submitted the fiscal
    year 2001 supplemental appropriation request. We may have some
    questions about that, but let me assure you that the committee
    is fully aware of the urgent need of these funds.
        Before calling upon you to testify, may I turn to the co-
    chairman of the committee, Senator Stevens, for opening
    remarks.

                        STATEMENT OF Senator TED STEVENS

        Senator Stevens. Well, thank you very much, Mr. Chairman. I
    do join in welcoming Secretary England to this committee and
    also General Jones and Admiral Clark.
        I remain really seriously concerned about the state of our
    sea forces. My State joins yours, Mr. Chairman, as a forward
    projection site for our armed services, and the Pacific region
    I think is still the most critical area in the world to our
    future. Despite the challenges we face out there, the maritime
    force projection capability continues to shrink in my judgment
    and appears to be burdened by programmatic challenges on
    several different fronts.
        When I was in your chair, Mr. Chairman, I tried, as you
    know, for 2 years to find a means to increase ship production
    and to maintain an adequate presence. We do not have either
    Navy or Marine Corps in my State, despite the fact we have half
    the coast line in the United States. It is not a provincial
    thing that I have been involved in, but yet now once again it
    appears that the administration will continue the policies of
    the past administration and oppose incremental or advance
    appropriations for vessels.
        Mr. Secretary, I hope to be able to ask you this morning
    how many ships you think you can build in the next years under
    that approach. These shipbuilding programs are blighted by cost
    overruns. In the supplementals before us right now we have $222
    million for cost overruns for just this fiscal year. In the
    projections for fiscal year 2002 already before us, we have
    another $800 million in cost overruns.
        It does not take a rocket scientist to figure out that that
    is the equivalent of a new Aegis destroyer in cost overruns in
    1 year. I have got to tell you, gentlemen, I think something
    must be done to meet the concept of how we build our ships or
    we are going to continue to have a shrinking naval force and
    marine force, and I think it is these forces that you have that
    allow us to still be rated as a superpower of the world.
        General Jones, we have talked many times about the V-22 and
    the supplemental before us provides for some changes following
    the blue ribbon panel that you have been working with. I think
    it is critical for us to try to understand what is intended to
    be done with the V-22, to see that we can restore the faith of
    the Nation and the families and the marines that fly that
    aircraft. Our confidence has been shaken by the two most recent
    V-22 crashes and I am frankly very disturbed about that also,
    because I think V-22 represents the one great breakthrough in
    new technology that has enormous potential for changing
    military tactics for the future. Yet it does not seem to me we
    are moving forward to try and remove that blight on this new
    technology.
        Finally, Mr. Secretary, I do have some questions concerning
    Vieques and I hope we will get a chance to ask those questions.
    The Commander in Chief has announced a new position on Vieques.
    I know that we will welcome your comments here this morning to
    see how we might implement that decision without deterring from
    the really--reducing the level of training that our forces need
    before they are deployed overseas.
        I wish we had a full day for this hearing, Mr. Chairman,
    because I think there are a lot of questions I have in my mind
    about where we are going with regard to the forces that these
    gentlemen command.
        Thank you very much.
        Senator Inouye. Thank you.
        Senator Cochran.

                       STATEMENT OF Senator THAD COCHRAN

        Senator Cochran. Mr. Chairman, thank you very much. It is a
    pleasure to join you and Senator Stevens at this hearing with
    the leadership of the United States Navy and the Marine Corps.
    In our State we are very active in our participation in Navy
    and Marine Corps activities. We have shipbuilding facilities,
    of course, at Pascagoula, Mississippi, that supply some of the
    most important combatants and amphibious ships for the Navy and
    the Marine Corps. We are very proud of that fact and we watch
    very closely the budget submissions that come from the
    administration on those subjects. We hope that the witnesses
    will tell us about what their plans are for the future
    shipbuilding needs of the Navy and Marine Corps.
        Also, we are proud to be the home State for a pilot
    training facility. Jet fighter pilots train at Meridian Naval
    Air Station. We are very proud of that. Two hundred students
    each year train there. We have a home port in Pascagoula,
    Mississippi, too, for the Aegis cruiser-destroyer fleets and
    other ships. The Cole was brought to Pascagoula for repairs
    after the sad incident in the Near East.
        The fact is that we also are proud to host the Atlantic
    Fleet headquarters of the Seabees. We have an active Seabees
    construction battalion, located there that are actively
    participating in our safety responsibilities all over the
    world.
        Naval oceanographic activity and research is done also in
    Hancock County, Mississippi. We are also the site of some
    reserve forces that drill and maintain their proficiency in our
    State. We are proud of all of this connection that we have and
    a lot of our citizens are on active duty or on active duty in
    the Navy and Marine Corps as well.
        So we are proud to be a part of this hearing. We look
    forward to having a good discussion about our needs for this
    year and what the plans are for this committee's support for
    your activities.
        Thank you very much.
        Senator Inouye. Thank you.
        Senator Bond.

                    STATEMENT OF Senator CHRISTOPHER S. BOND

        Senator Bond. Thank you very much, Mr. Chairman. I do have
    a number of questions, so I will just wait until the question
    period. Thank you.
        Senator Inouye. Thank you, sir.

                         ADDITIONAL SUBMITTED STATEMENT

        Before I call on the Secretary, Senator Craig has submitted
    a statement which will be placed in the record.
        [The statement follows:]

                  PREPARED STATEMENT OF SENATOR LARRY E. CRAIG

        Mr. Chairman, thank you for allowing me to submit an
    opening statement and questions for the record. Secretary
    England, General Jones, and Admiral Clark, I welcome you to the
    Senate and I appreciate this opportunity to ask you some
    questions and express my concerns about Navy programs and
    budget issues.
        We have all been eagerly waiting for the results of
    Secretary Rumsfeld's Strategic Defense Review in order to
    determine the priorities of the Administration in defense
    spending and also to gauge the President's strategic goal for
    the years ahead.
        Secretary England, in light of increasing regional
    conflicts across the globe, I think you would agree that a
    strategic trend that will continue to be in demand is our
    ability to project our forces over long distances in an easy,
    rapid and effective manner. The versatility of the
    expeditionary force is as important in the case of the Navy and
    Marine Corps, as it is with the Air Force. I recognize the
    value in my home state, of having an Air Expeditionary Wing
    whose success hinges upon its ability to quickly adapt and
    reach over long distances.
        That is why it is so important not to cut short vital
    programs like the DD-21 Destroyer, which as you know,
    represents the next generation in naval warfare technology. The
    DD-21 will have the kind of versatility we need in a changing
    security environment, an environment that includes increased
    international sales of submarines and the proliferation of new
    submarine technology. The DD-21 will also play an important
    role in fire support of our Marines, and has possible missile
    defense applications, all at a savings of approximately one-
    third in man-hour costs.
        Some of the most important naval testing in acoustics takes
    place in Idaho at the Bayview facility on Lake Pend Oreille. We
    would like to see that those facilities are put to good use for
    the DD-21. Therefore I would urge you and the Secretary of
    Defense to move forward with the acquisition and testing of
    this program, which I believe would be a vital asset to our
    expeditionary forces.
        Thank you Sec. England, General Jones and Admiral Clark. I
    look forward to having discussions with you on this matter in
    the future. Thank you Mr. Chairman.

        Senator Inouye. Now may I call upon our new Secretary.
        Mr. England. Mr. Chairman, thank you very, very much. It is
    a pleasure to be here and good morning to you and Senator
    Stevens, and members of the committee.
        Regarding your comments, I have also noticed since I have
    been the Secretary of the Navy that there are a number of
    challenges before the Department, and I appreciate your words
    of encouragement and support and we do look forward to working
    with you, sir, as we address those issues.
        I am delighted first to be here as Secretary of the Navy
    for the very first time, as you commented, sir. I am even more
    delighted to be here with Admiral Clark and General Jones, and
    hopefully you will see us together often because we have formed
    a very close leadership team to guide our naval services into
    the future.
        I do want to thank the chairman and all the members of the
    committee for all you have done and for your continuing support
    in keeping our Navy and Marine Corps team the very best in the
    world. I do have a written statement to be entered into the
    record, but with your permission I would like to make just a
    few comments.
        Senator Inouye. The statement will be made part of the
    record.

                         STATEMENT OF GORDON R. ENGLAND

        Mr. England. Thank you, sir.
        First, as really a foundation of my tenure in office, I
    want you to know that I have pledged to be forthright, honest,
    and direct in my dealings with everyone and in every
    circumstance. Of course, that is exactly how I will always be
    with this very, very important committee, so you will find me
    very forthright, open, and direct in all dealings.
        That said, you are aware of Secretary Rumsfeld's various
    ongoing defense reviews and the Quadrennial Defense Review
    (QDR). Although I cannot speculate on the ensuing budget, as
    Secretary of the Navy I will concentrate in four areas, namely
    combat capability, business practices, technology, and people.
    I feel that they are all interrelated in terms of how we
    proceed.
        Regarding combat capability, the naval services do have a
    need to both modernize our equipment and enhance our
    capability, not just for the conventional missions but across
    more stressful missions, such as time-critical strike, theater
    air, missile defense, intelligence, surveillance, and
    reconnaissance. Additionally, considering the average age of
    our platforms, which you have alluded to, recapitalization of
    our capabilities does become imperative. That is very, very
    high on my agenda.
        As you are perhaps aware, we now spend more money on tail
    than we do on tooth, and we need to reverse this trend.
    Accordingly, you will see considerable effort within the
    Department of the Navy to improve the efficiency and
    effectiveness of our business practices. Senator Stevens, I do
    hope that it will be reflected in how well we control the cost
    of our programs as we go forward.
        Regarding technology, Under Secretary Dr. Pete Aldridge
    testified that the science and technology (S&T) budget
    objectives should be in the range of 2.5 to 3 percent of the
    total of the Department of Defense (DOD) budget. I also support
    that goal for the Department of the Navy. It is important that
    we invest in the future, so that will be one of our criteria as
    we go forward.
        Finally, I would close with my very highest priority,
    namely our men and women in uniform, their families, and our
    civilian workforce. During confirmation hearings I commented
    that any capital asset purchased by the Department of the Navy,
    such as an aircraft carrier, has no asset value to the Nation,
    until it is manned by highly motivated and trained people, and
    then it becomes a very, very valuable asset.
        Therefore, people are indeed our most important resource,
    and as we plan for the future we need to first be sure that our
    personnel policies will provide us the people and the skills we
    require for our future systems. So people are indeed our
    highest priority.

                               PREPARED STATEMENT

        I look forward to working with each of you to meet the
    challenges ahead. I thank you for this opportunity to appear
    before you and for your continued dedicated support to the
    Naval services. Thank you very much. I do look forward to
    answering your questions along with Admiral Clark and the
    Commandant. Thank you, sir.
        [The statement follows:]

                    PREPARED STATEMENT OF GORDON R. ENGLAND

        Mr. Chairman, members of the Committee, good morning. Thank you for
    the opportunity to speak with you today. The CNO, Commandant and I are
    grateful for your continuing support to keep the Navy and Marine Corps
    the very best in the world.
        President Bush, in his remarks at the Naval Academy graduation,
    said ``we must build forces that draw upon the revolutionary advances
    in the technology of war that will allow us to keep the peace by
    redefining war on our terms--a force that is defined less by size and
    more by knowledge and swiftness . . . and that relies heavily on
    stealth, precision weaponry and information technologies.'' I am in
    full agreement with this challenge and, while naval forces inherently
    fit the President's vision, modifications and alignments will be needed
    to meet these goals.
        For some time the sea services have undertaken an evolutionary
    shift from operations on the open seas to operations that include the
    littoral: an evolution that has underscored the requirement for
    improved data networking; battle management systems and sensors; and
    innovative ideas for employing Marines that are attuned to the
    difficult littoral environment--afloat and ashore. This shift in focus
    generates a need to look at our equipment across a broader mission
    range . . . such as time-critical strike, ballistic and cruise missile
    defense, anti-submarine warfare, and intelligence, surveillance, and
    reconnaissance (ISR), air and ground mobility platforms, and
    Expeditionary Maneuver Warfare.
        We also recognize that we need to recapitalize our force . . . by
    that I mean building new platforms . . . for the future. For instance,
    even as the average age of our ships has been steadily increasing to
    its present average of 16 years--and trending upward for the next five
    or so years--our building rates have not been keeping apace. Likewise,
    the average age of Navy and Marine Corps aircraft is about 18 years . .
    . close to the age of those Sailors and Marines who maintain them. Here
    also building aircraft in sufficient numbers . . . ideally at
    economical orders of production . . . is called for.
        We have precious few new programs to re-capitalize our forces other
    than systems like DDG 51, F/A-18E/F, and the new carrier under
    construction, USS RONALD REAGAN. In fact, projected replacement
    aircraft, such as the F/A-18 E/F and the Joint Strike Fighter do not
    meet the entire need, as there are no replacements scheduled for the
    EA-6B, P-3, or E-2 aircraft and some of our helicopter fleet. New
    funding will certainly be needed, but I also intend to identify some
    funding sources through process improvement.
        To make the most of our Navy-Marine Corps team I intend to focus on
    four strategic areas: combat capability, people, technology, and
    business practices.
        As this Committee is well aware, the primary purpose of the Navy
    and Marine Corps is to deter, train for, and when necessary, fight and
    win our Nation's battles. In remaining faithful to this charge, combat
    capability, which includes readiness, must be our primary emphasis. In
    all our decision-making, we will ask the question, ``Does this task,
    program, organization or facility materially contribute to improving
    our combat capability?'' Likewise we will recognize that what has
    worked in the past may not always succeed in the future. Therefore, the
    Department will invest more in technical and doctrinal experimentation,
    and in new and different ways of accomplishing our mission. Let me
    emphasize, our mission is, and will remain, joint. We are committed to
    the concept ``One Team, One Fight.'' Along with our sister services and
    allies, we will organize, equip and train to fight jointly, recognizing
    that forward deployed naval forces are integral to the combined efforts
    of all the armed services.
        I would like to briefly address my very highest priority; namely,
    our men and women in uniform, their families and our civilian
    workforce. During my confirmation hearings, I commented that any
    capital asset purchased by the Department of the Navy has no asset
    value to the nation until it is manned by highly motivated and trained
    people. Therefore, as we plan for the future, we need to first be sure
    that our personnel policies will provide us the people and skills we
    require for our future systems.
        In this regard, emphasis needs to be placed on ``Quality of
    Service''--achieving a higher quality workplace as well as a higher
    quality of life for our Sailors, Marines, active duty and reserve, and
    civilians and all of their families. The goal will be to create an
    environment where our men and women can excel at their chosen
    profession, unimpeded by factors that divert their attention from work
    and sap their morale. This includes competitive compensation and
    quality housing, workplace resources, health care, training, and an
    operational tempo that considers the individual, as well as the family
    and community. Fostering a positive working environment where young men
    and women believe they contribute meaningfully to their units will
    encourage them to want to stay and grow with our team. When people want
    to stay with a group, others will want to join that group. Retention is
    a great recruiting tool!
        Creating this environment requires attuned leadership throughout
    our command structure. I am talking about leadership that encourages
    information to flow freely up and down the organization, and that
    values the knowledge and expertise of the total force. Everyone in the
    Department of the Navy needs to recognize that while some positions
    carry greater responsibility, all of our people are equal and
    important. No one capable and willing to contribute will be discounted.
        The application of advanced technology is central to our Nation's
    military strength. I am concerned, however, that the application of
    technology in the military has for a generation lagged its commercial
    availability. This is a high priority in our combat systems, but also
    includes technology for training, testing and management systems.
    Technological advances are central to the priorities set forth by the
    President and Secretary of Defense as we shift from the 20th century
    force, to the more lethal and agile one of the 21st. Technology will
    emphasize networks of information and communications as well as
    improvements in sensors and weapons. Care must be taken to plan for
    future advances and logical insertion points early in the design
    process. This preplanned improvement schedule combined with spiral
    design should allow for the delivery of increased combat capability
    over a shorter period of time. Also important, U.S. systems need to
    have designed into them conduits that allow our allies to participate
    to the best of their significant capabilities at increasing levels of
    complexity. It goes without saying that embarking on this technological
    transformation will necessitate we recruit, train, and retain bright
    and intelligent people to operate and maintain these systems.
        Our management team should be more process-oriented, working on
    ways to improve ``how we do business'' rather than concentrating only
    on specific programs and products. To do that, we need to know where we
    are and to have clear visibility of where we are going. Measures and
    metrics provide the tools to do so and as such, will be a key element
    of our process-oriented management strategy. Our cold war acquisition
    infrastructure and regulations have been described as a ``voracious
    dinosaur consuming dollars which should be applied to the real
    mission.'' It is time to change. Borrowing applicable business
    practices from commercial industry is a logical step. While the Navy
    and Marine Corps will always need good leaders in their primary combat
    arms arena, the Department of Navy will also develop leaders with a
    better understanding of business strategies, cost control and rapid and
    flexible design.
        The world has changed a great deal over the past decade. But one
    thing, has not changed: the Navy and Marine Corps needs to deter, train
    for, and when necessary fight and win our Nation's battles. As we steam
    into this new century, I am reminded that forward presence provides an
    essential benefit for our nation. The Navy and Marine Corps, and in
    fact the entire U.S. military, contribute to a stable global
    environment allowing our economy and our citizens to prosper along with
    other nations and peoples throughout the world. The stabilizing
    benefits of American military strength are key to our national
    interests and the well being of the international community. The
    investment by our nation in its military to underwrite this prosperity
    is, indeed quite modest.
        I look forward to working with the Congress, the Secretary of
    Defense, and our sister Services to meet the challenges in the next
    year and beyond. The changes and transformations I have discussed
    constitute a new start at the beginning of the new century. Thank you
    for your time this morning and your continued support for our Sailors,
    Marines . . . active and reserve . . . our civilians and their
    families. The statements made in this testimony are contingent upon the
    results of Secretary Rumsfeld's strategic review. I ask that you
    consider them in that light.
                                     ______

                    Biographical Sketch of Gordon R. England
        Mr. England was nominated on 24 April 2001 by President George W.
    Bush to serve as 72nd Secretary of Navy, and was sworn in on 24 May
    2001.
        Mr. England served as executive vice president of General Dynamics
    Corporation from 1997 until 2001 and was responsible for two major
    sectors of the corporation: Information Systems and International.
    Previously he had served as executive vice president of the Combat
    Systems Group, president of General Dynamics Fort Worth aircraft
    company and before that he served as president of General Dynamics Land
    Systems company producing land combat vehicles.
        Mr. England began his career with Honeywell Corporation working as
    an engineer on the Gemini space program before joining General Dynamics
    (GD) in 1966 as an avionics design engineer in the Fort Worth aircraft
    division. He also worked as a program manager with Litton Industries on
    the Navy's E-2C Hawkeye aircraft.
        Following various engineering and management positions with GD Fort
    Worth, Mr. England became president of GD Land Systems company. Shortly
    afterwards he returned to Fort Worth as president of that division and
    as executive vice president of the corporation in 1991. He served in
    these roles until 1993 when Lockheed Martin purchased the Fort Worth
    division after which he continued to serve as president of Lockheed's
    aircraft company from 1993 to 1995.
        Mr. England established a mergers and acquisitions consulting firm
    following his retirement from Lockheed Martin in 1995 and operated that
    business until his selection as executive vice president of General
    Dynamics in 1997.
        A native of Baltimore he graduated from the University of Maryland
    in 1961 with a bachelor's degree in electrical engineering. In 1975 he
    earned a master's degree in business administration from the M.J.
    Neeley School of Business at Texas Christian University. He is a member
    of the following honorary societies: Beta Gamma Sigma (business),
    Omicron Delta Kappa (leadership) and Eta Kappa Nu (Engineering).
        Mr. England has served as a member of the Defense Science Board and
    as Vice Chairman of the National Research Council Committee on the
    Future of the U.S. Aerospace Industry. He has also been actively
    involved in a variety of civic and charitable organizations including
    Goodwill International where he served as vice chairman of the board of
    directors, the USO's board of governors, and as a member of the board
    of visitors at TCU and other universities.
        He has received numerous professional and service awards from many
    organizations including the Boy Scouts of America, National Defense
    Industrial Association and the National Management Association. He was
    selected as an IEEE Centennial awardee and is a member of the Aviation
    Heritage Hall of Fame.

        Senator Inouye. Thank you very much, Mr. Secretary.
        Admiral Clark, would you care to?

    STATEMENT OF VERNON E. CLARK, CHIEF OF NAVAL
                OPERATIONS, U.S. NAVY

        Admiral Clark. Yes, sir. Good morning, Mr. Chairman and
    Senator Stevens and other members of the committee. I thank you
    for the opportunity to be here today and appear before you.
    Certainly I want to express my appreciation for the continued
    support of this committee in support of the young men and women
    who make our Navy what it is today.
        Mr. Chairman, with your permission, I have submitted a
    written statement and I have a few brief comments.
        Senator Inouye. Without objection, your statement is made
    part of the record.
        Admiral Clark. Thank you.
        Today we have the Kearsage Amphibious Ready Group in the
    Mediterranean (Med), we have the Boxer Amphibious Ready Group
    in the Red Sea, we have the Constellation Battle Group in the
    Arabian Gulf, and the Enterprise Battle Group in the
    Mediterranean getting ready to go relieve the Connie. Behind
    them, the Carl Vinson Battle Group out of the Northwest just
    completed her final exam and is getting ready to deploy. Her
    battle group commander was in to see me yesterday. The Theodore
    Roosevelt Battle Group is conducting training, getting ready to
    be the next rotational deployer headed toward the Med and then
    the Gulf. That is the way it goes. The beat continues.
        Here, it has been alluded to already, inside the Beltway we
    are in the process of the defense review panels and the opening
    rounds of the Quadrennial Defense Review. While I cannot say
    with certainty all the things that will come out of that, it is
    very clear to me, Mr. Chairman, that when it is complete it
    will reaffirm that our Navy-Marine Corps team exists for one
    principal purpose and that is to project credible combat power
    to the far corners of the Earth, supporting the Nation, the
    kinds of things that the National Command Authority calls upon
    us to do, being ready to win in combat if we are called upon to
    do that, certainly being the force that can help assure access
    if we have to go to those far corners and engage in combat,
    dissuading and deterring potential adversaries, promoting
    regional stability, and so forth.
        I would say that, you know, we look at where our Navy has
    been. We are 41 percent smaller than we were 10 years ago, but
    the demand on this force certainly is not less. Today, this
    morning, 96 of the 316 ships that we have in our Navy, 96 of
    them, 30 percent, are forward deployed in the far corners of
    the Earth. By the way, that is not a high number. It is
    oftentimes more than that.
        Certainly our Navy faces serious fiscal challenges starting
    in 2001. Mr. Chairman and Senator Stevens, you have both
    alluded to them. I would just say that we have taken strong
    action to live within our means the best way we know how to in
    2001. The approval of the requested supplemental appropriation
    is at a stage that we critically need that to continue
    operations.
        Since I have been the Chief of Naval Operations (CNO)--and
    I complete 11 months today--manpower has been my top priority,
    number one on my top five list. Every place I go, I talk about
    being at war for people, being at war for talent. Certainly, to
    win this war we are engaging in a campaign plan on three
    fronts: recruiting the right people, retaining the right
    people, and attacking attrition.
        The things that have been supported by this committee are
    helping us succeed: bonuses, pay table adjustments, retirement
    reforms, better medical for our people. I just want to report
    to you that all of those things and the focus that we have on
    it are having the desired impact. We are on track in 2001 on
    our recruitment and I would tell you that we are winning in
    improved retention and this is a good news story. It is a top
    priority for our Navy. We have not won the war, but we are
    doing the right things and we are headed in the right
    directions. That said, we still have to do better, and the
    leadership of our Navy, your Navy, understands that.
        We are also facing today, and we have had in the past,
    significant readiness issues. You all have alluded to them.
    Some of these issues are institutional in nature and we can
    talk about those in the course of the questions and answers.
    The issue that Secretary England raises, increased age of our
    force, is a key part of the increasing, in fact spiraling,
    operational and support costs to keep our Navy running today.
        It has been said our aircraft age, the average age of our
    air force today in the Navy, is the oldest it has ever been in
    our history. The key challenge that I see is sustaining current
    readiness and investing in future key capabilities to make the
    future Navy what it has to be, and the Navy-Marine Corps team.
        Certainly, in recent years current readiness has come at
    the expense of recapitalization and modernization. You have
    heard this story before, so that is not news. We have been
    buying insufficient numbers of ships and aircraft to make our
    future what it needs to be. So this is the major issue, the
    challenge that we face today, for the services and the
    Congress, coming to grips with the acquisition bow wave that we
    face and dealing with future risk for our forces.
        One brief word about the infrastructure, if I might. I am
    encouraged by the position that has been taken by the President
    and by the Secretary of Defense and by Secretary England
    regarding the importance of our base structure. I often speak
    about quality of service. It is number four on my top five
    list. The two items included there include quality of life and
    quality of work. We talk about quality of life a lot, not so
    much about quality of work.
        Too many of our people in our Navy live and work in
    facilities that are substandard. Much of the Navy's shore
    infrastructure today is in poor condition, and correcting this
    requires not just talking about excess infrastructure, which we
    have to do, and not just finding and trying to find innovative
    ways to satisfy infrastructure needs. That is required, but not
    just that. It is going to require from us a commitment that
    this is an important part of our working environment and that
    we are in fact going to make it right.
        So, Mr. Chairman, members of the committee, the challenge
    of accomplishing all this today is significant, preparing for
    the future. As I come to this, this is the challenge of a
    lifetime. To meet it, we must embrace innovation, we must
    embrace experimentation, organizational efficiencies that
    Secretary England talked about. I just want to say that I am
    committed to doing exactly that.

                               PREPARED STATEMENT

        I thank the committee for your continued, continuing
    support of our Navy and of our sailors and their families, and
    I look forward to responding to your questions.
        [The statement follows:]

                     PREPARED STATEMENT OF VERNON E. CLARK

        Mr. Chairman and members of the Committee, thank you for this
    opportunity to appear before you. I am grateful for your continuing
    support.

                          THE CONTEXT FOR NAVAL FORCES

        The Navy's posture, programs, and character are largely shaped by
    the critical question: What does our nation expect its Navy to do? I
    believe the nation expects--as it has for much of our history--the Navy
    to project sovereign American power in support of national interests
    while forward-deployed to the far corners of the earth. The nation
    expects us to command the seas; provide on-scene, sustainable, combat-
    credible power to promote regional stability; dissuade potential
    adversaries; enhance deterrence; and--when needed--prevail decisively
    in combat.
        Forward-deployed naval forces are central to the National Military
    Strategy and integral to regional Commander-in-Chief (CINC) plans for
    peacetime and combat operations. On any given day, one-third of our
    Navy is forward deployed, protecting command of the seas, ensuring the
    free flow of trade and resources, providing combat-ready presence, and
    assuring access for joint forces.
        Our Navy is shaped by how we meet the national and regional
    requirements for forward forces. While some ships and squadrons are
    homeported overseas, most are deployed rotationally for periods of up
    to six months in an 18-24 month cycle. This construct drives the Navy's
    force structure.
        While the requirement for forward-deployed, combat-capable naval
    forces has remained consistent since the end of the Cold War, assets
    available to meet that requirement have decreased markedly. Our force
    structure declined 41 percent since 1991, from 538 to 316 ships. Today,
    over 30 percent of our ships are forward deployed on average, compared
    with 21 percent ten years ago. Although deployed naval forces remain
    ready to respond, we no longer have excess capacity for operational
    flexibility or experimentation.
        Some say emergent technologies have reduced the importance of
    forward-deployed forces, allowing us to effectively influence events
    without a robust in-theater presence. I do not believe this. In most
    cases, dissuading potential adversaries, deterring aggression, and
    quickly bringing combat power to bear require on-scene forces. Such
    presence is fundamental to providing sustained precision fires for
    joint forces, projecting defense over land, and assuring access. In
    short, we must remain ready to ``climb into the ring'' with an opponent
    and prevail.

                           PRIORITIES AND CHALLENGES

        Upon becoming CNO nearly a year ago, I outlined my top five
    priorities, the areas of concern our Navy must address if we are to
    sustain readiness and prepare for the future. Today, I would like to
    update you on those priorities, including an assessment of our
    financial situation.
        As you are aware, all of the Services face serious fiscal
    challenges in 2001. Early this year, I directed a reduction to our
    Flying Hour Program to mitigate funding shortfalls while maintaining
    minimum readiness levels for deploying forces. Additionally, the fleet
    commanders have been using Real Property Maintenance (RPM) funds to
    address rising utility costs, enhance force protection, meet emergent
    maintenance expenses, and pay other unforeseen bills.
        While these measures avoided significant operational impact,
    receipt of requested supplemental appropriations is now critical. An
    Omnibus Reprogramming is also vital to supporting a number of other
    requirements. These actions, if fully supported by the Committees, will
    get us through the year. All requirements beyond the minimum needed to
    execute the remainder of fiscal year 2001 have been deferred to next
    fiscal year.
        This is not the way we want to do business. To address this
    reoccurring problem, it is my intent to strengthen our requirements
    determination and budgeting processes. I am committed to working within
    the Department and with you to break this cycle of underfunding
    understated requirements and position us to execute future fiscal years
    without redress.
    Manpower and Personnel
        Navy men and women are our most valuable resource and we must
    provide them with the tools and leadership to excel. We are now--and
    will continue to be--in a ``War for Talent'' with other employers. To
    win this war, we are focusing on recruiting the right people, reducing
    attrition, and increasing reenlistments.
        Improvements in compensation that you have supported--bonuses, pay
    table adjustments, retirement reforms, and better medical benefits--are
    having the desired impact. The Navy met its overall recruiting and end-
    strength goals in fiscal year 1999 and 2000, and we are on track for
    2001. Officer and enlisted retention is edging upward, though we remain
    below steady-state goals. Particular areas of concern remain, such as
    our 1,300+ pilot shortage. We are currently reenlisting 60 percent of
    eligible Sailors who reach the end of their first enlistments, compared
    with 48 percent in 1999. Two-thirds of petty officers with 6-10 years
    of service are reenlisting, compared with 61 percent two years ago.
    Attrition rates are declining, but we still must do better.
        As a result of improved retention in fiscal year 2001, we expect to
    begin fiscal year 2002 approximately 3,200 Sailors above our authorized
    end strength of 372,642, but within the one percent flexibility allowed
    by law. This additional strength has improved at-sea manning to the
    best level in years, reduced gapped billets by 16 percent, and enhanced
    Navy personnel readiness.
        Looking ahead, two personnel issues concern me. First is the
    erosion in Career Sea Pay, last updated in 1986. Redress of this
    problem was authorized in the fiscal year 2001 National Defense
    Authorization Act (NDAA) but not funded. Second is the issue of ITEMPO.
    We are analyzing the implementation of ITEMPO legislation contained in
    the fiscal year 2000 and 2001 NDAAs, including potential funding and
    operational impacts. We will work closely with you and the authorizing
    committees as we address these issues.
    Current Readiness
        We are a Navy that has significant readiness shortfalls. While
    forward deployed naval forces are prepared to accomplish assigned
    missions, non-deployed forces are below satisfactory readiness levels,
    making it increasingly difficult to effectively prepare for upcoming
    deployments. Figure 1 shows the percentage of time deployed and non-
    deployed Navy units reported C1 or C2 in overall readiness during the
    last two decades. The gap between these two groups has widened
    significantly.

                                   [Figure 1]

        The increasing age of our equipment is a major factor contributing
    to this trend, mainly due to rising operating and support costs. Our
    aircraft fleet is now the oldest in naval aviation history (older on
    average than our ships). Increased utilization of repair parts has
    driven a 14 percent annual cost increase in this component of our
    Flying Hour Program. Many ships, including AUSTIN and ANCHORAGE-class
    amphibious ships, as well as our fleet command ships, are reaching the
    end of their service lives. These vital ships often require more
    repairs than planned for, forcing us to reschedule other ship
    maintenance periods.
        To arrest these trends, it is imperative that we accurately budget
    readiness requirements in fiscal year 2002 and beyond, ending our
    reliance on supplemental appropriations. This includes correctly
    forecasting requirements such as force protection, utility costs, and
    precision guided munitions.

    Future Readiness
        Sustaining current readiness while investing in key future
    capabilities is a most difficult balancing act. In recent years,
    current readiness has come at the expense of recapitalization and
    modernization. As a result, we have slowed modernization efforts in all
    but safety and near-term readiness-related programs.
        Today, we face an acquisition ``bow wave'' for ships and aircraft.
    After completion of the Defense Department's strategy and force
    structure review, we will evaluate the Navy's modernization goals and
    determine the appropriate funding levels to procure aircraft, ships,
    and network-centric warfare capabilities, as well as conduct research
    and development to transform and upgrade the fleet.
        I am fully committed to the F/A-18 E/F; the sooner we get it to the
    fleet, the sooner we can retire older aircraft. For that reason, we
    should procure the upper limit of the multi-year buy. The same is true
    of the V-22, once retrofit is complete. DD-21, CVNX, and JSF also
    present compelling technological leaps in warfighting capability and
    innovation.
        The impact of the current low procurement rate goes beyond force
    levels. It adversely affects the stability of our unique defense
    industrial base. We are paying a premium in program cost because of
    production inefficiencies due to the lack of economies of scale. We
    need to pursue reform in acquisition and budgeting, which will allow us
    to better partner with industry and correct procurement shortfalls.
        To ensure future readiness, we must adapt swiftly to emerging
    requirements and technological opportunities related to transformation.
    Such agility will be central to the success of our conceptual shift
    from platform-centric warfare to an emphasis on networked, distributed
    systems. The success of this shift will also rely on our commitment to
    vigorous technological and doctrinal experimentation, exploration that
    will help shape investment priorities in future years.

    Quality of Service
        A high Quality of Service is directly related to retaining and
    motivating Sailors. I define Quality of Service as a balanced
    combination of Quality of Life and Quality of Work. While we have
    achieved gains in Quality of Life programs, our Quality of Work
    requires substantial improvement in many areas.
        In previous testimony, I noted that a ``psychology of
    deficiency''--the acceptance of sustained resource shortages as a
    normal condition--has become ingrained in our operating forces. It is
    manifested in such things as substandard facilities and working
    environments. For example, much of the Navy's shore infrastructure is
    in poor condition because our recapitalization cycle exceeds 160 years,
    our backlog of maintenance and repair exceeds $5.5 billion, and our RPM
    funding is only about half of the private industry average.
        Meeting this challenge requires reducing excess infrastructure and
    finding innovative ways to satisfy infrastructure needs. I am hopeful
    that fiscal year 2002 will represent a significant improvement in RPM
    and military construction accounts.

    Alignment
        Navy-wide alignment is critical to ensuring our organizations,
    systems, and processes deliver a combat-capable Navy ready to sail ``in
    harm's way.'' To enhance communications and coordination, we realigned
    the OPNAV Staff and more fully integrated the fleets' requirements and
    training organizations. These changes will allow us to more accurately
    determine requirements, improve readiness, and maximize investment
    effectiveness.

                                   CONCLUSION

        I thank the Committee for your continued strong support of our
    Navy, our Sailors, and their families. Working together, I am confident
    that we can meet the challenges of current and future readiness,
    allowing the United States Navy to fulfill the missions fundamental to
    a more stable and peaceful world. The statements made in this testimony
    are contingent upon the results of Secretary Rumsfeld's strategic
    review. I ask that you consider them in that light.

        Senator Inouye. Thank you very much, Admiral.
        General Jones.

    STATEMENT OF GENERAL JAMES L. JONES, COMMANDANT OF THE
                MARINE CORPS, U.S. MARINE CORPS

        General Jones. Mr. Chairman, thank you very much for the
    invitation to appear before you. Senator Stevens, members of
    the committee, I am delighted to appear to represent the United
    States Marines and their families. I would like to underscore
    the Secretary's comments and the CNO's opening remarks that
    reported that the Navy and the Marine Corps are indeed one
    team. You see before you three leaders who are committed to
    working together to achieve great things for the Nation in
    terms of our naval forces, the people that wear the uniform,
    the civilians who work for us, and their families.
        I am happy to tell you, Mr. Chairman and members of the
    committee, that in the Marine Corps you have an organization
    that has a very stable culture and a very clear purpose in mind
    of what it is about. Basically, we know what we are and we like
    what we do.
        As evidence of that, for the past 6 years running, we have
    achieved our recruiting goals every single month in terms of
    quality and quantity. We recruit roughly 39,000 young men and
    women every single year. But the true test of cultural
    stability does not come from recruiting alone. It comes from
    looking at our retention figures. As we look at our retention
    figures, of our first-termers in the Marine Corps we are 95
    percent complete for this year's goals and we were actually 90
    percent complete with 6 months to go in this fiscal year.
        We have a vision for our future that is basically expressed
    in both sea-and land-based expeditionary maneuver warfare. In
    order to round out the Nation's capabilities to project power,
    for 6 percent of our budget we provide about 20 percent of the
    expeditionary combat power available to the Nation and fully
    one-third of the active force ground combat logistics available
    to the United States.
        But we still pay for readiness out of modernization and
    infrastructure. Forty-three percent of the Marine Corps'
    infrastructure is either C-3 or C-4. Thirty-five percent of our
    infrastructure is over 50 years old. Our backlog of maintenance
    and repairs is about $650 million and, though we have made some
    improvements, it is still a very, very important figure.
        This past year, spiraling energy costs have affected our
    quality of life for our families and been a drain on our
    resources that we would otherwise have used for procurement and
    other things that we would like to do.
        When you think of the Marine Corps, if you would think of
    it as an organization that is expeditionary by culture and
    transformational by design, I think you would have it about
    right. Words are very important in this context and I would
    like to discuss two sets of words with very important, but very
    different, meanings.
        The first set is ``expeditionary'' versus
    ``deployability.'' In this context, ``expeditionary'' means
    that you want to be able to get to wherever you need to get to
    fairly quickly and put investments up front so you can shape
    and affect the outcome for the desires of the Nation. In this
    context, speed is expensive. Too much speed, in other words the
    ability to deploy forces too fast and get them there too
    quickly, may result in them not being logistically sustainable.
    So when you invest in expeditionary forces you have to make
    sure of the totality of the investment.
        Put another way, it is my belief that the Nation does not
    need all of its forces to be able to arrive at spot X or Y on
    the globe at the same time. The truth of the matter is we
    cannot afford it and we cannot lift it. So we ought to be able
    to understand that some of the forces will have to be truly
    expeditionary, some of them will be ultimately follow-on forces
    and will be deployable, and that is important. But the two
    words have different meanings.
        The second set of words I would like to just pause and
    discuss for a minute is ``transformation'' versus
    ``modernization.'' In 1973 this country had a serious energy
    crisis. We called for transformational goals with regard to the
    auto industry to release our dependence on foreign oil and
    energy and the like, and we tried very quickly or very
    dramatically to transform our auto industry into either
    electric or solar-powered cars.
        What we actually wound up doing is modernizing our cars. We
    made them fuel efficient, they have greater ranges. We adopted
    composite metals. We made them safer. So we wound up
    modernizing as opposed to transforming, although that is still
    a goal. But we stated transformational goals in 1973 and we
    really did achieve modernizational goals.
        So when you think of those terms of ``expeditionary'' and
    ``deployable'' and ``transformation'' versus ``modernization''
    in terms of the armed forces of the United States, we should
    remember that in the last 50 years we have moved forces about
    300 times in response to a burgeoning or emergent crisis where
    our national interest may be affected. We have actually flowed
    follow-on forces forward six times, and we have actually fought
    major theater conflicts about three times.
        Now, in the main when you look at that force utilization
    and you apply the notion of what is expeditionary versus
    deployable and what is transformed versus modernization, those
    definitions become important in how we use our forces. So we
    need both transformation and modernization, but perhaps not in
    the same amounts. We are likely to be more dependent on
    modernization than we are transformation, which is technology
    and science that may or may not come to pass when we want it,
    much like the transformation of our automotive industry.
        For the Marine Corps, though, transformation and
    modernization means general convergence in a direction, on an
    axis, and all of these programs converge around 2008 at the
    current levels of investment. We are transformation by design,
    transformational by design.
        As an example of transformational programs, let me just
    list a couple for you. Senator Stevens has already referred to
    one, but I believe that tilt rotor technology as a technology
    is transformational technology. It is not just about the V-22
    as a military instrument. It is about an industrial base
    question of whether we can adopt this new technology to go from
    rotary wing aircraft to tilt rotors and what does that do for
    not only the military capability, but the industrial base.
        I believe the Joint Strike Fighter is transformational. I
    believe the Advanced Amphibious Assault Vehicle (AAAV) also
    fits in that definition. They are not always just weapons
    systems. I think our integrated logistics concepts by which we
    lighten the footprint which supports our forward-based forces
    is transformational. Informational operations is
    transformational in a military sense, as are precision fires
    from our naval ships, which will replace the saturation
    bombardments that were relatively imprecise, but by virtue of
    the shear mass were able to achieve our objectives in the
    twentieth century. So that is a transformational technology.
        In modernization I would say the Marine Corps programs such
    as Lightweight 155, Landing Craft Air Cushion (LCAC) Service
    Life Extension Program (SLEP) program, the High Mobility
    Artillery Assault Vehicle (HIMARS), the modernization of our
    Cobras and Hueys, our 120 millimeter mortars program, the M-4
    rifle, the Joint Tactical Radio, and the KC-130J's are all very
    important modernization components.
        Mr. Chairman, I believe that our citizens expect that 50
    years from now America will be a Nation of great influence,
    just as it is today. I believe that we understand how we got to
    where we are. Many of you were members of the greatest
    generation, are members of the greatest generation, and you
    know full well how we got to be where we are today.
        I am optimistic that we can do this for our future
    generations if we understand why we invest in national security
    in peacetime so that we do not have to invest in wartime, if we
    understand that national security is not an independent stand-
    alone investment, if we understand that such an investment is
    the anchor, literally the anchor, that allows our Nation to be
    the Nation of global influence, economically, politically and
    diplomatically, culturally, scientifically and technologically,
    which are really the pillars that make us different from any
    nation in the world.
        As I have testified before, it is now I think abundantly
    clear that 2.9 cents on the dollar for a global superpower is
    not adequate. Whatever the Congress and the administration
    decides the future investment should be, I respectfully
    recommend that it be sustained over a reasonable period of
    time.
        I am excited by the prospect of working with Secretary
    England and Secretary Rumsfeld and the new team with the
    Pentagon, a team that brings unqualified expertise in two areas
    that critically need to be addressed by the Department of
    Defense. One is bringing better business practices to the
    Pentagon and the second much-needed acquisition reforms. I am
    very encouraged by the public pronouncements of our new team of
    civilian leaders in that context.
        As a matter of fact, I might say that the United States
    Marine Corps is running the largest activity-based costing
    management program in DOD right now and perhaps even in the
    entire government.
        Our budget request is designed with transformation and
    modernization in mind. It balances what is truly expeditionary
    versus what is deployable. It has convergence in 2008. I
    previously testified that for approximately $2 billion you can
    achieve that, over and above that 6 percent that we are
    normally allocated, you can achieve, you can move that
    convergence up before 2008 in many of the programs that I
    listed earlier.
        Inclusive in this total is modernization of our base
    housing and recapitalization of our entire infrastructure. We
    have a path for success if we continue to develop our
    foundational needs. For me that means an acquisition of Blount
    Island by 2004, which is a national asset in my judgment. It is
    our national logistics gateway for maritime power projection if
    we pay serious attention to the 3.0 Marine Expeditionary
    Brigade (MEB) lift requirement that we have not filled in
    recent years. I firmly believe that I see a future where
    forward land bases on the global playing field will probably be
    fewer rather than more numerous in the years ahead. That to me
    drives us to some conclusions with regard to naval forces that
    we should discuss.
        I think maritime prepositioned forces of the future will
    explore rapid sealift. I believe that, with regard to our fixed
    land bases, we should pay a lot of attention to the rise of
    encroachment issues, which are going to dominate the landscape
    both here and abroad in the next few years.
        Our new Secretary of Defense has said that we should only
    replace things if you have something better to replace them
    with. I completely agree with that statement and I think we
    need to understand those things that we already have that will
    carry us into the future.
        The rapidly deployable force with staying power that some
    have said is nonexistent with regard to land forces, does
    exist. It is the Marine Expeditionary Brigade. It is both
    expeditionary and deployable, and it is being modernized and it
    will be transformed, in part or maybe even in whole between now
    and 2008.
        We have that today in the naval context. We have the
    capability of forcible entry. It is affordable in that it is
    bought and paid for up front. It is scalable. It is forward-
    based and deployed. It is sustainable. It is joint and
    operable, and it is combined arms capable without peer anywhere
    in the world, and I make that statement without any fear of
    contradiction.

                               PREPARED STATEMENT

        As a final thought, it is an exciting time to be a member
    of the naval service. It is a great time to be a Marine. We
    look forward to our future, while learning from the past. I am
    deeply honored to be here and I look forward to answering your
    questions. Thank you.
        [The statement follows:]

                      PREPARED STATEMENT OF JAMES L. JONES

        Chairman Inouye, Senator Stevens, distinguished members of the
    Committee; it is my pleasure to report to you on the state of your
    Marine Corps. On behalf of all Marines and their families, I want to
    thank the Committee for its continued support. Your efforts to increase
    compensation and improve the quality of life of our young men and women
    in uniform have been central to the health of your Marine Corps and are
    deeply appreciated.

                                     VISION

        I believe the committee is well familiar with the nature of the
    present international security landscape and the current state of our
    forces, so I will begin simply by noting some of the ways in which
    warfare has changed in the 21st Century. In the 20th Century, mass and
    volume were the primary methods relied upon to win wars. In their
    place, speed, stealth, precision, and sustainment have become the
    emergent principles of modern warfare.
        These four principles have application from the strategic to the
    tactical levels. Furthermore, they are key with regard to how our
    forces maneuver and employ weapons as well as to how they exchange
    information and logistically sustain themselves. The Marine Corps'
    vision, accordingly, is to inculcate these principles into our
    doctrine, organization, training, equipment, and support. One
    indication of our commitment to do this, reflected in Marine Corps
    Strategy 21, is our concerted aim to enhance the strategic agility,
    operational reach, and tactical flexibility of our Marine Air-Ground
    Task Forces. Speed, stealth, precision, and sustainment are integral to
    each of these capabilities.
        Indeed, we are revolutionizing our approach to operations with
    these 21st Century principles of war in mind. We are moving beyond the
    traditional amphibious assault operations which we conducted in the
    20th Century. Our goal now is advanced, expeditionary operations from
    land and sea to both deter and respond to crises.
        The Corps has been our nation's premier expeditionary force since
    our landing at Nassau in the Bahamas, two hundred and twenty-five years
    ago. To Marines, the term ``expeditionary'' connotes more than a given
    capability. For us, it is a cultural mindset that conditions our
    Marines to be able to rapidly deploy with little advance warning and
    effectively operate, indefinitely, with organic logistical support in
    an austere environment. The Marine Corps' culture reflects that
    expectation, and the acknowledgement of the necessity to do more with
    less and to be prepared to fight and win with only the resources we
    bring with us. We have the flexibility to shift focus rapidly, from one
    mission to an entirely different one, without the need to return to
    fixed bases for refitting or retraining. In turn, we have worldwide
    responsiveness and the versatility to undertake missions across the
    spectrum of operations.
        A prime example of these attributes is resident within our medium
    weight Marine Expeditionary Brigade (MEB). Nearly ten years ago, in
    light of pressing manpower considerations, we deactivated our six
    standing brigade command elements. Last year, we reestablished three
    Marine Expeditionary Brigades by embedding their staffs within our
    Marine Expeditionary Force headquarters. These units are now actively
    operating. The 1st MEB recently participated in NATIVE FURY, a
    humanitarian assistance operation in Kenya, and 2d MEB completed a
    Maritime Prepositioning Squadron offload exercise, DYNAMIC MIX, in
    Greece.
        The versatility of the MEB is emblematic of the unique scalability
    of our Marine Air-Ground Task Forces. In size and capability, these
    brigades are midway between our Marine Expeditionary Units and our
    Marine Expeditionary Forces. Furthermore, our MEBs can either deploy on
    amphibious shipping or be airlifted into a theater of operations and
    join up with Maritime Prepositioning Forces.
        A special characteristic of our MAGTFs is that they consist of five
    integrated elements: command; ground combat; aviation; logistics; and,
    supporting establishment. The MEB consists of a regimental landing
    team, with organic infantry, artillery, and armor elements, and in
    addition to a composite aircraft group with both fixed-wing and rotary-
    wing aircraft, it also has a combat service support group--whose
    supplies can sustain the MEB in full scale combat for thirty days. Each
    of these elements reinforces the others. This teamwork, built on
    training and experience, reaches across every battlefield function,
    creating a unique degree of synergy that distinguishes our units from
    others.
        Ultimately, our vision of the future and our expeditionary culture,
    along with our philosophy of maneuver warfare, come together in our
    emerging capstone concept, Expeditionary Maneuver Warfare. Achieving
    the full promise of that concept will hinge on our efforts to balance
    the competing demands of near-term readiness and investment in
    equipment modernization and infrastructure. This is no small task.
    These over-arching concerns are interrelated and in the long-term we
    cannot have one without the others.
        In order to improve our near-term readiness, we have made
    significant internal adjustments over the past two years. Through
    reduction in attrition of our first term Marines, internal management
    efficiencies, outsourcing, and privatization, we will eventually return
    over 3,000 Marines to the operating forces. We are also utilizing
    numerous best business practices to make our operations both efficient
    and effective and now have the largest Activity-Based Costing/
    Management program in the Department of Defense, if not all of
    government. While these efforts have improved the efficient application
    of fiscal and manpower resources, and directly supported our commitment
    to personnel readiness in the operating forces, we are still assessing
    the totality of our personnel requirement. Should a need for additional
    personnel be determined, we are confident that commensurate funding and
    our continued recruiting and retention successes will support any
    required increase.
        Despite such supports, we are, regrettably, continuing to maintain
    our near-term readiness at the expense of our future readiness. As a
    result of the Defense Reviews of the past decade, the nation has
    consistently limited the resources dedicated to its security.
    Consequently, the dramatic increases in operational requirements
    coupled with topline constraints over the last several years have
    mandated a substantively reduced rate of investment in equipment
    modernization and infrastructure. We are, in fact, at a point where
    failure to rectify those shortfalls can no longer be neglected. As a
    nation with global responsibilities, we cannot ignore the critical
    importance of readiness.

                                   READINESS

        We assess our readiness in terms of ``four pillars:'' Marines and
    their families; our infrastructure; our legacy equipment systems; and,
    our modernization efforts. Each of these pillars requires attention and
    resources in order to ensure your Corps is prepared to serve our
    nation's interests. I will discuss each of the pillars and comment on
    what we are currently doing and what we want to do with the support of
    this committee, beginning with the most important part of the Marine
    Corps, its people.

    Our Marines and Their Families
        The Marine Corps has three major goals: making America's Marines;
    winning our nation's battles; and, creating quality citizens. The fact
    that people are the focus of two of these three goals exemplifies the
    extent to which we recognize the special trust and confidence that the
    nation reposes in us for the care and welfare of the young men and
    women in our charge.
        Safety is central to the Corps' focus on people and it is a
    critical component of maintaining our readiness. It is also a vital
    element of the quality of life that we provide our Marines and their
    families. Along these lines, I am pleased to report that we have
    significantly lowered our off-duty mishap rates. Moreover, we have had
    notable success in aviation safety: our Class ``A'' flight mishap rate
    is the lowest it has ever been at this point in the fiscal year. For
    these trends to continue, it will take our unrelenting attention and we
    are dedicated to maintaining our focus on this important issue.
        One factor contributing to our safety challenge is that we are a
    young force. The average age of our Marines is twenty-three, roughly
    seven to nine years younger than the average age of the members of the
    other services. This is part of the culture of the Corps inasmuch as
    our unique force structure results in over two-thirds of our Marines
    being in their first enlistment. The nature of our force structure
    requires us to annually recruit more men and women into our enlisted
    ranks than does the Air Force, for example. To fulfill this tremendous
    demand, our recruiters work tirelessly and have met our accession goals
    in quality and quantity for nearly six years.
        Retention is equally as important as recruiting, and we are proud
    that we are meeting our retention goals across nearly all military
    occupational specialties. Intangibles--such as the desire to serve our
    nation, to belong to a cohesive organization, and to embrace leadership
    responsibilities satisfied by service in the Corps--are a large part of
    the reason we retain the remarkable men and women who choose to
    continue to be Marines after their initial commitment. Concrete
    evidence of this phenomena is seen in our deployed units, which
    continually record the highest reenlistment rates in the Corps.
    Retention success is also partly a consequence of the investment we
    make in supporting our operational forces--to give our Marines what
    they need to do their jobs in the field when they are deployed--as well
    as the funds we earmark for educating and training our Marines.
        Moreover, while we recruit Marines, we retain families. Your
    support of our families' quality of life has contributed greatly to our
    retention success. As noted earlier, the effectiveness of our Marines
    is dependent, in large measure, on the support they receive from their
    loved ones. Our families are indeed vital to our readiness. Increased
    pay as well as improved housing and health care directly influence our
    families' quality of life and, in turn, bolster the readiness of our
    units.

    Our Infrastructure
        Beyond providing for our families, your support in allocating and
    sustaining resources for our bases and stations has had a profound
    impact on our readiness. Bases and stations are the launching pads and
    recovery platforms for our deployed units and thus are integral parts
    of our operating forces. Hence, we want to ensure that our posts
    possess the infrastructure and ranges necessary to prepare our Marines
    for the wide variety of contingencies they can expect to confront.
    Equally important, they are sanctuaries for many of our families.
    Moreover, just as our bases and stations are vital to our current
    readiness, the recapitalization of our infrastructure is as important
    to our warfighting strength in the future as is modernization.
        Increasingly, the many forms of encroachment threaten to degrade
    our readiness. When most of our bases and stations were established,
    they were distant from civilian population centers. Today, population
    growth and commercial development have not merely reached our
    installations, they have enveloped them. There are two major
    ramifications of this phenomenon. The first is that our bases and
    stations often are the last remaining wilderness zones in otherwise
    over-developed areas--which has meant that we have to balance our
    training requirements with our increasing responsibilities as
    environmental stewards. The second consequence is that we are now
    obliged to routinely deal with a wide variety of complaints, often
    regarding noise or flight patterns from citizens who now live in
    proximity to our bases and stations.
        Such concerns about sea, land, and airspace utilization have
    necessitated close coordination and frequent compromise with many
    elements of the civilian sector. Accordingly, we work diligently to be
    good neighbors and try to accommodate the demands of environmental
    protection and concerns of adjoining communities without degrading
    training and the mission effectiveness of our Marines. Despite this
    focus, encroachment issues have the potential to increasingly affect
    readiness in the years ahead. We need your continued support to ensure
    that the growing complexity and expense of encroachment issues do not
    hamstring our efforts to conduct meaningful training in order to
    provide for national security.

    Our Legacy Equipment Systems
        Our present and future readiness do not rest solely on the
    investments we make in our personnel and infrastructure. We also must
    consider the equipment we give our Marines. This is no simple task. We
    must apportion our allotted resources between maintaining the ability
    to respond to crises and the requirement to lay the foundation for our
    capacity to respond to the security challenges of the future.
        As a consequence of the procurement pause of the 1990s, many of our
    weapons, vehicles, aircraft, and support systems are approaching block
    obsolescence. In the last decade, we have watched the size of our
    forces decline while the number of contingencies has increased. Under
    these circumstances, our equipment has been put under tremendous
    stress. Marines are spending ever-increasing amounts of time conducting
    preventive and corrective maintenance. Moreover, we are spending more
    and more money on spare parts to repair our legacy equipment. The
    limited availability of spare parts has put additional strain on these
    efforts. Our procurement programs seek to address this concern, but we
    are acutely aware that the acquisition process is often a slow
    enterprise. As a result, our legacy equipment systems and our efforts
    to maintain them will remain central to the readiness of our Marine
    Air-Ground Task Forces until our modernization programs replace those
    aging pieces of equipment.

                                 MODERNIZATION

        We recognize that we cannot know for certain what missions and
    threats we will face in the future, and that, as a result, we need to
    hedge our modernization programs in such a way as to provide America
    with weapons platforms that are flexible and robust enough to allow her
    Marines to excel across the wide spectrum of tasks and environments
    that they may encounter. The Marine Corps looks to the Advanced
    Amphibious Assault Vehicle, V-22 Osprey, Joint Strike Fighter, KC-130J,
    Lightweight 155mm Howitzer, High Mobility Artillery Rocket System,
    Medium Tactical Vehicle Replacement, Naval Precision Fires, and
    increased amphibious shipping, among other systems, to give us the
    versatility that we will need in the decades to come.

    Advanced Amphibious Assault Vehicle
        The award winning Advanced Amphibious Assault Vehicle program is
    the Corps' highest ground acquisition priority and promises to allow
    high-speed surface maneuver from ship-to-shore as well as on land.
    Importantly, these vehicles will be able to deploy to their objectives
    from over the visual horizon, which will allow our ships to remain
    beyond the range of many threat weapons and surveillance systems. This
    capability will help negate an enemy's anti-access strategies and
    enable expeditionary operations from the sea.

    V-22 Osprey
        The Osprey remains the Corps' premier near-term aviation
    acquisition priority. Tiltrotor technology promises to revolutionize
    aviation and the V-22 will radically increase our strategic airlift,
    operational reach, and tactical flexibility. The Osprey's superior
    range, speed, and payload will allow us to accomplish combat missions
    and other operations from distances previously unattainable and at
    faster response times than possible with other airframes.
        We are acutely aware of the challenges associated with the Osprey
    but are gratified that the Review Panel, appointed by then-Secretary of
    Defense William Cohen, concluded that tiltrotor technology is mature
    and that, though the aircraft's reliability and maintainability must be
    improved, the V-22 is cost-effective and provides the Marine Corps with
    capabilities that cannot be provided by any single helicopter or
    conventional aircraft. Indeed, the Panel's conclusions mirror those of
    seven major cost and operational effectiveness analyses and the fact
    that the tiltrotor XV-15 has been flying since 1977.
        We are presently in the process of ensuring that the V-22 is
    reliable, operationally suitable, and affordable--just as we did forty
    years ago with each of the aircraft the Osprey is intended to replace.
    Currently, 85 reliability and maintainability improvements have been
    incorporated, or are on contract for incorporation, on the Osprey's
    production line--out of the 120 identified. With time, diligence, the
    close cooperation of our partners in industry, and with the support of
    the Congress, we can work through the present challenges confronting us
    and achieve the tremendous operational capabilities offered by this
    remarkable aircraft.
        As has always been the case, our actions will be guided by an
    unyielding commitment to do what is right for our Marines, their
    families, and our nation. In asking for your support, I assure you that
    we will not compromise our integrity or jeopardize the safety of our
    Marines for any program.

    Joint Strike Fighter
        Another aviation modernization effort of great importance is the
    Joint Strike Fighter. The Joint Strike Fighter is, first and foremost,
    a product of Congressional guidance from the 1980s. At the time, all of
    the services routinely produced a large number of different airframes.
    Congress, therefore, asked the Department of Defense and industry to
    develop airframes that could be used in common by the services. The
    Joint Strike Fighter is the first step in that direction. The Short
    Takeoff and Vertical Landing variant promises to combine the current
    basing flexibility of the AV-8 Harrier with the multi-role
    capabilities, speed, and maneuverability of the F/A-18 Hornet to
    fulfill both the Marine Corps' air-to-ground and air-to-air mission
    requirements, as well as incorporate both stealth and standoff
    precision guided weapon technology. Just as the Joint Strike Fighter
    has incredible operational potential, it also holds remarkable promise
    for our industrial base and our nation's economy. Considering the fact
    that many of our allies have expressed interest in becoming partners in
    the program, the aircraft has the potential to bolster our defense
    industrial base to a degree similar to that achieved by the F-16
    Fighting Falcon over the past twenty-five years.

    KC-130J
        Replacement of our aging KC-130 fleet with KC-130J aircraft is
    necessary to ensure the viability and deployability of Marine Corps
    Tactical Air and Assault Support well into the 21st Century. The KC-
    130J's performance features include increased cruise airspeed, night
    vision compatible interior and exterior lighting, enhanced rapid ground
    refueling capability, digital avionics, and powerful propulsion
    systems. These strengths promise lower life-cycle expenses and
    eliminate the need for costly KC-130F/R Service Life Extension
    Programs. With the KC-130J, our aerial refueling fleet will be ready to
    support the tremendous increase in capabilities that the Osprey and the
    Joint Strike Fighter promise to provide for our Marine Air-Ground Task
    Forces.

    Lightweight 155mm Howitzer
        A number of ground weapon system programs are also of great
    interest to us. The Lightweight 155mm Howitzer is our first priority in
    this regard. The Lightweight 155 is a joint Marine-Army program that
    meets or exceeds all the requirements of the current M198 Howitzer
    while reducing the weight of an individual artillery piece from 16,000
    to 9,000 pounds. This lower weight allows for tactical lift by both the
    CH-53E Sea Stallion helicopter and the V-22. Moreover, the digitization
    of this platform will greatly reduce response time and increase
    accuracy. The program's Engineering Manufacturing Development phase is
    scheduled to be complete this summer and we plan to begin production in
    fiscal year 2002.

    High Mobility Artillery Rocket System
        Also integral to our plans to improve our fire support is the
    acquisition of the High Mobility Artillery Rocket System (HIMARS). This
    system is designed to be rapidly deployable as a key part of our
    expeditionary operations. It will fire both precision and area
    munitions, as well as extend our ground-based fire support umbrella to
    45 kilometers. HIMARS's tactical mobility, small logistics footprint,
    and capacity to deliver heavy volume fires against time-sensitive
    targets will, in conjunction with the Lightweight 155, at last remedy
    the fire support shortfall we have known for much of the last two
    decades.

    Medium Tactical Vehicle Replacement
        The Medium Tactical Vehicle Replacement is at the heart of Combat
    Service Support modernization and will provide our forces improved
    sustainment and permit maximum flexibility in responding to crises. The
    vehicle's weight and height allow it to be transported internally by
    the KC-130 Hercules aircraft and externally by the CH-53E Sea Stallion
    helicopter. The Medium Tactical Vehicle Replacement can readily
    negotiate terrain twice as rough as our current vehicles can, and it
    has increased payload, speed, and reliability.

    Naval Precision Fires
        Marine Corps expeditionary capabilities are intrinsically linked to
    our partners, the U.S. Navy. One illustration of this, among many, is
    that Naval precision fires are an essential dimension of our power
    projection capabilities. Yet, today the available resources for Naval
    fire support are sorely limited. Efforts to upgrade current naval
    surface fires capabilities are focused on modifications to the existing
    Mark 45 gun mount as well as the development of an advanced gun system,
    extended range guided munitions, and the Land Attack Standard Missile.
    The future of naval precision fires is represented by the Zumwalt class
    DD-21 Land-Attack Destroyer and the development of an extended range
    missile system. Taken together, these planned enhancements will
    dramatically improve the range, responsiveness, accuracy, and lethality
    of the Naval Surface Fire Support provided to forces ashore.

    Amphibious Shipping
        Our forward-based presence around the globe is becoming
    increasingly constrained while threats to force protection grow. As a
    result, America's operations are less and less likely to rely on large
    fixed bases overseas for deployment or sustainment. Accordingly, in
    most cases of crisis prevention or crisis response, U.S. forces are
    going to deploy and sustain operations either from our ships or our
    homeland.
        Projecting power from the Continental United States, however, has
    substantive limitations. It is, in fact, myopic to think we can deter
    or defeat aggression overseas solely with capabilities based here in
    the United States. It is going to take presence in the operating area--
    more accurately, it is going to take a sea-based presence in the
    operating area, a formation of joint assets that together project and
    sustain combat power ashore while reducing or eliminating our landward
    footprint. Nonetheless, the United States Navy's fleet of ships has
    shrunk by nearly 40 percent of what it was a decade ago, despite the
    fact that the enduring requirements of global sea control, strategic
    deterrence, naval forward presence, and maritime power projection have
    not declined. Similarly, our amphibious fleet, which has been
    chronically under-resourced, remains the linchpin of the Corps' ability
    to shape the international security landscape, project power, and
    respond to crises.
        We are grateful for your support to replace four classes of older
    ships with the new LPD 17 San Antonio amphibious ship class. The
    delivery of these twelve ships to the fleet is programmed to be
    complete at the end of the decade. Unfortunately, such an extended
    time-frame for ship design, construction, and delivery is typical and
    underscores the critical importance of ensuring now that we are ready
    to replace the LHD Wasp class ships when they reach the end of their 35
    year service life starting in 2011.
        Today's amphibious ship force structure, when the number of active
    fleet vessels is combined with reserve ships that can be mobilized, has
    the capacity to lift nearly two and a half Marine Expeditionary Brigade
    assault echelon equivalents. Several formal studies have concluded that
    the actual requirement is an amphibious ship force structure capable of
    lifting three Marine Expeditionary Brigade assault echelon equivalents
    in order to satisfy all forward presence requirements while maintaining
    the flexibility to deal with the unexpected.
        Additionally, our current fleet of maritime prepositioning ships
    will require replacement in the 2020 timeframe. The development of
    advanced maritime prepositioning capabilities will incredibly advance
    the strength and flexibility of our sea-based expeditionary operations.
    The marriage of a modern amphibious fleet with maritime prepositioning
    shipping capable of hosting at-sea arrival and assembly of forces will
    eliminate the requirement for access to secure ports and airfields, and
    give our nation an unmatched asymmetrical advantage in projecting
    power.

    Convergence
        Looking ahead, the programs we have planned will, with your
    support, begin to converge in our operating forces in 2008. In the not
    distant future, the Advanced Amphibious Assault Vehicle, V-22 Osprey,
    Joint Strike Fighter, KC-130J, Lightweight 155, High Mobility Artillery
    Rocket System, Medium Tactical Vehicle Replacement, Naval Surface Fire
    Support, amphibious shipping, and a number of other smaller programs
    will together dramatically transform our expeditionary capabilities. As
    discussed earlier, these systems promise to embody speed, stealth,
    precision, and sustainment as well as afford us modern agility,
    mobility, and lethality. But, we cannot stop here. We must work
    together with the Navy and our defense industrial base to exploit other
    opportunities to advance our capabilities in the future. Continuous
    modernization is key to our long-term national interest because without
    it, we will fail to keep pace with change. The Corps has an
    institutional tradition of such innovation. Inasmuch as we are
    expeditionary by nature, we are transformational by design. Indeed, we
    have long viewed transformation as an evolutionary process, not a
    singular event.

                             TRAINING AND EDUCATION

        People, not systems, are the fundamental component of the Corps.
    Just as we are continually striving to evolve our doctrine, equipment,
    and supporting establishment so that we can better win our nation's
    battles, we are also constantly moving forward to improve how we train
    and educate our Marines.
        We believe the old adage, ``you fight the way you train.'' Because
    of this, our training exercises are becoming ever more Joint and
    Combined in order to provide our Marines with the experience that they
    will need when they are called upon to respond to crises--because there
    is no doubt that they will work alongside our sister services and
    partners from other nations in such circumstances. Moreover, we
    recognize that while our first duty is to be ready to win our nation's
    battles, we are increasingly called on to execute missions at the lower
    end of the spectrum of operations. Accordingly, our exercise scenarios
    emphasize both conventional warfighting missions as well as operations
    other than war.
        Experience in tandem with education is the best foundation for
    dealing with both difficulty and fortuity. Accordingly, we are not only
    focused on training our Marines, but on educating them as well. We have
    expanded our distance learning programs to ensure that greater numbers
    of Marines have the opportunity for education, not merely those who
    attend resident courses. In light of this, we are adjusting
    administrative policies to accommodate family concerns--such as spouses
    with careers or children with exceptional needs--when selecting
    officers to attend our various schools that require a change in duty
    station. Moreover, we have instituted a year-out program for our junior
    officers that places them within the corporate world, think-tanks, and
    the Congress, in order to widen their perspectives.

                           OUR MARINE WARRIOR CULTURE

        At the very heart of the Corps and its relationship to each Marine
    is our service culture. The Marine Corps is sui generis--that is, we
    have a nature that is distinct from all others. This goes beyond the
    unique characteristics of our expeditionary Marine Air-Ground Task
    Forces which are always prepared to be deployed overseas. It, in fact,
    pertains to our warrior ethos. From the individual Marine to our
    institution as a whole, our model is the thinking and stoic warrior who
    fights smarter than his enemy and is inured to hardship.
        Our commitment to maintaining our warrior culture is illustrated by
    our recently instituted martial arts program. We have developed a
    discipline unique to the Corps and are in the process of training every
    Marine in its ways. This program seeks to promote both physical prowess
    and mental discipline. Different levels of achievement are rewarded
    with belts and reflect a combination of demonstrated character,
    judgment, and physical skill. This training will benefit Marines across
    the panoply of missions we face; especially in peacekeeping operations
    where physical strength and mental discipline are vital to such things
    as crowd control. Furthermore, our martial arts training is
    fundamentally concerned with mentoring our young men and women to
    understand that the key to mission accomplishment often is a matter of
    using intelligence, strength, and self-control to influence
    circumstances, rather than always resorting to the simple application
    of brute force.
        I would like to note that each of the United States' Armed Services
    has a different set of responsibilities legislated by Congress under
    Title 10. The services have separate operating roles and institutional
    structures, just as corporations are not carbon copies of one another.
    Indeed, cultural diversity is a force multiplier. Consequently, ``one-
    size fits all'' standards are often not the best solutions in the
    Department of Defense, despite the importance of our on-going work to
    be fully joint in the conduct of operations. Therefore, it is important
    to understand how the differences between the services may require
    separate and service-specific means of accomplishing universal goals
    such as promoting the quality of life of our people.
        The recently enacted PersTempo Program is an example of a
    requirement that is likely to impact each of the services differently.
    The 2001 National Defense Authorization Act mandated that any service
    member deployed more than 400 days in two years receive $100 for each
    additional deployment day. While the larger services may be capable of
    managing the restriction placed on deployments and the additional costs
    associated with this requirement, the policy runs counter to the Corps'
    rotationally deployed, expeditionary force identity as well as our
    limited budget.
        Our young men and women join the Corps to make a difference, to
    challenge themselves, and are prepared to deploy in service of our
    country. The testament to this is our success in recruiting and
    retention: the ``acid-test'' of any service culture. Our young Marines
    and their families understand that our forward presence and
    expeditionary deployments are the core expression of our warrior
    culture. It is why they are Marines. And, in turn, though the PersTempo
    Program may be appropriate for the other services, its present
    construct does not comport with the Corps' culture and missions, and is
    likely in the long run to have a profoundly deleterious effect on our
    cohesion and on our ability to conduct operations and training.

                                   CONCLUSION

        Looking at the Corps overall, I think one of the clearest
    indicators that our people are our first priority is that presently
    sixty percent of our budget is allotted to funding our manpower. Yet,
    this fact also emphasizes the relative state of the other pillars of
    readiness, especially modernization; which has been shortchanged for
    most of the past decade. The Marine Corps has long prided itself on its
    ability to do more with less. Nothing reflects this more clearly than
    the fact that the Corps provides twenty percent of our nation's ground
    and aviation combat force with just six percent of the Department of
    Defense budget.
        Just as the other services have pursued plans to reorganize from a
    Cold War posture to one that matches the post-Cold War world, the
    Corps, too, has adapted itself to the challenges and opportunities that
    have emerged during the last ten years. But, inasmuch as we are in what
    future historians may call ``the expeditionary age,'' I want to
    underscore that the Marine Corps has always been and will continue to
    be our nation's premier expeditionary force. That identity is central
    to who we are as Marines.
        With that firmly in mind, the Corps has carefully plotted a course
    for the future. Indeed, if the programs we have currently planned are
    properly funded, we will see a convergence of leap-ahead capabilities
    in our Marine Air-Ground Task Forces by the end of this decade that
    will revolutionize our expeditionary operations.
        Our nation's current strategy and force structure may change in
    light of the many reviews initialized by Secretary of Defense Rumsfeld.
    Yet, only a sustained increase in resources will yield the operational
    strength, flexibility, and resilience we envision in both the short and
    the long-term. As I have testified in the past, an increased investment
    by this Committee, the Congress, and the American people, of
    approximately $1.8 to $2 billion a year sustained for the next eight to
    ten years--a modest step that is less than one percent of what is
    allotted to the overarching national security budget--will permit us to
    fulfill our vision and ensure that the Corps continues to defend
    America's far-flung national security interests, now and in the future.
    Such an investment addresses our warfighting readiness requirements,
    accelerates the pace of our modernization, and recapitalizes our
    infrastructure. This, in fact, is our transformation. With your
    consistent support we can achieve our goals and provide our Marines
    with a Corps that, by 2008, will be well on the road to dramatically
    transformed expeditionary capabilities.

                                     DD-21

        Senator Inouye. I thank you very much, General.
        Mr. Secretary, I will forgo asking questions on the V-22
    Osprey because of the important role Chairman Stevens has
    played in the development of this program. But I would like to
    ask a question on the DD-21, which has been touted as the ship
    of the future. I note that the contract award has been delayed
    awaiting the Secretary's review and the QDR. Can you give us
    some hint as to where we are now? Has a decision been made?
        Mr. England. Mr. Chairman, with your permission I would
    like to defer that question to Admiral Clark. I have recused
    myself from those discussions, so I have not been involved in
    DD-21 and will not be for some time. So with your permission I
    would like to have Admiral Clark address that, please.
        Senator Inouye. All right, sir. Admiral Clark.
        Admiral Clark. Mr. Chairman, of course this activity is by
    law the responsibility of the acquisition executive is not
    here. But I am happy to speak to this issue with the
    understanding that I have of the sequence of events and where
    we stand. We have and I have testified that we need the
    capability that DD-21 brings to the Navy.
        General Jones talked about transformational issues. There
    are transformational pieces in DD-21. The technology that comes
    with the integrated power system is not just modernizing a new
    ship just like ones we have built in the past. The incredible
    steps to inject manpower savings into the platform, very
    important. A number of things that--we could talk about the
    benefits of DD-21, but that is not really your question.
        Your question is where are we in the process. I believe
    that the decision made by the acquisition executive was the
    correct decision, and that was to not step forward and do a
    down-select at a time when so much review is going on about the
    future of the entire military, not just the Navy-Marine Corps
    team; and that with these reviews ongoing and with the QDR not
    just in the opening rounds but ongoing, with ends in sight in
    the very near future, this was the right step to take.
        The question about how long will it be before the Navy has
    a clear direction ahead, I think that it would be appropriate
    for us to respond to you for the record on that and the
    acquisition executive state his case. But it is clear that the
    real time line is tied to these other events that I have
    mentioned. Now we are not talking about months and months and
    months. We are talking about weeks to a couple of months, and
    it is my understanding that that is where we are in the
    process, Mr. Chairman.
        Senator Inouye. Assuming that it moves along according to
    the timetable, is there a role for the DD-21 in missile
    defense?
        Admiral Clark. Well, one of the potential longer term
    solutions is--DD-21 is not a missile defense ship in and of
    itself when you talk about--I mean, it is going to have great
    capability. But early in the development process it was talked
    about this perhaps being a transitional ship to a CG-21 at some
    point in the future. That is not under contract. That is not
    part of this development process, but it is easy for me to see
    that that could some day be a reality.
        What I would say, Mr. Chairman, is this, is that the
    technology that is part of the DD-21 development is technology
    that we need in our future Navy. So it seems to me that it is a
    natural thing for us to consider, in fact it would be very
    unwise for us not to consider, the potential for such a
    solution in the future.
        Senator Inouye. Thank you.

                              JOINT STRIKE FIGHTER

        Mr. Secretary, another matter on the Joint Strike Fighter
    (JSF). We have had press reports suggesting that a decision has
    been made. Has this decision been made?
        Mr. England. No, sir, not to my knowledge.
        Senator Inouye. Do you believe that the Joint Strike
    Fighter is affordable with other priorities on F-18/E and F and
    V-22?
        Mr. England. Yes, sir. I believe that the JSF is a very,
    very important platform, not just for the Navy but for the
    Nation, sir. I know that Senator Stevens just returned from the
    Paris Air Show. My own experience is that the United States has
    been preeminent in aviation since the dawn of aviation.
    Frankly, we have started to lose that preeminence in the
    commercial sector. We have been targeted, I believe,
    particularly by the Europeans in our military sector. It is
    very, very important that we remain dominant in this
    technology. It is important from a military sense, but it is
    also very important from a civilian technology point of view to
    be preeminent.
        It is important in my judgment to our naval services. It
    does provide us a long-range stealth platform that would
    augment our F-18E/Fs, and of course is critical to the United
    States Marine Corps. So this is a very important program and we
    will work very, very hard to find a way to make sure it fits
    within our budget. If anything, I would like to accelerate that
    program based on the briefings I have had to date.
        Senator Inouye. General, the Secretary just said that it is
    very important to the Marine Corps. Why is that?
        General Jones. Mr. Chairman, some years ago my predecessor
    in the leadership of the Marine Corps made a decision to go for
    a generation leap, if you will, in technology. That leap meant
    that we decided to stay with our legacy F-18's and Harriers for
    a longer period of time based on the promise of the Joint
    Strike Fighter.
        Everything I have seen to date from both competitors,
    whether it be the Conventional Takeoff and Landing (CTOL) or,
    as we are seeing now, even Vertical/Short Takeoff and Landing
    (VSTOL), is extraordinarily promising. Since I have been in
    office, I have been to several conferences around the world
    with my military counterparts, and I also just came back last
    night from the Paris Air Show. I am astounded at the number of
    senior leaders in uniform that approached me on the side and
    asked me with some sense of urgency, how is the Joint Strike
    Fighter progressing; you know we consider that to be very
    important to us.
        Our British friends have invested over $2 billion up front
    in betting on this technology. In fact, they are restructuring
    the Royal Air Force based on the promise of the Joint Strike
    Fighter and the ability of those aircraft to fly off the ships
    of the Royal Navy.
        For the Marine Corps, I mentioned this is a
    transformational capability because of its stealth, its range,
    its payload, its survivability. It will in fact replace two
    lines of aircraft that we currently use. Admiral Clark and I
    are in complete agreement that we have to figure out the way to
    get to JSF, as it is not only a militarily transformational
    capability, but also probably has the potential of being the F-
    16 of the 21st century for the industrial base of the United
    States.
        Senator Inouye. Thank you very much.
        Senator Stevens.

                                  SUPPLEMENTAL

        Senator Stevens. Thank you very much, Mr. Chairman.
        Admiral Clark, you mentioned the supplemental. This is not
    a hearing on the supplemental, but just for my and the
    committee's information, is there a real deadline for money in
    July?
        Admiral Clark. There is, Senator, and it has to do with the
    operating accounts.
        Senator Stevens. Steaming hours, flying hours?
        Admiral Clark. Steaming hours and flying hours,
    specifically flying hours. We must have relief soon or in July
    I will have to start taking some actions to further inhibit the
    flying hour program. I say further because I have already taken
    action and I did early in the year to bring the level of
    release of funds in the flying hour program from a level that
    would keep us within the required standards for readiness
    standards for deployment.
        But if we do not have relief in July, I will have to take
    additional actions at the operational level.
        Senator Stevens. How many ships of the line do you think
    you have now?
        Admiral Clark. I am sorry?
        Senator Stevens. How many ships of the line do you think
    the Navy has now?
        Admiral Clark. Well, I have 316 ships that are in
    commissioned or United States Naval Ship (USNS) civilian-manned
    ships.
        Senator Stevens. What is the average age?
        Admiral Clark. The average age of our force today is
    slightly over--between 15 and 16 years.
        Senator Stevens. What is your rate of replacement now?
        Admiral Clark. The rate over the last several years, 1 year
    it is six and 1 year, but it has been between six and seven
    ships.
        Senator Stevens. So your average age is going up about
    every other year by a year?
        Admiral Clark. I would have to run the math, Senator, but
    fundamentally it tells you that if you buy 6 a year, 30-year
    ships, you are going to a 180-ship Navy.
        Senator Stevens. Not good.
        Secretary England, I want to get provincial first, if I
    may. We are dealing now with the final stages of ending the
    Navy's presence in Adak and I know that you realize we are
    appreciative of what the Navy has done to assist the local
    reuse authority. The community at Adak is an Alaskan Native
    community. It has now incorporated as a new city and will
    become Alaska's westernmost city. It has great hopes of
    becoming a free port and other things.
        We have a problem in that special legislation is now
    required by Congress to convey the property to the Aleut
    Corporation. Are you familiar with that transfer problem?
        Mr. England. I am familiar, sir, that that is in process. I
    can tell you that my understanding is that most of that
    property intended for conveyance, except for the Mount Moffett
    area, will be environmentally suitable for transfer by early
    next year, 2002, and the Mount Moffett area will be ready for
    conveyance by early 2003.
        So my understanding is that is now coming to a conclusion,
    sir.
        Senator Stevens. I thank you. Again, I thank you for the
    assistance. I think there is a future for that city. It is so
    far out, people forget that it is west of Australia.

                                      V-22

        General Jones, can we talk about the V-22 yet?
        General Jones. Certainly, sir.
        Senator Stevens. Where are we now in the follow-up on the
    task force report?
        General Jones. Sir, as you know, the task force convened to
    answer basically several fundamental questions. The first one
    in my mind was is tilt rotor technology mature? I believe that
    the testimony of the task force was very powerful in that
    context and they answered the question with a resounding yes,
    that the technology is in fact not only mature, but, to quote
    from their testimony, that it is in fact a national asset.
        Senator Stevens. There has been no question raised as to
    basic technology involved?
        General Jones. The panel affirmed that the technology is
    mature and characterized it as being a national asset for the
    industrial base of the United States.
        The second question, though, was if the technology is
    mature then is it operationally robust enough for use in the
    fleet or by marines? On that question, we are going back to the
    drawing board because their detailed investigation, which I
    thought was quite comprehensive, showed a number of things that
    were troubling and needed to be repaired.
        Some of it is related to just engineering. It has nothing
    to do with technology itself. Specifically, the chafing of
    hydraulic lines in the nacelles was found to be a bigger
    problem than anyone had suspected. We were fortunate, to the
    degree there is anything fortunate in a tragic accident, but we
    did recover the part that failed in the December accident in
    North Carolina, revealing that wiring bundles had chafed the
    hydraulic fuel line to the point that it caused the fuel line
    to burst. That, coupled with the anomaly in the software flight
    control system, combined to cause the accident.
        There is some work that needs to be done, obviously, in the
    software. That is ongoing. We have addressed already 85 of the
    120 recommendations by the panel to be corrected. We have
    shored up to the extent that it needed to be the cohesion
    between the production base and the operational base of the
    marines and the squadron that are not only working on the
    aircraft, but will once again fly in the aircraft, to make sure
    their confidence, as you mentioned in your opening statement,
    is restored.
        We had intended to be able to accept your request to go
    down and visit that flight lane. That invitation to you and the
    chairman and members of the committee is always there. I
    welcome that opportunity at your convenience. I think you will
    be pleased by what you hear and see.
        Senator Stevens. Is it flying now?
        General Jones. It is not flying now, sir, and it will not
    until we have resolved the engineering rewiring of the nacelle.
        Senator Stevens. Is there a timetable on that, General?
        General Jones. We are in the first 30 days of a 90-day
    review that was asked for by the Under Secretary for
    Acquisition and Technology. Those determinations are being made
    right now. It would be speculative on my part to guess as to
    when that might be, but I think we are talking before the
    entire program is restored to full health, I think we are
    seeing at least a year's slip.

                                     EA-6B

        Senator Stevens. Mr. Secretary, in terms of the EA-6A's and
    EA-6B's, my staff and I have looked at that and I understand
    there is a study now concerning the EA-6B fleet and that there
    are two different proposals regarding the EA-6B's. It is my
    understanding further that the United States Navy is now the
    only service that is relied upon, or at least the lead service
    that is being relied upon, to provide the electronic attack
    mission.
        Now, I have two questions. Do you believe that this funding
    for the plan for the EA-6B is adequately funded under the
    requests that are before us, and are you working with the other
    services to determine what funding is necessary for a follow-on
    to the EA-6B's to perform this mission?
        Mr. England. Well, Senator Stevens, again with your
    permission I would like to defer that to Admiral Clark. I just
    frankly have not been on board long enough to know that detail.
    Admiral?
        Admiral Clark. I would be happy to, Senator. This is a
    critical capability for our military and you are right on the
    mark, of course, as always. We are providing this capability
    for the entire military. There are Air Force pilots that do fly
    as part of the expeditionary squadrons.
        Now, having said that, there is an analysis of alternatives
    going on at this time and so regarding decisions that have been
    made and so forth, there are no decisions yet. That analysis is
    continuing. That analysis is addressing what the follow-on to
    the EA-6B should be, what platform should it be in and so
    forth.
        There is an additional issue with regard to the program and
    that is the modernization that is required for EA-6B, because
    the threat continues to improve and so this kind of capability
    we must continue to invest in. The current program has a
    funding line for something called improved capability (ICAP-
    III). This is an essential capability that I am now building
    that is very high on my priority list.
        The discussion about what shape this will take in the
    future cannot be addressed until we figure out where the
    analysis of alternatives takes us. They are looking at a number
    of issues. I will just--this is Vern Clark's view about naval
    aviation and the costs of operations. Secretary England made
    the point earlier as a broad statement, not applied to this
    program, as a broad statement--in my opening statement I talked
    about the operation and the support costs spiraling.
        The age of my air force is such, over 18 years average age
    of the naval air force, it is such that the cost of operating
    it and maintaining it is spiraling. I want to look ahead and
    get us postured on a footing that is going to provide us the
    replacement for EA-6B as soon as we can move to it. At that
    point in time we need to work with the Air Force and see what
    the right solution is for them in the future, whether we should
    continue to have this capability as a Navy-only capability or
    they should embed this in their expeditionary wings that they
    now have built and put together.
        So that is a question that we must deal with. I have had
    discussions with Mike Ryan about that, but we do not have--we
    are not at a point that we can craft the way ahead.
        The second part of your question is is it adequately
    funded. There is not--since we do not know what the solution
    is, there are no funds for follow-on aircraft in the program.
    There is funding for this necessary modernization that I talked
    about, ICAP-III, in the program. This kind of capability,
    whatever the analysis of alternatives shows us, this kind of
    capability will of course have to deliver with the capability
    that will allow us to defeat the threat.
        Senator Stevens. I think what I am getting at, are we
    spending money now on converting EA-6B when we ought to be
    spending money developing a new platform?
        Admiral Clark. The answer is yes to both questions. We are
    spending money to develop the follow-on improved mission
    capability within the airplane and we are also spending money
    on the development of the future platform, just the analysis of
    alternatives.
        Senator Stevens. Very well. Thank you. We may have to visit
    further on that, Mr. Chairman. I apologize for taking so much
    time right now, but I would like to be excused after this
    question. I have to meet with Senator Byrd about the
    supplemental.

                                    VIEQUES

        But I would be remiss if I did not ask both the Secretary
    and Admiral Clark concerning the Vieques problem. Secretary
    England, we put $40 million in the current year's supplemental
    to implement the agreement reached by President Clinton on
    Vieques. Have those funds been obligated, do you know, and is
    the remainder, if there is a remainder, can it help deal with
    the problem that now exists because of the change in policy?
        Mr. England. Sir, $5 million has been obligated for direct
    execution by the Navy. We have obligated $1 million for
    apprenticeship programs in Vieques and $4 million for what we
    call the mini-grant program, that is small sums of money,
    $25,000, $50,000, for businesses to expand their business. That
    money has not all been spent. It has been obligated.
        We have also transferred $3 million to other agencies,
    namely $1.6 million to Health and Human Services for various
    health studies associated with the island and $1.4 million to
    the Department of the Interior, and that was for management of
    the conservation zones on the island. So $5 million obligated
    in addition to another $3 million that has been transferred.
    That $3 million I believe has basically been spent. The $5
    million has not all been spent, but some has been obligated.
        Regarding the remainder, because it was up to $40 million,
    at this point I would certainly like to retain the $40 million
    until this whole matter comes to a conclusion. So I would like
    to have the flexibility as we go forward to deal with any
    issues that may come up as we work to resolve this issue.
        Senator Stevens. Admiral Clark, you have in the Pacific
    Fleet a comparable facility, right?
        Admiral Clark. Well, it is not comparable in the pure
    technical sense, but we do train and develop our battle groups
    with the same objective in mind in both fleets, but with
    different capabilities. For example--and I mentioned we just
    had a battle group, the Carl Vinson, just completed this
    operation and I talked to the battle group commander yesterday.
        Off the coast, the West Coast of the United States, you
    have got San Clemente, you have got Camp Pendleton right there,
    and you have got ranges within reach of the battle group and
    the amphibious ready group as it is working up. So it can
    operate from one geographic location, and I do not mean a fixed
    point in the ocean, but I mean within the footprint that a
    group, a carrier battle group and an amphibious ready group
    occupy when they are operating together at sea.
        They can reach all of these sites and fundamentally they
    integrate their operations that way from one general position.
        On the Atlantic side you cannot do that. The reason Vieques
    had such appeal to us is that it was the only site that we had
    the air space where we could do the Marine integration, do the
    aviation integration, and the Navy surface fire support all in
    one location. Again, one general area called Vieques.
        The other available sites to us are hundreds of miles away,
    so that you cannot do that kind of integration, operating--we
    have used when Vieques was not available to us Eglin Air Force
    Base, we have used sites in Florida and sites off the coast of
    Carolina. So while we can integrate the operations in
    California, it is at different sites that are all within reach.
    When you are in the southern California operating area, you are
    a matter of a dozen or so miles from San Clemente and Camp
    Pendleton and so forth. So you can reach it all and still be
    integrated even though you are using different sites.
        So the Vieques site just puts those all in one place. We do
    not have such a way to integrate it in other places on the
    Atlantic side.
        Senator Stevens. Thank you very much.
        Gentlemen, former Admiral Roof has just announced a new
    concept of ocean wilderness areas. Having been deeply involved
    in the extension of our jurisdiction over the water column
    beyond our traditional limits of 3 miles and understanding, the
    way I understand the proposal the Admiral is coming forward
    with, it is a concept of determination of areas off our shores
    where the wilderness concept will be applied.
        I urge you to start studying how that will impact our Navy
    and our Marine operations and particularly in terms of training
    and our ability to defend our Nation. Beyond that, I would hope
    that some of your lawyers would teach Admiral Roof a little bit
    of admiralty law. We did not claim jurisdiction over the ocean
    in terms of the surface. We do not exclude foreign ships from
    our zone beyond 3 miles. We protect the creatures of the sea in
    order to assure their reproductivity, but we have not made a
    national claim beyond 3 miles to my knowledge to the extent of
    excluding vessels from navigation.
        I think we are headed for a real battle up here over this
    proposal as I understand it and I would hope the Navy will be
    prepared to, as they did during the Law of the Sea discussions
    that I participated in some 30 years ago, be prepared to take a
    role for our Nation in preserving our ability to utilize the
    areas off our shore for our own defense.
        Thank you very much, General and Mr. Secretary and Admiral.
    I hope you will excuse me, Mr. Chairman, and I apologize for
    taking too much time.
        Senator Inouye. Senator Cochran.

                                     DD-21

        Senator Cochran. Thank you, Mr. Chairman.
        The chairman asked questions about the DD-21 program. I
    noticed in General Jones' prepared statement there is a comment
    about the importance of Navy precision fires being an essential
    dimension of the capabilities of the Marine Corps on pages 13
    and 14. I was curious as to whether or not, General Jones, you
    would have an opinion about what the loss of the DD-21 would
    mean in terms of impact on naval gunfire support for the Marine
    Corps?
        General Jones. Senator, thank you for that question. The
    fact is that one of the serious shortfalls in our warfighting
    capability as we pursue the land campaign is in the field of
    fire support, both land-based and sea-based, as contrasted to
    say 20 or 30 years ago, in the 20th century. The Marine Corps
    had a healthy, very healthy and robust shore-based artillery
    fire support system, which over the years we attempted to
    modernize, but what we really wound up doing was virtually
    scrapping it, to where we have one field artillery piece left
    called the M-198, which is not a bad field artillery weapon,
    but certainly not very expeditionary.
        So the Lightweight 155 is a very important program for us.
    Furthermore, at sea we also scrapped most of our shore
    bombardment capability. I do not need to remind you of the
    debates we have had over the last 20 years on the activation
    and deactivation of battleships and the like, all for very,
    very good reasons.
        The transformational aspect of what the Navy precision
    fires program is is really important. It is not only important
    to the Marines, it is important to the joint warfighters. If
    you look at the likelihood of prosecution of the Nation's
    future battles, it will probably be in the littorals. As far as
    we can see, certainly those are going to be the flash points of
    the future. Having a transformational precision fire capability
    allows you to deliver ordnance at much greater range with
    greater precision, so that those units that are out there,
    which will probably be smaller but much more lethal and much
    more effective than they were in the 20th century, because we
    will depend on speed, mobility, lethality, stealth, and
    sustainability for those forces, but they will only survive if
    they have the robust backup of systems like those provided by
    the DD-21.
        So the DD-21 is a very, very important program for the Navy
    and very important for the Marines.
        Senator Cochran. In your response you mentioned the 155
    millimeter howitzer, the Lightweight Howitzer. As I understand
    it from your statement also on page 12, you say it will make a
    major impact on improving outdated artillery capability. Can
    you tell us the status is of that program and what the
    committee could do to support the development of this system?
        General Jones. Yes, sir. The Lightweight 155 has a lot of
    technology built into it. For example, it is about 6,500 pounds
    lighter than the M-198, which it is going to replace. It is a
    joint program. The Army is very actively involved in this with
    us, so it has tremendous support. As recently as 3 weeks ago,
    we had the successful shoot of the second gun at Aberdeen. The
    first gun has been a success.
        So there are some minor problems, developmental problems
    with the sighting system, for example, but these are not show-
    stoppers. These are problems that you have with new technology
    that we will overcome. I would characterize the program as not
    only being extremely important, but one of the programs that
    appears to be on track, and would recommend and appreciate your
    support.
        Senator Cochran. Thank you very much.
        General Jones. Thank you, sir.

                             MODERNIZATION PROGRAMS

        Senator Cochran. Admiral Clark, you mentioned the Navy's
    modernization programs. One of the events that occurred in our
    State was the repair of the U.S.S. Cole--I mentioned that in my
    opening statement. One need that was highlighted by that
    experience was the lack of an offloading facility for
    ammunition at that naval station. I am told that the
    requirement now is if you want to offload ammunition you have
    to go to Yorktown, Virginia. That is a 10-day round trip.
        Would it make sense for us to put a weapons loading wharf
    at Pascagoula to reduce time away from home port and also have
    a more efficient naval station at Pascagoula?
        Admiral Clark. Senator, I remember the days of U.S.S. Cole
    and tracking her across the ocean and watching her inch by inch
    on my chart, and the issue coming up of the ordnance issue.
    There is no doubt about it that it would be a lot more
    convenient if we had the capability to do that in Pascagoula.
        The discussions with the staff inform me that there are
    certification issues in Pascagoula that have to do with
    explosive arcs and so forth. That said, this is a capability
    that needs to be examined and see what those roadblocks might
    be and then evaluate, given the number of ships that we have in
    Pascagoula, the best way to meet this requirement from a cost
    effectiveness point of view.
        But fundamentally, if we had such a capability it certainly
    would be better.

                                MISSILE DEFENSE

        Senator Cochran. In the discussion of the challenges of the
    future, the Navy is involved in missile defense activities. You
    have the Navy Theater Wide Program. You also have had in recent
    days an announcement by one of your officers, Rear Admiral
    Remp, that the Navy could provide a boost phase missile defense
    system in about 1 year for less than $200 million, according to
    one news report. I do not know how accurate that report was.
        Could you tell us what you see as the capability of the
    Navy in terms of development and early deployment of missile
    defense systems?
        Admiral Clark. I would be happy to, Senator. Thank you for
    the question. In the first 11 months that I have been CNO, I
    have been looking at this program carefully, especially in
    light of the announcements made by the President and Secretary
    Rumsfeld about the investments that they intend to make in
    missile defense. My position on this has been that we need to
    prove the capability that we have been investing in.
        We have had wonderful support from the Congress in helping
    us try to extract the utility that is available in Aegis to
    give us a near-term capability. We are committed to the
    development of the area capability first and foremost, I think
    for very obvious reasons. I talked in my opening statement
    about what the defense reviews and the QDR is going to come
    down to.
        What are they going to say when this whole process is over?
    I am convinced, and not speaking for what the documents are
    going to say, the way I see the world, I see a world where for
    us to rely on host nation support for the future entails risk
    that we want to have a hedge against. That hedge comes from our
    ability to operate in the domains that I call the international
    space, that is the maritime zones and space itself.
        I cannot imagine any solution other than a very strong
    Navy-Marine Corps capability that will allow us, without being
    encumbered by sovereignty issues, will allow this Nation and
    the President of this Nation to have options to be able to put
    military capability, combat-credible capability, into points
    where we need to influence events.
        In order for us to be there--and as the threat develops, we
    are going to need the capability to defeat the kind of
    adversary with improved technology on the part of potential
    enemies. We are going to need area capability first.
        The second thing becomes clear, that if we cannot continue
    to develop--and this is a development issue; clearly we do not
    have it. But to take on boost issues, boost capability, with
    our existing systems and develop the capability and prove that
    we can hit the target. The boost part of it is not significant,
    and in an unclass hearing we probably should not go a lot
    further than this. But I believe that those two capabilities we
    should be investing in and see where that takes us.
        There are follow-on issues that, if you wanted to go to
    next level kinds of capabilities, you would need to make other
    kinds of investments and potentially could lead to different
    size and shape missiles and so forth. But the kind of
    capability I am talking about is extracting utility out of and
    investing in the advancements within the current system that we
    have and taking it as far as we can and as rapidly as we can.
        So for us that becomes theater-wide capability, but area
    first.
        Senator Cochran. The question of funding comes up with
    respect to the adequacy of the budget. I know the Air Force,
    for example, thought that it had such a major stake in airborne
    laser technology that it went on and put funds for the
    development of that program in its own budget. It was not
    funded through the Ballistic Missile Defense Organization
    (BMDO). Would the Navy be willing to or have you up to this
    point considered funding some of these activities through your
    own budget and not waiting for funding through BMDO?
        Admiral Clark. Well, Senator, I cannot answer this question
    for budgets past because I was not here. But I am on record as
    stating that--we are currently operating under seeking to
    achieve a force level and structure that was specified in the
    1997 QDR. I am on record as saying that I was somewhere in the
    neighborhood of $13 billion short a year in being able to
    sustain that force, with the issues that we have already raised
    with regard to recapitalization of our aircraft capability and
    ship capability.
        I am convinced that what we see here is that as the funding
    migrated to BMDO, with the other financial pressures that
    exist, it is seriously inhibiting our ability to recapitalize
    and modernize. It is very difficult to have BMDO funding this
    and then fund it out of Navy programs.
        I would then say that the 2002 deliberations, of course,
    are going on and I cannot speak to how that is going to come
    out. I am building, doing the groundwork for the building of
    the first budget that I will send forward as the CNO in the
    2003 Program Objective Memorandum (POM). It certainly is
    something that will be considered, given what happens, as the
    2002 budget proposal is sent forward. I can speculate about the
    importance of it, but I also have to be honest with you and
    direct and say, given the shortfalls that exist, it is
    difficult to do that while BMDO is funding investment in this
    area and then looking at the other shortfalls that I have
    addressed that are complicating that problem.
        Senator Cochran. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Inouye. Thank you.
        Senator Bond.

                                   READINESS

        Senator Bond. Thank you very much, Mr. Chairman. I am
    delighted to join you, Senator Stevens and others in welcoming
    Secretary England, a fellow Missourian General Jones, and the
    Admiral, who is a very fine graduate of one of our proud
    institutions, Evangel College in Springfield, Missouri.
        Gentlemen, I am very much concerned about the readiness
    status of our military and I would like to address a question
    first to General Jones and then to Admiral Clark. I understand
    that the current defense supplemental request addresses the
    most pressing readiness needs of the Marines and the Navy, and
    these are items that have to be done in order to avoid stopping
    operations in many areas.
        But I believe, and I would like to have you give me an idea
    of some of the additional unfunded requirements that you will
    be forced to address through reprogramming readiness and/or
    modernization funds for fiscal year 2001. What are your needs,
    General Jones?
        General Jones. Well, sir, what we actually received was an
    ability to cover our most pressing bills and our most
    unforeseen must-pay bills, primarily those bills which were
    externally driven, like increases to military pay and
    entitlements, health care, utilities, flying hours, and the
    like.
        There was also some force protection issues that had to be
    funded. Thus far, we have avoided, thus far avoided, curtailing
    operations by deferring doing what we normally do to pay for
    these requirements, and that is the maintenance of our
    infrastructure, to pay utility bills and the procurement of
    ground equipment in the event we were forced to absorb these
    bills.
        Basically, our shortfall, though, was about $27 million--
    $21 million in military personnel accounts and $6 million in
    operations and maintenance, for things like pay raises for our
    information technology civilian personnel, a reduction in
    Government of Japan burden-sharing, some collateral equipment,
    and this is really the range of the impact that we are going to
    have to figure out some reprogramming actions to cover those
    requirements to get us through 2001 with the hope and the
    expectation that we can remedy these problems in the first
    quarter of 2002, recognizing that it is a hope.
        Senator Bond. Those are not covered in the supplemental?
        General Jones. Correct.
        Senator Bond. Admiral Clark.
        Admiral Clark. My fundamental area is similar to General
    Jones'. The reprogramming request will address issues in
    manpower primarily. I mentioned in my opening statement that we
    are making progress in the war for people. I talked about the
    battle groups that are getting ready to deploy. The last two
    that we have deployed, Senator, are in better manning condition
    than any we have sent out of here in a dozen years. This is
    good news.
        In the process, I am retaining more people and our
    combination of recruiting and retaining is that we are slightly
    overexecuted. By that I mean that we have an end strength, but
    then you program what level of that end strength you are going
    to have on board at certain times in the year based upon past
    track history. We are doing better than that. So these are the
    areas that we need to fix with the programming actions.
        The other area that I would just address--and by the way,
    the manner in which this was sent forward was to address the
    areas that were absolutely critical and vital to us continuing
    operations for 2001 and push what things could be sent into
    2002, the plan is to push that forward in 2002. Of course, that
    is still, that is all being worked in the Office of the
    Secretary of Defense (OSD).
        But the other area that I would talk about is in the area
    of real property maintenance. I also mentioned that in my
    opening statement. This is the quality of life, quality of work
    thing. This is the easiest account to cut. It has always been
    this way. It has been this way since I have been in the Navy.
        I am concerned about this because we have to turn this
    around.

                                   F/A-18E/F

        Senator Bond. We are, too, and we look forward to working
    with the chairman to see what relief we can provide and how we
    can best provide it.
        Admiral Clark, I was disappointed to see the numbers of
    appropriated F/A-18E/F Super Hornets reduced in fiscal year
    2001. I understand you may also reduce the quantity provided in
    the 2002 budget. Based on the requirements to replace legacy
    carrier aircraft, I hope that you would reinstate the number of
    Super Hornets at the appropriate time in an effort to execute
    fully the approved multi-year agreement, in which the
    government gets the best buy, the best deal.
        What are the Navy's plans for executing the multi-year plan
    for the Super Hornet?
        Admiral Clark. Well, again the 2002 budget amendment is
    being worked, and let me just talk about what this CNO would
    like to see. Secretary England alluded to the fact that he
    would like to see JSF come on line quicker. Well, I want
    every--we need to maximize our investment in the aviation
    accounts. I see us in this--we have this balance that we are
    trying to work here. We have got to maintain the current
    readiness of our force because we are deployed and we are out
    on point, and on the other side we have got to try to modernize
    this force.
        Senator, this dichotomy is causing--and again, this force
    is 18 years old now on average. We have got to accelerate the
    retirement of these older aircraft that are costing so much to
    keep operating. I believe that the path out of that is to
    maximize our investment in the replacement accounts and to do
    that as rapidly as possible. So where I would like to be is
    that I want to be at the top end of that multi-year. We have to
    figure out how to get there. That is my objective. I want to be
    on the record that the way out of this is to accelerate our way
    out of it with the procurement of new aircraft that give us the
    reliability and maintainability that we need, so that we are
    not being eaten alive with spiraling operational support costs,
    which is about 15 percent a year over the last 4 years.
        Senator Bond. Keep that in your thoughts and prayers as you
    work on 2002.
        Admiral Clark. Yes, sir.
        Senator Bond. Thank you.
        Admiral Clark. Secretary England, did you want to comment
    on that?
        Mr. England. Senator, we will honor the multi-year and we
    will definitely buy sufficient quantities to maintain that
    multi-year in the F-18E/F program. So while we do not know
    specifically what that quantity will be next year, it will
    definitely be within the range that was negotiated to maintain
    that multi-year.

                                 PILOT TRAINING

        Senator Bond. Thank you, sir.
        A question maybe for Admiral Clark and maybe for the
    Secretary as well. Obviously, pilot training is an important
    part of supporting both the Navy and the Marine Corps
    operational readiness. I am hearing that the Navy is cutting
    back on the procurement of T-45 Goshawk training systems, which
    could have a direct impact. What are your plans for continuing
    to pursue the 234 T-45 aircraft that have been determined to be
    the optimal number to meet the operational pilot training rate?
        Admiral Clark. I have to go back and review the numbers for
    you, Senator. If you would like, I will submit the details on
    that for the record.
        Senator Bond. We would appreciate that.
        [The information follows:]

        The 234 T-45C aircraft total represents the number required
    to support the operational pilot training requirement until
    fiscal year 2035. The Navy completed a study in December 2000
    that analyzed options available to support the pilot training
    rate through fiscal year 2035. These options included continued
    procurement of T-45C aircraft, extension of the T-2 Buckeye
    beyond which was previously envisioned, and follow-on trainer
    aircraft new start research and development requirements. The
    Navy is now conducting a prioritized review of programs as part
    of its fiscal year 2003 budget submission process. A focal
    point of this process will be a review of options available to
    meet the pilot training requirement. Continued procurement of
    the T-45C Goshawk training system will be among those options
    reviewed.

        Admiral Clark. I would say the principle has been that--
    here we are again in this balance that I am talking about, and
    that we are going to buy those aircraft, but we are going to
    buy them at a rate at which we need to replace the existing
    inventory, and that is a tradeoff decision that will have to be
    examined again as we build our next budget.

                                 AV-8B HARRIER

        Senator Bond. One last question for General Jones and I
    will submit additional questions for the record. Mr. Chairman,
    I appreciate your indulgence.
        General, the AV-8B Harrier is the mainstay for the close
    air support for the Marines, and the requirement for conversion
    of older models to the all-weather night attack variants as I
    understand it remains a high priority. Has the requirement for
    additional conversions changed and can we conclude that the
    Marine Corps needs additional AV-8B's?
        General Jones. The Marine Corps's AV-8B program is one of
    the success stories of this past year, year and a half. A year
    and a half ago, I was extremely concerned with the reliability,
    maintainability, availability of parts, in fact the safety of
    the program. I would like to take the opportunity, Senator, to
    underscore the fact that Marine Corps aviation as a whole is
    experiencing its safest year in recorded history this year,
    knock on wood and hope it continues.
        One of the reasons for that is that the AV-8B has had a
    tremendous resurgence in capability, some of the program, the
    program that you just referred to, but a true story of success
    with partnership with industry and the operators on the flight
    line. As a result, our pilots are averaging more than
    approximately 20 hours of flying time on the AV-8B's. They are
    flying safely, they are excited about their airplane. They have
    confidence in it. It is a wonderful story and I am very
    grateful to the CNO for his blue dollar support, that is what
    we call it, to that very important program.
        With regard to the upgrades, the upgrades that we have in
    mind will allow the AV-8B to continue on into the future and to
    let us transition, which is our ultimate goal, to transition to
    the Joint Strike Fighter at an appropriate time. It is a very
    exciting program.
        Senator Bond. General, thank you very much. Thank you,
    gentlemen. We appreciate the opportunity to hear your very good
    information. Thank you.
        Thank you, Mr. Chairman.

                        FUTENMA MARINE CORPS AIR STATION

        Senator Inouye. Thank you.
        Mr. Secretary, if Okinawa is to remain the headquarters of
    the Third Marine Expeditionary Force, it would appear that our
    relationship with the Okinawan prefectural government must
    improve. An important part of this relationship is the future
    of the Futenma Marine Corps Air Station. Can you tell us what
    the status is at this time?
        Mr. England. Can I have General Jones address that, please.
        General Jones. Mr. Chairman, as you know, we have for some
    years been in negotiations with the Government of Japan on the
    future of our forces on the island of Okinawa. The facts are
    that over the years the southern half of the island has become
    very crowded and the space is available in the northern half of
    the island. As a result of a series of agreements called
    Special Action Committee on Okinawa (SACO) agreements, we have
    entered into an agreement that at a point in time the air base
    at Futenma would be returned to the host nation and the
    prefecture of Okinawa in return for building adequate
    facilities in the northern part and less inhabited part of the
    island.
        To date that is the sum and substance of the progress that
    has been made, simply that agreement. We stand by to honor that
    agreement at such time as the host nation desires to move ahead
    with the implementation phase.
        Senator Inouye. Is it not true, General, that we are
    prepared to move, but the Okinawan government and the Japanese
    government are still negotiating?
        General Jones. That is correct, sir. We find ourselves in
    the middle of intermurals many times between host nation
    issues, between a prefecture and the host, and their
    government. But I would like to say for the record that I know
    of no military community anywhere that works harder to be a
    good neighbor to the people that surround our bases and
    stations, not here in the United States and not anywhere in the
    world.
        The fact that every small incident--and they have not all
    been small--but every small incident is banner headlines by the
    small but vocal opposition to our presence on the island makes
    life there just a little bit more difficult for our commanders
    than anywhere else in the world. But I would also underscore to
    you that as a result of the support of the host nation that I
    consider that the totality of our bases in Japan, to include
    Iwakuni, Okinawa, and our base at Camp Fuji in Japan, to be the
    Marine Corps' finest bases from the quality of life, from a
    modernization standpoint, quality of work spaces. That is
    reflected in the high number of reenlistments and extensions
    and family stability and appreciation for life on the island.
        That is a remarkable transformation over what it was during
    my career, which started--my first visit to Okinawa was in 1967
    and I have been there at least once every 10 years. As
    Commandant, to be able to go back to the island and to see the
    people to people projects, the cultural exchanges, the
    educational projects that are vibrantly in force on the island,
    to see for the first time ever a recent poll that showed that a
    slim majority of the people on Okinawa actually favor a
    continued presence of U.S. forces, is very, very heartwarming
    and very I think great credit to our leaders and the Japanese
    leaders and the government on the island, to work together to
    try to achieve satisfactory outcome to this island that is very
    geostrategically important to our future and the peaceful
    future of the Asia Pacific Rim.
        Senator Inouye. General, I am certain you know that I was
    there last year, and I must join you in your conclusions, and
    in so doing would like to congratulate you and the Corps for
    the fine work you are doing there.
        General Jones. Thank you, sir.
        Senator Inouye. One of the conditions the prefectural
    government has articulated is that they would like the set a
    time limit of 15 years for the use of the Futenma replacement
    facility. Can you live with that?
        General Jones. Mr. Chairman, as you know, that is a matter
    that, as they say in the vernacular, is beyond my pay grade.
    This is a policy issue for our government and the Government of
    Japan, and I am in the execute mode when that decision is made.
    I would fall back on my statement that geostrategically our
    base on Okinawa and our bases in that part of the world,
    particularly with the emphasis that the current administration
    is putting on Asia Pacific in our future from the standpoint of
    our economy and our engagement strategy.
        If we did not stay there, we would certainly have to
    develop some sort of alternate basing at least in that region.
    I might just add parenthetically, even though I have said it
    earlier, that I think the future of our land bases as we know
    them today might look considerably different in 15 or 20 years.
    We need to constantly be engaged in not only developing our sea
    basing capabilities, but, who knows, perhaps other alternative
    bases in the region, including, inclusive of Okinawa, and maybe
    even our own bases which might be underutilized, for example,
    in Guam and places like that.

                               AMPHIBIOUS SEALIFT

        Senator Inouye. Admiral, if I may ask a question. Two-
    thirds of our Marine forces are in the Pacific area, one-third
    in the Atlantic area. Yet the amphibious sealift availability
    is just about 50-50. Can we not increase the sealift for the
    Marines to about two-thirds?
        Admiral Clark. As we have talked about on other occasions,
    Mr. Chairman, and I committed to you that I was the guy about
    challenging our assumptions and I intended to do that as we put
    our program together for the future, I owe you an answer on the
    question and the challenging of those assumptions.
        My work to date leaves me--I am at this point in this
    discussion, that the decisions on home porting in the past have
    been made relative to the peacetime deployment posture that we
    are in and that the larger proportion of the Marines in the
    Pacific are basically about the fly-away groups that fall in on
    the maritime preposition ships, and that changes the balance
    between the Atlantic and the Pacific.
        What I promised you as we go through the defense reviews
    and the QDR and as I build the program for the future is that I
    would analyze how and challenge every assumption about the way
    this decision has been made. We are in the process of doing
    that and I will report to you when I have those conclusions.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Inouye. Thank you very much, Admiral.
        Like my colleagues, I have several questions I would like
    to submit for your response, Mr. Secretary.
        Mr. England. Yes, sir.
        Senator Inouye. May I, on behalf of the committee, thank
    you and your extraordinary team for the great work you have
    done for our country.
        Mr. England. Thank you, sir.
        Senator Inouye. So once again we thank you for your
    testimony today.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                    Questions Submitted to Gordon R. England

                Questions Submitted by Senator Daniel K. Inouye

                      PRIOR YEAR SHIPBUILDING COST GROWTH

        Question. Secretary England, the fiscal year 2001 Supplemental
    Appropriations request includes $222 million for cost growth in the
    shipbuilding account. This is in addition to $500 million in transfer
    authority for increased shipbuilding costs that has already been used
    in fiscal year 2001. We are told that the bill for cost growth in
    fiscal year 2002 may be as high as $800 million. Mr. Secretary, we are
    very concerned that cost overruns in the shipbuilding accounts may be
    out of control. As a former businessman, what can you tell us about the
    cause of these cost overruns and do you have a plan to get them under
    control?
        Answer. The funding required to complete construction of ships
    currently under contract has increased significantly. SCN funding is
    already insufficient to finance current force structure requirements
    and prior year completion ``bills'' exacerbate the issue. Cost growth
    on ship construction contracts erodes the confidence of Congress in our
    estimating and budgeting process for future procurements. Many factors
    have contributed to the cost growth of current ships under contract,
    including: Low rate procurement of vendor material and Government
    Furnished Equipment; Configuration changes; Budget reductions/
    rescissions; Unanticipated challenges with the design and production of
    lead ships; and Inflation and fiscal constraints.
        All of these factors, but particularly fiscal constraints, cause
    the Department to budget procurement programs tightly. The consequences
    of these factors are that any cost growth or budget reduction causes
    immediate execution issues. During times of robust ship construction,
    the Ship Cost Adjustment (SCA) process would allow the Navy and
    Congress to finance programs which were experiencing difficulty with
    those that were performing well. Due to fiscal constraints, the SCA
    process is no longer viable and does not fund program execution
    shortfalls due to lack of assets.
        To prevent further increases to the prior year completion funding
    shortfall, the Department is pursuing the following corrective actions:
      --Remedy the systemic issues within our control and provide incentive
            for industry partners to do the same.
      --Ensure that estimating and budgetary processes better reflect cost
            risk of factors beyond our control, such as inflation.
        The Navy's amended fiscal year 2002 President's budget requests
    $800 million to address the near term issue. This prior year budget
    request only addresses funding required to execute the prior year
    programs during fiscal year 2002. The program execution consequences of
    receiving funding below the request are very serious and are not in the
    nation's interest.

                              JOINT STRIKE FIGHTER

        Question. Secretary England, on the matter of the Joint Strike
    Fighter, there have been press reports that a decision has been made to
    go forward with the program. Is this true?
        Answer. A formal decision regarding Joint Strike Fighter (JSF) has
    not been made. The JSF program is currently in the Concept
    Demonstration phase, with both Boeing and Lockheed Martin conducting
    flight demonstrations of their Concept Demonstration Aircraft. A
    Milestone II review will take place in the fall of 2001. Following a
    successful Milestone II review decision by the Department of Defense,
    the Engineering and Manufacturing Development contract will be awarded.
        Question. Is JSF affordable for the Navy with your other priorities
    of F-18E/F and the V-22 in Naval aviation?
        Answer. Joint Strike Fighter, F/A-18E/F, and V-22 support our long-
    term strategy to reduce the number of types and models of aircraft in
    the active inventory. We need an affordable multi-mission force that
    possesses improved mission flexibility, effectiveness, supportability,
    and mobility. Each of these aircraft replaces aging legacy aircraft and
    offers significantly improved supportability, cost of ownership and
    warfighting capability.

                                      V-22

        Question. Mr. Secretary, when will the decision be made about the
    long-term purchase plans for the V-22? Do you anticipate that much more
    R&D must be completed before we move to full rate production of the
    aircraft?
        Answer. Currently, the Department of Navy is reviewing the program
    to determine the way ahead for the V-22. The date for the V-22 full
    rate production decision will be based on successful completion of
    events as we proceed with the restructured development program. The
    Navy does intend to continue to procure the aircraft under low-rate
    initial production until a full rate production contract is awarded.
    The fiscal year 2002 President's Budget will reflect the costs of
    additional development.

                       COOPERATIVE ENGAGEMENT CAPABILITY

        Question. Secretary England, the Navy and the Marine Corps are both
    looking to improve their single integrated air picture but are
    currently looking at different systems to enable this, how in the new
    era of interoperability will this be overcome in joint operations?
        Answer. A disciplined systems engineering process is underway to
    develop and implement incremental and systemic improvements to command
    and control architectures of existing service weapon systems, enabling
    joint operations while evolving to a true Single Integrated Air Picture
    (SIAP). Navy efforts also are being coordinated with the Department of
    Defense SIAP System Engineer. A case in point is the Navy development
    of Cooperative Engagement Capability (CEC) which has been tested and
    demonstrated to provide a solid foundation for SIAP with ships,
    aircraft and land-based Marine Corps units. The Marine Corps has
    approved an Operational Requirements Document that includes a CEC
    capability, and has programmed funding to procure CEC systems.
    Additionally, the Marine Corps is adapting components of the Navy CEC
    system to land applications. Through the common use of CEC, the Navy
    and Marine Corps will have jointly taken a major step toward an
    integrated air picture. The long range engineering challenge is to
    provide a coherent tactical picture of the theater-wide battlespace for
    use by joint operating forces. It is expected that as CEC evolves,
    other joint systems may also be outfitted with CEC.
                                     ______

                  Questions Submitted by Senator Arlen Specter

        Question. The Washington Post recently reported on Secretary

    Rumsfeld's emphasis on more flexible, rapidly deployable forces. The
    FastShip project involves the use of Maritime Administration Title XI
    loan guarantees to finance the construction of four 38-knot, U.S.-flag,
    roll-on/roll-off, commercial cargo ships. Each of these ships is
    capable of transporting 300 helicopters to the Persian Gulf in less
    than 11 days and of carrying 10,000 tons of military cargo over about
    5,000 nautical miles at a speed of 36 knots without refueling. Would
    the availability of such a fast sealift vessel be consistent with
    Secretary Rumsfeld's new emphasis?
        Answer. The Navy has been following the progress of the FastShip
    project for several years. Several Navy-sponsored studies and analyses
    show that a FastShip vessel, when modified with appropriate National
    Defense Features, can become a very useful sealift asset. In this
    manner, a FastShip vessel which normally operates in commercial
    service, becomes an ``active'' Ready Reserve Force asset providing high
    speed sealift at a much lower cost than maintaining such a ship in the
    Navy's organic sealift fleet. It should be noted, however, that no
    funds have been requested in the Navy's fiscal year 2002 budget
    submission because the FastShip or other comparable projects have not
    yet progressed beyond the project stage.
        Question. In 2002 the contract to host the Army-Navy football game
    will be renegotiated for the following 10 years. Philadelphia is the
    traditional home for this great contest and is centrally located
    between the two academies with superior transportation infrastructure,
    hotel accommodations, tourist attractions and a new football stadium
    under construction. Who will make the decision and what criteria will
    be used to award the contract?
        Answer. Contract decisions regarding future hosting of Army-Navy
    football games beyond 2003 will be made jointly by the Superintendents
    of the Naval Academy and Military Academy. A Request for Proposal (RFP)
    is being prepared by the Directors of Athletics of the two academies to
    be submitted to both Superintendents for final approval. The RFP will
    be sent to all interested cities/stadiums for their review and
    potential bid. The RFP will include a request for all details
    surrounding the game. It is intended that the RFP will be distributed
    to potential bidders by early 2002, with final contract decisions to be
    made by the end of 2002.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

        Question. Last week I noticed that Secretary Rumsfeld's review
    panel on the transformation of conventional forces recommend
    accelerating the Navy JSF program by two or three years in order to add
    radar-evading stealth capabilities to our carrier decks.
        What is your opinion on accelerating the Navy's JSF production and
    how would this affect the current FA-18E/F requirement and numbers?
        Answer. The Secretary of Defense is currently conducting a
    comprehensive strategic review of the Department's near and long-term
    requirements. The results from that review will be incorporated into
    the Quadrennial Defense Review to provide the appropriate
    prioritization of our programs to meet those requirements. The Joint
    Strike Fighter (JSF) is an affordable and critical element of the
    Navy's total force modernization plan. JSF is the first step in the
    direction to develop airframes that could be used more commonly by each
    of the services. The carrier variant promises both stealth and standoff
    precision-guided weapon technology that will complement the F/A-18E/F
    Super Hornet.
        Accelerating the pace of Naval Aviation modernization is one of the
    most challenging issues facing Navy leadership today. Initial
    procurement of the Navy's JSF variant could be accelerated two years,
    from fiscal year 2008 to fiscal year 2006, concurrent with initial
    procurement of Air Force and Marine Corps variants. Additional
    programmatic risk would be minimal, but availability of funding earlier
    would be a major consideration. Accelerating initial JSF procurement to
    earlier than fiscal year 2006 would increase concurrency and program
    risk. Earlier procurement of the Navy JSF means that the Navy would
    have to spend less on F/A-18C/D center barrel replacements and could
    retire that legacy platform sooner.
        In the interim, the Navy must ensure its current force is ready for
    combat. Based on the Program of Record, F/A-18E/F requirements and
    numbers would not change.
        Question. The other service Secretaries have encouraged the
    Congress to authorize another round of BRAC. Does the Navy and Marine
    Corps support another round of BRAC? Has the Navy realized any cost
    savings from the last rounds of BRAC?
        Answer. I fully support the Secretary of Defense's efforts to
    prepare a proposal for additional rounds of BRAC. Infrastructure is one
    of the key components in the Quadrennial Defense Review now underway. I
    expect the review to lead to an overall defense strategy, the requisite
    force structure to meet that strategy, and an appropriately sized
    infrastructure to support that force structure. The savings realized
    would assist Navy in properly resourcing for readiness at sea and
    properly maintaining the enduring infrastructure.
        The Department of the Navy has achieved significant cost savings
    from the four previous rounds of BRAC. The 1998 Report of the
    Department of Defense on Base Realignment and Closure estimated net OSD
    savings during BRAC implementation at approximately $14 billion through
    2001 and recurring savings at $5.6 billion annually thereafter. Navy's
    share for net implementation and recurring savings is $5.8 billion and
    $2.6 billion respectively. OSD projects that the proposed Efficient
    Facilities Initiative will save an additional $3.0 billion annually.
        I would also add a word of caution.
        While BRAC savings can be substantial, it can take one to four
    years before the savings and cost avoidance are realized. BRAC is one
    of many initiatives that will produce savings essential to enhancing
    our maritime readiness.
        Question. I am very concerned about the aging infrastructure of our
    military posts. What is the shortfall of your Sustainment, Restoration
    and Modernization (SRM) account for the Navy? Does the proposed
    supplemental budget from DOD address those shortfalls adequately?
        Answer. In developing future Program Objective Memorandums, we will
    address our facilities requirements in terms of Sustainment,
    Restoration, and Modernization as defined by the Department of
    Defense's Facility Sustainment Model. Through fiscal year 2002, we have
    used the maintenance backlog and asset preservation index (API) to
    define these requirements. The Facility Sustainment Model will help us
    better define a total facility investment strategy, via an asset
    preservation strategy.
        We need $136.6 million to arrest the growth of our critical
    maintenance backlog and increase our API to comparable industry
    standards in fiscal year 2001.
        The proposed fiscal year 2001 supplemental appropriation was not
    intended to address shortfalls in the Sustainment, Restoration, and
    Modernization accounts.
        Question. Admiral, the successes of several important Navy programs
    are too often overlooked when ballistic missile defenses are debated.
        Would you update us on the success of the Navy's theater missile
    defense programs?
        Answer. The Navy has two programs engaged in Missile Defense: Navy
    Area Theater Ballistic Missile Defense (TBMD) and Navy Theater Wide
    Ballistic Missile Defense.
        Recent successes in the Navy Area TBMD Program include:
      --Completed in-depth aero-thermal survivability program (wind tunnel,
            shock tunnel, and sled testing) to verify survivability of
            Block IVA infrared sapphire dome in April 2001.
      --Executed procurement of long-lead material to support SM-2 Block
            IVA low rate initial production in December 2000.
      --Completed ground-based live-fire test and evaluation phase in
            November 2000.
      --Began land-based flight-testing, successfully completing two
            controlled test vehicle flight tests at White Sands Missile
            Range in June and August 2000.
        Recent successes achieved in the Navy Theater Wide Ballistic
    Missile Defense program include:
      --Conducted high-range resolution and captive carry test bed work in
            March 2001 as part of the Theater Critical Measurements
            Program.
      --Demonstrated ballistic missile warning, battle management, and
            command, control and communications capabilities during Quick
            Reaction Launch Vehicle mission in March 2001.
      --Conducted the first ``full-up'' test of the Solid Divert Attitude
            Control System (SDACS) in February 2001.
      --Demonstrated third stage guidance, nosecone separation, kinetic
            warhead (KW) seeker separation, and KW ejection during the SM-3
            Aegis Leap Intercept flight test launched from U.S.S. LAKE ERIE
            (CG-70) in January 2001.
      --Completed the SDACS Engineering Evaluation in December 2000.
                                     ______

                 Questions Submitted to Admiral Vernon E. Clark

                Questions Submitted by Senator Daniel K. Inouye

                          DD-21 LAND ATTACK DESTROYER

        Question. Admiral Clark, the DD-21 has been billed as the ship of
    the future for the Navy. We understand that the contract award for the
    ship has been delayed as we await Secretary Rumsfeld's review and the
    Quadrennial Defense Review (QDR) for answers.
        Can you tell us, has a decision on the future of the DD-21 been
    made?
        Answer. Although no formal decision has been made on the future of
    the DD-21 program, the Navy remains committed to the requirements
    associated with this ship and the objectives of this program.
        Question. Are you looking at other options?
        Answer. While the objectives of the DD-21 program remain valid, the
    Navy thinks it prudent to afford itself an opportunity to consider if a
    change in program strategy is warranted based upon the outcome of the
    respective defense strategy studies.
        Question. Do you see a role in missile defense for the DD-21?
        Answer. The Land Attack Destroyer (DD-21) Operational Requirements
    Document does not mandate a missile defense requirement for DD-21, and
    as such, DD-21 is not being designed for missile defense.
        Missile defense is a transition technology that would be supported
    by the DD-21 hull form and could be incorporated into a follow-on DD-21
    flight or a future CG-21 class ship.
        Question. Admiral Clark, does delaying DD-21 affect other
    shipbuilding programs?
        Answer. The decision to hold completion of DD-21 source selection
    in abeyance pending the results of the defense strategy studies does
    not affect other shipbuilding programs.

                       COOPERATIVE ENGAGEMENT CAPABILITY

        Question. Admiral Clark, the Cooperative Engagement Capability
    (CEC) is a much anticipated program that promises increased situational
    awareness and better ship self-defense. However, as CEC finally enters
    into production, the technology is 15 years-old. Is there any effort
    within the Navy to take a ``fresh'' look at the program to ensure we
    are buying the most capable and cost-effective system?
        Answer. Cooperative Engagement Capability (CEC), as a sensor
    network with integrated fire control, has capabilities beyond ship self
    defense. It promises enhancements to all major air and missile defense
    systems.
        Although conceived 15 years ago, the technology of the CEC system,
    which recently completed Operational Evaluation, is essentially state
    of the art. The hardware has undergone several significant evolutions
    since the first experimental systems were tested. The shipboard AN/USG-
    1, which underwent operational testing at sea in 1994, weighed nearly
    10,000 lbs. The current AN/USG-2 shipboard system weighs less than
    3,000 lbs. including support equipment, while the AN/USG-3 aircraft
    version is less than 700 lbs. Through the use of open architecture and
    commercial off the shelf equipment, the system processors have been
    improved steadily from the Motorola 68040 seven years ago to the
    PowerPC RISC processor today. As with any warfighting system,
    initiatives are ongoing to improve and expand CEC capabilities, and to
    reduce the procurement and maintenance costs. Following are key efforts
    in progress or being considered:
      --Development of a Low Cost Planar Array (LCPA) antenna. The LCPA is
            a 4 sided, flat faced array which will reduce antenna cost and
            improve reliability. It will also enable several classes of
            ships to operate with one antenna vice two for full 360 degree
            coverage.
      --Development of an enhanced communications capability for an
            increased number of network nodes.
      --Development of a next generation CEC for further reductions in size
            and weight with potential new architecture changes.

                      AMPHIBIOUS SHIP STATIONING AND LIFT

        Question. Admiral Clark, Naval amphibious shipping seems to be
    nearly evenly divided between the Atlantic and Pacific fleet, although
    both the First and Third Marine Expeditionary Forces are focused on the
    Pacific and Asia. Why is there not a stronger commitment to amphibious
    sealift in the Pacific fleet?
        Answer. The Navy's 38 amphibious ships are distributed to support
    the Unified Commanders' forward presence/peacetime engagement
    amphibious lift requirements, as well as the response times for a Major
    Theater War (MTW). Although shifting additional amphibious ships to the
    Pacific may enhance that theater's lift capability, it would severely
    impact support and response times to the Atlantic, Mediterranean, and
    Caribbean theaters.
        The Department of the Navy has a validated requirement for 3.0
    Marine Expeditionary Brigades amphibious lift. The Marine Expeditionary
    Brigade (MEB) is the smallest unit capable of forcible entry.
    Currently, our active available amphibious lift is limited to 2.1,
    respective to a fiscally constrained 2.5 MEB lift goal.
        The Amphibious Ready Group (ARG) with an embarked Marine
    Expeditionary Unit (MEU) is the cornerstone for the forward presence/
    peacetime engagement mission. The MEU is also the leading element of an
    Amphibious Task Force (ATF) embarked with a MEB. The MEU, MEB, and
    contingency ATFs are drawn from any one of, or a combination of the
    three Marine Expeditionary Forces (MEFs) located at Camp Lejeune, North
    Carolina (II MEF), Camp Pendleton, California (I MEF) and Okinawa,
    Japan (III MEF).
        The forward positioning of III MEF and amphibious forces in Japan,
    with follow-on forces deploying from San Diego, enables the Navy-Marine
    Corps team to meet the Pacific MTW requirements. Third Marine Regiment,
    the infantry regiment stationed on Hawaii, is a major subordinate
    element of Third Marine Division located on Okinawa. In time of crisis,
    this regiment will deploy to Okinawa by strategic air to link up with
    their Division.
        Accordingly, to meet the Unified Commanders' forward presence/
    peacetime engagement amphibious lift requirements, as well as the DPG
    response times for a MTW, the Navy homeports Amphibious Ships in
    Norfolk, VA (17 ships), San Diego, CA (16 ships) and Sasebo, Japan (4
    ships). The Navy also maintains several amphibious ships in a reduced
    operating status in Hawaii, California, and Virginia.

                           NAVY SURFACE FIRE SUPPORT

        Question. There is concern that the Navy seems to be backing away
    from their Navy Surface Fire Support (NSFS) commitment. Although the
    Cruiser Conversion Program (CCP) has remained intact, of the 22
    cruisers in the original Program of Record scheduled to be back-fit
    with land attack 5 inch 62 tubes, only 9 of these cruisers are
    currently scheduled to receive them.
        Is the Navy backing away from the littorals and NSFS?
        Answer. No, the Navy is not backing away from the littorals or Navy
    Surface Fire Support (NSFS). Quite the opposite is true. Our
    cornerstone documents for Naval Operations, From the Sea and Forward .
    . . From the Sea, reflect Navy's intention to operate in the littorals.
    Development of NSFS systems are key to our ability to shape the
    littoral battle space and win.
        Question. What alternatives does the Navy have to satisfy Marine
    Corps NSFS requirements if the DD-21 does not prove viable?
        Answer. The Navy established a two-phased approach to satisfy the
    Marine Corps' Navy Surface Fire Support (NSFS) requirements. In the
    near-term, we are developing systems for installation on our Aegis-
    equipped destroyers and cruisers. These systems include the Extended
    Range Guided Munition, 5 inch/62 Mk 45 Mod 4 Gun, Land Attack Standard
    Missile, Naval Fires Control System, and Naval Fires Network.
    Collectively, these systems significantly improve the range, accuracy,
    and responsiveness of NSFS. In the far-term, we are developing the
    Advanced Gun System, Long Range Land Attack Projectile, and Advanced
    Land Attack Missile for DD-21. The systems improve even further our
    NSFS capability beyond our near-term efforts. These systems are only
    part of what makes the DD-21 a viable platform for the 21st century and
    fully answer Marine Corps' NSFS requirements.
                                     ______

               Questions Submitted by Senator Christopher S. Bond

                              DEFENSE SUPPLEMENTAL

        Question. We understand the current defense supplemental request
    addresses the Navy and Marine Corps most pressing readiness needs. What
    are some additional unfunded requirements that you will be forced to
    address through reprogramming readiness and/or modernization funds for
    fiscal year 2001?
        Answer. In addition to the urgent needs being addressed in the
    fiscal year 2001 budget supplemental now before Congress that are
    beyond the Navy's ability to fund internally, we have submitted to the
    Secretary of Defense a reprogramming request involving approximately
    $286 million to address critical shortfalls based on unforeseen
    requirements. Over 70 percent of the reprogramming request is for
    military compensation associated with improved recruiting and
    retention. The remainder of the unfunded requirements address support
    to operating forces, information technology needs, cost overruns
    related to closure of the Conventional Ammunition Working Capital Fund,
    and urgent engineering and manufacturing associated with aviation
    systems.
        As proposed, almost all of the funds will use procurement accounts
    as a source and will come from lower priority line items. Aircraft
    Procurement, Navy will provide over 60 percent of the funding due to
    delays and cost growth in the SH-60R that makes fiscal year 2001
    production not executable.

                                   F/A-18E/F

        Question. I was disappointed to see the numbers of appropriated F/
    A-18E/F super hornets reduced in fiscal year 2001, and I understand you
    may also reduce the quantity in your fiscal year 2002 budget. Based on
    the requirements to replace legacy carrier aircraft, I hope that you
    would reinstate the numbers of super hornets at the appropriate time in
    an effort to fully execute the approved multi-year agreement.
        What are the Navy's plans for executing the approved multi-year
    plan for the Superhornet?
        Answer. The Navy has a requirement for 548 F/A-18E/F aircraft. Last
    year the Navy entered into a multi-year contract for the production of
    222 aircraft through fiscal year 2004. This contract provided
    flexibility to increase or decrease aircraft quantity (+/-6 aircraft)
    in fiscal year 2001 through fiscal year 2004 to meet emergent
    requirements. Unfortunately, current economic price adjustments and
    other unforeseen costs required the Navy to decrease procurement by
    three aircraft in fiscal year 2001.
        In the fiscal year 2002 amended budget, the Navy has increased F/A-
    18E/F procurement by three aircraft from 45 to 48.

                                      T-45

        Question. Pilot training is an important part of supporting both
    Navy and Marine Corps operational readiness. Indications are that the
    Navy is cutting back on the procurement of the T-45 Goshawk training
    systems, which will have a direct impact upon pilot training.
        What are your plans for continuing to pursue the 234 T-45 aircraft
    that have been determined to be the optimal number to meet the
    operational pilot training rate?
        Answer. The 234 T-45C aircraft total represents the number required
    to support the operational pilot training requirement until fiscal year
    2035. The Navy completed a study in December 2000 that analyzed options
    available to support the pilot training rate through fiscal year 2035.
    These options included continued procurement of T-45C aircraft,
    extension of the T-2 Buckeye beyond which was previously envisioned,
    and follow-on trainer aircraft new start research and development
    requirements. The Navy is now conducting a prioritized review of
    programs as part of its fiscal year 2003 budget submission process. A
    focal point of this process will be a review of options available to
    meet the pilot training requirement. Continued procurement of the T-45C
    Goshawk training system will be among those options reviewed.

                                     AV-8B

        Question. The AV-8B Harrier is the mainstay for Marine close air
    support. The requirement for the conversion of older models to the all-
    weather night attack variants remains a high priority as explained to
    Congress.
        Has the requirement for additional conversions changed?
        Answer. No.
        Question. Can we conclude that the Marine Corps needs additional
    AV-8Bs?
        Answer. Yes. The current program will deliver the final
    Remanufactured Radar/Night Attack Harrier in June 2003. At the end of
    the current program there will be 14 less aircraft than required to
    meet operational and training requirements. The Marine Corps has a
    requirement for 14 additional remanufactured Harriers. This requirement
    does not account for attrition.

                                    F/A-18 G

        Question. The DOD is currently conducting an airborne electronic
    attack analysis of alternatives (AOA) study. My understanding is that
    the purpose of the AOA is to determine the best platform or systems to
    take over the electronic attack mission--a mission currently conducted
    by the Navy and Marine Corps EA-6B Prowler. I also understand that the
    services need to begin replacing the Prowler no later than 2010 due to
    the advanced age and heavy operating tempo of these aircraft.
        Upon completion of the AOA does the Navy have plans to conduct a
    risk reduction effort prior to commencing a new development program?
        Answer. The Navy currently has an EA-6B weapons system upgrade
    program called Improved Capabilities Three (ICAP III) which will
    achieve initial operational capability in early fiscal year 2005 and
    will keep the EA-6B relevant until its planned retirement date in
    fiscal year 2015. The ICAP III capabilities are the baseline for the
    ongoing Analysis of Alternatives (AoA) and will serve as a significant
    risk reduction tool as those capabilities are incorporated into a
    follow-on platform. The majority of the platforms being considered to
    host this electronic attack weapon system already exist or are in
    development with a significant amount of risk reduction inherent in
    each program. The combination of knowledge from the ICAP III system and
    selected host platform will enable the abbreviation of risk reduction
    requirements and rapid progression to the Electronic Attack Follow-on
    Program.
        Question. Is there funding in place to support such an effort?
        Answer. Funding requirements are being considered as part of fiscal
    year 2003 Program Review and Program Objective Memorandum build for
    fiscal year 2004.
        Question. What specific tasks are important to the Navy in reducing
    the risk of a follow-on system?
        Answer. Tasks important in reducing the risk of a follow-on system
    include:
      --Integration of a high power jamming system with existing host
            platform systems (flight controls, avionics, navigation,
            communication and weapons),
      --Electromagnetic interference,
      --Quantifying and understanding the shielding and blanking
            requirements of system-to-platform integration, and
      --Dynamic flight envelope exploration of the system/platform
            combination.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                                TRAINING RANGES

        Question. I understand the Navy is looking at different options to
    replace the Vieques training range; however, I am concerned about the
    quality of training our deploying units will be able to conduct until a
    new site is found. During the next two years, will the Navy and Marine
    Corps be able to conduct the full range of training exercises required
    at Vieques to send our personnel in harm's way? What other ranges are
    being used to make up for the limitations placed on Vieques operations?
        Answer. Over the next two years, Atlantic Fleet's naval forces
    intend to use Vieques as we are today. When Vieques is unavailable,
    Atlantic Fleet's naval forces conduct limited live fire training at
    other ranges; however, the training opportunities are less than optimal
    for completing invaluable integrated battle group training. For
    example, air-to-ground bombing with live ordnance can be conducted at
    Eglin and Pinecastle ranges in Florida, but those ranges cannot support
    combined arms exercises from the sea. They also have altitude and
    maneuvering restrictions that result in diminished realism. Amphibious
    operations and ground maneuvers can be conducted at Camp Lejuene and
    Onslow Bay, but those locations cannot support Naval Surface Fire
    Support or combined Naval Force exercises across the full range of
    mission areas.

                                      T-45

        Question. I read a study the Navy completed last November
    concerning Training aircraft requirements. It showed that there was a
    shortfall in T-45 training aircraft and recommended continuing to build
    the T-45C and upgrading the older T-45's to the glass cockpit
    configuration.
        What are the Navy's intentions concerning T-45 production and
    upgrades? Is the age of the T-2 negatively affecting its readiness and
    quality of student training?
        Answer. The Navy completed a strike training aircraft requirement
    study in November 2000 that analyzed options available to meet the
    strike pilot training requirement through fiscal year 2035. Options the
    study analyzed included: continued procurement of T-45C aircraft,
    extension of the T-2 Buckeye beyond which was previously envisioned,
    and follow-on trainer aircraft new start research and development
    requirements. The training aircraft study will be used as a planning
    tool for Navy's future budget submission process. Continued T-45C
    procurement and the upgrade of the T-45A analog cockpit to the T-45C
    digital configuration will be reviewed during future budget process.
        The age of the T-2 is currently not affecting the readiness or
    quality of student training. The T-2 continues to meet aircraft ready-
    for-training goals. As with many aging systems, T-2C parts obsolescence
    and supportability for out of production items will become increasingly
    difficult in the future. The Navy will continue to assess this and
    review all factors to continue to meet the strike pilot training
    requirement. The quality of pilot training is not being affected, nor
    will it be compromised. Navy continues to produce the finest Naval
    Aviators in the world at both NAS Kingsville, Texas where student
    pilots fly the T-45A and in NAS Meridian, Mississippi where students
    fly both the T-2C and the T-45C.
        Since Texas is the Headquarters for Naval Mine Warfare, I take
    special interest in ensuring that this often overlooked fleet obtains
    the resources it requires.
        Question. What is the plan to replace the U.S.S. INCHON?
        Answer. U.S.S. INCHON is approaching the end of its service life.
    The Navy plans to decommission INCHON around 2005, however the exact
    plan will be reviewed as a part of the Program Review for 2003. In
    order to understand all options, a study to determine the approximate
    cost of extending U.S.S. INCHON's service life is underway, and should
    be completed in December of 2001.
        Another study to evaluate the particular future requirement for a
    follow-on MCS ship is being done. This study, to be completed in the
    fall, will identify both requirements and options for replacing U.S.S.
    INCHON.
        Question. Do you anticipate changes to the Mine Sweeper basing/
    deployment plan?
        Answer. No changes to the Navy's Mine Sweeper basing/deployment
    plans are anticipated.

                                   RETENTION

        Question. I'm happy that the Navy appears to be meeting its
    recruiting goals, however, I understand that Non Commissioned Officer
    (NCO) retention remains a concern.
        What is the Navy doing to retain these experienced technicians and
    managers? What is the current retention status of Aviation and SEAL
    junior officers?
        Answer. The Navy has developed long-range reenlistment goals that
    reflect our vision to mold the force profile to support and sustain a
    75.5 percent top six pay grade Enlisted Program Authorization (EPA)
    requirement which reflects anticipated manpower needs based on future
    technology and weapons platforms.

                                            NAVY ENLISTED REENLISTMENT RATES
                                                      [In percent]
    ----------------------------------------------------------------------------------------------------------------
                                                                           Zone A (<6    Zone B (6-10  Zone C (10-14
                               FYTD (Oct-May)                                years)         years)         years)
    ----------------------------------------------------------------------------------------------------------------
    Fiscal year 1999...................................................           47.1           60.4           83.1
    Fiscal year 2000...................................................           51.3           62.6           83.2
    Fiscal year 2001...................................................           59.6           67.6           84.2
    Long-range Goal....................................................           57             69             89
    ----------------------------------------------------------------------------------------------------------------

        While shy of long-range goals, fiscal year 2001 reenlistment rates
    for mid-career (Zone B) and career (Zone C) non-commissioned officers
    (NCOs) have shown steady improvement over the same time period in the
    past two years. To combat aggregate enlisted personnel shortfalls, and
    as a long-term solution, we have focused significant retention efforts
    on Sailors in Zone A, resulting in significant improvement in Zone A
    reenlistments. To counter specific skill shortfalls, we maintain a
    robust Selective Reenlistment Bonus (SRB) program that has helped
    retain Sailors with high demand skills in the near term.
        Ultimately, as we continue building on enlisted retention successes
    of the last two years, we must increase the number of mid-career and
    career NCO reenlistments for third (and subsequent) tours.
        SEAL officers are being retained at 60 percent against a
    requirement of 74 percent. Enactment and implementation of Special
    Warfare Officer Continuation Pay, as well as other compensation
    enhancements in the National Defense Authorization Acts of the past two
    years, coupled with Navy Special Warfare and Navy-wide quality of
    service initiatives have had a positive impact on SEAL retention
    efforts.
        Through the third quarter of fiscal year 2001, aggregate aviator
    retention is at 38 percent against a requirement of 42 percent. The
    fiscal year 2001 aviation bonus program has contributed significantly
    to maintaining retention rates above the all time low of 31 percent
    experienced in fiscal year 1999.
                                     ______

                 Questions Submitted to General James L. Jones

                Questions Submitted by Senator Daniel K. Inouye

                              JOINT STRIKE FIGHTER

        Question. General Jones, would you comment on the importance of the
    JSF to the Marine Corps?
        Answer. The Joint Strike Fighter is the future of Marine Corps
    TACAIR. As this nation's premier expeditionary force, the Marine Corps
    routinely depends on its tactical air forces to contribute a
    significant portion of the firepower needed to succeed on the modern
    battlefield. JSF, with its combination of lethality, stealth, and
    operational flexibility offers exactly what the Marine Air Ground Task
    Force (MAGTF) Commander needs. By the time JSF arrives in 2010, the
    need will have become critical. Over the next decade, the Corps' fleet
    of F/A-18's and AV-8's will approach or exceed the end of their service
    life while cost of ownership will increase dramatically and issues of
    operational obsolescence will emerge in the face of ever more lethal
    threats. Keeping JSF on track is key to maintaining the Marine Corps'
    well-deserved credential as the CINC's joint warfighting force of
    choice.

                                      V-22

        Question. General Jones, the recent--and tragic--problems that have
    occurred in the V-22 programs may have undermined confidence in the
    aircraft. Will you describe for us the path ahead for the V-22 program
    that will rebuild confidence in the aircraft and solve these problems?
        Answer. Currently the V-22 Program is being restructured based upon
    recommendations from the Panel to Review the V-22 Program and
    acquisition leadership. The planned ``Way Ahead'' for the V-22 is a
    safe, conservative, event driven plan. Naval Air Systems Command is
    detailing this conservative path to return to flight. It is predicated
    on corrections of known deficiencies supported by an independent
    technical assessment of designs and processes to minimize additional
    unknowns. The redesigns will be fully assessed by Developmental Test
    followed by an Operational suitability assessment.
        The return to full flight operations and the plan to restore
    confidence in the V-22 is based upon the following five phases:
        Phase 0.--Commence Technical Assessment and Complete Rigorous
    Flight Readiness Review.
        Phase 1.--Resume Testing with EMD (MV and CV) Aircraft--Augment
    with LRIP Aircraft as Necessary.
        Phase 2.--Resume VMMT 204 Training Operations and Production
    Acceptance Flights.
        Phase 3.--Stand-up MV-22 Fleet Squadron/CV-22 Training Squadron at
    Kirtland AFB.
        Phase 4.--Deploy First MV-22 Squadron/CV-22 Operational Employment.
        We fully expect this will allow the Marine Corps to field a safe,
    reliable combat assault aircraft for the 21st Century battlefield.
        Question. General Jones, are you satisfied that the supplemental
    request for more R&D funds for this program is sufficient?
        Answer. The Marine Corps fully supports the V-22 restructure plan
    as submitted by OSD in the fiscal year 2001 Supplemental Request. The
    additional $80 million of RDTEN provided by this plan is considered
    sufficient to execute the ``way ahead'' initiatives for the remainder
    of this fiscal year and begin work on 2 CV-22 aircraft to meet SOCOM's
    requirements.

                      AMPHIBIOUS SHIP STATIONING AND LIFT

        Question. General Jones, does the Marine Corps require additional
    amphibious shipping in general, and specifically in the Pacific
    theater?
        Answer. Naval amphibious ships combined with embarked Marines
    provide forward presence and flexible crisis response forces for
    employment in support of foreign policy objectives. These forces
    provide the most formidable amphibious forcible entry capability in the
    world. Amphibious lift requirements are formulated to support the
    national military strategy, satisfy combat surge requirements, and can
    also be tailored to meet real world day-to-day commitments.
        The warfighting requirement, the capability the Marine Corps
    strives to provide to our nation, remains at 3.0 Marine Expeditionary
    Brigade Assault Echelons and equates to 14 Amphibious Ready Groups. The
    requirement for an amphibious force structure plan that supports lift
    for 3.0 Marine Expeditionary Brigade Assault Echelons, as stated in the
    Department of the Navy's 1990 Integrated Amphibious Operations and USMC
    Air Support Requirements Study, the 1992 Mobility Requirements Study,
    and reemphasized in Congressional testimony and the Secretary of
    Defense's 26 June 2000 Report On Naval Vessel Force Structure
    Requirements, remains a priority requirement.
        Fiscal constraints, however, have limited amphibious lift to a
    programmatic goal of 2.5 Marine Expeditionary Brigade Assault Echelons
    that equates to 12 Amphibious Ready Groups. This capability will be
    achieved with active amphibious ship force structure upon delivery of
    the twelfth LPD 17 class ship. In the meantime, maintaining LKAs and
    LSTs in a reduced operating status called the Amphibious Lift
    Enhancement Plan is a temporary fix meant to fill the gap between
    today's shortfall and the delivery of the LPD 17 ship class. The
    shortfall in active amphibious ships remains an area of concern.
    Important to note is that the U.S. Navy is responsible for determining
    the homeport of amphibious ships.

                           NAVY SURFACE FIRE SUPPORT

        Question. Are you satisfied with the current Navy Surface Fire
    Support (NSFS) capability? Are you satisfied with the Navy interim
    plan, with regard to NSFS capabilities, of 9 cruisers and 27
    destroyers? What impact would the cancellation of the DD-21 have on the
    viability of the Marine Corps to execute its Expeditionary Maneuver
    Warfare Concepts?
        Answer. As the Navy/Marine Corps team continues to field our 21st
    century expeditionary warfare capability, we re-affirm the critical
    role of naval surface fires in the success of Expeditionary Maneuver
    Warfare. It is important that we deploy a full spectrum of responsive,
    lethal, and accurate naval weapon systems to complement the flexible
    warfighting capability of our maneuver forces.
        The Marine Corps has in the past, and continues today to support
    the Navy's two-phased land attack weapons development approach for
    meeting near- and far-term naval fires requirements for supporting
    expeditionary operations. Near-term programs such as the 5 inch/62 gun,
    Extended Range Guided Munitions and the Land Attack Standard Missile
    will provide an enhanced naval surface fire support capability, but
    will not meet all of the range and lethality requirements for
    supporting the Marine Air Ground Task Force in expeditionary
    operations. In the far-term, the 155 mm Advanced Gun System, with a
    family of precision-guided and ballistic ammunition, and the Advanced
    Land Attack Missile, with a family of general use and specialty
    warheads, will meet these requirements. Both the Advanced Gun System
    and the Advanced Land Attack Missile are systems designed for the DD-21
    class of ships.
        The capabilities provided by the DD-21 and its associated systems
    remain vital to realizing the full potential of Expeditionary Maneuver
    Warfare and the conduct of expeditionary operations and sustained
    operations ashore in a fluid, non-linear battle space.
                                     ______

                  Questions Submitted by Senator Thad Cochran

        Question. General Jones, I have been briefed that during the 1999
    incident in East Timor the 3rd Marine Expeditionary Force did not have
    sufficient amphibious assault lift capability to rapidly deploy from
    Okinawa, Japan to Darwin, Australia. Do you have any concerns with the
    existing strategic lift capability?
        Answer. Naval amphibious ships combined with embarked Marines
    provide forward presence and flexible crisis response forces for
    employment in support of foreign policy objectives. These forces
    provide the most formidable amphibious forcible entry capability in the
    world. Amphibious lift requirements are formulated to support the
    national military strategy, satisfy combat surge requirements, and can
    also be tailored to meet real world day-to-day commitments.
        The warfighting requirement, the capability the Marine Corps
    strives to provide to our nation, remains at 3.0 Marine Expeditionary
    Brigade Assault Echelons and equates to 14 Amphibious Ready Groups. The
    requirement for an amphibious force structure plan that supports lift
    for 3.0 Marine Expeditionary Brigade Assault Echelons, as stated in the
    Department of the Navy's 1990 Integrated Amphibious Operations and USMC
    Air Support Requirements Study, the 1992 Mobility Requirements Study,
    and reemphasized in Congressional testimony and the Secretary of
    Defense's 26 June 2000 Report On Naval Vessel Force Structure
    Requirements, remains a priority requirement.
        Fiscal constraints, however, have limited amphibious lift to a
    programmatic goal of 2.5 Marine Expeditionary Brigade Assault Echelons
    that equates to 12 Amphibious Ready Groups. This capability will be
    achieved with active amphibious ship force structure upon delivery of
    the twelfth LPD 17 class ship. In the meantime, maintaining LKAs and
    LSTs in a reduced operating status called the Amphibious Lift
    Enhancement Plan is a temporary fix meant to fill the gap between
    today's shortfall and the delivery of the LPD 17 ship class. The
    shortfall in active amphibious ships remains an area of concern.
                                     ______

               Questions Submitted by Senator Christopher S. Bond

                              DEFENSE SUPPLEMENTAL

        Question. We understand that the current defense supplemental
    request addresses the Navy and Marine Corps most pressing readiness
    needs. What are some additional unfunded requirements that you will be
    forced to address through reprogramming readiness and/or modernization
    funds for fiscal year 2001?
        Answer. While the fiscal year 2001 Supplemental Request addresses
    the Marine Corps' most critical ``must fund'' requirements, it does not
    cover approximately $27 million still needed to fund other critical
    requirements in our military personnel (MPMC) and operation and
    maintenance (O&MMC, O&MMCR) accounts. The Marine Corps has requested
    approval, within the DOD Omnibus Reprogramming Request, to transfer $27
    million from our ground equipment procurement account (PMC) to cover
    these critical requirements. Specifics are as follows:

    ``Must Pay'' Bills Not Covered in the Fiscal Year 2001 Supplemental
    Request

                                  (In Millions)

    MPMC:
        Enlisted Average Strength Overexecution O&MMC................. $21.0
        IT Pay Raise..................................................   1.9
        Reduction in Govt. of Japan Burdensharing.....................   2.3
        Collateral Equipment, Hospital Pt., Quantico O&MMCR...........   1.6
        IT Pay Raise..................................................    .2
                                                                      ______
          TOTAL.......................................................  27.0
                            =================================================================
                            ________________________________________________
    PMC:
        Target Location Designation Handoff System.................... -11.9
        Transportation Coordinators Auto Info Movement Sys............  -1.3
        Combat Vehicle Appended Trainer...............................  -9.8
        Forklifts.....................................................  -4.0
                                                                      ______
          TOTAL....................................................... -27.0

                                  F/A/-18 E/F

        Question. I was disappointed to see the numbers of appropriated F/
    A-18 E/F super hornets reduced in fiscal year 2001, and I understand
    you may also reduce the quantity in your fiscal year 2002 budget. Based
    on the requirements to replace legacy carrier aircraft, I hope that you
    would reinstate the numbers of super hornets at the appropriate time in
    an effort to fully execute the approved multi-year agreement.
        What are the Navy's plans for executing the approved multi-year
    plan for the Super Hornet?
        Answer. All decisions on F/A-18E/F procurement are made exclusively
    by the Navy. The Marine Corps has made the decision to skip this
    current generation of F/A-18E/F aircraft and wait for introduction of
    the Joint Strike Fighter.

                                    T-45 TS

        Question. Pilot training is an important part of supporting both
    Navy and Marine Corps operational readiness. Indications are that the
    Navy is cutting back on the procurement of the T-45 Goshawk training
    systems, which will have a direct impact upon pilot training.
        What are your plans for continuing to pursue the 234 T-45 aircraft
    that have been determined to be the optimal number to meet the
    operational pilot training rate?
        Answer. The 234 T-45 aircraft total represents the number required
    to support the operational pilot training requirement until fiscal year
    2035. The Navy completed a study in December 2000 that analyzed options
    available to support the pilot training rate through fiscal year 2035.
    These options included continued procurement of T-45 aircraft,
    extension of the T-2 Buckeye beyond which was previously envisioned,
    and follow-on trainer aircraft new start research and development
    requirements. The Navy is now conducting a prioritized review of
    programs as part of its fiscal year 2003 budget submission process. A
    focal point of this process will be a review of options available to
    meet the pilot training requirement. Continued procurement of the T-45C
    Goshawk training system will be among those options reviewed.

                                     AV-8B

        Question. The AV-8B Harrier is the mainstay for Marine close air
    support. The requirement for the conversion of older models to the all-
    weather night attack variants remains a high priority as explained to
    Congress.
        Has the requirement for additional conversions changed? Can we
    conclude that the Marine Corps needs additional AV-8Bs?
        Answer. Fiscal year 2001 Congressional enhancement procured two of
    the 16 additional Remanufactured Harrier requirements as identified by
    the DoN Strike Master Plan. The USMC maintains the requirement for 14
    additional Remanufactured Harriers. Presently the inventory of new
    production Radar variant Harriers is 24 and there are 74 Remanufactured
    Harriers delivered or on contract. This will bring the total inventory
    of Radar variants to 98 by the time of final delivery in 2003. The 14
    additional Remanufactured Harriers will raise the total to 112 in order
    to fill the current squadron PAA (7 squadrons  16 aircraft)
    without accounting for attrition or pipeline.

                                    F/A-18 G

        Question. The DOD is currently conducting an airborne electronic
    attack analysis of alternatives (AOA) study. My understanding is that
    the purpose of the AOA is to determine the best platform or systems to
    take over the electronic attack mission--a mission currently conducted
    by the Navy and Marine Corps EA-6B Prowler. I also understand that the
    services need to begin replacing the Prowler no later than 2010 due to
    the advanced age and heavy operating tempo of these aircraft.
        Upon completion of the AOA does the Navy have plans to conduct a
    risk reduction effort prior to commencing a new development program?
        Answer. The Navy currently has an EA-6B weapons system upgrade
    program called Improved Capabilities Three (ICAP III) which will IOC in
    early fiscal year 2005 and will keep the EA-6B relevant until its
    planned retirement date of 2015. The ICAP III capabilities are the
    baseline for the ongoing Analysis of Alternatives (AoA) and will serve
    as a significant risk reduction tool as those capabilities are
    incorporated into a follow-on platform. The majority of the platforms
    being considered to host this electronic attack weapon system already
    exist or are in development with a significant amount of risk reduction
    inherent in each program. The combination of knowledge from the ICAP
    III system and selected host platform will enable the abbreviation of
    risk reduction requirements and rapid progression to the Electronic
    Attack Follow-on Program.
        Question. Is there funding in place to support (a risk reduction)
    effort (prior to commencing a new development program)?
        Answer. Funding requirements are being considered as the Department
    of the Navy develops the fiscal year 2003 and fiscal year 2004 budgets.
        Question. What specific tasks are important to the Navy in reducing
    the risk of a follow-on system?
        Answer. The Navy is concerned with the integration of a high power
    jamming system with existing host platform systems (flight controls,
    avionics, navigation, communication and weapons). Also, the Navy has
    additional concerns with ElectroMagnetic Interference (EMI),
    quantifying and understanding the shielding and blanking requirements
    of system-to-platform integration, and dynamic flight envelope
    exploration of the system/platform combination.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

        Question. General, does the supplemental appropriations request
    provide enough funding for the necessary redesign and testing for the
    V-22 program?
        Answer. Yes, the fiscal year 2001 supplemental appropriations
    request does provide sufficient RDT&E,N funding to support the
    necessary redesign and testing for the V-22 program for fiscal year
    2001.
        Question. A few months ago it sounded as if the Marine Corps
    commitment toward the vertical take off version of JSF was wavering.
    Does this program remain a Marine priority? If the vertical lift
    version proves to be too expensive, would the Marine Corps buy the Navy
    version instead?
        Answer. The CNO and I are firmly committed to the Joint Strike
    Fighter. We agree that JSF will be a vital element for our
    expeditionary Navy and Marine team, a stealthy aircraft able to operate
    from carriers, large deck amphibious ships, expeditionary sites ashore
    or main operating bases. I am also firmly committed to the vision of a
    JSF STOVL aircraft for the future all V/STOL force in Marine aviation.
    The JSF program is delivering precisely the kind of weapons system that
    the Congress has repeatedly called for: a truly joint aircraft that
    avoids unnecessary duplication in developments yet also provides leap
    ahead technology at a low cost, highly reliable, and interoperable
    system. We need new aircraft beginning in fiscal year 2008, and I
    expect that aircraft to be JSF STOVL. However, should a currently
    unforeseeable technical/affordability challenge preclude introducing an
    ``acceptable'' JSF STOVL aircraft in fiscal year 2008, then it is
    logical for us to accept JSF Navy CV variants until the program
    delivers the STOVL variant that Marines require.
        JSF is an important national program, not only for the Navy,
    Marines, and Air Force to fly in the increasingly threatening skies of
    the 21st century, but also for our allies who have shown strong
    interest with their capital investment in the program. JSF has the
    potential to deliver up to 6,000 aircraft for America and our friends,
    thus potentially increasing further the U.S. industrial base. There is
    no foreign aircraft development that can compete with JSF. I support
    JSF for reasons that are greater than the valid requirement to equip
    Marines with a great weapon system.
        Question. We are constantly hearing about the ``Transformation'' of
    our military to meet emerging threats. Would you please explain your
    understanding of ``Transformation'' as it relates to the Marine Corps
    and its relationship to readiness and modernization requirements?
        Answer. Unlike the other services that have undergone a major
    restructuring in response to the changing strategic and operational
    landscapes of the post Cold War world, the Marine Corps has been
    assigned a role and organized, trained, and equipped as an
    expeditionary force in readiness that is as relevant today as it was in
    1952 when Congress established in law the role of the Marine Corps. The
    Marine Corps has neither had to downsize, nor reshape itself, as a
    result of the Cold War. Instead, the Marine Corps has continued to
    follow an evolutionary plan for developing additional capabilities
    needed to hone its ability to conduct its assigned role against the
    changing threat in the 21st century. One thing is clear: the strategic
    uncertainty that has followed in the wake of the end of the bi-polar
    era demands military forces different from the heavy forces that
    comprised the bulwark of U.S. conventional defense for the last five
    decades. The Marine Corps, true to its heritage and already trained,
    organized, and equipped for operations across the spectrum of conflict,
    stands ready to continue its role as the nation's ``total expeditionary
    force in readiness''.
        Absent a change of role as a result of the end of the Cold War, the
    Marine Corps has sought to modernize its forces through selective
    acquisition of new equipment that takes advantage of emerging
    technologies such as precision weapons, information technology, new
    engines, stealth, etc. In some cases--such as the Light Weight 155 mm
    Howitzer--the intent is to replace existing equipment that is past its
    service life. In other cases--such as the MV-22 and AAAV--the ideas for
    the technologies were developed during the 1980s to enable new
    operational concepts, while the technologies to build the equipment
    have not been sufficiently developed until 20 years later. Equipment
    modernization will provide a major increase in the depth and speed that
    the Marine Corps can carry out its assigned role within a naval
    expeditionary force. It will result in potentially revolutionary
    increased capabilities, but without a major restructuring and
    transformational change in the operating forces of the Marine Corps.
        Accordingly, modernization as used by the Marine Corps explicitly
    means reshaping the Marine Corps capabilities to meet future missions
    through the selective acquisition of new equipment that will enable the
    execution of Expeditionary Maneuver Warfare in support of emerging
    joint warfighting concepts. Modernization will lead to significant
    increases in capability. However, because it is part of an
    institutionalized and continuous process of Marine Corps combat
    development, there is no requirement for a major shift in the way our
    service trains, organizes, and equips Marine Corps operating forces
    implied in the term ``transformation''.
        To the Marine Corps, transformation is a continuing process that
    spans decades of innovation and experimentation with the implementation
    of new systems, operational and organizational concepts. It involves
    the development of new operational, concepts, refinement of enabling
    capabilities through experimentation, and the development of new
    organizations, tactics, techniques, procedures, and technologies as
    necessary to turn these concepts into warfighting capabilities.
        Question. Please provide an update on the enhanced Maritime
    Prepositioning Force. What is the funding status of ship number three?
        Answer. The first MPF(E) ship, the USNS Harry L. Martin, is
    assigned to Maritime Prepositioning Squadron One (MPSRON 1) in the
    Mediterranean.
        Conversion of the second ship, the USNS Stockham, was recently
    completed by NASSCO, San Diego, CA. The USNS Stockham completed load
    out in July 2001 and will join MPSRON 2 in Diego Garcia.
        Our last MPF(E) ship to be fielded, ship number three, the USNS
    Wheat/GTS Bazilaya, has a new delivery date scheduled for late November
    2001. Military Sealift Command (MSC) negotiated a contract modification
    (firm, fixed price vice cost plus contract) with Bender Shipbuilding
    (Mobile, AL) and additional funding of $11 million was provided from
    the National Defense Sealift Fund (NDSF) for the USNS Wheat/GTS
    Bazilaya conversion.
        Question. Please explain the mission of the Blount Island complex
    and its role in supporting U.S. national security interests?
        Answer. The mission of the Blount Island Complex focuses on
    attainment, maintenance, and sustainment of all requirements in support
    of the Marine Corps' Maritime Prepositioning Ships (MPS). Maritime
    Prepositioning Force (MPF) Maintenance Cycle operations conducted at
    Blount Island are vital to maintaining the readiness and continued
    capability of the MPF program. Blount Island is recognized by DOD, the
    Joint Staff and the Commanders-in-Chief (CINCs) as a vital national
    strategic asset, through its role in support of the MPF program. Since
    1986, the MPF Maintenance Cycle for prepositioned equipment and
    supplies has been conducted at Blount Island. Blount Island is part of
    the Strategic Enabler entitled ``Strategic Mobility'', and is an asset
    that 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.

                              SUBCOMMITTEE RECESS

        Senator Inouye. The subcommittee will stand in recess until
    June 27, when we will hear from the Secretary of Defense, the
    Honorable Donald Rumsfeld. Thank you very much.
        [Whereupon, at 11:37 a.m., Wednesday, June 20, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2002

                                  ----------

                          WEDNESDAY, SEPTEMBER 5, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Daniel K. Inouye (chairman)
    presiding.
        Present: Senators Inouye, Hollings, Leahy, Feinstein, Kohl,
    Stevens, Cochran, Specter, Domenici, Bond, Shelby, and
    Hutchison.

                             DEPARTMENT OF DEFENSE

                       Office of the Secretary of Defense

    STATEMENT OF HON. DONALD H. RUMSFELD, SECRETARY OF
                DEFENSE
    ACCOMPANIED BY DR. DOV ZAKHEIM, COMPTROLLER

                 OPENING STATEMENT OF Senator DANIEL K. INOUYE

        Senator Inouye. Mr. Secretary, General Shelton, we welcome
    you here this morning to discuss the Department of Defense's
    (DOD) budget request for fiscal year 2002.
        General Shelton, we recognize that this is likely to be
    your last appearance before the subcommittee, and so on behalf
    of the committee I want to thank you for your service to our
    Nation. You have been a great military leader, a soldier's
    soldier, and a true defender of military personnel. Your
    initiatives to reform military pay and health care will serve
    as your legacy for many, many years the men and women of the
    Armed Forces will remember what you have done for them. Thank
    you.
        General Shelton. Thank you, Mr. Chairman.
        Senator Inouye. Mr. Secretary, although I cannot truly say
    I remember, I would suspect this is not your first appearance
    before this committee.
        Secretary Rumsfeld. No, sir.
        Senator Inouye. Well, I do believe it is the first time in
    25 years. We will welcome you this morning, and look forward to
    hearing your candid assessments of the state of our military
    forces, and justification for your budget request. The fiscal
    year 2002 amended budget request before this subcommittee is
    for $319.4 billion in budget authority. This is $26.3 billion
    more than that was provided in 2001, and $18.2 billion more
    than what was requested in February.
        Unfortunately, the budget resolution did not provide the
    increased funding requested in your amended budget. Instead, it
    stipulated that the additional $18 billion in defense funding
    could only be provided if funds remained above and beyond the
    Medicare and social security surpluses. According to the
    Congressional Budget Office (CBO) and the Office of Management
    and Budget (OMB), since the Bush administration took over, a
    slumping economy, a large tax cut, have eliminated all the
    available funds.
        Mr. Secretary, this leaves this committee and the Senate in
    an untenable position. The allocation for this subcommittee is
    $20.8 billion below your request. If we are to abide by this
    allocation, we must cut your request by this amount. The only
    way for us to live within this level would be to decimate your
    modernization budget or gut your readiness funding and
    eliminate the pay raises and some force structure, and Mr.
    Secretary, I want you to know that I will not be a party to
    that.
        I have served on this subcommittee for nearly 30 years. I
    have shared the responsibility for chairing it with Senator
    Stevens for the past 13 years, and Senator Stevens has been
    doing the same for the past 21 years. Together, we saw the post
    Vietnam drawdown, the Carter cuts and then his reversal, we
    witness the Reagan build-up, when much good was done for
    defense, but a great deal was wasted as the administration
    failed to make careful choices. We saw the post cold war
    drawdown and procurement holiday begun by President Bush and
    continued by the Clinton administration, and then we saw return
    to minimal growth at the end of the last administration, but at
    a level much lower than what was needed.
        Now we are faced with an administration that says it wants
    to increase defense, but allocated all the available resources
    from a large tax cut, so we are told. If we want to provide
    what is needed for defense, we must do so by cutting social
    security and Medicare revenues. Mr. Secretary, many of our
    colleagues are going to be reluctant to cut into Medicare and
    social security to pay for defense. Politically, they worry
    that the voters will penalize them for raiding social security.
    I, for one, believe it is essential that we provide the
    resources necessary for defense. I am old enough to remember
    what happens when we fail to take care of defense. I saw the
    attack on Pearl Harbor. I remember June 25, 1950, when the
    North Koreans attacked. There is one lesson I will never
    forget. If we want to prevent war, we must be prepared for war.
        It would be easy to play politics on this issue, but this
    is too important, and so I will not take part in any effort
    which would short-change national defense for political gain.
    Today, fewer than 1 percent of all Americans serve in the
    military. They protect the remaining 99 percent. It is the duty
    of the Congress and the administration to make sure they are
    well-paid, trained, and ready, and equipped with the finest
    weapons to serve as a warning to any potential adversary that
    we will defend freedom throughout the world.
        Mr. Secretary, as we receive your testimony today, we hope
    not to focus on the political debate of spending social
    security for defense, but rather on the nuts and bolts of your
    request. Many of my colleagues believe your request is
    excessive. They argue that 9 percent is too much growth. They
    question why you need to increase missile defense by $3 billion
    in 1 year. They want to know why you have requested a 55-
    percent increase in the defense health program. They wonder why
    a 5-percent across-the-board pay raise for the military is
    necessary when the services have met their recruiting and
    retention goals during each of the past 2 years.
        Mr. Secretary, I pledge to you that we will do everything
    we can to get you the funding that you need, but we need your
    help. In your words today, you need to convince these skeptics
    that the $319 billion request before us is essential to
    maintain readiness, and that it invests in the right mix of
    programs for the future.
        So Mr. Secretary, General Shelton, this is a challenging
    assignment, but we are confident that you are up to the task,
    and we look forward to your testimony.
        With that, I want to defer to my dear colleague from
    Alaska, Senator Stevens, for any comment he wishes to make.

                        STATEMENT OF Senator TED STEVENS

        Senator Stevens. Thank you very much, Mr. Chairman, and I
    apologize for not being here on time. I do join the chairman in
    welcoming you here today, gentlemen, Mr. Secretary, Chairman of
    the Joint Chiefs, and Under Secretary Zakheim. We have long
    followed this practice of asking the Secretary to come before
    us prior to our markup of the bill to give the Secretary the
    last word. I do think we ought to start off by commending you,
    Mr. Secretary, for having the courage to take the time to
    closely examine and assess the programs of the past and to try
    and see what we can do to determine what the future
    requirements of our country will be for defense.
        No one welcomes that tough scrutiny, but I believe a
    challenge to the status quo is always in order, and it was the
    right decision to make at the right time and for the right
    reasons, and we welcome your assessment.
        General Shelton, I join the chairman, of course, in
    thanking you for your service and regretting that this may be
    the last time you are here. God only knows what is going to
    happen this fall. You may be back, but I hope not. Not that I
    do not want you back, but I just do not want to continue this
    process for too long.
        We are at a very strange time now. I applaud the statement
    the chairman has just made. I do believe it is the time for us
    to assess the needs of the Nation in the future. I think we all
    have to keep in mind the enormous time that it takes now to
    deploy systems or make changes in the military structure. The
    decisions that we will make, based upon your request and your
    findings, will affect generations to come. As a matter of fact,
    I would predict that less than half of the members of this
    panel will be here when we deploy the systems that you are
    working on now. It is taking as long as 20 years now to get
    some of the major systems to our forces. Since the end of the
    cold war, Senator Inouye and I have urged a successive number
    of administrations to pay close attention to the Pacific. I
    commend all of you gentlemen for the emphasis you have placed
    on that portion of the world, and look forward to hearing your
    views and priorities for defense in that region.
        Many are quick to point to China as the potential adversary
    should we develop new military concepts. As one who served in
    China, and watched China for many years now, I do not think we
    should come to that automatic conclusion that they will
    necessarily be an adversary of our country in the future, but
    the systems that we are going to review here today are
    important not only for the concept of the Pacific, but for our
    whole global role now as a nation, and from India to North
    Korea, to Australia, throughout the world, the complexities of
    our future require that we work together without regard to
    politics, as the chairman has said.
        I join everyone in regretting that we are in a situation
    where the budgets are going to be tight.
        Mr. Secretary, I had the honor to be present on Monday in
    Berlin, the meeting of what they call the Atlantic Bridge. A
    group of our military officers and the officers and former
    officers of the German Army meet together annually to assess
    the future, and it was really a sobering time to review the
    problems of Europe as they affect our future, and to try and
    comment upon our view of what is going on over there now.
        We have never really shied away on this subcommittee from
    tough choices, and we welcome the opportunity you are going to
    give us to make some. I think that the need to recast our
    military for the future is obvious. The need for really tough
    decisions on what weaponry we must prepare to assure that we
    meet the future needs of our country is also obvious, but I
    hope that we can have the working relationship with you and
    your colleagues that will assist us in developing this budget
    now on a bipartisan basis.
        My last comment would be that I do sincerely join the
    chairman with regard to his comments concerning the surplus
    problem. We are dealing with estimates, and the margin of error
    on any estimate of the complexity that we are dealing with here
    in terms of defense is such that the differences between OMB
    and CBO are immaterial, and the statistical comparison of those
    estimates could lead us just as easily to a conclusion that
    there still is a surplus, as well as the conclusion that we may
    face the problem of whether we should invade it in order to
    assure that our defenses for the future are secure.
        I intend to support the chairman in his comments, and to
    work to try and make sure that we do set off now in this first
    budget after--you know, this was our year for the goal of a
    balanced budget, Mr. Secretary, but if we go forward now in
    2002 on a basis of continuing the decline in moneys that are
    available for our defense, I think it will be a sad mistake for
    future generations.
        I welcome the opportunity to work with you, Mr. Chairman,
    and with you, Mr. Secretary, and the Joint Chiefs, and the
    Under Secretary and Comptroller. It is going to be a tough
    call, but I look forward to working with you.
        Thank you, Mr. Chairman.
        Senator Inouye. Thank you very much, Senator Stevens.
    Senator Leahy.

                     STATEMENT OF Senator PATRICK J. LEAHY

        Senator Leahy. Thank you, Mr. Chairman. I want to welcome
    Secretary Rumsfeld here. Looking around, Mr. Secretary, this
    committee, I see of course both Senator Inouye and Senator
    Stevens as well as Senator Hollings and Senator Domenici. We
    were all serving here when you were first Secretary of Defense.
    You have not aged, but some of us have, so I welcome you back.
        And I would say General Shelton, you have done this country
    proud in your service as Chairman of the Joint Chiefs, not only
    here in the United States, but we always look to the military
    for the best, especially at your level, but just by the nature
    of your role you are in effect a worldwide ambassador.
        I know you have traveled all over the world. You are what
    many other countries from their leaders on down see as the
    reflection of the military when they see the Chairman of the
    Joint Chiefs come, and that reflection has been a very good one
    from all the services, and I appreciate the amount of time and
    commitment you have made, and your family has made in your
    career, a long and distinguished career. I want to say it on
    the floor, but I did want to say that with you here, how much I
    appreciate it.
        General Shelton. Thank you, sir.
        Senator Leahy. I am also going to have a number of
    questions, Mr. Chairman, on the budget, land mines and military
    modernization. I should say initially I was troubled by the
    reports which came out on Sunday that the administration may
    turn a blind eye to China's nuclear weapons modernization for
    the sake of selling its missile shield plans. Mr. Secretary, I
    hope you will clarify the administration's policy on possible
    Chinese nuclear buildup. I would also ask the chairman's
    consent that an editorial from the Rutland Herald in Vermont on
    Tuesday, September 4 be included.
        Senator Inouye. Without objection.
        [The information follows:]

                    [From the Rutland Herald, Sept. 4, 2001]

                                Bizarre Thinking

        The Bush administration is considering a policy shift with
    regard to China that raises Kissinger-style realpolitik to a
    new level.
        The New York Times reported on Sunday that Bush was willing
    to set aside its objections to a Chinese missile buildup in
    exchange for acceptance by China of a U.S. missile shield.
        The logic of this position is so bizarre that it can be
    explained only by the confluence within the Bush administration
    of two dangerous ideas. The first is Bush's idea that missile
    defense must trump all other foreign policy and defense
    priorities. The second is that acquiescing in the
    militarization of China will make for stable relations, which
    would be in America's economic interest.
        This policy shift was revealed to the press by ``senior
    administration officials.'' Such revelations usually occur
    either as an attempt to torpedo a policy by making it public or
    as a trial balloon to test public reaction. Another motive may
    be to send a signal to China that the Bush administration is
    really its friend even if public opinion in America is not yet
    ready to go along.
        It's not clear whether the administration will try to
    advance this new policy in the open. On Monday, Bush's press
    spokesman said it was still U.S. policy to discourage the
    development of nuclear weapons. In other words, Bush hasn't
    officially changed his policy yet, but he may be preparing to
    do so.
        It is peculiar logic, however, to encourage the development
    of nuclear weapons by China in order to gain approval for the
    defensive shield designed to shoot down nuclear weapons. The
    unnamed senior officials explained the logic this way: China is
    going to develop its missiles anyway, so it doesn't do us any
    good to make the Chinese angry by resisting. Besides, the
    missile shield is meant for missiles from rogue nations such as
    North Korea or Iraq, not China, which is what we want China to
    understand.
        The logic of that assertion is bizarre as well: We intend
    to build a missile defense system against nations who lack
    threatening missiles, rather than against a potentially hostile
    power that actually has missiles and plans to build more.
        Bush's friendliness toward China raises a different
    question. China has become a favorite of America's business
    community because of the efficient and oppressive rule of the
    Beijing government. It creates a climate where business can get
    done.
        Increasingly, China's government is being compared to that
    of General Pinochet in Chile, which is to say a quasi-fascist
    military regime joined at the hip with business interests that
    benefit by the murders and oppression enacted by the military
    to nurture a profitable business climate.
        China is a major power, and there is no reason the United
    States needs to revert to the attitude of the 1950s when China
    was anathema and all ties were severed. But neither should the
    United States be sending love letters to the autocratic rulers
    of China.
        The United States cannot stop China from developing its
    missile program. But it ought to be U.S. policy to use all its
    diplomatic and economic power to discourage a nuclear arms race
    that would also involve India, Pakistan, and perhaps Taiwan.
        Realpolitik in American foreign policy of the Kissinger era
    gave us the shah of Iran and Pinochet in Chile--both of them
    disasters. Bush's obsession with missile defense has worked a
    screw loose in the thinking of his foreign policy specialists.
    It doesn't make sense.

        Senator Leahy. I would also like to mention, Mr. Secretary,
    that Senator Hagel and I met with General Shinseki and
    Commandant Jones to discuss the administration's policy on land
    mines. I know there's a policy review underway. I sent copies
    of correspondence that I have had with the President and with
    Secretary Powell, and Condoleezza Rice to you, Mr. Secretary,
    and I will make sure we give your staff copies, again, of those
    letters.
        I think that we have got to look at where our opportunities
    are. The Pentagon is preparing to spend hundreds of millions of
    dollars on an alternative program of land mines. When you look
    at the design, many within the Pentagon will state very frankly
    it is not going to go anywhere.
        There are some existing smart weapons and sensor technology
    that could offer a more cost-effective solution to the problem,
    but also could put us back into a leadership role, a worldwide
    leadership role on this whole issue of land mines, and that the
    rest of the world--it says is suggesting we are not being
    positive, acknowledge not only a positive role but also start
    to acknowledge what we have done, everything from land mine
    clearing to things like the war victims fund.
        So there is a lot of things in here, Mr. Chairman. I am not
    going to belabor it further, but those are the areas of
    questions that I will have.
        Thank you very much.
        Senator Inouye. Senator Shelby.

                     STATEMENT OF Senator RICHARD C. SHELBY

        Senator Shelby. Thank you, Mr. Chairman.
        Mr. Chairman, I, too, want to join in the chorus and
    welcome Secretary Rumsfeld back here, he is no stranger, and I
    do not want to take all morning because I want to hear from
    him, and also have an opportunity, Mr. Chairman, to ask him a
    few questions.
        General Shelton, everybody has been saying you served this
    country well. We are proud of your record. You have earned it.
    You might be back here and you might not, but wherever you are,
    we wish you the best.
        Mr. Secretary, there are a couple of things that I will get
    into later. One has to deal with the chemical demilitarization
    program that I am very concerned about, because it affects not
    just my State and Anniston Army Depot, but some other States,
    and we had a hearing on this here in this committee back in the
    spring, and I have written to you about this, and I will get
    into it later, and the other is, as we talk about the budgets
    and the weapons, future weapons, I would be interested in your
    comments and also General Shelton on the future modernization
    of the services, and what role the rotor craft, the helicopter
    will play in this transformation effort, and why will they play
    it? What role do you see helicopters playing on the battlefield
    of the future, in light of the talk about the increasing
    likelihood of urban operational environments and a push for
    greater emphasis on joint operations. I will get into that a
    little later.
        Mr. Chairman, I would ask that my complete statement be
    made a part of the record.
        Senator Inouye. Without objection, so ordered.
        [The statement follows:]

                PREPARED STATEMENT OF SENATOR RICHARD C. SHELBY

        I would like to join Chairman Inouye and my other
    colleagues in welcoming both of you here today to discuss the
    fiscal year 2002 defense budget and the posture of our military
    forces--Secretary Rumsfeld for the first time and General
    Shelton for the last time. I would like to take a moment to
    join the chorus of members who have expressed their
    appreciation to you General Shelton for your service to our
    country. I have enjoyed working with you and wish you the best
    in all your future endeavors.
        We are here to discuss the fiscal year 2002 defense request
    of $328.9 billion sent to us by President Bush for the
    Department of Defense. Comments on the way you conducted your
    ``strategic review'' for President Bush and the adequacy of the
    fiscal year 2002 request have been very freely offered. I would
    have loved to have seen a higher number for defense. I believe
    many more critical requirements exist than can be met with this
    budget or those proposed in the future years. Mr. Secretary,
    being experienced and having done this before, you possess a
    keen understanding of the political realities that exist in
    Washington right now with a divided Congress. While
    unsatisfied, I agree that the fiscal year 2002 budget request
    represents a reasonable and feasible approach to providing for
    the near-term and most immediate needs of our military
    services. Given recent news about budget surplus projections,
    much remains to be done if we hope to put the Department on a
    glidepath that will result in your being able to meet out-year
    R&D, Personnel, Procurement, Modernization and overall
    Transformation goals.
        The budget is very tight. Many competing interests and
    issues of varying priority are fighting for scarce dollars. I
    want to be very clear how I feel about the work we are here to
    do on this subcommittee. I believe that providing for the
    National Defense is our number one responsibility as a
    Congress. The defense budget blueprint we have been presented
    with is a good first step. I continue to be troubled by what
    I've seen both on a regional scale and by activities of a
    number of foreign countries in terms of the threats we face. I
    am also concerned with the state of health of many of our
    critical military bases. If you have been to even the best of
    our military bases recently, you know exactly what the real
    needs are facing our military commanders and the soldiers,
    sailors, airmen and Marines they lead.
        I look to President Bush and you, Secretary Rumsfeld, to
    show the kind of leadership we need to meet the challenges we
    face. I, along with many others, eagerly await the completion
    of the 2001 Quadrennial Defense Review. With its completion,
    answers to the big questions surrounding how to modernize and
    transform our military forces should become clearer. I want to
    work with you to take this first step this year and am very
    interested to see how big a step will be prescribed for fiscal
    year 2003. Just as we must act to keep our men and women in
    uniform ready and equipped to meet and defeat any threat in any
    theater of operations, I believe this fiscal year 2002 budget
    represents the perfect vehicle to resolve as a Congress, as a
    government and as a nation to make the defense of our country
    and our allies a national priority by fielding theater and
    national missile defenses as soon as possible.
        Thank you Mr. Chairman. I look forward to your testimony,
    and I have some questions to ask when my time comes.

        Senator Inouye. Senator Hollings.

                    STATEMENT OF Senator ERNEST F. HOLLINGS

        Senator Hollings. Thank you, Mr. Chairman. Let me commend
    General Shelton on the outstanding job you have done for the
    country, General.
        Secretary Rumsfeld, we are back at the old BMD, ballistic
    missile defense. When you were the Secretary under President
    Ford and they had General Danny Graham in charge of it down at
    Huntsville, Alabama, so they call come and talk about a new
    initiative. The fact of the matter is, there are not as many
    Americans as there are Russians, or as there are Chinese. We
    cannot match them man for man, but we maintain the security of
    our country with the superiority and technology, and I am glad
    you understand this, while we have got world peace generally.
        Otherwise, I am worried about Colombia. They have yet to
    learn the lesson that in a country there has got to be one
    military force, and that has got to be in the hands of the
    Government.
        David Ben Gurion admonished Menachim Begin of just that, in
    the early days when Israel had been recognized by the United
    Nations. Begin was ready to receive a ship off-shore full of
    arms and run his own military, and David Ben Gurion said, ``In
    a country, there has got to be but one military force, and that
    is going to be in the hands of the Government.''
        The Colombians never have really agreed to that in their
    minds. They are trying to make peace. They are trying cooling-
    off periods, they are trying to give demilitarization zones,
    and unless and until they agree on their own to clean the drugs
    and militants out, I am opposed to anymore military assistance.
    I have been there, and it is just like another Vietnam, and we
    are headed right down that road.
        Otherwise, I thank you, Mr. Chairman.
        Senator Inouye. I thank you very much. Senator Domenici.

                     STATEMENT OF Senator PETE V. DOMENICI

        Senator Domenici. Mr. Chairman, fellow Senators, I
    appreciate an opportunity just to make a couple of statements
    about your numbers--and I understand you are supporting the
    White House, the President's request--and whether the numbers
    will fit in this budget. I believe they do.
        I believe a point of order should not take precedence over
    your request, because according to the numbers, the
    Congressional Budget Office had assumed an increase in its
    baseline of $7 billion. And, then what you have left over gives
    you enough to cover the outlays that are attributable to the
    increased funding. It is outlays that impact the surplus, be it
    social security's assumed surplus, or Medicare, so I believe
    for this year you can get by with, 18, and we can have a nice
    debate about whether it fits.
        On the other hand, I believe there is a far more important
    issue, and I think that is the issue of the American economy.
    As a matter of fact, we are now talking about using the
    surpluses of this great American economy for one thing.
    Everybody is talking about debt service. As a matter of fact,
    we have reduced debt in the past 2 years more than any country
    in civilized history, and we are on that path again. As a
    matter of fact, with the pessimism that is being expressed by
    the budget chairman on the Democratic side, we will pay down
    the debt and accumulate a surplus of $165 billion.
        All of that is now earmarked for debt service, but what
    happens to education during a slump in the American economy? Do
    we say we cannot fund it because we want to put all of our
    money on the debt service? What do we say when defense comes
    forward with a proposal? The economy is gobbling up our
    surpluses. It is gobbling it up fast. How fast? $46 billion in
    outlays for next year will be gobbled up not by this budget,
    not by an increase in the Department of Education, all because
    the American economy is in the fifteenth month of a recession,
    not a technical recession, but from 5.1 percent growth, down to
    less than 1 percent now, on a gradual 15-month path.
        Incidentally, Mr. Chairman, I listened to your remarks
    about worrying about social security and the Medicare surplus.
    Let me just suggest to you that the truth of the matter is that
    yesterday we had a witness before us from the Congressional
    Budget Office. I said to him, Mr. Crippen, did the President of
    the United States have anything to do with the current
    recession in the United States economy? Answer, a simple no.
    Did the Congress of the United States do anything that brought
    on this recession? Answer, no.
        What has happened is that a readjustment in the world and
    in America on the capital side of the equation. As a result, we
    have $46 billion of the surplus we counted on gobbled up by one
    thing, the American economy being in recession. Everything we
    do ought to be, how do we get the American economy to come
    back?
        I do not believe you cut spending. I do not believe you cut
    spending when you have this kind of a recession. As a matter of
    fact, I might join with those who say you should increase
    spending; that may be my personal view, but in this case I
    believe that it is pure folly to talk about the United States
    is doing something to social security or Medicare, when we are,
    as a matter of fact, paying down the debt, which is all you do
    with the social security surplus. That is all you do with it,
    is pay down the debt.
        We are paying now the second largest amount in American
    history. Which was the largest? Last year.
        So I submit there is room for this budget. There is room
    for what we think, in both Houses, should do the job. Is it the
    entire budget that they have asked for? I do not know. I have
    some serious questions about why they have ignored some of the
    nuclear weapons needs as they produce this budget, but frankly,
    I intend to support you on either count. If you want to waive
    what I consider to be a fictional impact on social security or
    Medicare, a fictional impact, if you want to waive that, I will
    be with you. I will do whatever you say. I will do as much as
    you think you need.
        If, as a matter of fact, you are worried about the 2002
    budget, you can fit it in. You can fit it with the outlays.
    When will the American economy turns back up and starts
    yielding the revenues that we need to pay for education
    increases, to pay for military increases, and all of the other
    things that we need.
        So Mr. Chairman, I think it is relevant that we find out
    what is needed in this budget, but I do not believe we ought to
    be terribly frightened about the fact that we are $3 billion or
    $4 billion, or $5 billion over, as I indicated a while ago,
    some fictional line, when as a matter of fact the on-budget
    surplus is huge, huge at this point.
        I thank you.
        Senator Inouye. Thank you very much. Senator Kohl.

                         STATEMENT OF Senator HERB KOHL

        Senator Kohl. Thank you, Mr. Chairman, and Secretary
    Rumsfeld, we all welcome you here today. I just briefly make
    the point to you that I believe the American people need to
    hear from you why, at a time when we are basically at peace
    with the world, and cannot make the case that there is some
    extreme urgency about considerably increase defense spending,
    why you feel that with money being in short supply, as it is,
    and with all agree with that, no matter where we sit we all
    understand and recognize that we do not have a great deal of
    money to spend this year beyond our needs, which exist in
    virtually every category, and which, I am sure many people
    would argue, are equally as important as defense--why, in light
    of all of this, you would like for us to allow the military a
    significant an increase as what it is you are asking for,
    whether it is force modernization or the missile shield defense
    system, or all the other items you have which you believe are
    well-justified.
        Looking at it from the big picture, which of course you are
    very capable of doing and have always done, we need to hear
    from you why it is that defense in its largest aspects deserves
    such a large chunk of our total expenditures, and particularly
    when it is so much more than it has been in recent years. I
    think that when we come out from this hearing we need to hear
    from you what the justification is for that, and I thank you
    for being here.
        Senator Inouye. Thank you very much. Senator Cochran.

                       STATEMENT OF Senator THAD COCHRAN

        Senator Cochran. Mr. Chairman, I am very pleased to join
    you in welcoming the distinguished witnesses we have before the
    committee today. I am especially glad to have the opportunity
    to welcome General Shelton in his final appearance here, and
    commend him for his 38 years of dedicated service to our
    country.
        I am pleased the budget request attempts to address some of
    the concerns this subcommittee has raised in the past,
    including restoring military morale and improving readiness, as
    well as a robust development and deployment program for missile
    defense systems, but I am troubled that in some areas we are
    still falling short of the mark, particularly in ship
    construction.
        I realize the quadrennial defense review (QDR) will not be
    completed until the end of the month, and discussions of force
    structure requirements might be premature at this time, but I
    am deeply concerned about the continued downward trend in
    shipbuilding, and its potential negative impact on our Navy's
    and our Nation's ability to maintain a credible forward
    presence. I am concerned about the harm that the construction
    rate is having on our shipbuilding industrial base, and its
    ability to meet future requirements.
        Furthermore, I am skeptical of the proposed General
    Dynamics acquisition of Newport News Shipbuilding. Even though
    it has the potential to create a short-term savings in the
    construction of nuclear powered ships and submarines, the
    resulting monopoly could have a long-term crippling effect on
    the rest of the industrial shipbuilding base. If this merger is
    allowed to proceed, I believe we will be paying significantly
    more per ship in the future.
        Additionally, I think a commitment should be made as soon
    as possible to begin the DD-21 program. It will provide
    operating efficiencies and stealthy power projection that will
    enable us to prevail in future conflicts with less risk to our
    sailors and marines.
        Mr. Chairman, I look forward to the testimony of our
    witnesses.
        Senator Inouye. Thank you very much. Senator Feinstein.

                     STATEMENT OF Senator DIANNE FEINSTEIN

        Senator Feinstein. Thanks very much, Mr. Chairman, and
    welcome, Mr. Secretary. Welcome, General Shelton. It is good to
    see you both again.
        I want to just make a few off-the-cuff comments, if I
    might, on the missile defense issue. I am greatly concerned
    about the testing, the cost, and the strategic and arms control
    implications of proceeding with the plan you want to proceed
    with involving missile defense. The bottom line of a program it
    seems to me, is: is the world going to be safer because the
    United States has an overarching ballistic missile defense
    system, or is the world going to be a more dangerous place?
        When I read that the administration may well support
    additional nuclear testing, allow China additional nuclear
    tests, would not object to China's moving ahead with the
    development of a missile program, I see where the world may be
    a much more dangerous place.
        I would also suspect that the $60 billion put forward as
    the cost is just the first down-payment on what is likely to
    cost literally hundreds of billions of dollars, and when I talk
    to men in uniform, yes, even the heads of services, as I did
    last night, they do not believe this is a number one threat.
    They are much more concerned about the asymmetrical threat, and
    one I spoke with was even more concerned about the concept of
    homeland defense, because they believe that the asymmetrical
    threat to the United States is much more dangerous and should
    be a much higher priority.
        As a member of the Intelligence Committee, chairman of the
    Terrorism Subcommittee of the Judiciary Committee, Senator Kyl
    and I have held three hearings on the commission reports with
    respect to terrorism. Intelligence has been looking at how we
    manage our counterterrorism effort. We have asked the
    administration, Senator Kyl and I, in writing, for advice as to
    a program. We have not yet had a response, and yet to me this
    is a much more significant threat to the United States of
    America than the very remote possibility that Kim Jong II is
    going to commit suicide by putting a TAEPODONG III in the air.
    And yet we are faced with a budget that begins to put some
    deployment mechanisms into an untested ballistic missile
    defense, and I must tell you I have a major concern about it,
    so I think--and I will be asking some precise questions about
    that.
        What is circulating on the Hill, and let me be very
    precise, is that this administration is going to use China to
    essentially justify a missile defense program. I very much hope
    that is not the case. I do not believe--and I am a China
    watcher too. I studied Chinese history in college, have tried
    to read everything that has been written, have been to China
    literally dozens of times, have had discussions with the
    leadership.
        I do not believe that China wants to be our enemy. We could
    make China an enemy. I do not doubt that. But I have very deep
    concerns about the wisdom of violating, or abrogating, or
    pulling ourselves out of the Anti-Ballistic Missile (ABM)
    Treaty, and I would like to know whether that is really the
    intent that is behind this program as well, so that is where my
    questions will be.
        Thank you, Mr. Chairman.
        Senator Inouye. Thank you. Senator Bond.

                    STATEMENT OF Senator CHRISTOPHER S. BOND

        Senator Bond. Thank you very much, Mr. Chairman, and I very
    much appreciate the opportunity to join with you in welcoming
    our old friend and new Secretary of Defense again. Secretary
    Rumsfeld, we appreciate having you here.
        I join with my colleagues in saying a sincere thanks to
    General Shelton. We have certainly appreciated the great work
    that he has done, and service to the United States, as well as
    his work with this committee.
        Mr. Chairman, as a member--and I would say that let me add,
    I concur with Senator Domenici. As one of his team on the
    Budget Committee, I believe he has stated it well, and I will
    join with him in supporting the budget, as he outlined.
        But as a member of this committee, and as cochair with
    Senator Leahy of the Senate Guard Caucus, I believe that our
    defense policy and the role of the Guard and Reserve in
    supporting our national military strategy is of the utmost
    importance. It is important to me, it is important to the
    people I serve in Missouri, and I think it is important to this
    Nation, and frankly, I have been very disappointed that we in
    Congress have not been consulted on many of the issues that
    concern our Armed Forces, and that the Guard and Reserve in
    particular have not been more fully engaged in the process of
    evaluating our national military strategy. These issues have
    significant implication to our national security in our Nation.
        Mr. Secretary, we are your strongest allies. We want to be
    your allies, but in order to help, as the chairman so aptly
    stated, we needed to be included in the discussions.
    Communication and coordination would suffice. After all, we are
    all working in the same direction.
        As you look for necessary savings within the Department of
    Defense, it is clear to me that we will fail to maximize
    potential savings if you fail fully to leverage the myriad
    numbers of capabilities residing within the Guard and Reserve.
    We have seen an increased use of Guard and Reserve capabilities
    in past regimes, and they have enabled us to do a lot more with
    less. However, we have yet to see a clear signal from this
    Department of Defense, and you and your team, that this
    philosophy will continue, and that this reliance will continue
    to be there, and I am nervous. I hope you can assuage our
    concern.
        Having commanded the Guard in Missouri, as Commander-in-
    Chief for 8 years, and having worked with them in the Reserve
    over the years, I know they bring tremendous capabilities,
    often at a great cost-savings, savings above what you can get
    from full-time forces. We need to address and assess adequately
    the depth and the breadth of these capabilities as we develop
    our military strategy and shape our military forces.
        Furthermore, I think it is critical that we acknowledge the
    value of our citizen soldiers, sailors, airmen, and marines in
    sustaining America's own involvement in support for a strong
    defense. Our Guard and Reserve forces forge a link, a bridge
    between our active forces and our citizens, and I saw that, Mr.
    Secretary, in the aftermath and during Desert Storm. The people
    of America were aware of and they were mobilized, and they were
    vested in our efforts because units were called up from their
    home towns, and I joined in greeting them when they came back
    as conquering heroes and heroines as they should have been
    welcomed back.
        This involvement, this citizen participation in our
    Nation's military commitment is something that has a value much
    higher than any dollar amount we can put on it, and I just call
    your attention, and I hope we can see the Guard and Reserve
    fully involved in the military strategy, both for the sake of
    our defense, and for the sake of saving dollars.
        Thank you, Mr. Chairman.
        Senator Inouye. Thank you very much. Senator Specter.

                       STATEMENT OF Senator ARLEN SPECTER

        Senator Specter. Thank you very much, Mr. Chairman. I thank
    you, Secretary Rumsfeld, for returning to the Department of
    Defense and undertaking the prodigious job, and the way you are
    tackling it, and I thank you, General Shelton, for your great
    service to the country.
        My questions will focus, among the many, many issues which
    this subcommittee is looking at, on the issue of missile
    defense and the ABM Treaty. I personally support missile
    defense, but I want to see the particulars as to how much it is
    going to cost, what the realistic possibilities are and the
    plans on deployment.
        Back in the mid-eighties when I was part of the Senate
    observer team in Geneva, we had long debates about the narrow
    versus broad interpretation of the ABM Treaty. I participated
    in the floor debate which was characterized by some as historic
    at that time, and I am very much concerned as to what is going
    to happen with the ABM Treaty. I am hopeful that we will be
    able to work it out with Russian President Putin and the
    Russians, because it is such a major matter.
        During the August recess, I had occasion to travel to
    China, where our missile defense and the ABM Treaty was very
    much on the minds of the Chinese leaders. The same concerns
    were expressed in South Korea, where the South Korean president
    was hopeful that we would take a little different tone toward
    North Korea. He hopes we will not depict North Korea as a major
    threat, even though they may be, and instead, try to work
    something out on diffusing that problem.
        I think it is very important that there be an unequivocal
    statement from the administration denying, which I think is the
    fact, a policy of permitting, or not objecting to, a Chinese
    buildup on nuclear defense in exchange for not opposing our
    missile defense. China is the coming Colossus, 1 billion 250
    million people, and if they have a nuclear build up, that will
    encourage India as an offset, which will encourage Pakistan as
    an offset, and cause all sorts of problems.
        Finally, Mr. Secretary, I will be interested in your views
    concerning abrogation of the ABM Treaty, if it comes to that,
    the role of the Congress. There has been a historical policy of
    congressional resolution on abandoning treaties.
    Constitutionally, there has to be a two-thirds ratification by
    the Senate. However, that policy was changed by President
    Carter by the Taiwan treaty of 1978. That change led to a
    curious lawsuit which was brought to the Supreme Court, with
    Senators Goldwater, Helms, Thurmond and Hatch all arguing that
    the executive could not unilaterally terminate a treaty. We are
    far from that situation, but it is something which I think is
    worth exploring at an early stage.
        Thank you for being here, and thank you, Mr. Chairman.
        Senator Inouye. Thank you very much. Senator Hutchison.

                   STATEMENT OF Senator KAY BAILEY HUTCHISON

        Senator Hutchison. Thank you, Mr. Chairman, and I want to
    thank you for taking your time to come here, and I think this
    is a very important time for us. First, I want to thank you,
    Mr. Secretary, for taking on the mammoth task of saying that
    the security threats of the 21st Century are different from
    those we have faced in the last century, and I applaud you for
    being very bold, because I do not think the United States has
    established what those security threats are in the past, and I
    do not think that we have even established our rightful place
    in the world in the post cold war era, so I applaud that, and I
    know you are going to be very deliberate and I want to say that
    of the things that I have seen in the paper, I am very open to
    a change in our strategy of two major regional conflicts, but I
    hope you will have intense briefings for us if that is what you
    are going to recommend, and tell us why you think the threats
    should be different.
        Secondly, I have talked to you about this, and I hope that
    part of your overall strategy for building our force will
    include assessing our overseas deployments and making sure that
    we are in full force where we need to be, but where we also
    pull back from perhaps the numbers that we have had. Just
    because we have been there for 20 or 30 or 40 or 50 years does
    not mean that in this new assessment it will be the same.
        Third, I just want to say that I appreciate what the
    President and your support of the President are doing for
    missile defense, that you are being very deliberate, but I
    cannot imagine the United States of America seeing the
    potential threats and not addressing those threats, and it is
    not as if we could all of a sudden 10 years from now say, oh my
    goodness, there is a rogue nation that has an intercontinental
    ballistic missile, and immediately have a missile defense
    system for that. We have to plan ahead. That is our
    responsibility. That is our duty, and it is yours, and you are
    taking it, and I appreciate it.
        So I am going to be very supportive of your missile defense
    needs, your assessments, and it would be unthinkable to me that
    we would not do the necessary things to prepare for the long
    term for a missile defense, not only theater, which protects
    our troops in the field wherever they may be in the world, but
    intercontinental, to protect our people who live in our
    country.
        So I thank you for your boldness. I look forward to a lot
    more discussion and briefings from you, and I think once we
    have all the facts and your assessments, then you will find the
    support that you need in Congress to prepare us for the 21st
    Century and the security of our people.
        Thank you.
        Senator Inouye. Thank you very much. I have a statement
    from Senator Reid that I would like to put in the record.
        [The statement follows:]

                    PREPARED STATEMENT OF SENATOR HARRY REID

        Mr. Chairman, let me begin by saying how pleased and honored I am
    to serve on this prestigious committee entrusted with appropriations to
    meet the nation's defense needs. Clearly, the beginning of the 21st
    century is a time of profound change for our military. We must provide
    for the immediate personnel, readiness and modernization needs of our
    armed forces, with a clear emphasis on quality-of-life issues for our
    servicemen and their families. At the same time, we must transform our
    military to meet new threats and take advantage of enabling
    technologies to ensure that America's fighting forces are second to
    none, now and in the decades ahead. This balance between short- and
    long-term needs is a difficult one, and I look forward to hearing
    Secretary Rumsfeld's thoughts on setting priorities in a challenging
    budget environment.
        Perhaps no other state in the Union played a more significant role
    than Nevada in winning the Cold War. The Nevada Test Site is a high-
    technology engineering marvel where the United States developed,
    tested, and perfected a nuclear deterrent which remains the cornerstone
    of America's security and leadership among nations.
        In this post Cold-War era, Nevada's military bases and industry are
    poised to make a continued contribution to ensure America's armed
    forces will prevail in any armed conflict. For example, Nevada's Nellis
    Air Force Base is slated to play an increasingly important role in
    testing and evaluating new and upgraded Air Force weapons systems.
    Nellis Air Force Base has a solid infrastructure, cutting edge
    technology, some of the most talented personnel in the U.S. armed
    forces, and is one of the only air bases where planes have the ability
    to take off with live ordinance. This March, Nellis will also become
    the premier training base for pilots of the F-22 Raptor, a plane that
    provides an asymmetric fighting advantage to protect U.S. interests the
    world over for the next 20 years.
        The Naval Air Station at Fallon is the Navy's premiere tactical air
    warfare training facility. The associated Fallon Range Training Complex
    is a national treasure that offers our military services the very
    finest conditions in which to conduct critical training exercises. Put
    simply, the facilities at Fallon define the airborne battle tactics
    that lead to victory in battle. Fallon's future is bright among Naval
    shore activities. A new hangar, ramp and academic building were built
    in 1995 to accommodate the move of the Navy Fighter Weapons School,
    popularly referred to as TOPGUN.
        The Hawthorne Army Depot has been at the forefront of Army
    logistics for the past 70 years, serving as the government's premier
    resource, recovery, and recycling facility for munitions numbering in
    the tens of thousands and ranging from small arms and fuses to rocket
    propellants and tactical missiles. To demonstrate its leadership at the
    forefront of military logistics, Hawthorne is seeking alternatives to
    the open burning and detonation of munitions. Open burning and
    detonation generates pollutants, raising serious concerns about adverse
    health effects on populations sited down range from these facilities.
    This year's defense appropriation will hopefully include funding for
    the development of a rotary furnace technology at the Hawthorne Army
    Depot to dispose of munitions in an environmentally friendly manner.
        In closing, I want to pledge my support to the Secretary of Defense
    and General Shelton, and to the men and women of America's armed
    forces. Finding the right balance between present needs and future
    musts is indeed a challenging task, but we will find that balance
    point. As a new member of this committee, I'm committed to proving the
    necessary funding for the defense of this great nation and its people.

        Senator Inouye. Mr. Secretary, now that you have heard the
    accolades of this committee and the concerns, I am pleased to
    have you here, sir.
        Secretary Rumsfeld. Thank you very much, Mr. Chairman,
    Senator Stevens, members of the committee. I have with me also
    Dr. Dov Zakheim, the Comptroller of the Department of Defense.
    I would like to submit my prepared testimony for the record----
        Senator Inouye. Without objection.
        Secretary Rumsfeld (continuing). And then make some summary
    comments.

                           TRIBUTE TO GENERAL SHELTON

        First I want to join with you, Mr. Chairman, and the
    members of the committee, in commenting on General Hugh
    Shelton's service as Chairman of the Joint Chiefs of Staff. It
    has been remarkable. He is a courageous and talented
    individual. Two tours in Vietnam, a Purple Heart, leadership of
    infantry and special forces units all over the world, leading
    the 101st Airborne Division into battle in Iraq, commanding the
    Joint Task Force in Haiti, leading U.S. Special Operations
    Command, and then serving as our Nation's highest ranking
    military man.
        General Shelton is, indeed, a model soldier, and an
    outstanding leader of men. It has been my privilege to serve
    with him these past months. I must say that I have benefitted
    from his wise counsel as we have worked together to fashion a
    new defense strategy that we hope will help guide our forces
    into the 21st Century.
        General Shelton, America is grateful to you for your
    dedication and your service, and I feel fortunate to work with
    you.
        General Shelton. Thank you very much, Mr. Secretary.
        Secretary Rumsfeld. I would very much have liked to comment
    on the very thoughtful comments and questions that were posed
    as we began the meeting today. There are two I think I should
    respond to immediately before making my remarks, just in case
    someone leaves the room with the wrong impression.

                                NUCLEAR TESTING

        Senator Feinstein, I believe you said something to the
    effect that you have heard that the United States is talking
    about nuclear testing, and I do not know quite what you said,
    but if you said that, it would be not correct. The President
    has indicated that he supports the moratorium. There have been
    no utterances by anyone that I know of in the administration
    about the subject of nuclear testing, and I would not want
    someone to leave the room with the impression that that is
    under debate or consideration, because to my knowledge it is
    not.

                           NO CHANGE IN CHINA POLICY

        Second, with respect to the People's Republic of China, and
    the things that are in the press on that subject, I had the
    benefit of being out in Senator Domenici's home State for a
    little vacation over the week and returned back to find the
    press filled with stories about this.
        I have checked with Secretary Powell and I have checked
    with Dr. Rice, and the suggestion that the United States has or
    is poised to approve of China's military and nuclear buildup
    for some reason in exchange for something is simply not the
    case, notwithstanding what people are reading in the press, and
    I think, Senator Specter, you asked the question, and I know
    Senator Feinstein, you asked the question, and all I can say
    is, I have talked to the two people in foreign policy who work
    very closely with the President on those issues, and that is
    not the case.

                  OVERVIEW OF FISCAL YEAR 2002 BUDGET REQUEST

        Mr. Chairman, when President Bush took office 7 months ago,
    he made clear that one of his highest priorities would be to
    address and arrest the decline in our Armed Forces and begin
    working to build the 21st Century military that can help deter
    aggression and extend peace and prosperity. To begin reversing
    the effects of close to a decade of overuse and underfunding,
    the President first submitted the 2001 supplemental budget
    request which was approved by Congress earlier this year, and
    we thank you for that, and a 2002 budget request followed. It
    includes the largest increase in defense spending since the
    mid-1980's.
        This is an important step in getting the Department out of
    a hole that a long period of underfunding has put us in, and it
    is a significant investment of taxpayer's money, as the members
    of the committee have pointed out.
        The 2002 budget includes funding for military quality of
    life, increases in miliary pay, housing, and health care, for
    training, for readiness, for maintenance and repair of aging
    equipment, for modernization and transformation in the research
    and development (R&D) area, and Mr. Chairman, we need every
    nickel of it.
        The budget request does not solve the problems of the
    Department. It begins to repair the damage that has been done
    by a long period of underfunding and overuse. In addition, it
    lays the foundation for the effort to transform the Armed
    Forces for the 21st Century, and as we work to transform the
    Armed Forces, we are working at the same time to try to improve
    the way the Department of Defense functions, and to encourage a
    culture of greater innovation, to turn waste into weapons, to
    show respect for the taxpayer's dollars, and to speed the
    utilization of new technologies to help keep the peace into the
    decades ahead.

                               BUDGET PRIORITIES

        As you consider the 2002 budget, let me briefly share some
    of our priorities with you and how they relate to the request
    that is before you. As we prepare for the new challenges that
    have been mentioned in some of the opening comments, certainly
    U.S. homeland defense takes on an increasing importance, and I
    quite agree with Senator Feinstein's comment that the so-called
    asymmetrical threats are the more likely threats in the period
    ahead, and they run across the spectrum, from terrorism, cruise
    missiles, to ballistic missiles, to cyber attacks, and
    certainly the Department needs to address all of those issues.
        The proliferation of weapons with increasing range and
    power in the hands of multiple potential adversaries means that
    the coming years will see an expansion of the risks to U.S.
    population centers, as well as our allies and friends. We will
    face new threats, as has been pointed out.
        Today, we are vulnerable to missile attack. That is a fact,
    and as has been suggested by the chairman, weakness is
    provocative. It invites people into doing things that they
    otherwise would avoid.
        If a rogue State, and you can pick any one you might like,
    has that capability and demonstrates that capability, there is
    no question but that a terror weapon has the effect of
    terrorizing and altering behavior, regardless of whether or not
    it is used, and simply its existence forces people to change
    their behavior.
        Think, in trying to forge an international coalition and
    stop an act of aggression, by--for example, when Iraq went into
    Kuwait, if we had known beforehand that Iraq had a nuclear
    capability and a ballistic missile capable of reaching Europe
    and the United States, it would have been difficult, if not
    impossible to fashion such a coalition.
        The alternatives a country is faced with, absent the
    ability to defend, are several. One is to acquiesce, and allow
    a country to take over their neighbor. A second is to preempt,
    and that is a very difficult decision for a country, and a
    third is to put your population at risk and then retaliate
    after you have lost a large number of people, if that happened
    to be the case.
        What is at stake here is not only protecting the American
    people and our allies from attack, although that is critical.
    What is also at stake, in my view, is the ability to project
    force to defend peace and freedom in this world. Winston
    Churchill once said, I hope I shall never see the day when the
    forces of right are deprived of the right of force, and that is
    precisely what rogue States intend, to deny the forces of right
    the ability to stop aggression and defend freedom in the 21st
    Century.
        The President's request for missile defense is less than 3
    percent of the 2002 budget. For so-called national missile
    defense, that is to say, separating theater missile defense
    from it, it is something like 1\1/2\ percent of the budget.
    More than 98 percent of the budget is for other priorities,
    including the other so-called asymmetrical threats.
        But let there be no doubt, the threats are real. President
    Bush is committed to ensuring that we develop the capability to
    contribute to peace, stability and freedom, and without such
    capabilities the United States could be driven inward, at great
    risk to the world economy.
        Senator Kohl mentioned the reason why a budget request with
    an increase in a time of peace makes sense. If you think about
    it, the world economy is what enables the American people to go
    about their business and have economic opportunities and
    provide for their families, that we are a participant in that.
    If we see an instability injected into the world economy,
    because of war or conflict or because of the fear of war or
    conflict, the American people lose that. We lose that, all the
    things that we value, and that our fellow citizens value.
        We have to remember that what underpins a prosperous
    economy is peace and stability, and what provides peace and
    stability at this time in the history of the world is the
    United States of America's capabilities. We are spending less
    than 3 percent of the gross national product of the United
    States on defense.
        When I came to Washington in 1957, President Eisenhower was
    President, and during that period, my early years in Congress,
    we were spending 10 percent of the gross national product on
    defense, and we could do it just fine. Today, we are down below
    3 percent of the gross national product, and the idea that we
    cannot afford to spend 3 percent of the gross national product
    to provide the peace and stability that makes prosperity and
    economic opportunity across this globe possible I think is not
    debatable. We can.
        As you know, we are working to reach an understanding with
    Russia by the time our development programs begin to bump up
    against the constraints of the ABM Treaty. I do not know if we
    will be able to reach an agreement or not, but certainly
    everyone is working on it. The President is, Secretary Powell
    is, I am. I have had meetings, and will have more this month,
    and that is our hope.
        The question as to whether or not they will be successful I
    would submit partly depends on the perceptions that the
    Russians have, and to the extent the Russians develop a
    perception that the United States is not interested in going
    forward and providing defense against ballistic missiles, or
    that we are split on that issue, obviously it is in their
    interests to not come to any agreements with us, and so I would
    hope that we would go through this period strengthening the
    President's position in his negotiations with the Russians so
    that we can move beyond and establish a new framework for the
    relationship between the United States and Russia, a
    relationship that is based not on the cold war, and not on
    mutual assured destruction, but is based on the future and the
    relationship that makes the most sense between two countries
    that are, indeed, not enemies.
        The 2002 amended budget moves us on a path towards
    transformation by undertaking urgently needed immediate repairs
    on our existing force, and by investing now in some of the
    transformational technologies and R&D that will be needed.
    Regrettably, we can't build the 21st Century force unless we
    first begin repairing the damage that has been done by
    overdrawing the peace dividend in the 1990's. We spent much of
    the 1990's living off investments of the 1980's, and we allowed
    our military capabilities to be slowly degraded, as we overused
    a shrinking and underfunded force.
        To their enormous credit, America's dedicated servicemen
    and women dutifully did more with less, putting off needed
    investment in training, infrastructure, maintenance,
    procurement, to keep up with the proliferation of missions. A
    number in Congress and certainly on this committee have worked
    hard to give them the resources they need, but notwithstanding
    those efforts, the reality was that they were overworked and
    underfunded over a sustained period, and the result has been a
    serious backlog in maintenance, deferred procurement, a
    deteriorating infrastructure, and lost opportunities for
    transformation.
        For example, basic research funding has declined 11 percent
    since 1992, research, development, test and evaluation (RDT&E)
    funding levels have declined by 7.4 percent in the same period,
    the deferred maintenance for DOD facilities, which is the
    cumulative amount that has not been funded from year to year,
    currently stands at $11 billion, DOD is failing to meet the
    current standard to maintain a steady state of 310 ships, as
    Senator Cochran mentioned. Without added ship construction, it
    is headed towards an unacceptable steady state of 230 ships,
    which is obviously unacceptable.
        Every year the U.S. Government puts off addressing these
    problems the cost of catching up grows worse. We need to change
    it. In addition to the various risks associated with our
    ability to execute war plans, the Department must also develop
    the ability to take into account the risk to personnel, the
    risk to modernization if we fail to transform. We have to
    develop the skill and the ability to weigh an expenditure today
    for modernization of a weapon against the risk of being in a
    conflict 3 years from now and being struck deaf, dumb, and
    blind because we did not make the proper investments in
    information technologies and interoperability and antijamming
    capabilities. That is not easy to do, but that is the process
    we are going through.
        In February, the President proposed a $310.5 billion
    baseline budget that includes $4.4 billion in new money for
    military pay, housing, and R&D. The request before you raises
    that investment to a total of $328.9 billion. That is an
    increase of $18.4 billion in budget authority. Taken together,
    this is $22.8 billion in new money for the Department in 2002.
        Among other things, the request increases spending for
    military personnel level of $75 billion in 2001 to $82 billion,
    an increase of 9 percent, including funds for needed targeted
    pay raises and improved housing allowance. It requests $4 plus
    billion to improve the quality of family housing, a 12 percent
    increase. It requests the congressionally required increased
    spending on defense health from the 2001 level of $12 billion
    to $7.9 billion, an enormous 48 percent increase of $5.8
    billion.
        I was asked, why such a large increase in health? The
    answer is, the Congress passed legislation providing for a set
    of health provisions in one case, for example, for the over-65
    lifetime health, and the estimates are very difficult to make,
    but the cost of that program, while difficult to estimate, is
    clearly enormous, and it is going to have a significant effect
    on the defense budget over the coming period.
        The budget before you begins to reverse the neglect of
    maintenance and repair requested increased spending on
    operations and maintenance from a 2001 level of $107 billion to
    $125 billion, a 16-percent increase. It fully funds the Navy
    and Air Force op tempo costs. The Army made a decision to be
    slightly below full funding with respect to tank hours and
    helicopter hours.
        The reality is that we cannot transform the Armed Forces
    unless we also transform the way we do our business in the
    Department. The Department used to be a technological leader in
    innovation. Today, with few exceptions, the Department can
    barely keep up with the pace of technological change, much less
    lead. Since 1975, the Department has doubled the time it takes
    to produce a weapons system at a time when new generations of
    technology have shortened the years down to just 18 to 24
    months. This virtually guarantees that many of DOD's newest
    weapons will be one or more technology generations behind the
    day they are fielded. The combination of internal
    inefficiencies and external constraints on the Department
    together ensure that DOD operates in a manner that is too slow,
    too ponderous, and too inefficient, and that whatever it does
    ultimately produce tends to be late and not respectful of
    taxpayers dollars.
        The situation really cannot continue, in my view. In the
    coming weeks, we will be laying out a plan to address the waste
    and duplication of effort in the Department. We will undertake
    initiatives to encourage cost savings to foster the culture of
    intelligent risk-taking and begin applying modern business
    practices to the way the Department does its business. We will
    outline specific cost savings that we are undertaking
    unilaterally, as well as some structural reforms that will help
    lay the groundwork for further savings in the years ahead.
        While there are many things we are doing unilaterally in
    the Department, we will also need some help from Congress. For
    example, we will need support for our so-called efficient
    facilities initiative, requesting congressional authorization
    for a single round of miliary base closures and realignments in
    2003.
        Since the end of the cold war, the number of men and women
    in uniform has come down 40 percent, but there has not been a
    parallel reduction in facilities. People who have studied the
    problem conclude that we have from 20 to 25 percent more
    infrastructure than we need to support the force. That excess
    infrastructure is costing us unnecessary billions of dollars
    every year in unneeded rent, utilities, and maintenance. We
    estimate that after the first few years, this program could
    save us as much as $3.5 billion annually, money that could be
    better spent on high priorities like readiness, modernization,
    and quality of life for the troops.
        We also need your support for the proposed revitalization
    of the B-1 bomber fleet. By reducing the fleet from 93 to 60
    aircraft, and concentrating the remaining aircraft in two of
    the largest B-1 bases, rather than in the five bases where they
    are currently scattered around today, we can free up funds for
    the Air Force to rapidly modernize the remaining 60 aircraft
    with new precision weapons, self-protection systems, and
    reliability upgrades, so that they can remain viable for use in
    future conflicts.
        There has been a good deal of opposition to this proposal,
    but it is the right thing to do, and we need to get on with it.
    By undertaking both unilateral reforms, and reforms in
    cooperation with Congress, we can bring the Defense Department
    to a more effective institution.
        Mr. Chairman, we need to do it because of the harsh reality
    that the unmet needs of the U.S. Armed Forces exceed the funds
    available to address them, so unless, together, we can turn
    waste into weapons, we will have to come to you next year and
    the year after that asking you to appropriate still more of the
    taxpayer's dollars to meet unmet needs, many of which could
    have been paid for by trimming and cost savings from within.
        Neither the transformation of the Armed Forces nor the
    transformation of the Department is going to be easy. Change is
    hard, and if anyone does not believe it, just look at the
    turmoil that it can cause when one proposes change. A
    philosopher once wrote that there is nothing more difficult to
    plan or more dangerous to manage than the creation of a new
    system, for the initiation has the enmity of all who would
    profit by the preservation of the old institution, and merely
    the lukewarm defense of those who would gain from the new.
        We really have no choice. We are entering a world where new
    threats can emerge suddenly. We need to have a military that is
    sized and structured to meet those challenges. We need a
    Department that is innovative, flexible, and forward-thinking
    if we are to meet those new and different threats. The time has
    come to reinvigorate the morale and readiness of the force and
    prepare for the new and different challenges in this new and
    still dangerous and untidy world.

                               PREPARED STATEMENT

        Mr. Chairman, I thank you for the opportunity to be here,
    and look forward to responding to questions.
        [The statement follows:]

                 PREPARED STATEMENT OF HON. DONALD H. RUMSFELD

        Mr. Chairman, members of the Committee, I thank you for this
    opportunity to meet with you this morning.
        When President Bush took office some seven months ago, he made
    clear that one of his highest priorities would be to arrest the decline
    of our armed forces and begin building a 21st Century military that can
    help deter aggression and extend peace and prosperity well into the new
    century.
        To begin reversing the effects of close to a decade of overuse and
    under-funding, the President submitted first a 2001 supplemental budget
    request, which was approved by Congress earlier this year, and more
    recently, a 2002 budget request that includes the largest increase in
    defense spending since the mid-1980s. This is an important step in
    getting the Department out of the hole that long period of under-
    funding has put it in, and a significant investment of the taxpayers'
    money. But it is a step desperately needed by the men and women in
    uniform.
        The 2002 budget includes critical funding for military quality of
    life--increases in military pay, housing, and health care. It includes
    funding for training and readiness, for maintenance and repair of our
    aging equipment, for modernization and transformational R&D.
        Mr. Chairman, we need every nickel of it.
        This budget request not only begins to repair the damage done by a
    long period of under-funding and over use, it lays the foundation for
    the effort to transform our Armed Forces for the 21st Century.
        Earlier this year, the President asked the senior civilian and
    military leaders of the Department to review the U.S. defense strategy,
    to propose ways we could reinvigorate the morale of our men and women
    in uniform, improve readiness to meet current threats, and achieve
    transformation of the forces to meet the new and different security
    challenges of the 21st Century.
        That effort is nearing completion:
      --The Congressionally mandated Quadrennial Defense Review will be
            finished this month. It has been the subject of extensive and
            fruitful discussion by the senior DOD civilian and military
            leadership. The report will be presented to the President and
            the Congress in the coming weeks.
      --The annual Defense Planning Guidance (DPG) was issued last week. It
            will help guide the Department as work goes forward to prepare
            the President's 2003 budget.
      --A new National Defense Strategy has been developed and discussed
            with the President, along with a new approach to planning for
            and sizing forces. This new approach focuses less on specific
            regional conflicts, and more on building a portfolio of U.S.
            military capabilities to meet the wide range of contingencies
            we are likely to face in the future. Because we cannot
            anticipate who might threaten us in the future, but can predict
            with some confidence the means an adversary is likely to
            employ, we will likely be shifting from a ``threat-based'' to a
            ``capabilities-based'' approach to long-term planning.
      --The new force-sizing construct we have developed and discussed with
            the President will replace the two Major Theater War construct
            that has guided us since the end of the Cold War. The new
            construct would prepare forces to defend the U.S., deter in
            four critical regions, prevail in two overlapping conflicts,
            while leaving the President the option to commit forces in
            either of those conflicts to impose our will on the adversary--
            including regime change and occupation.
      --The Congressionally-mandated Nuclear Posture Review is well along,
            and will be issued this fall. It will recommend a path to
            fulfill President Bush's pledge to achieve a strong, credible
            deterrent with the lowest number of nuclear weapons consistent
            with U.S. national security needs and U.S. alliance
            commitments.
      --We have re-focused and revitalized the missile defense program,
            shifting from a single-site ``national'' missile defense
            approach, to a broad-based research, development and testing
            approach that will explore many previously untested
            technologies and approaches, and lead to the development and
            deployment of defenses able to intercept missiles of various
            ranges in various stages of flight. This will include the
            capability to defend not only the American people, but our
            friends, allies and deployed forces as well, from limited
            threats.
      --At the same time, we are working with Russia to develop a new
            strategic framework for the 21st Century--one that will put
            behind us the hostilities and institutions of the Cold War,
            including the nuclear balance of terror and the ABM Treaty that
            helped enshrine that balance of terror as the foundation of our
            relationship.
      --And, as we work to transform the Armed Forces for the 21st Century,
            we are working at the same time to transform the Defense
            Department--to encourage a culture of greater innovation, to
            turn waste into weapons, to show respect for the taxpayer's
            dollars, and to speed the utilization of new technologies to
            help keep the peace into the decades ahead.
        Mr. Chairman, these efforts will help us transform our Armed Forces
    for the 21st Century. But let me be clear: we cannot wait until the
    2003 budget cycle to get started--the needs are too great and too
    urgent to delay.
        We need your support for the President's 2002 budget. We need your
    support for critical funds to repair aging planes, tanks and ships, to
    fix collapsing roofs and fund training and readiness for our troops.
        The budget before you lays the foundation for the transformation of
    U.S. Armed Forces, while at the same time providing immediate and much
    needed funding for critical priorities contained in the new defense
    strategy--including funds to address risks to people, modernization and
    transformation that have been neglected.
        So as you consider the 2002 budget, allow me to briefly share some
    of those priorities with you, and how they relate to the 2002 budget
    request before you.
        As we prepare for the security challenges of the 21st Century, U.S.
    homeland defense takes on increasing importance. For most of U.S.
    history, we have been blessed with the security advantage of excellent
    geography, friendly neighbors and a vast ocean buffer. But the Cold
    war, with its threat of missile and bomber strikes against our
    territory, ended our geographic advantage. The end of the Cold War has
    not restored it.
        To the contrary, the proliferation of weapons with increasing range
    and power into the hands of multiple potential adversaries means that
    the coming years will see an expansion of the risks to U.S. population
    centers--as well as those our allies. We will face new threats--from
    satchel bombs, cruise missiles, and ballistic missiles of varying
    ranges.
        This is a major change in our circumstance. We can no longer count
    on future conflicts remaining largely contained within their region of
    origin far from our shores. States unfriendly to the U.S. are working
    aggressively to develop nuclear, chemical and biological weapons of
    mass destruction and a variety of means to deliver them. They are doing
    so because they want to have the ability to blackmail us by having the
    capability to strike our people where they live and work--as well as
    U.S. friends, allies and deployed forces around the world.
        If we remain vulnerable to missile attack, a rogue state that
    demonstrates the capacity to strike the U.S. or its allies could have
    the power to hold our people hostage to nuclear or other blackmail.
    Forging an international coalition to stop an act of aggression by such
    a state would be difficult if not impossible. Without missile defense,
    the alternatives would be to do nothing and thereby let aggression
    stand, to repel the aggression (and thereby put our populations at
    risk), or to attempt to preempt, a difficult decision for any country.
        What is at stake here is not just protecting the American people
    and our allies from attack--although that is critical; what is at stake
    is the U.S. ability to project force to defend peace and freedom in
    this new century.
        Winston Churchill once said: ``I hope that I shall never see the
    day when the forces of right are deprived of the right of force.'' That
    is precisely what rogue states intend--to deny the forces of right the
    ability to stop aggression and defend freedom in the 21st Century.
        If we are to remain engaged in the world, the capability to defend
    the United States from a range of new asymmetric threats must be a high
    priority.
        This is why the President has requested $8.3 billion for all types
    of ballistic missile defense. We need Congress to fully fund the
    President's budget request--a budget that also contains critical funds
    to deal with terrorism, force protection, cruise missile and protection
    of our space assets. The safety of our people, our friends, allies, and
    deployed forces--and our ability contribute to the peace and stability
    that underpin world prosperity--depend on your approval of these funds.
        The President's request for missile defense is less than 3 percent
    of the 2002 amended budget. More than 97 percent of the defense budget
    goes to other critical priorities. It is a modest, but prudent,
    investment--especially when compared to the significant investments
    that rogue states like Iran, Iraq, Libya and North Korea are making.
        Let there be no doubt: The threats are real. President Bush is
    committed to ensuring we develop the capability to contribute to peace,
    stability, and freedom. Without such capabilities, the U.S. could be
    driven inward at the great risk to the world economy; for without peace
    and stability, the world economy is threatened.
        As you know, we are working to reach an understanding with Russia
    by the time our development programs bump up against the numerous
    constraints of the ABM Treaty.
        Mr. Chairman, I recently returned from Moscow, where I met with my
    Russian counterpart and others discussing these matters. I believe that
    we may be able to reach an understanding with Russia--but let there be
    no doubt, doing so will be difficult and success is by no means
    assured.
        Our discussions with Russia will continue in the months ahead.
    Secretary Powell will meet with his counterpart next month in
    Washington. I will meet with my counterpart later this month in Italy.
    And President Bush will be meeting with President Putin in China in
    October and in Crawford, Texas, in November.
        Congress can help determine the success or failure of these
    discussions. If Congress shows the same resolve as the President to
    proceed seriously with research, development, testing and deployment of
    missile defense, it will significantly improve the prospects to achieve
    a cooperative outcome with Russia.
        If Congress does not approve the President's request for missile
    defense--if funding is cut or restrictions attached--Russia could get
    the mistaken impression that by dragging its feet it will be able to
    prevent development of U.S. missile defenses. This would harm our
    chances of achieving a cooperative solution.
        We may or may not succeed in these discussions with Russia. But let
    us not fail because we send them signals of disunity or lack of
    resolve.
        Mr. Chairman, The 2002 amended budget starts us on a path toward
    transformation by undertaking urgently needed, immediate repairs to our
    existing force, and by investing now in some of the transformational
    technologies and R&D that we will need for the 21st Century force. We
    cannot build that 21st Century force unless we first begin repairing
    the damage that was done by overdrawing the peace dividend of the
    1990s.
        We spent much of the 1990s living off the investments of the 1980s.
    We allowed our military capabilities to be slowly degraded as we
    overused a shrinking and under-funded force. To their enormous credit,
    America's dedicated servicemen and women dutifully did more with less--
    putting off needed investment in training, infrastructure, maintenance,
    and procurement to keep up with a proliferation of missions. A number
    in Congress--and on this Committee--worked hard to give them more
    resources. But notwithstanding those efforts, an imprudent policy of
    overworking and under-funding our troops continued.
        The result has been a critical backlog in maintenance, deferred
    procurement, a deteriorating infrastructure and lost opportunities for
    transformation.
        For example, basic research funding has declined by 11 percent
    since 1992, and RDT&E funding levels have declined 7.4 percent in the
    same period. The deferred maintenance for DOD facilities--the
    cumulative amount that has not been funded from year to year--currently
    stands at some $11 billion. DOD is failing to meet the current standard
    to maintain a steady state of 310 ships, and, without added ship
    construction, is headed towards a clearly unacceptable steady-state of
    230 ships. Every year the U.S. government puts off addressing these
    problems, the costs of ``catching up'' grow worse.
        We need to change this. In addition to the various risks associated
    with our ability to execute war plans, the Department must also take
    into account the risks to personnel, to modernization and to
    transformation when determining how we allocate resources. And we need
    the cooperation of Congress in this effort.
        The President's 2002 budget proposes immediate investments to
    address the neglect of these critical areas and to begin stabilizing
    the force.
        In February, the President proposed a $310.5 billion baseline
    budget that included $4.4 billion in new money for military pay,
    housing, and R&D. The request before you raises that proposed
    investment further to a total of $328.9--an increase of an additional
    $18.4 billion. Taken together, President Bush has proposed $22.8
    billion in new money for the Department of Defense in 2002.
        Among other things, the President's budget:
      --Requests increased spending on military personnel from the fiscal
            year 2001 level of $75.4 billion to $82.3 billion--an increase
            of $6.9 billion--including funds for a needed targeted pay
            raise, and an improved housing allowance.
      --Requests $4.1 billion to improve the quality of family housing--an
            increase from $3.6 billion in the fiscal year 2001 budget.
      --Requests the Congressionally required increased spending on defense
            health from the fiscal year 2001 level of $12.1 billion to
            $17.9 billion--an enormous 48 percent increase of $5.8 billion.
      --Begins to reverse the neglect of maintenance and repair, requesting
            increased spending on operations and maintenance from the
            fiscal year 2001 level of $107.9 billion to $125.7 billion
            today--an increase of $17.8 billion.
      --Fully funds Navy and Air Force OPTEMPO costs.
      --Plants signposts for 21st Century transformation, proposing an
            increase in spending on RDT&E from the fiscal year 2001 level
            of $41 billion to $47.4 billion--an increase of $6.3 billion.
        This budget also includes a commitment ``realistic budgeting'' in
    order to stop the pattern of annual ``emergency'' supplementals. For
    example, health care costs in the country are increasing at an annual
    rate of 13 percent. But the fiscal year 2001 budget provided just $12.1
    billion for military healthcare--falling short of what was needed to
    cover that rate of increase by $1.4 billion.
        By contrast, this 2002 budget proposes $17.9 billion for defense
    health--a $5.8 billion increase--that should allow us to cover a
    probable 12 percent growth in the costs of medical care and a likely 15
    percent growth in the cost of pharmacy purchases. This means that, for
    the first time in years, the fiscal year 2002 budget should fund a
    realistic estimate for military health care costs.
        Mr. Chairman, these are important investments. But let me be clear:
    this budget won't get us out of the hole we are in. Today, we are
    proposing a $328.9 billion defense budget for fiscal year 2002. But to
    keep the department going next year--fiscal year 2003--on a straight-
    line--no improvements, just covering the costs of inflation and
    realistic budgeting--we will need a budget of $347.2 billion. That is
    an $18.3 billion increase before including the additional investment
    that will be needed to modernize and transform the force for the
    future.
        The point, Mr. Chairman, is that it took the U.S. government years
    to drive the Department of Defense into this hole, and, I regret to
    say, it is going to take us years to get out. It is a lot easier to do
    things right in the first place than it is to straighten things out
    after they've been done badly. But, that is the hand we've been dealt,
    and we need to get about the task of fixing it.
        We need your support for the President's proposed increases in pay,
    housing, health care and quality of life for our men and women in
    uniform. We need your support to fund the increased cost of flying
    hours, tank miles and steaming hours for our forces. We need your
    support to begin to work off the backlog of facilities maintenance and
    repair, for weapons system maintenance and repair, for modernization,
    and for transformational research and development. These important
    investments will help lay the groundwork for 2003 transformation
    budget.
        But we cannot transform our Armed Forces for the 21st Century
    unless we also transform the way the Department of Defense does
    business.
        This Department used to be a technological leader--an engine of
    innovation. Today, with few exceptions, DOD can barely keep up with the
    pace of technological change, much less lead.
        Consider: Since 1975 the Department has doubled the time it takes
    to produce a weapons system--at a time when the pace for new
    generations of technology has shortened from years to just 18 months.
    This virtually guarantees that many of DOD's newest weapons will be one
    or more technology generations old the day they are fielded.
        The combination of internal inefficiencies and external constraints
    on the Department together ensure that DOD operates in a manner that is
    so slow, so ponderous, and so inefficient that whatever it ultimately
    does produce is late and wasteful of taxpayer dollars.
        At the same time, DOD's processes and regulations have grown so
    onerous, that a number of commercial businesses--developing needed
    technologies--prefer not to do business with the Department.
        If DOD is no longer the engine of innovation in the 21st Century,
    and if many of the private sector companies that are the engines of
    innovation prefer not to do business with us, how can we effectively
    transform to meet the challenges of the 21st Century?
        This situation cannot stand. That is why, in the coming weeks we
    will lay out a plan to address the waste and duplication of effort at
    the Department. We will undertake initiatives to encourage cost
    savings, to foster a culture of intelligent risk taking, and to begin
    applying modern business practices to the way the Department does its
    business. We will outline specific cost savings that we are undertaking
    unilaterally, as well as structural reforms that will help lay the
    groundwork for further savings in the years ahead.
        Our efforts will be guided by a new Senior Executive Council that
    includes the Undersecretary of Defense for Acquisition, Technology and
    Logistics Pete Aldridge, and the three Service Secretaries: Secretary
    of the Army Thomas White, Secretary of the Navy Gordon England, and Air
    Force Secretary James Roche. They are leading a new effort to bring the
    Department and its business practices into the 21st Century.
        But while there are many things we are doing unilaterally to
    transform the Department, we cannot succeed without help from Congress.
        For example, we need your support for our Efficient Facilities
    Initiative of 2001 (``EFI''), requesting Congressional authorization
    for a single round of military base closures and realignments in 2003.
        Since the end of the Cold War, the number of men and women in
    uniform has come down over 40 percent. But there has not been a
    parallel reduction in facilities. People who have studied the problem
    conclude that we have roughly 20-25 percent more infrastructure than we
    need to support the force. That excess infrastructure is costing
    unnecessary tens of billions of dollars every year in unneeded rent,
    utilities, and maintenance. We estimate that after the first few years,
    EFI could save as much as $3.5 billion annually--money that could be
    better spent on priorities such as readiness, modernization, and
    quality of life improvements for our troops.
        We need your support for the proposed revitalization of the B-1
    bomber fleet. By reducing the fleet from 93 to 60 aircraft,
    concentrating the remaining aircraft in the two largest B-1 bases
    (rather than the five bases where they are scattered today), we can
    free up funds for the Air Force to rapidly modernize the remaining
    aircraft with new precision weapons, self-protection systems, and
    reliability upgrades so that they can remain viable for use in future
    conflicts. There has been a great deal of vocal opposition to this
    proposal, but it is the right thing to do and we need to get on with
    it.
        This reform will add some $1.5 billion of advanced combat
    capability to today's aging B-1 fleet over the next five years--without
    requiring additional dollars from the taxpayers. It would revive the B-
    1 force, so that it can provide America with the kind of all-weather,
    long-range strike capabilities that will be critical in the 21st
    century.
        Mr. Chairman, this is the kind of efficiency we owe the American
    taxpayers. Congressional support for this plan is needed to send an
    important signal to all of the Services, and give them an incentive to
    find further cost savings by telling them that such efforts will be
    rewarded with freed up funds to improve capabilities, rather than
    simply being bombarded with complaints for their efforts.
        The failure of this proposal, by contrast, would send a harmful
    signal across the defense establishment that if the Services do step
    forward to find innovative ways to save money and to increase
    efficiency, not only it will be a waste of their time and effort, but
    it will lead to hostility to them and to the Department. That is not
    the message we want to send if we want to be respectful of the
    taxpayers' dollars and if we truly want to strengthen our national
    security.
        We also need your support for the proposed elimination of the
    Peacekeeper missile. The previous Administration's 2002 budget included
    $100 million to fund operations, maintenance, and personnel support for
    the Peacekeeper, plus $5 million more for procurement support in 2002--
    but then it included not a dollar for follow-on funding for 2003 or
    beyond, either to sustain the missile squadron, or to retire them.
        Rather than continue spending taxpayer's money on an unneeded
    system, we have proposed deactivating the Peacekeeper system over a
    five-year period. Doing so should avoid costs of $320 million during
    the deactivation, and then an additional $150 million annually
    thereafter.
        Another area where we may also come to you with proposals for
    reform is in officer and enlisted career lengths. We're losing good
    people sooner than we need to. Today, we have policies that have the
    effect of uprooting enlisted personnel and families every few years to
    move them to new assignments--and then, after training them and
    benefiting from their fine services, half of them leave the service
    when they still have so much to offer. Similarly, we bring in
    commissioned officers, train them, bounce them around from assignment
    to assignment every two or three years, that they end up skipping
    across the top of the waves so fast they don't have time to learn from
    their mistakes. And then we have them retire in their late 40s and
    early 50s--while still in their prime. No private enterprise could
    survive functioning this way.
        By undertaking both unilateral reforms, and reforms in cooperation
    with Congress, we can and will bring the Defense Department into the
    21st Century. As President Bush told the Veterans of Foreign Wars two
    weeks ago, ``We're not only going to spend more money on national
    defense--we're also going to spend it more wisely.''
        Mr. Chairman, we need to do so because the harsh reality is that
    the unmet needs of the U.S. Armed Forces far exceed the funds available
    to address them. So unless together we can turn waste into weapons, we
    will have to come to you next year and the year after that, asking you
    to appropriate still more of the taxpayers money to meet urgent needs--
    many of which could have been paid for by trimming cost savings from
    within.
        Neither the transformation of U.S. Armed Forces nor the
    transformation of the Department will be easy. Change is hard. A
    philosopher once wrote: ``there is nothing more difficult to plan . . .
    or more dangerous to manage than the creation of a new system. For the
    initiation has the enmity of all who would profit by the preservation
    of the old institution and merely the lukewarm defense of those who
    would gain by the new.''
        We have no choice. We are entering a world where new threats can
    emerge suddenly. We must have a military sized and structured to meet
    those challenges. And we must have a Department that is innovative,
    flexible and forward thinking if we are to meet those new and different
    threats.
        To accomplish this, we need your help. As I said at the outset, we
    are in a hole. And the first rule of holes is; ``when in a hole, stop
    digging.'' But each year we put off these critical investments, every
    year we ``kick the can down the road'', we are digging ourselves deeper
    and deeper into that hole. Each year we put off these investments, it
    will be vastly more difficult--and certainly much more expensive for
    the taxpayers--to fix the problems. It's like having a credit card--if
    you pay only the minimum every month, the interest will accumulate and
    the cost of digging out of debt gets bigger and bigger every year. That
    is what we have been doing to our Armed Forces.
        Changing that requires a new strategy, a new force sizing
    construct, and new investments. We've been living off the investments
    of the 1980s for too long, to the detriment of our men and women in
    uniform. We have given insufficient attention to the risks to
    personnel, to modernization and to transformation.
        The time has come to change that--to reinvigorate the morale and
    readiness of our force, and to prepare for the new and different
    challenges of this new and still dangerous century. The necessary first
    step to doing that is for Congress to approve the President's 2002
    defense budget.
        Thank you.

        Senator Inouye. I thank you very much, Mr. Secretary. May I
    now recognize General Shelton?
    STATEMENT OF GENERAL HENRY H. SHELTON, USA, CHAIRMAN,
                JOINT CHIEFS OF STAFF
        General Shelton. Thank you, Chairman Inouye, Senator
    Stevens, and other distinguished members of this committee.
    Once again, it is my privilege to appear before you today and
    report to you on the state of America's Armed Forces. I would
    like to highlight some key priorities from the written
    statement that I have provided for the record, and then move
    right into your questions.
        Mr. Chairman, I have been a soldier now for 38 years, and
    as I reflect on the state of the military today, I am reminded
    of three important lessons that I have learned over those 38
    years. The first is that in this legal profession of ours, our
    profession of arms, there simply is no substitute for being
    ready when the Nation calls, as you pointed out so eloquently
    in your article that appeared in Defense News this past week.
        The second is that the military is about people, about our
    great men and women in uniform and their families. They have
    never let America down, and they never will. We must properly
    take care of their needs.
        And third, we must always anticipate the threats of
    tomorrow, even as we deal with the challenges of today.
        I share these lessons with you because we must not let the
    spirit of relative peace, as Senator Kohl commented on a while
    ago, and also relative period of prosperity, lead us down the
    path of complacency and blind us to a fundamental truth, and
    that is that the furies of history will return, and they will
    produce destruction and violence at a time and at a place and
    in a manner that we probably will not expect. We must therefore
    remain vigilant, and we must remain prepared.
        Today, our military forces, and I refer to active, Guard,
    and Reserve, remain the best trained, best equipped, and most
    capable in the world, but before we congratulate ourselves, let
    me also say about our readiness that our people and our forces
    are experiencing some challenges which, if not addressed
    quickly, may erode our present-day advantage, and I would like
    to bring a number of these pressing issues to your attention.
        First, if we should have to fight tomorrow, I am confident
    that our frontline troops are trained and ready. However, it is
    important to note that many other operational units are not as
    ready. These include our combat service support units, our
    strategic airlift fleet, our intelligence surveillance and
    reconnaissance aircraft and assets, and our training bases, all
    of which provide critical capabilities to our war-fighting
    forces.
        These units are in some cases suffering the consequences of
    high op tempo, and the diversion of resources to sustain the
    near-term readiness of our first-to-fight forces.
        We are also a very busy force. Since 1995, DOD has
    experienced a 133 percent increase in the number of personnel
    that are committed around the globe, and these are real-world
    operations, not exercises, and we are doing it with 9 percent
    fewer people than we had in 1995. This high operational tempo
    on segments of our force has increased the strain on our
    people, and has highlighted the imbalance that we have today
    between our strategy and our force structure.
        Fixing this imbalance is part of the ongoing work in the
    QDR, and of course one of the top priorities for all of the
    Joint Chiefs, because the challenge will only increase over
    time, and we owe it to our people to get it right. In fact,
    through the QDR process, we are struggling to reconcile a
    number of competing demands, near-term readiness, recruiting
    and retaining our high-quality forces, long-term modernization
    and recapitalization of our aging systems, transformation, and
    yes, the infrastructure investments that are essential to
    preserve the world's best war-fighting capability.
        Secretary Rumsfeld commented on the fact that we have been
    living off our procurement accounts from the 1980's, and the
    smart reduction that we have had in the 1990's in our
    procurement accounts means that the average age of most of our
    major weapons systems continues to increase. Of course, many of
    these systems have already exceeded their planned service life,
    or are fast approaching it. Let me give you just a few
    examples.
        Our frontline air superiority fighter, the F-15, averages
    17 years, only 3 years away from the end of its original design
    service life. Our airborne tanker fleet and our B-52 bomber
    force are nearly 40 years old. Our intelligence, surveillance,
    reconnaissance, and our electronic warfare aircraft such as the
    RC-135, the Rivet Joint, the EP-3's, the P-3's, and our EA-6B
    Prowlers, all critical to our war-fighting capabilities,
    average between 19 and 38 years of service, and finally,
    numerous helicopter platforms, going back to Senator Shelby's
    comment, in all of our services have passed or are approaching
    their original designed service life, and of course these
    helicopters are a key part of our war-fighting capabilities in
    each of the services.
        In fact, most of the war-fighting platforms that I just
    mentioned were fielded at a time when most of our kids were
    listening to a group called Three Dog Night, they were
    listening to it on the latest in technology, an 8-track tape
    deck, while sitting in the seat of their Ford Pinto. Technology
    has come a long way since then, and just like the 25-year-old
    Pinto, our aging fleets of aircraft, ships, and vehicles are
    requiring increased numbers of parts, and they are requiring
    increased maintenance support.
        Let me give you a few examples that have been provided by
    our services, reflecting a recent trend with regards to our
    aging fleets. Between 1995 and the year 2000, the Air Force's
    F-15C model has seen a 38 percent increase in cost per flying
    hour, and a mission-capable rate that has dropped from 81 to 77
    percent. The Navy EA-6B Prowler has seen a 55 percent increase
    in cost per flying hour, and mission capable rates that have
    dropped from 60 percent to 56 percent, and the Army's M-1 tank,
    at an average age of 14 years, has seen a 22-percent increase
    in cost per operating mile, and a mission-capable rate drop
    from 91 percent to 85 percent.
        Now, while we have been successful, and I would even say
    highly successful, in meeting the demands of current
    operations, we have also been unable to significantly increase
    our investment in procurement, as Secretary Rumsfeld mentioned,
    in part due to the increasing costs associated with these
    platforms. If we do not increase our efforts in procurement,
    then we are left essentially with two choices. We can either
    retire these aging systems, or we can continue to maintain the
    old systems, resulting in increased costs, along with reduced
    operational capability.
        The bottom line is, I do not believe we can efficiently
    sustain our current capabilities for much longer, much less pay
    for ongoing efforts to modernize and transform without an
    increase in resources.
        But it is also important to remember these readiness issues
    have a tremendous impact on our people as well, requiring them
    to work harder and essentially do more with less, so let me now
    turn to a discussion on how we can better support our greatest
    asset, our men and women in uniform. Mr. Chairman, I believe
    that we have made real progress in the past 4 years providing
    long overdue support for our people, as well as for our
    families, and I would like to express my personal thanks and
    appreciation to the Congress and to this committee in
    particular for your outstanding role in helping take care of
    our troops.
        Consider the following that we have accomplished: increases
    in pay and allowances, pay table reform, Tricare improvements,
    increased funding for housing, and making good on our health
    care promise to our active force as well as our retirees. But
    let me also say that I believe we need to sustain this momentum
    to preserve the long-term quality and readiness of the force.
    An important first step in this regard is a renewed effort to
    eliminate the significant pay gap that still exists between the
    military and the private sector.
        A second related quality-of-life issue is the condition of
    our vital infrastructure, which continues to decay at an
    alarming rate. For quite some time now, budget constraints have
    forced us to make some hard choices, and we have had to
    redirect funds from military facilities and infrastructure
    accounts to support readiness requirements.
        A quality force deserves quality facilities, and that is
    why I believe it is essential that we provide the resources
    that are necessary to stop and reverse the deterioration at our
    posts, our camps, our bases, and our stations. One way that
    Congress can directly help is to support DOD's efficient
    facilities initiative, to dispose of excess bases and
    facilities.
        Third, I would ask your support to help ensure that all of
    our men and women in uniform, single, married, or
    unaccompanied, are provided with adequate housing.
    Unfortunately, this is not the case today. In fact, currently,
    62 percent of our family housing units are classified as
    inadequate, which means that an astonishing percentage of our
    families are living in substandard housing. We simply cannot
    let this situation continue.
        Finally, the other program that will greatly enhance the
    quality of life for our people is quality health care. Today,
    one of the most valuable recruiting and retention tools that a
    corporation can offer a workforce or a potential employee is a
    comprehensive medical package. Our Armed Forces are no
    different. For that reason, the Chiefs and I strongly urge the
    Congress to fully fund the defense health program as a strong
    signal that we are truly committed to providing health care for
    our troops. I cannot think of a better way to renew the bonds
    of trust between Uncle Sam and our service members and retirees
    than this commitment to military health care, and to quality
    health care.
        With your continued support of these initiatives, I believe
    we can sustain our quality force and ensure that America's best
    and brightest continue to answer the Nation's call. They truly
    represent our present and our future security.
        Since my last testimony, we have been reminded of the human
    element of national security in several profound ways. Last
    December, two U.S. Army helicopters crashed during a nighttime
    training mission in Hawaii, in Senator Inouye's home State.
    Nine soldiers perished in that crash. Some asked, why would the
    Army put their soldiers in harm's way, doing a dangerous
    training mission in the black of night. The answer is, that is
    what we do. We train for the most difficult missions that we
    may be asked to carry out. We must know that when America's
    interests are at stake, or when America's interests are
    threatened, we will be ready to go, day or night, and that
    failure is not an option.
        Last March, five of our soldiers and one New Zealander were
    killed during a nighttime training incident that took place at
    Udori range in Kuwait during a close air support training
    mission. Some may ask, why would you schedule such an event?
    Why would aircraft be dropping live ordnance on a range in the
    Kuwaiti desert? The answer is, because that is what we do. We
    train our troops to launch their aircraft 24 hours a day, often
    in unfamiliar surroundings, often with night-vision goggles,
    and often in difficult weather, precisely because we do not
    know where the next fight may take place and under what
    conditions. We will ask that of our great soldiers, sailors,
    airmen and marines.
        We must know, however, that when America's interests are
    threatened, we will be ready to go any time, day or night,
    because failure is not an option, and that, in fact, is the
    legacy of the honored dead that I have just mentioned.
        We must work hard to minimize the risks to our great
    volunteer force, but we must train the way we anticipate
    fighting, and we will fight at night. I am very proud of the
    performance of these men and women, and many thousands of other
    individuals who proudly wear the uniform of our country. They
    are, as they have always been, America's decisive edge. Indeed,
    they are so good at what they do that unless there is an
    incident or an accident, we rarely take notice of their daily
    contributions to our national security. They sail their ships,
    they fly their aircraft, they go on patrol quietly and
    professionally, and America is safe and enjoying great
    prosperity in part because of them.
        Mr. Chairman, as we consider new budgets and new national
    security strategies, and new ideas of transforming the force,
    it is important that we always remember that the quality of
    people in our military are critical to all that we hope to
    accomplish, and if we take action today to ensure that our men
    and women in uniform are properly taken care of, I am confident
    that we will prevail, regardless of the challenges that we face
    in the future.
        We have an opportunity in the succeeding weeks and months
    to build a foundation that will sustain the U.S. military
    supremacy in the decades ahead. Our professional, highly
    trained and motivated young Americans in uniform are counting
    on us to make the right decisions. If we are successful, we
    will help underwrite the continued peace and prosperity that
    our Nation currently enjoys well into the future, and I would
    submit that your support is needed now more than ever.
        As this could be, Mr. Chairman, and I emphasize could be,
    my last appearance before this committee, I would like to
    express my profound gratitude for the opportunity to work with
    all of you during the past 4 years, and I thank each of you and
    Secretary Rumsfeld for your very kind words, and I can tell you
    that coming from such outstanding public servants, as they did,
    and such strong advocates for our troops, they mean a great
    deal to me.
        I have a great feeling about what we collectively have
    achieved, and I also feel great about turning over the reins to
    General Dick Myers, a superb warrior, and a visionary leader.
    It has been my great honor to represent the hopes, the needs,
    and the aspirations of our great American servicemen and women,
    and I thank you for making your priorities their priorities.

                               PREPARED STATEMENT

        Thank you very much, Mr. Chairman, and we look forward to
    your questions.
        [The statement follows:]
            Prepared Statement of General Henry H. Shelton
        It is an honor to report to the Congress today on the state of
    America's Armed Forces. As every member of this committee knows, our
    Nation is blessed with an unsurpassed warfighting force that has been
    actively engaged over the past year supporting America's interests
    around the globe. I am extremely proud to represent the young men and
    women of our Armed Forces. They serve our country selflessly, away from
    home and loved ones, and are frequently put in harm's way. They
    personify America at its very best.
        It is those young soldiers, sailors, airmen, and marines who will
    fight tomorrow's wars with the strategy, force structure, doctrine, and
    equipment that we develop today. For them to do what we ask--to remain
    the best in the world--we must give them the best tools. This means
    ensuring that they always have the resources necessary to be trained,
    armed, and ready. It means properly compensating them today and
    tomorrow. And, it means recapitalizing our weapon systems and
    infrastructure, and modernizing the force to meet tomorrow's
    challenges. As we consider the choices ahead, may we always remember
    that our great people have the most at stake in the decisions that we
    make here in Washington.
        In this Posture Statement, I will address two broad topics: (1)
    Sustaining a Quality Force, concentrating on those programs that are
    critical to maintaining the force; and (2) Building Tomorrow's Joint
    Force, what we are doing today to prepare for tomorrow's
    challenges. deg.

                           SUSTAINING A QUALITY FORCE

        America's best and brightest must continue to answer the clarion
    call to serve if our Nation is to remain the strongest force for peace
    and stability on the planet. It is the quality of our people that gives
    us a decisive edge over our adversaries and to sustain this qualitative
    edge we must support our personnel with continued investments in pay
    compensation, health care, housing, and other quality of life programs.
    Compensation Gains
        A robust economy coupled with intense competition from the private
    sector continues to challenge our ability to attract and retain the
    very people needed to operate our increasingly sophisticated military
    equipment. With Congressional efforts to bring military pay in line
    with the civilian sector, the Employment Cost Index plus 0.5 percent
    initiative, and the President's $1 billion plus-up to military pay, we
    are moving in the right direction.
        Indeed, as a result of compensation gains in fiscal year 2000 and
    fiscal year 2001, we have made great strides toward improving the
    standards of living for members of our Armed Forces. With the
    significant support and help of this Committee, Congress, and the
    Administration, the Fiscal Year 2000 National Defense Authorization Act
    (NDAA) provided one of the largest pay raises in recent history,
    instituted retirement reform, and implemented pay table reform.
        That same level of outstanding support was evident in the fiscal
    year 2001 NDAA which included a 3.7 percent pay increase and allowed us
    to replace out of pocket (OOP) costs for off base housing to less than
    15 percent. Moreover, the opening of the Thrift Savings Plan to
    military members, the implementation of a monetary allowance for
    military members currently receiving food stamps, and revising the
    enlistment/retention bonus authority have also demonstrated to our
    forces a commitment to their quality of life. Again, this helps us
    attract and retain quality people.
        It is important to emphasize, however, that we need to sustain the
    momentum of the past two years. The pay raise slated for fiscal year
    2002 and your continued support of our efforts to reduce OOP expenses
    for housing to zero by fiscal year 2005 will further improve the
    quality of life for our servicemembers and their families. This is not
    only important for their well being, it is also critical to our efforts
    to recruit and retain a quality force.
    Military Health Care
        One of the most valued recruiting tools any major corporation can
    offer a potential employee is a comprehensive medical package. DOD is
    no different. Congress and the Administration have done much over the
    last year to address the health needs of our active duty and retired
    servicemembers and their families. As in the civilian sector,
    healthcare costs for the military community have continued to rise
    rapidly. Passage of the fiscal year 2001 NDAA demonstrated Congress'
    commitment to honor the promise to those currently serving and to those
    who served honorably in the past. I appreciate the support of Congress
    for this effort.
        We are pursuing full funding of healthcare costs as a strong signal
    that we are truly committed to providing quality healthcare for our
    active duty military members, retirees and their families. This
    commitment will have a profound impact on all who wear our uniform, and
    will encourage those who are considering a military career. It is also
    imperative that we fund healthcare benefits for retirees and their
    families in such a manner that this funding no longer competes with
    operations, force structure, and readiness. This will honor the
    national commitment we made long ago to our military retirees, without
    impacting the readiness and military capability of today's force.
        Additionally, the Joint Chiefs are working with the Assistant
    Secretary of Defense for Health Affairs in seeking business practice
    improvements and implementing the new benefits identified in the fiscal
    year 2001 NDAA. And, beginning in fiscal year 2002, TRICARE will pay
    costs not covered by Medicare for over-65 retirees and their families.
    Housing
        Housing continues to be a core element in our efforts to improve
    the quality of life for our service members. All our men and women in
    uniform deserve adequate housing. The Services remain on track with
    plans to eliminate inadequate housing for unaccompanied enlisted
    personnel by 2008. The situation for family housing is more
    challenging. Last year, the Service Family Housing Master Plans deemed
    almost 61 percent of family housing units inadequate. The Services are
    revamping their respective Family Housing Master Plans to revitalize,
    privatize, or demolish these inadequate units by 2010.
        Congressional support for DOD's three-pronged strategy to improve
    family housing has been outstanding and is greatly appreciated. First,
    the initiative to raise housing allowances to reduce out-of-pocket
    expenses for our servicemembers has provided welcome relief to the
    force. Second, creating smart partnerships with the private sector
    makes defense dollars go further and effectively frees up resources to
    revitalize existing housing. Finally, your continued efforts to fund
    our construction and privatization programs will pay great dividends by
    ensuring our servicemembers and their families can live in respectable
    accommodations.
        There is an inseparable, direct link between personal and family
    readiness and our total force combat readiness. Your continued support
    of these and other quality of life programs will provide substantial
    returns in retaining not just the member, but also the family.

                        BUILDING TOMORROW'S JOINT FORCE

        In this section, I present some of my thoughts on those actions we
    are taking today, to build tomorrow's joint force. In my view, these
    are the critical enablers for any new defense strategy designed to
    confront the challenges of this 21st century.

    Modernization
        While recent funding increases have arrested the decline in current
    readiness, our modernization accounts, which are critical to future
    readiness, remain under funded. Solving this problem has become my most
    urgent priority.
        Modernization will help reduce our capability concerns by
    leveraging advanced technology to improve interoperability. Also,
    newer, technologically advanced Intelligence, Surveillance, and
    Reconnaissance (ISR) collection assets, communications systems, and
    logistics support systems will help reduce manpower requirements while
    simultaneously improving the CINCs' warfighting capabilities.
    Modernization is also necessary for improved operational flexibility
    and to ensure that we retain a technological and qualitative
    superiority on the battlefield.
        We must modernize our force; however, we must not sacrifice current
    readiness to do it.

    Recapitalization of Force Structure
        After the Cold War, we made a conscious decision to cut procurement
    and live off the investments of the eighties as we reduced force
    structure. Between fiscal years 1993-98, approximately $100 billion was
    taken out of DOD procurement accounts. The 1997 QDR Report identified a
    potentially serious procurement problem if we did not increase
    investment in new platforms and equipment. A goal of $60 billion in
    procurement was established as an interim target to recover from the
    sharply reduced procurement spending in fiscal year 1993-98. Last year,
    for the first time, this interim goal was achieved.
        However, several recent studies, to include one by the
    Congressional Budget Office, have concluded that $60 billion is not
    sufficient to sustain the force. Since the QDR will determine the
    strategy and size of the force, I cannot give you a precise
    recommendation on the additional amount required. What is clear today
    is that we must accelerate the pace of replacing our aging and worn
    systems if we are to deliver the right capability to meet future
    challenges. We simply cannot continue to defer procurement and continue
    our usage at existing rates if we expect our force to meet all of our
    21st century commitments.

    Recapitalization of Infrastructure
        Our vital infrastructure is decaying. The understandable desire for
    a post-Cold War peace dividend forced us to make hard choices that
    redirected funds from military facilities and infrastructure accounts
    to support immediate readiness requirements. Years of belt-tightening
    have increased the risk of facility failures and have added to the
    costs of upkeep.
        Within civilian industry, the replacement, restoration or
    modernization of physical plant assets is accomplished in roughly a 50-
    year cycle. The rate of investment in DOD infrastructure has fallen to
    a level that requires over 100 years for recapitalization. We must find
    the resources to accelerate the recapitalization of our infrastructure
    to avoid further damage and degradation. A sustained period of
    increased funding is required to develop a modern infrastructure
    capable of supporting our 21st century force and the next generation of
    weapon systems.
        In its current state, the DOD infrastructure is still capable of
    supporting the National Military Strategy; however, in some locations,
    we face a high risk of operational limitations that may affect mission
    success. Throughout DOD, installation readiness is at an all-time low.
    In fact, 60 percent of our infrastructure is rated C-3 (some failures)
    or C-4 (major problems). It is particularly alarming that the current
    condition of training and operational facilities is lower than any
    other facility category in DOD. Usage restrictions and the shortage of
    required training ranges and operating areas slowly but inevitably
    degrade the readiness of our operational units. The poor material
    condition of facilities also directly contributes to lost or degraded
    training opportunities.
        In sum, our deteriorating infrastructure continues to impair
    readiness and detract from the quality of life of our service members
    and their families. I ask you to support our efforts to fix this
    problem, because it effectively reduces the efficiency of our uniformed
    and civilian workforce and further lowers retention rates for highly
    qualified and otherwise motivated personnel. A world class fighting
    force requires mission-ready facilities.
        Additionally, we sorely need further base closure rounds as part of
    our overall recapitalization effort. According to the April 1998 DOD
    BRAC Report, we have 23 percent excess base capacity in the United
    States, a situation that directly impacts the ability of the Service
    Chiefs to provide, train, maintain, and equip today's force. By
    removing validated excess capacity, we could save $3 billion per year
    in the long-term. This money would then be available to fund
    appropriately our remaining bases and help fix the remaining
    infrastructure.

                                 TRANSFORMATION

    Joint Vision 2020
        Our future force must be a seamless joint force and our roadmap for
    achieving this joint force is detailed in Joint Vision 2020 (JV 2020).
    Although the Services are busily engaged in the transformation of their
    respective forces, in my view these individual transformations will be
    most effective operationally only if they mesh fully with the more
    encompassing joint transformation called for in JV 2020.
        A key feature of this transformation will be the implementation of
    dominant maneuver, precision engagement, focused logistics, and full
    dimensional protection in the context of Joint Task Force (JTF)
    operations. Today, we successfully execute JTF operations when they are
    needed. But, in my view, we will be more responsive and agile in the
    future with JTF operations as our ``national military core
    competency.'' This goal will not be achieved through technology and
    materiel solutions alone. It will also require intellectual innovation
    and the development of doctrine, organizations, training and education,
    leaders, people, and facilities that effectively make use of new
    technologies.
        Using JV 2020 as a conceptual template, the goal of our joint
    transformation effort is a force that is dominant across the full
    spectrum of military operations. DOD is seeking to transform its forces
    to meet future challenges through a comprehensive plan that integrates
    activities in several areas: Service concept development and
    experimentation efforts; joint concept development and experimentation
    designed to integrate Service capabilities where possible and develop
    joint solutions where necessary; implementation processes in the
    Services and joint community to identify rapidly the most promising of
    the new concepts; and Science and Technology efforts focused on areas
    that can enhance U.S. military capabilities.
        This overall transformation effort is not focused solely on U.S.
    military capabilities. USJFCOM has developed an aggressive plan for
    outreach to multinational partners as well. Our objective is to bring
    allied perspectives into the concept development process to facilitate
    our future ability to operate effectively within a coalition
    environment.
        Based on joint experimentation and implementation programs, we
    expect to see some new capabilities that will be operational well
    before 2020, while other promising concepts will continue to be
    explored and developed. Our overarching goal is to bring these various
    capabilities together in a coherent and synchronized fashion.

                          OTHER TRANSFORMATION ISSUES

    Logistics Transformation
        Our goal for logistics transformation is to provide the joint
    warfighter real-time logistics situational awareness by leveraging
    technology and optimizing logistics processes. The Defense Reform
    Initiative Directive #54, Logistics Transformation Plans, establishes a
    framework of objectives and a means to measure progress toward
    accomplishing this goal.
        Ultimately, we must create a network-centric environment in which
    data can be accessed in real time at its source. This network-centric
    environment will provide the warfighter with operationally relevant
    logistics information necessary to make accurate, timely decisions and
    to maintain our military advantage into the next decades.

    Mobility
        We are making significant improvements in our ability to deploy
    forces. Our fleet of 35-year old C-141s is being replaced with C-17s,
    and numerous conventional break-bulk cargo ships are being replaced by
    Large Medium Speed Roll-on Roll-off ships. However, we foresee
    increased challenges and stresses to the mobility system. These
    challenges were carefully examined in the comprehensive two-year
    Mobility Requirements Study 05 (MRS-05). The study determined that
    programmed strategic lift capability falls short of requirements for
    both CONUS and inter-theater missions. MRS-05 also determined that
    increased capability is needed within theaters to move equipment and
    supplies forward from pre-positioning sites, airports, and seaports.
    Consequently, we are aggressively pursuing policy changes, host-nation
    agreements, and, where necessary, considering new equipment as part of
    the 2001 QDR to ensure timely force deployment. More than ever,
    Congressional support of strategic lift is needed if we are to build a
    national mobility capability sufficient for our current and future
    needs.

    Joint Interoperability
        We have made progress in the area of interoperability with an
    overall effort focused on creating a force that is ready to fight as a
    coherent joint unit, fully interoperable, and seamlessly integrated.
    Our long-term goal is to require that interoperability be ``designed
    in'' at the beginning of the development process rather than ``forced
    in'' after the fact. We intend to achieve this goal through
    improvements in the requirements generation process, including
    establishment of interoperability Key Performance Parameters (KPPs) and
    Information Exchange Requirements (IERs) in systems development. A
    requirements-based Joint Operations Architecture, well grounded in
    joint doctrine, will provide a roadmap for addressing interoperability
    issues across the full spectrum of capabilities. These efforts will
    enable DOD's senior leadership to focus more on interoperability and
    integration of the joint force.

                 INTELLIGENCE AND COMMUNICATIONS TRANSFORMATION

    Intelligence, Surveillance & Reconnaissance
        Achieving and maintaining a decisive advantage in our ability to
    access, gather, exploit, and act on information remains a critical
    aspect of our combat capability and readiness. A full spectrum ISR
    capability is the mainstay of that concept. To achieve this, we need to
    place more emphasis on the capability to ``watch'' or ``stare at''
    targeted objectives with collection systems able to monitor, track,
    characterize, and report on moving objects and dynamic events as they
    occur in the battlespace. In other words, a constant rather than
    periodic sensor access is required.

    Intelligence Interoperability
        Intelligence interoperability is the foundation of our capability
    for dominant battlespace awareness. Our goal is to ensure that our
    forces retain an information edge over potential adversaries. To be
    fully interoperable, intelligence must be produced and delivered in a
    fashion that immediately supports command decision making and mission
    execution. We are gradually tearing down barriers to interoperability
    between intelligence and operations systems to ensure we provide the
    Common Operating Picture essential to future command and control. The
    Common Operating Picture will provide a unified view of the battlespace
    for the soldier in the field, the pilot in the cockpit, and the
    commander, regardless of location.

    Intelligence Federation
        The Intelligence Federation is a new concept wherein designated
    commands and units provide specified intelligence support to an engaged
    CINC during a crisis or contingency operation using a pre-planned
    methodology tailored to that CINC's area of responsibility and
    operational requirements. The concept evolved from the growing need to
    ensure the collective resources of the intelligence community function
    as a ``system of systems,'' so that users are able to receive
    information tailored to their unique requirements, and with the
    necessary fidelity. To do this effectively, we need to create a
    federation among intelligence components using Joint Tactics,
    Techniques, and Procedures.

    Global Information Grid (GIG)
        The CINCs testified last year that a major warfighting deficiency
    in some theaters is the inability to plan quickly and execute
    decisively because of C4 deficiencies. I wholeheartedly agree. Simply
    put, our C4 infrastructure falls short of what is needed to support
    properly our decision makers and the men and women on the front lines.
    To help alleviate this shortfall, we must ensure that our warfighters
    have full and reliable access to the GIG from any point on the globe.
    The GIG is the globally interconnected, end-to-end set of information
    capabilities, associated processes, and personnel that we are
    developing to manage and provide information on demand to warfighters,
    policy makers, and supporting personnel. I believe that our ongoing
    efforts to bring the GIG online will provide the foundation for
    information superiority on the battlefield in the decades ahead. To
    that end, it is necessary to continue to invest in and upgrade the GIG
    infrastructure. Satellites, fiber optic cables, support of network
    operations, information assurance programs, and DOD's use of the radio
    frequency spectrum, are all tremendously important to achieving this
    goal.

    Radio Frequency Spectrum Access
        There is an important debate ongoing concerning the proposed
    reallocation of a segment of the DOD radio frequency spectrum to
    commercial users, an initiative with the potential to disrupt our
    transformation effort. In the last 8 years, 247 MHz of the RF spectrum
    for Federal use, primarily used by DOD, has been reallocated for
    commercial use by the private sector. I am concerned that further
    reallocation of frequency spectrum for commercial use, without
    comparable spectrum to execute DOD's critical functions, will have a
    major impact on our ability to execute our missions. Our success on the
    battlefield largely depends on our ability to use advanced
    communications technology to exchange vital information between
    decision-makers, commanders, and deployed forces.
        One of the principal areas of interest to the private sector is the
    1,755-1,850 MHz band. This band is currently used for tactical data
    links; satellite telemetry, tracking, and control; precision guided
    weapons; air combat training systems; and the delivery of voice, video,
    and data information to warfighters and commanders in the field. These
    systems are indispensable to our national defense. Some industry
    advocates have suggested that DOD share segments of this frequency band
    or relocate to another operationally suitable spectrum. I believe this
    proposal is problematic for two reasons. First, according to our
    analysis, sharing with commercial users is not possible due to
    interference over large geographical areas and metropolitan centers.
    Second, moving DOD communications to a different, but comparable,
    spectrum could be problematic due to the lengthy transition period
    required. Some national security satellites will use this frequency
    band well into the future. If directed to move, a more detailed cost
    and transition timeline will be required to ensure continuity of our
    nation's defense capabilities. It is imperative that we strike a
    reasonable and informed balance between commercial needs and military
    requirements. I understand that there is a White House process, led by
    the National Security Council and the National Economic Council, which
    is reviewing this issue to achieve this balance, critical for national
    security. We anticipate that suitable solutions will be found that are
    acceptable to all parties.

                                   CONCLUSION

        Today, even as we seek to transform our force to face an evolving
    security environment, our goals remain firm. We must protect America's
    interests, deter aggression, support peaceful resolution of disputes
    and most importantly, to be ready to intervene or respond to a conflict
    and win decisively.
        This is a critically important time for our Nation as we move
    further into the new millennium as the only global superpower. It is
    clear that we have a great deal of work to do with the Administration
    and Congress as we develop a new NSS and support the requirements of
    the QDR. Our professional, highly trained, and motivated young
    Americans in uniform are counting on us to make the right decisions. We
    have an opportunity in the months ahead to build on successes, address
    the challenges, and sustain and support our dedicated forces. We must
    provide our warfighting forces with the best tools available as they
    defend America's interests, and we must shape a future force that will
    help us achieve our national security objectives well into the 21st
    century. Together, I am confident we can capitalize on this
    opportunity.

        Senator Inouye. I thank you very much, General Shelton.
    Once again, thank you for your service to our Nation.
        General Shelton. Thanks, Mr. Chairman.
        Senator Inouye. I will be asking all members to limit their
    questioning to 5 minutes, because of the limitation of time.

                        NEED FOR ADDED DEFENSE SPENDING

        Mr. Secretary, as several of us have indicated, the budget
    resolution states very clearly that we may allocate the
    additional $18.4 billion if this would not use up the Medicare
    surplus. OMB and CBO have both indicated that it will use up
    the Medicare surplus. If that circumstance continues to the
    moment we consider this measure, we have a few terrible
    options, one, a general reduction, one going back to the
    drawingboard and looking at priorities, another declaring an
    emergency, which I think would be a farce, and seeking a waiver
    of the budget provision, which I have recommended to this
    subcommittee, and that would require 60 votes. What would you
    suggest that we do, sir?
        Secretary Rumsfeld. Mr. Chairman, I am here to present the
    budget for the Department of Defense, and of course your
    questions, and the important questions that others have raised,
    relate to the Federal budget overall, which is the purview of
    this committee and this Congress, as well as the President of
    the United States.
        All I can say in response is that there is no question but
    that the Department of Defense needs every nickel of this
    budget. You are correct in your opening statement. The
    President has been unambiguous on this subject. He has been
    very forthright. It is not possible, given the totality of the
    budget, to say which Department's budget is the one that is
    pushing against the self-imposed constraints of this Congress.
        What we do know is that the President said his priorities
    are defense and education, and he has said it repeatedly, and I
    certainly agree with him.
        Senator Inouye. In other words, you would not suggest any
    reduction in defense spending?
        Secretary Rumsfeld. Absolutely not, Mr. Chairman.
        Senator Inouye. That would mean you would reject a general
    reduction across the board?
        Secretary Rumsfeld. That is, of course, not for the
    Secretary of Defense to even opine on. That is a presidential
    decision as to what he wants to do, but what he has said thus
    far is very clear, that his priority is defense and education.
        Senator Inouye. Would the Secretary of Defense and the
    administration object if the Congress decided to waive the
    restrictions set forth in the budget resolution and allocate
    the funds, notwithstanding the fact that the Medicare surplus
    has been depleted?
        Secretary Rumsfeld. Well, Mr. Chairman, as I have
    indicated, that is a presidential decision and not one that I
    can make myself.
        Senator Inouye. And you have received no indication from
    the White House?
        Secretary Rumsfeld. Other than what I have stated, that his
    priority is defense and education.

                                 BASE CLOSURES

        Senator Inouye. Mr. Secretary, in your prepared testimony,
    you mention efficient facilities initiative of 2001. Am I to
    assume this covers base closures?
        Secretary Rumsfeld. Yes, sir.
        Senator Inouye. What are your thoughts on base closures,
    sir?
        Secretary Rumsfeld. My thoughts are several, first that it
    is the last thing in the world anyone with any sense would like
    to propose to the Congress, that they go to their House and
    Senate Members and suggest that they have to close some bases
    in their districts when they do not want to close them, so I
    did not do this willingly. I do it out of necessity. There is
    no question, everyone who looks at this, every one of the
    Chiefs of Staff, the Chairman, the Vice Chairman, every single
    one comes and says, we simply must close some bases.
        The estimates by the experts, I am no expert, but the
    experts suggest that somewhere between 20 and 25 percent of our
    base structure is not needed.
        I certainly agree that we ought to address the base
    structure around the world as well, but we have to address it
    in the United States in my view, and that is why we have come
    forward with it.
        Senator Inouye. Are you recommending that certain bases be
    closed?
        Secretary Rumsfeld. I am recommending that the initiative
    that has been put forward to Congress, which is for an
    additional round of the existing legislation, be approved by
    the Congress so that a proposal can be made ultimately to the
    Congress for base closures.
        Senator Inouye. The committee has been advised that there
    are--I notice that my time is up, sir, so may I now call upon
    Senator Stevens.

                         POSTPONED PROCUREMENT PROGRAMS

        Senator Stevens. Mr. Secretary, there are a great many
    examples of systems that have been in R&D since the 1990's that
    have not come out of R&D because we have stretched them out.
    Both the administration and the Congress agreed the Comanche
    and the Crusader artillery systems in the Army, the B-22, the
    advanced amphibious assault vehicle for the Marine Corps, the
    pressures that we have had in the past, that also applies to
    the LPD-17 for the Navy, originally funded in 1996, and yet
    construction only began in the year 2000.
        You have inherited a lot of postponed programs. I assume
    that you have reviewed them as part of your current review.
    Have you come to a conclusion about any of those that ought to
    be terminated, or what to do about getting into position where
    we can move them from R&D into production and deployment?
        Secretary Rumsfeld. Senator Stevens, the way this process
    is working is that the quadrennial defense review is coming
    towards a close. The defense planning guidance has been given
    to the Department and the components, along with some specific
    guidance as to things that the administration believes that
    they ought to budget for and fund for.
        The services and the components are then asked to come back
    in the normal budgeting process, and that will take place later
    this month, and in October and in November, in preparation for
    the 2003 budget.
        The services will be making their recommendations to me and
    to Deputy Secretary, and to the Department officials, senior
    officials, as to what they think their priorities ought to be.
    In that process, they will recommend, I am certain, some things
    be discontinued and some things be brought forward, but you are
    quite right, it is not unusual with research and development
    that a number of things get started and only some of them
    eventually are fully funded and deployed.

                               NAVY SHIPBUILDING

        Senator Stevens. We will await that report. Let me move on
    to another thing that I have been working on for sometime, but
    unsuccessfully. The current rate of production of new vessels
    for the Navy will sustain only a fleet of about 250 ships by
    2010. The rate of replacement is woefully low, and the process
    of acquisitions is really almost stalled. We have had poor
    performance on several of the shipbuilding programs. Your
    budget request before us now has $800 million solely to pay for
    cost overruns in ship procurement.
        I have tried to get the Navy to adopt the procedure
    followed by the Coast Guard for a long time. It is called
    advanced appropriations. It deals with putting into play the
    acquisition of multiple ships and not fully funding each one as
    we get the authorization.
        The Navy now tells us they are going to have another one-
    half billion dollars needed to pay for cost overruns on ships
    prior to construction contracts for 2002. It is my
    understanding the administration has turned down the concept of
    advanced appropriations and allowing us to go forward with
    multiple ship acquisition through a concept of annual
    appropriations. Why?
        Secretary Rumsfeld. I may ask Dr. Zakheim to comment on
    this, but it is correct that at the present time the Office of
    Management and Budget does not favor the idea of advanced
    appropriations for ships. It has a number of advantages,
    obviously, from our standpoint, from the Department of
    Defense's standpoint, because you can begin the process of
    moving along with a more robust shipbuilding program than you
    can without advanced appropriations.
        The argument they make, I suppose, is that it creates a
    mortgage for the future that concerns them, and it is something
    that is being discussed within the administration.
        Senator Stevens. I think the current system encourages cost
    overruns. I cannot think of one single Navy ship that has been
    built since I have been here that did not have cost overruns,
    but if you turn around and look at the fixed price contracts
    for the Air Force or for the tanks, we have been able to have
    some sort of cost control.
        The problem is that they get the money, they put it in the
    bank, and they do not care when the ship comes off because they
    have already got the money. Now, I think there ought to be
    something done about that, and I hope that you will take
    another look at it.

                          INTERIM BRIGADE COMBAT TEAMS

        I am running out of time, so I will run along. We
    accelerated the deployment of the second interim brigade combat
    team, the so-called IBCT. This is General Shinseki's
    transformation initiative approved by the Chairman of the Joint
    Chiefs, which we think offers a great opportunity for us to
    move the Army into their full needs for the 21st Century.
        We have--well, first, do you support the whole concept of
    these interim brigade combat teams? They are interim because we
    still have a transition out there for the future, but do you
    support the creation of them?
        Secretary Rumsfeld. I think that the approach that the Army
    is taking has been a good one, yes.
        Senator Stevens. Will your budget fully fund the expansion
    of the concept announced by the Army?
        Secretary Rumsfeld. As I indicated earlier, those are the
    kind of tradeoffs that take place. I do not even know if the
    Army will propose that when they come back to us, but those are
    the kinds of tradeoffs that get taken care of and addressed
    during the budget bill which is in the September-October
    period.
        Senator Stevens. I am done. I have a lot of other questions
    I would like to ask. I do hope we will have a chance to confer
    with you along the line before we face the proposition of
    confrontation at the very last minute on this 2002 budget.
    Thank you, Mr. Chairman.
        Senator Inouye. Thank you. Senator Leahy.

                         CHINESE MILITARY CAPABILITIES

        Senator Leahy. Thank you, Mr. Chairman. I appreciate the
    fact that you responded to the concerns that I and Senator
    Feinstein and others raised about China. I must tell you, on
    Sunday I was in Europe when this article came out. I know you
    said you have talked to others, including Dr. Rice, although
    her quotes in the New York Times article did not give a great
    deal of comfort to those of us who are concerned about China
    expanding their nuclear capability, and a number of European
    allies I talked with were also concerned.
        The articles at least give the impression that the
    administration feels that China needs to increase their nuclear
    stockpile to accommodate their comfort level about a possible
    nuclear shield, or missile defense system here in the United
    States. Now, I think the future Chinese nuclear stockpile is
    one of the more worrisome aspects of all international
    security, and frankly the concern about a missile from a rogue
    State, one that would come here with a return address on it, is
    a lot less worrisome to me than an international nuclear arms
    race. I think we sometimes bend over backwards to look at a
    small problem and ignore a much bigger one.
        If you are really into nuclear proliferation, I mean, I do
    not see how that helps us, especially when our defenses are
    more and more contingent on the ability of our intelligence to
    counteract serious terrorism threats. I am not so concerned
    about the missile being lobbed by a rogue State coming wobbling
    over the horizon at us, when we will know where it is coming
    from, than I am about the small ship that comes into New York
    Harbor or off the coast of California and loaded with a large
    nuclear weapon, just as I am concerned about a McVeigh or
    somebody like that in our own country that might bring about a
    terrorist attack.
        So can you assure us, categorically, Mr. Secretary, that we
    are not, directly or indirectly, giving a green light to China
    to increase their nuclear arsenal without any concern being
    expressed by us?
        Secretary Rumsfeld. Well, Senator Leahy, I suffer from not
    having read all of the articles about this. As you, I returned
    to town and saw the flurry of all these articles, and
    statements, and counterstatements, and what have you.
        Senator Leahy. Well, resuming from the articles, is it the
    administration's position to give either indirectly or directly
    the signal to China that we are not going to resist their
    increasing of their nuclear arsenal?
        Secretary Rumsfeld. I am told that there is no one in a
    position of authority in the Bush administration in the foreign
    policy area, which I am not, but Secretary Powell and Condi
    Rice are, who has any intention of giving a green light to
    China, period, or in exchange for anything. Now, that is what I
    know.
        You mentioned the risk of an international nuclear arms
    race. I mean, quite the contrary, it seems to me, the President
    of the United States has indicated he wants to significantly
    lower the number of nuclear weapons, offensive nuclear weapons
    in the United States stockpile. He has me engaged in a
    congressionally mandated nuclear posture review, which I am
    well along on and should complete well before the deadline at
    the end of the year. It is his announced intention to reduce
    the number of weapons. I know that from my meetings with the
    Russians, that their intention is to reduce the number of
    weapons, and I think that the risk of a nuclear arms race is
    really not something that is likely.
        There is no question but that China has been increasing its
    defense budget in double digits, and in not just ballistic
    missiles, longer range and shorter range, and nuclear, but
    mostly nonnuclear, and they are doing what they are doing. I
    also agree with you that it is unwritten exactly how China is
    going to engage the rest of the world and its neighbors.
    Certainly we ought to be doing everything we can to see that
    they engage the world in a peaceful and rational way.
        Senator Leahy. There are some aspects of this that maybe I
    should discuss with you or your staff, because it would require
    going into some highly classified areas that I do not want to,
    would not discuss here in an open session, and we just have to
    set up a time with some of your staff to do that.
        Secretary Rumsfeld. Good.

                    MODERNIZATION AND THE RESERVE COMPONENTS

        Senator Leahy. I also would like to hear more about the
    plans to modernize our Armed Forces, but especially the
    National Guard. Senator Bond made some reference to this. He
    and I chaired the National Guard Caucus here in the Senate,
    doing more and more on the efforts to carry on our national
    defense, especially as we go on to other parts of the world,
    sometimes for short-term, sometimes for long-term, where they
    are using a lot of aging equipment. I think of the F-16,
    beginning to develop cracks in its airframe and so on.
        How will the soon-to-be-released defense strategy address
    the National Guard modernization? I mean, will there be an
    increased transfer of equipment to them, more modern equipment,
    the purchase of new equipment? I mean, how are they going to
    figure in this? If they are going to be part of our strategy,
    are they going to do it with equipment that works, or old
    equipment?
        Secretary Rumsfeld. Those kinds of decisions, of course,
    are the ones that are being considered now by the service
    components, and will be coming out over the coming weeks.
        In answer to you and Senator Bond, let me say that I
    certainly believe in the Guard and the Reserves and in the
    total force concept. As a matter of fact, after I left the Navy
    as a naval aviator I was a weekend warrior in the Reserves for
    the Navy.
        As you also probably know, one of the brigades of the new
    transformational interim brigade combat teams is a Guard
    brigade, in Pennsylvania, as I recall, so the Guard and
    Reserve--and they are active in Bosnia and Kosovo, the Guard
    and Reserve, so they play a very important role, and the
    quadrennial defense review did not have the time to address
    them in a thoughtful way, so it will be done as a subset, and
    we will proceed over the coming weeks and months, very likely,
    in a more thorough way than the QDR was able to address them.
        Senator Leahy. Thank you.
        Senator Inouye. Thank you very much. Senator Shelby.

                           CHEMICAL DEMILITARIZATION

        Senator Shelby. Thank you, Mr. Chairman.
        Mr. Secretary, a $1 billion chemical incinerator stands on
    the Anniston Army Depot in my State. Big issues like buying F-
    22's and fielding a missile defense are very important to our
    national security, I believe, and because of their budget
    implications they tend to dominate our discussions here and out
    in the halls, but a very important issue, Mr. Secretary, to
    some of us is the chemical demilitarization program. You are
    very familiar with this, and I know General Shelton is.
        While I think most observers were pleased when you acted
    earlier this year, Mr. Secretary, to elevate the chemical
    demilitarization program to what you call an acquisition
    category 1 defense program under the control of Secretary Pete
    Aldrich, that cloud of distrust remains in the communities in
    the United States, including my State, where the chemical
    stockpiles are.
        I believe, Mr. Secretary, that Secretary Aldrich has
    assumed the central leadership role, and so far has shown a
    willingness to reach out to the communities in my State and
    others. I hope he understands the problems which exist in
    Alabama and these other States with the chemical stockpile
    emergency preparedness program. They call it, I believe, CSEP.
    The recent General Accounting Office (GAO) report on the
    program should serve as a guide to fixing these problems, I
    believe. This program has not turned the corner, and continues
    to be in need of deep organizational reform.
        We are quickly approaching our burn date in my State of
    Alabama, and burn, as you well know, they start burning the
    chemicals, and the people that live in these neighborhoods get
    nervous, as you would and I would. It is a point where I
    believe maximum protection must be in place for the community,
    and I do not believe it is today.
        Meanwhile, Mr. Secretary, agreement on whether the right
    safety measures are in place is anything but unanimous. The
    facility in Alabama, I can tell you, I cannot wait myself until
    the last chemical round is destroyed, as you would be, at the
    depot, and I am very concerned about where this program is
    right now in my State and some other States.
        Mr. Secretary, as the person, the Secretary of Defense,
    with the ultimate responsibility for the program, could you
    share your thoughts with us about where the chemical
    demilitarization program is as a whole, and take a moment or
    two to comment on the health of the CSEP program, the
    preparedness, because a lot of people, when they start
    operating that $1 billion incinerator in my State of Alabama,
    Anniston, Alabama, are going to be nervous. Should they be
    nervous? I know that is a lot of it.
        Secretary Rumsfeld. It is a lot.
        Senator Shelby. But it is an important issue, too, though.
        Secretary Rumsfeld. It is something that I recognize, from
    the standpoint of any community, is enormously important, and
    it is the responsibility of the Department of Defense to see
    that we are as attentive as is humanly possible to the proper
    safety measures, and the appropriate protections for the people
    in the region. It is a program that has had its difficulties,
    as you point out, not only from the standpoint of timing.
        It is also the kind of a program that I think is inherently
    going to generate a variety of views and opinions and
    controversy.
        Senator Shelby. And concerns.
        Secretary Rumsfeld. Concerns, legitimate concerns. It is
    just inevitable, but also debate as to what is the appropriate
    safety measure, and what is the appropriate approach, just as
    most things scientific and technical do.
        Pete Aldrich is on top of it. I am told that the program is
    going to be addressed tomorrow at the Defense Acquisition Board
    by Secretary Aldrich, and he is a very talented and competent
    person who I know shares your respect for the sensitivities.
        Senator Shelby. Sure, but the people who live in these
    communities, 150, 200,000, in that area, are concerned, and
    should be concerned. Would you not agree?
        Secretary Rumsfeld. You bet. I mean, there is no question
    but that we are dealing with some very dangerous chemicals.
        Senator Shelby. Absolutely.

                          INTEROPERABILITY WITH ALLIES

        General Shelton, I just have a minute, but I am concerned
    about what General Ralston has called basically, to paraphrase,
    the growing gap of technology between the United States and our
    European allies. You are very familiar with all of this. Lord
    George Robertson said, and I will quote him, ``we have a
    glaring Transatlantic capability gap, and interoperability
    problem between the allies.''
        What initiatives are underway to address this
    interoperability problem with our allies, because since our
    allies' for the most part current military structure's military
    budgets do very little to narrow this interoperability gap, and
    if the technological and budgetary trends remain the same, do
    you not think the service unfunded requirements, the huge cost
    of modernization, become even more critical if we hope to be
    able to execute further contingencies and defend against
    threats? Is that real, and is it a growing concern? Obviously
    it is for the Europeans.
        General Shelton. Well, yes, sir, and I think, as we saw
    during Operation Allied Force, and this is when it was really
    brought to light. I will not say first came to light, because
    we had started working on this issue even before Allied Force,
    which was the Kosovo operation, but Allied Force highlighted
    the growing gap between our allies and the United States
    forces, and really got our attention focused on the way ahead,
    and how we ensure that in this world of interoperability, that
    we can keep that gap as narrow as we possibly can through
    tactics, techniques, procedures, et cetera.
        But also simultaneously kind of a dual track approach
    through the defense capabilities initiative that was initiated
    was to bring them into the fold, if you will, show them the
    direction in which we are headed, and solicit their voluntary
    participation in some of these programs as well as continuing
    to stress the need to place adequate funding in their own
    budget to not let this gap get too large.
        Senator Shelby. But if it continues, the trend continues,
    they are going to fall further behind. That is just common
    sense.
        General Shelton. And that has been a concern, but at the
    same time that we see this developing, we do not want to send
    our people into harm's way with second class technology in any
    way, shape, or form, and so while we continue to modernize and
    try to stay on the leading edge of technology, we also look for
    ways that we can, through nontechnical means, if you will,
    reduce that interoperability gap between us and our allies
    through either tactics, techniques, procedures, and work-
    arounds, if you will, and we have been successful in a number
    of areas in that regard.
        Senator Shelby. Thank you.
        Senator Inouye. Thank you very much. Senator Hollings.
        Senator Hollings. Thank you, Mr. Chairman. I will use my
    minute just to comment.
        General Shelton, with no reflection on General Myers, if I
    were the President I would reappoint you. We are lucky to have
    had you.
        And Secretary Rumsfeld, we are more than lucky to have you.
    I have been getting disillusioned. I have been listening to
    Secretaries up here for almost 35 years, and you have given us
    a very, very comprehensive, visionary presentation of the needs
    of Defense, and I am going to support you in every regard that
    I possibly can.
        Your problem is your Commander-in-Chief is running around
    hollering, cut spending, hey, watch that Congress, they are
    spending, they are spending, Congress. That is outrageous
    nonsense. He favors $7 billion more we are going to need on
    agriculture, he favors and in fact sponsored the $7 billion
    more over 3 years that we need in education, and now you are
    coming asking for the $18 billion more, or whatever, and I am
    trying to help you, and you are trying to get it, and you are
    saying every nickel is needed, and I know everybody is going to
    vote for the farm, and I know everybody is going to vote for
    education, but you can tell from the questioning everybody is
    not going to vote for every nickel, and that is going to cut
    you back, so just ask the Commander-in-Chief to cut that shabby
    political charade out so that we can get to work and really
    provide the money you need.
        Thank you, Mr. Chairman.
        Senator Inouye. I thank you, sir. Senator Domenici.
        Senator Domenici. Mr. Chairman, might I say to Senator
    Hollings I think I have been heard in the last couple of weeks
    that I think in a time of recession, which we are now in, that
    it is better to spend more money than cut programs. That may be
    translated into agreeing with what you have been saying, what
    you are just saying, but I have not had a chance to ask the
    administration how they feel about these other add-ons. There
    are going to be add-ons, and there are going to be add-ons in
    this one.
        First I want to say to the General. I did not congratulate
    you. Since I am here, I want to say congratulations.
        General Shelton. Thank you, sir.
        Senator Domenici. And Mr. Secretary, I want to say I am
    glad you come to New Mexico frequently. I cannot be up there as
    often as you of late, at least, because I have a little more
    work to do in other parts of the State than you do up in the
    Taos area. You live in a beautiful part of our State part-time.
    We are glad to have you.
        Now, let me see if I can explain this a little bit
    different one more time, very quickly. First, Senator Inouye,
    there is no point of order for breaching the social security
    accumulation as part of the surplus, and there is none on
    Medicare.
        There may be a point of order arise at a point in time on
    the total of the budget of the programs that the appropriators
    do. We might exceed the budget allocation to the various
    committees, in which event there will be a point of order
    against the last bill through, which would probably be this
    one.
        Now, let me see if I can explain a little differently what
    has happened to the Defense Department. We produce a budget
    resolution. We have had 10\1/2\ years of prosperity, which
    means we have been collecting enormous amounts of revenue. So
    we are estimating in this budget resolution that we are going
    to continue to grow by about 2.7 percent, and so what we say
    is, there will be plenty of revenues to pay for what the
    Defense Department needs.
        Then, members of the committee go out and prepare the add-
    ons that they want for the budget. Everybody knows the $18.3
    billion is less than they need, less than they want. They said,
    we will live with it.
        Now, what happens? You can talk about the President's tax
    cut all you want. It is the right thing, but what really
    happened is, that economic estimate that you are operating on
    went down, through no fault of the military, through no fault
    of anyone, as I just said. That means that the surplus went
    down. That means that today we are telling you, after you have
    gone to the trouble of making this fit a 4-month-old budget,
    and try to build into it continuity, we are going to ask you to
    cut it because somebody is saying the economics have changed.
        So I would ask the members here, and I would ask the
    Congress, do you really want to treat the military as a roller
    coaster, depending upon what the economists say the state of
    growth of the American economy is? I do not believe so. I think
    what they need, they need, and we ought to give it to them.
    This economy is going to come back. Do we want them to be
    anxiously awaiting for an economic recovery so that they will
    have money to fund their budgets? I think that is ludicrous.
        What we have to do is, fit in an honest budget that was
    changed by economic downturns. That would be a terrible mistake
    to send them back and say, do it over again, for what reason?
    Because the economy faltered somewhat, but it will be back in a
    year, 2 years, and then what do they do, try to build back and
    make harmony out of confusion. That is my assessment.

                SAFETY AND RELIABILITY OF U.S. NUCLEAR STOCKPILE

        Now, let me say to both you and the General, I am very
    worried about the way the military and the Defense Department
    treats nuclear weapons activities. Our good friend from
    California raised the issue, are we going to do nuclear
    testing. Senator, we are not going to do nuclear testing
    provided we get sufficient money to keep that part of the
    United States research effort in defense nuclear security,
    headed by General Gordon, so we can have enough money to do the
    research to do what, to tell Congress and the President that
    the weapons are safe and secure. That is called science-based
    stockpile stewardship.
        Now, whenever the military gets tight, they put more in the
    regular defense and less for nuclear weapons. I submit that the
    nuclear weapons compound of America, including the three
    national laboratories, including a big laboratory in Tennessee,
    are in desperate state of repairs. You did not put any money in
    for this, in this $18.3 billion for that, and we must begin to
    have you worry about that just like you worry about tanks, or
    readiness. General Gordon has reached the end of the rope in
    trying to put together his new semiautonomous agency that will
    protect us in the science-based stockpile stewardship.
        I do not expect an answer, other than, Mr. Secretary, are
    you aware of this problem?
        Secretary Rumsfeld. Senator, I am very aware of the
    problem. I have had at least three or four meetings with
    General Gordon. I have worked with OMB and the President on
    General Gordon's budget. As you know, his budget is in the
    Department of Energy and not in the Department of Defense.
        Senator Domenici. That is true.
        Secretary Rumsfeld. But you are absolutely right, the worst
    nightmare would be to receive a phone call and say, Secretary
    of Defense Rumsfeld, I am very sorry to report, but the nuclear
    stockpile, we have just been examining it and reviewing it, and
    it simply is not safe or reliable, some element of it, and we
    need to make the kinds of investments you are talking about to
    assure that we do not have that situation.
        Senator Domenici. Mr. Chairman, might I ask if the
    Secretary will be a little more involved right now? They are
    cutting next year's more than this year's. Right now, your
    budget does not cover any reconstruction of these buildings,
    including the dilapidated one in Tennessee, where the ceiling
    is falling in on the workers so they have to wear helmets, even
    in service-type jobs. You put no money in for that. This
    committee did. You put none in. It is a very serious problem,
    and I hope you will look at it.
        Senator Inouye. Your time has expired. Senator Kohl.
        Senator Kohl. Thank you, Mr. Chairman.
        Secretary Rumsfeld, getting back to nuclear missile
    defense, which theoretically would make us invulnerable to the
    rogue State's missile, what about chemical weapons? What about
    biological weapons? Are we invulnerable to that, and if we
    cannot address that satisfactorily, then why are we addressing
    this as if to suggest that this protects us against rogue
    States?
        Is it not true that during the gulf war, that Saddam
    Hussein, had he wished, could have released biological warfare
    against us, and that he did not because he recognized that we
    would destroy his country in an instant, so unless we can deal
    with nuclear, with chemical and biological weapons, how are we
    offering the American people any sense of protection by dealing
    with this missile shield defense?

                          WEAPONS OF MASS DESTRUCTION

        Secretary Rumsfeld. Senator, you are quite right, if one
    looks at the world, the number of countries that have active
    nuclear programs and/or active chemical programs, weaponized,
    and active biological programs that they weaponize, is growing.
    All three are serious. All three are considered weapons of mass
    destruction, and terror weapons. They can be delivered in a
    variety of ways. They can be delivered on ballistic missiles,
    they could be delivered on cruise missiles, they could be
    delivered by terrorists.
        So to the extent countries that want to impose their will
    on their neighbors know that they really cannot compete with
    the western armies and navies and air forces, they not
    surprisingly look for terror weapons, and terrorism, and the
    use of weapons of mass destruction, and a variety of means of
    delivering them.
        We are spending, I think, something like $10 or $11 billion
    to deal with terrorism, Government-wide and force protection.
    We have funds in our budget to address subjects like chemical
    and biological weapons. They are very serious, and very
    worrisome.
        However, to go then to the next step and say, well, if we
    cannot defend against everything, why should we defend against
    anything, is really a leap in logic that I cannot make. The
    advantage of a terrorist is, they can attack at any time at any
    place, suing any technique, and it is not possible to defend in
    every time, in every place, against every technique, but simply
    because we cannot defend against everything at every time in
    every technique, does not mean we should not defend against
    that which we can defend against, and that is why we are
    investing the money we are for antiterrorism, it is why we are
    proposing money for missile defense, it is why we are investing
    money for cruise missile defense.
        Senator Kohl. But would you not agree that developing a
    missile defense system to render ourselves invulnerable
    encourages other countries to then develop chemical and
    biological weapons to make themselves effective in defending
    themselves against us?
        Secretary Rumsfeld. I think the history of mankind----
        Senator Kohl. And I have to ask this question.
        Secretary Rumsfeld. Yes, sir.
        Senator Kohl. Why would we then deny other countries the
    right to defend themselves with chemical and biological weapons
    if they cannot afford and do not have our missile defense
    system? Why would not they then argue, if you are going to
    develop a missile defense system, and we cannot prevent you, or
    you will not allow us to prevent you, then you must also allow
    us to develop our own system of chemical biological weapons,
    and do not tell us we cannot have them?

                         RATIONALE FOR MISSILE DEFENSE

        Secretary Rumsfeld. Senator, first let me say that there is
    no missile defense system that is going to make us invulnerable
    in terms of, there is no weapons system, defensive or offensive
    either one, that has ever been perfect, that has ever worked
    100 percent of the time. That is just not in the cards.
        Second, the whole history of mankind has been that because
    there are people who want to impose their will on their
    neighbors and deny them freedom, and occupy their lands, that
    we have seen an offense and then a defense, and a new offense
    and a new defense, and a new capability, so it has always been
    evolving and changing.
        It would not really matter whether the United States told
    these countries they should not have chemical or biological
    weapons. We have told them not to, and they still go right
    ahead and do it. They have them. They exist. There are
    countries that have weaponized those weapons in a way that they
    can today impose enormous damage on their neighbors and on
    others.
        Senator Kohl. So then, why missile defense?
        Secretary Rumsfeld. The advantage of missile defense is the
    same thing as the advantage in looking at force protection for
    your forces in the Middle East, for example. One might say,
    gee, U.S.S. Cole was just hit. Why do we worry about that?
    Well, we worry about it because we would prefer to be able to
    take the U.S.S. Cole and steam it in the Persian Gulf and not
    have it blown up by a terrorist.
        We lost, I do not remember the exact number, but in Dharain
    in the gulf war 19 to 23 were dead, and some 60, 80, 90, 100
    were wounded, Americans, by a ballistic missile fired by Saddam
    Hussein, and anyone who has lived in Israel and seen the
    ballistic missiles come raining down on them ought to have a
    good sense of why it is that people do not like to have
    ballistic missiles raining down on them, and would prefer to
    have a defensive capability to defend them.
        Senator Kohl. I hear you, and you know a lot more about
    this than I do, and you are a smarter man than I am, but I do
    not understand it. It is to me an effort to make this country
    invulnerable in that respect, but totally not taking into
    account that any country wanting to respond to us can just go
    beyond or go around missiles and deal with mass warfare in
    other ways, and until you can address, or until we can address
    these other ways, it seems to me it does not make sense to
    start moving down this path, as long as there are other paths
    that other countries can use, a lot cheaper and just as
    effectively.
        If the goal is to kill several million people, which a
    missile would do, they could do it with biological and chemical
    weapons and ensure their disruption as quickly from our
    country, just as would be the case if they rained a missile
    down on us, so unless, it seems to me, we can proceed in all
    three ways in a convincing manner, it does not make any sense
    to go down just one road.
        Senator Inouye. Thank you very much. Senator Cochran.
        Senator Cochran. Mr. Chairman, I think I will take just a
    few seconds to say that my impression is that in the Department
    of Defense budget there are requests for funding of other
    programs that deal with the biological threat and that deal
    with other terrorist activity. Is that not correct?
        Secretary Rumsfeld. Absolutely correct.
        Senator Cochran. And are we not trying our best to marshall
    all the technologies and the best, scientific minds we have
    available to us to come up with the answers to the challenges
    posed by these other kinds of threats?
        Secretary Rumsfeld. We have, indeed, invested a good deal
    over the years. For some reason, missile defense has become
    almost theological, and separated out from the others. While I
    tend to deal with them all across the spectrum, as Senator Kohl
    suggested, from terrorism to cruise missiles to ballistic
    missiles, and any of the asymmetrical methods that one can use
    to get around a country that has powerful armies, navies, and
    air forces.
        Senator Cochran. It may be helpful, actually, for our
    debate when this comes up on the floor, to have a comparison
    between the amount of money that is being requested, or has
    been spent, dealing with these other threats that are described
    by Senator Kohl, and compare that with the investments that we
    are making in missile defense, technology development and
    possible deployment of systems. Can we do that? Would that he
    possible to submit that for the record? Mr. Zakheim--is it
    something that can be done?
        [The information follows:]

                                  DOD SPENDING

        No, such a cost breakdown cannot be provided because the
    Department of Defense does not organize its budget or programs
    according threats. Ballistic Missile Defense is the only
    program that comes close to doing such a thing. But even there,
    DOD spending to protect the United States and its forces
    against missile attack entails more that BMD accounts. For
    broader threats--like terrorism or attacks on our DOD
    information systems--the fact is that the bulk of our defense
    spending gives us the forces, capabilities, infrastructure,
    intelligence, and more, to counter these and other threats.
    Yes, we have specific programs--like Chemical and Biological
    Defense--that would seem to define DOD spending to counter a
    certain threat. But even in these cases, DOD has other spending
    that contributes as well. DOD has not invested the time or
    money to aggregate total costs per type of threat because that
    simply is not how we plan, program and budget. We assess full
    panoply of threats and design a complex of capabilities to
    counter these threats.

                               NAVY SHIPBUILDING

        Senator Cochran. Let me go back to the shipbuilding. I am
    glad to hear the Secretary say that this is a major concern of
    his as well. One thing that happened earlier this year that was
    a jolt was that there was a delay in the selection of the DD-21
    program. It was scheduled for May. It has now been postponed so
    that the quadrennial defense review can be completed.
        Then there was some concern, even though in June the
    testimony from the Commander of Naval Operations (CNO), Admiral
    Clark, and the Commandant of the Marine Corps, General Jones,
    indicated that this program provided very important new
    technological advances, modernizing war-fighting capability,
    force projection, with support from naval forces that would be
    very, very important in the years ahead, and then there was a
    news conference by somebody at the QDR, a former Air Force
    General, talking about how they were not certain at this point
    that there was sufficient evidence that the DD-21 program would
    be a truly innovative advancement in Navy war-fighting
    capability.
        So it leaves one with the concern that the Department of
    Defense has publicly described differences of opinions between
    very high-ranking officials and people who are given
    responsibilities for helping make these decisions.
        So what I am saying this for is to put an emphasis on the
    importance of this program to the future of shipbuilding, for
    the future of our Navy's capabilities to fight the wars of the
    future, and if we abandon this effort at this time, it is going
    to deal a death blow to not only the industrial base, but also
    the capability of the Navy to deal with the challenges of the
    future in a way that would avoid risk and make us more
    efficient in our effort to discharge our defense
    responsibilities.
        Secretary Rumsfeld. Well, Senator, I can say two things.
    One is, no decision has been made that I know of on the DD-21,
    and I think I would know. It is something that the Navy is
    considering in their priorities, and then it will be brought up
    in the budget cycle.
        Second, the fact that there are repeated news articles
    where someone in the Pentagon or someone outside the Pentagon
    in the contracting community, or someone in the Congress who
    has an interest in the subject opines on this or opines on that
    is something that is part of our free press and First Amendment
    to the Constitution.
        There is nothing we can do about it. It happens, and I know
    it can be disorienting and confusing, because frequently the
    articles are written in a way, as though they sound
    authoritative, as though something has been decided, and in
    fact what generally is the case is exactly what you said,
    somebody comments on something and says that is their view, and
    it may be a person who works in the building, or it may be a
    person who works outside the building.

                       CONTRIBUTIONS OF GUARD AND RESERVE

        Senator Cochran. One of the recent experiences I had back
    in my State, I was visiting Camp Shelby, which is a National
    Guard training facility. They had created there a training
    program for soldiers and guardsmen who were going to be going
    to Bosnia to participate in peacekeeping operations there. I
    think it indicates the importance of our training for Reserve
    and Guard personnel, that they are being brought into the mix
    now of some real live experiences that are important to our
    Nation's security and also our commitments that we have around
    the world.
        In addition, C-17's are being stationed down in Jackson at
    the Air National Guard facility that we have in Mississippi,
    the first National Guard unit that will be given the C-17's; we
    had a celebration event the other day in that city. The State
    welcomes the opportunity to be involved.
        In many cases the Air Force Reserve personnel are asked to
    volunteer for missions, to provide airlift, and support for
    troops in the field, as they did in Desert Shield and Desert
    Storm and other conflicts as well, and now are taking part in
    training exercises so they will be able to add and supplement
    the Air Force capability in this area.
        I am just curious, General Shelton, if so far the
    activities of the Guard and Reserve personnel are proving to be
    confidence well-placed, are they doing their jobs, and are they
    being trained so that when they are sent out here into the
    field to do these missions, they can take care of themselves,
    they can do their jobs, and come home safely?
        General Shelton. Senator Cochran, first of all I do not
    think there is any question that the tremendous value-added
    that our great Guard and Reserve units are in fact--you might
    say their motto would be, try fighting without us, because when
    you look at our--and you mentioned the tanker fleet as an
    example during Allied Force, a tremendous number of our
    reservists, and if you look at the Balkans, we are involved in
    that particular operation, airlift as well, and do a superb
    job.
        If you look in the Balkans on any given day, we will have a
    25 percent to 30 percent of our force in the Balkans will be
    from Reserve or Guard units, and they have done a great job,
    and I believe that we have gone to great extents in recent
    years to make sure that they are funded properly so that they
    can be trained, they can be ready for the mission that we
    assign them.
        The vignette type training that you saw at Camp Shelby,
    which is great training for those that are deploying into
    Bosnia, is just one example, I think, of a myriad of types of
    programs we have to make sure that when they are called, that
    we have them properly prepared before they are deployed into
    the theater of operation, but again they make a tremendous
    contribution day-in and day-out, and a lot of our specialties
    are predominantly in the Guard and the Reserve.
        If you look at the Guard and the Reserve, 96 percent of our
    civil affairs capabilities, which are in heavy use in most of
    the types of operations we are involved in today, are in the
    Reserve components, and it varies by type of specialty, but my
    biggest concern today, and part of what we are looking at as a
    part of the study that the Secretary mentioned, is how much
    more could they absorb, or do we have them overtaxed?
        Certainly, as we look at the numbers we are calling up, and
    the frequency, that is our major concern today, is to make sure
    we have got the balance right in the various types of units.
        Senator Inouye. Thank you very much. Senator Feinstein.
        Senator Feinstein. Thanks very much, Mr. Chairman.
        General Shelton, I do want to say congratulations. I want
    to wish you well on everything you do, and I want to say one
    more thing. I remember well, and will remember you for your
    classified briefings during military engagements. Unlike some,
    you were always direct. You were to the point. Your briefings
    were easily understandable. They were well-ordered, and I think
    your team was excellent.
        And from those briefings, it really gave me a great deal of
    faith in our military, and I think it is really your
    contribution, and I think one of the reasons that we had,
    really, no opposition to what was happening was the way you
    relayed it to us. So I want to say congratulations, and this
    Senator will miss you very much.
        General Shelton. Well, thank you very much, Senator, and
    let me say quickly that as you said, I was supported by a great
    team and was proud to be a part of it.
        Senator Feinstein. Yes, you really were.
        General Shelton. Thank you.
        Senator Feinstein. Thank you. Now, you mentioned that 62
    percent of the housing is substandard. I am glad Senator
    Hutchison is present. She is Ranking and I am chairman of
    Milcon, and I am going to look at the budget tomorrow. It would
    be very useful if I could have before tomorrow your priorities
    with respect to those requests that you believe are most
    important to upgrade the housing. I think it is extraordinarily
    important.
        I have talked to General Meigs about his need to move a
    division south of the Alps. I understand that. I talked to
    Admiral Blair about some of his concerns, and I think Senator
    Hutchison would appreciate it, too, if we could have some of
    your priorities.
        I have talked to the chairman of the House committee, and
    he feels similarly about doing what we can to upgrade the
    housing, so I think that will be the thrust of this Milcon
    budget, and we would love to have your priorities.
        Mr. Secretary, you mentioned additional base closures. I
    want to just share one thing with you. The environmental
    remediation dollars provided with base closure are remarkably
    short. California alone could use the entire Nation's total.
    The shortness of those dollars is truly responsible for why
    some of these bases cannot be transitioned into civilian use,
    and so in California, the process has really been stymied
    because of that. I will not use more of my time, but it is a
    real problem out there, and want you to know it.

                       SOURCE OF DEFENSE BUDGET INCREASE

        The other thing is, there are many of us that feel that the
    administration has an obligation to say where the $18 billion
    additional in the defense budget should come from, and what the
    administration's recommendation is with respect to what items
    we cut to provide that money. I would hope we would have a
    recommendation.
        Secretary Rumsfeld. If you are referring to the total
    Federal budget, and where the money for defense should come
    from----
        Senator Feinstein. That is correct.
        Secretary Rumsfeld. The President's answer is, he has
    repeated several times in the last month, is that his priority
    is defense and education, and that that is the place that he
    believes the Congress should put their priorities.
        Senator Feinstein. But he has also said he does not want it
    coming from social security, he does not want it coming from
    the Medicare trust fund, ergo, it has to come from something
    else that is cut, and all I am saying----
        Secretary Rumsfeld. Or not increased.
        Senator Feinstein. All I am saying is, what are his
    recommendations? I think this is his budget, I think he has an
    obligation to tell us, then, what he would cut, so in any
    event, that is that.

                           MISSILE DEFENSE DEPLOYMENT

        Now, let me go back to missile defense. The New York Times
    on its web site had an article, and there are two articles in
    the Washington Post under the byline of Michael Allen on the
    subject of perhaps some games being played around the issues
    that we discussed earlier. If you have not seen them, I will
    make them available to you. I would like to know whether these
    are totally false, essentially, and I will do that in writing.
        Secretary Rumsfeld. I would be happy to take a look at it.
    One thing I do want to comment on is, in your earlier comments
    at the opening of the session, you said that you were concerned
    that ballistic missile defense deployment would go forward
    untested, and I would not to--I think that is roughly what you
    said. I want to assure you that we are not deploying ballistic
    missile defenses. We are engaged in a research and development
    and testing phase of ballistic missile defense, and we have not
    arrived at an architecture, because these tests have never been
    done.
        Second, with respect to going forward with something
    untested, there is no question but that the goal would be to
    complete the testing and then make a decision as to the
    architecture, and then make a deployment decision. The reality
    about most things is, most complicated technological things, is
    that they evolve over time, and they are continuously changing.
        I mean, the F-16's of today are not the original F-16's.
    The M-1 tank is not the original M-1 tank. It has got the same
    number, but a new model, new block number, and that would be
    the case, and the suggestion that has appeared in the press
    that the intention of the administration is to rush out with
    something that has not been tested is simply not correct.
        Senator Inouye. I am sorry, the time has expired.
        Senator Feinstein. Oh. I would like to then ask in writing
    a follow-up on this, if I may. Thank you.
        Senator Inouye. Senator Specter.
        Senator Specter. Thank you, Mr. Chairman. Mr. Secretary,
    you can see at this session the considerable concern from the
    subcommittee on the issue of missile defense and all of its
    ramifications. When we were debating the broad versus the
    narrow interpretation of the ABM Treaty back in the mid-
    eighties, there was some thought that there might be some
    defenses allowed to the Soviets. At that time it was considered
    too expensive, too complicated, and too unworkable to have the
    massive defense program, so it was restructured to a
    considerable degree on the potential threat from North Korea.
        There have been some signs in recent months that we may be
    able to deal with North Korea. I want to cover just two
    questions with you in the brief time allotted to me. If, in
    fact, there is some opportunity to negotiate with North Korea,
    and to be satisfied that there is a verifiable system in
    effect, would there be concerns about the other so-called rogue
    nations--Iraq, Iran, Libya, or any other state--to cause the
    development of a missile defense system?
        And the second question--let me put it on the table before
    the time expires--is the issue that I raised in my brief
    opening comment with respect to abrogation of the ABM Treaty,
    if it comes to that. There is a long history in many instances
    where the executive branch has come to Congress, which of
    course has the responsibility to ratify treaties with a two-
    thirds vote for congressional joinder in abrogating treaties.
    That was changed, as I noted earlier, by President Carter in
    1978. A large group of Senators, Goldwater, Helms, Thurmond,
    Hatch, and others, joined with the position that it required
    congressional assent to terminate a treaty.
        I would like to have your comments on those two questions.

                            SO-CALLED ROGUE NATIONS

        Secretary Rumsfeld. Well, Senator, with respect to the
    first question the answer is yes, there are a number of other
    countries that are sufficiently worrisome that have been active
    in developing ballistic missile technologies and weapons of
    mass destruction, and you named some of them.
        One of the interesting things about life, if you think back
    to Iran under the Shah, within a year the Shah was gone, and
    the Shah had been a regional power, very friendly to the United
    States. Within a year, it was the Ayatollah, a total change in
    that country.
        When the Senate confirmed Dick Cheney for Secretary of
    Defense some 10 years ago, no one in the room raised the word
    Iraq, and within a year, we were at war with Iraq.
        If we know anything from history, it is that we cannot
    predict the future. The nature of our world is that there is so
    much proliferation of these technologies that we cannot know
    from exactly what country or at what moment a threat will come.
    What we can know is that those technologies are proliferating.
        Therefore our strategies are looking more at threat-based
    strategies, which is historically normal in the near-term, but
    in the mid to far term, you are forced to look at capabilities-
    based strategies, and look at the kind of capabilities that
    exist in the world that are going to pose a threat to the
    United States.
        So the answer to that question is, absolutely, there are
    any number of countries that we can see that are worrisome, and
    there are any number, like in the case of Iraq and Iran, that
    can shift in a matter of a few months.
        With respect to the treaty, I am not an attorney, and I
    think I will leave that question for the Department of Justice.

                                   ABM TREATY

        Senator Specter. Well, that is something that is going to
    come before you, Mr. Secretary, because you are asking for very
    substantial appropriations on missile defense. The ABM Treaty
    is an integral part, and I can understand the legalisms
    involved, but there is a question of public policy in dealing
    with this committee, in dealing with Congress. Would you not
    suggest a position on it?
        Secretary Rumsfeld. Well, I will certainly say this. The
    President has announced that his goal is to find an approach
    with Russia where the treaty will be mutually agreed to no
    longer inhibit the kinds of missile defenses which the
    President has announced he believes are in the best interests
    of the United States, and if he is able to achieve that kind of
    an understanding and either set aside the treaty or move beyond
    it with a new framework arrangement between the United States
    and Russia, that would be his first choice.
        Senator Specter. I see my red light is on, but of course I
    have a very brief concluding comment. If there is an agreement,
    then you will have the automatic concurrence of the Congress. I
    think this is really not a legal issue for the Department of
    Justice, Mr. Secretary. I think it is a public policy issue
    which is going to involve the Department of Defense and the
    Department of State.
        Thank you very much.
        Senator Inouye. I thank you, sir. Mrs. Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman.
        Mr. Secretary, I wrote you very early in the year to say
    that I have visited a number of our bases overseas, and at the
    time you were also talking about the need to lessen the number
    of bases in America, and I thought it was very important before
    we took any action lowering the number of bases in our country,
    that we know what our future force strength would be, what
    would be the numbers, what would be the numbers based in
    America for training purposes, what would be the numbers based
    overseas. I asked you to consider doing an assessment of our
    overseas deployments and report back.
        The letter that I received back said that the Chairman of
    the Joint Chiefs would be providing a master-basing concept
    after the QDR results came in. I wanted to ask you what your
    impression is at this point, if you have an idea of what we
    would be looking at, when you think the QDR and then the
    master-basing concept would be able to be brought forward, and
    if you would suggest that we do any base closures in America
    before we know what our troop strength and our strategy and our
    QDR results will be?

                            QDR AND FORCE STRUCTURE

        Secretary Rumsfeld. Senator, the QDR is going to be
    concluded September 30. There will be some pieces of it, as I
    mentioned, like National Guard and Reserves, which will follow
    on, but the force decisions for the United States are going to
    be made in the 2003 budget cycle, which is, as I say,
    September, October, November, so that the President can present
    his 2003 budget.
        Dr. Zakheim is going to Europe, I believe next week, to
    look at the European base structure situation, and you are
    quite right, we clearly need to have a good understanding of
    what our force structure is to be for the period ahead. We have
    to know with respect to that force structure which portions of
    it are likely to be based outside the continental limits of the
    United States, and then we have to review the base structures
    to see to what extent it fits that, and that is the process we
    are going through.
        Senator Hutchison. One of the things that struck me as I
    was visiting some of our bases overseas is the training
    constraints in some of those bases, whether air space
    constraints or constraints on missile ranges on the ground.
    Will that be a factor also in how you decide where the best
    training would be for our troops?
        Secretary Rumsfeld. It clearly would have to be, yes,
    ma'am.
        Senator Hutchison. General Shelton, did you have anything
    to add to what the master base concept would be and when it
    would be available?
        General Shelton. It will take a while, Senator Hutchison. I
    do not have a time on that right now. A lot of that would be
    driven, of course, the magnitude of it, depending on what the
    decisions are that came out of the QDR, but certainly the
    capabilities with each of the bases would be something that
    would have to be considered, and that is becoming, as you
    indicated, in some areas more and more of a challenge for us
    not only overseas, but here in the continental United States as
    well.
        Senator Hutchison. I think if you put that issue on the
    table together with the fact that we have closed some bases in
    our country which we then, 2 years later, determined that we
    actually needed, and with the astronomical cost mentioned by
    Senator Feinstein of the environmental cleanup, I would just
    hope that all of that would be a part of the equation before we
    go into making final decisions that could be more costly if we
    have to reverse them or try to seek another base because we
    have closed one that we actually needed.
        The second question that I would ask you, General Shelton,
    is regarding a piece of legislation that Senator Inouye and I
    and Senator Stevens have introduced that allows anyone in DOD
    who dies in the line of duty to be fully vested in the
    retirement system. Today, you have to have 20 years before you
    get fully vested in your retirement, and yet people can be
    killed even in combat--and in training situations before the 20
    years and not receive their full vesting of retirement benefits
    for their families, so I just ask you if you do think that it
    is important that we pass that legislation, and will it have a
    big impact on the military budget if we do?
        General Shelton. Senator Hutchison, from my standpoint it
    certainly would be the right thing to do. As we have talked a
    lot about here today, in tight times where we have, as the
    Secretary and I have indicated, in many places metal on metal
    contact, so to speak, in terms of the requirements versus the
    amount of funding available to carry them out, anything that
    adds an increase to the service budgets that is not currently
    projected causes great concern on their part.
        Without knowing what the magnitude--I have not seen any
    studies that show what it will be. Certainly, from my best
    military advice, it is the right thing to do for our people.
    Again, we would have to be careful that we look at the amount
    of funding required and identify a source for that funding
    before we implement it, but again, I would recommend that we
    proceed in that manner, and I fully support the legislation
    that would provide it for our servicemen and women.
        Senator Hutchison. Well, I think the number of training
    accidents that we have is fortunately very few, and we know we
    will keep it that way, so I would think it would have a minimal
    impact, but it certainly is the right thing to do. We
    appreciate your support.
        Thank you, Mr. Chairman.
        Senator Inouye. I thank you very much, Senator.

                         ADDITIONAL COMMITTEE QUESTIONS

        Mr. Secretary, General Shelton, on behalf of the committee
    I thank you very much for your presence here today. Your
    comments and your responses to our questions have been most
    helpful.
        I am certain from the questioning and comments you have
    gathered the concern about the challenge before us, balancing
    of defense needs and the budget situation, so I hope that we
    can continue to work together to come forth with a solution
    that all of us can agree upon.
        And once again, General Shelton, I must say that we are
    most grateful to you for the service you have rendered to the
    people of the United States over the years. You have made your
    career one that all of us could be very proud of, and we thank
    you very much, sir.
        General Shelton. Thank you very much, Mr. Chairman.
        Senator Inouye. We wish you much success and happiness as
    you retire from this career.
        [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. Donald H. Rumsfeld

                   Questions Submitted by Senator Tom Harkin

                       IOWA ARMY AMMUNITION PLANT (IAAP)

        Question. Secretary Rumsfeld, can you tell the workers at IAAP
    today that they can talk about exposures at the plant with their
    doctors, with environmental cleanup officials, and with health
    researchers without violating any secrecy oaths or policies?
        Answer, Yes. Neither secrecy oaths nor policies prohibit any
    citizen from discussing exposures to radioactive and hazardous
    materials with their healthcare professionals or other appropriate
    officials. Individuals bound by secrecy oaths at former defense nuclear
    weapons facilities, therefore, may respond to questions regarding
    possible exposures at the plant provided they do not reveal classified
    information.
        Question. The workers on the Army side of IAAP were exposed to many
    of the same toxic high explosives and radioactive materials as those on
    the AEC side of the plant, sometimes worked in the same buildings and
    areas, and were employed by the same contractor. Do you think they
    deserve the same treatment?
        Answer. I do, which is why I have authorized the development of a
    plan to identify, notify and provide security guidance to former and
    current personnel who worked at former Department of Defense nuclear
    weapons facilities that they may discuss possible exposures to
    radioactive or hazardous substances associated with nuclear weapons
    with health care providers and other appropriate officials, as long as
    they do not reveal classified information.
        Question. Currently the locations of former nuclear weapons storage
    sites within the United States are unclassified, but are still covered
    by the so-called ``neither confirm nor deny'' policy. When Army
    officials can't say the word ``nuclear'' in connection with a plant
    that everyone knows was a nuclear weapons facility, it sends the wrong
    signal to former workers who are afraid to talk about it. Now, I don't
    see why the function of a plant that closed in 1975 would be a security
    risk, so why can't you talk about it?
        Answer. Security classification is not the issue regarding the
    activities at the Iowa Army Ammunition Plant (IAAP). Classification has
    no direct bearing on a response to a question regarding the presence,
    or absence, of nuclear weapons. As long as there are, however,
    classified locations of nuclear weapons, official spokespersons for the
    U.S. government are prohibited from confirming or denying the presence
    of nuclear weapons at any general or specific location. The basis for
    this requirement 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 threats of sabotage and terrorism. This is a policy that acts
    to protect individuals from inadvertently revealing classified weapon
    locations stemming from a series of media queries and responses to
    them. In response to public affairs questions concerning the general or
    specific location of nuclear weapons, the response--Neither Confirm Nor
    Deny (NCND)--will always be given, even when the location is thought to
    be known or obvious.
        Question. Do you think it makes the government look foolish when
    the Energy Department says a plant assembled nuclear weapons, but the
    Defense Department won't admit the weapons were there?
        Answer. Former nuclear weapons sites within the United States are
    unclassified. However, it is the policy of the U.S. Government to
    neither confirm nor deny the presence or absence of nuclear weapons at
    any location independent of the classification. The basis for the
    security requirement inherent in the U.S. policy of neither confirming
    nor denying the presence or absence of nuclear weapons is to deny
    military 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 threats of sabotage and
    terrorism.
        Question. A document recently released by the Pentagon stated that
    the United States had nuclear weapons in Alaska, Cuba, Guam, Hawaii,
    the Johnston Islands, Midway, Puerto Rico, the United Kingdom, and West
    Germany. After the document was released, a Department spokesman said
    on television that the United States never had nuclear weapons in
    Iceland. Why can the Pentagon talk about nuclear weapons in Alaska and
    Iceland but not in Iowa?
        Answer. In response to public affairs question about the general or
    specific location of nuclear weapons, the response, neither confirm nor
    deny, will be given even when such location is thought to be known or
    obvious. The purpose is to deny militarily useful information to
    potential or actual enemies, to enhance the effectiveness of nuclear
    deterrence, and contribute to the security of the weapons. Documents
    released through the Freedom of Information Act (FOIA), 5 U.S.C.,
    Sec. 552, follow the classification procedures established under EO
    12958, Classified National Security Information, 17 April 1995, and the
    security guidance mandated for Formerly Restricted Data.
        Question. In 1999 the Army asked for former nuclear weapons storage
    sites to be excluded from the ``neither confirm nor deny'' policy for
    similar reasons, but the request was denied. Army officials have told
    me this is still a problem for them. Will you reconsider that request?
        Answer. It is my understanding that the Army is no longer pursuing
    such an exception.
        Question. In my letter to you I requested a timeline for
    implementing the amendment. I still have not received that. Please
    provide a timeline for the review of security policies, for the
    notification of workers, and for the report to Congress.
        Answer. The policy, procedures and implementing guidance for a
    program to comply with section 1078 of the Floyd D. Spence National
    Defense Authorization Act for Fiscal Year 2001 will take time to
    develop and sufficient funds to implement. As a comparison, the Nuclear
    Test Personnel Review (NTPR), which is a program to identify military
    personnel who participated in our atmospheric nuclear test program, has
    cost $225 million to execute to date and has been in progress nearly
    twenty-four years. As soon as the Department of Defense has a plan and
    the estimated resources to complete it, you, as well as the appropriate
    congressional committees, will be notified.
        Question. The letter from Mr. Verga hints that it may be difficult
    to find all the former workers who are supposed to be notified under
    the amendment. But we do know the workers at the Iowa plant and have
    records for them. Will you ensure that these Iowa workers are notified
    quickly while efforts continue to identify other covered workers?
        Answer. It is my intent to comply with the law and we appreciate
    any assistance that you can provide regarding the records of the Iowa
    workers. I intend to work the problem in a comprehensive manner with a
    realistic plan of action. In the spirit of fairness I think that it
    would be improper to single out Iowa workers for quick notification
    since the law requires me to notify all other workers who were, or are,
    engaged in activities as defined in section 1078.

                   MEETING THREATS TO U.S. NATIONAL SECURITY

        Question. Today you emphasized that spending on national missile
    defense is a small percentage of the total Defense Department budget
    and that ballistic missiles are just one of several threats to our
    security. Could you provide the funding level in the Defense Department
    fiscal year 2001 budget and in the fiscal year 2002 proposed budget
    that is allocated for defense of U.S. territory against each of the
    following weapons of mass destruction and possible delivery systems?
      --Ballistic missiles
      --Cruise missiles
      --WMD smuggled into the U.S. (``suitcase bomb'')
      --WMD made in the U.S. by terrorists
      --Conventional attack on a U.S. nuclear plant or chemical plant
      --Biological weapons
      --Chemical weapons
      --Nuclear weapons
        Answer. With the exception primarily of missile defense, Department
    of Defense spending does not have funding categories for specific
    threats. The entire DOD budget is geared to deterring and defending
    against all categories of threats, such as those cited in your
    question. America's military presence and ability to respond in any
    major global region is the foundation of our protection of U.S.
    territory and U.S. interests overseas.
        A specific example: Our global naval presence and dominance serves
    as our primary protection against cruise missiles launch or other
    weapons launched from hostile ships. Our DOD capability is also
    supported by Coast Guard capabilities. But as this example shows, one
    cannot take the total Coast Guard budget, plus our total Navy budget,
    and say that that is what we spend to defend against cruise missiles.
    That spending is to counter all threats to the United States and its
    interests, not just cruise missiles.
        In sum, total DOD spending aims to deter and defend against all
    weapons (nuclear, chemical, biological, and conventional) and all means
    of delivery (long-range ballistic missiles, cruise missiles, aircraft,
    naval vessels, etc.) There are no subcategories for each type of weapon
    or each means of delivery.
        The one subcategory that does exist and has meaning is Ballistic
    Missile Defense, which seeks to defend the U.S. homeland against
    ballistic missiles carrying any category of weapon (nuclear, chemical,
    biological, or conventional). For BMD, the fiscal year 2002 budget
    request was $8.3 billion, and the fiscal year 2001 budget was $5.4
    billion.
        For threats within American borders (WMD smuggled into the United
    States, WMD made in United States by terrorist, and conventional attack
    on American nuclear plants or chemical plants), virtually all of our
    nation's protection against these threats is provided by non-DOD
    entities: private security arrangements to protect non-government
    facilities, state and local police, and the FBI and other federal
    agencies. DOD spending does cover protection of its facilities against
    terrorist threats, but again there is no meaningful spending
    subcategory. DOD spending for police and security at its facilities
    does go solely or even largely for protection against terrorist
    attacks; such spending goes also for traffic control, crime prevention,
    etc.
                                     ______

                Questions Submitted by Senator Richard J. Durbin

                              ROCK ISLAND ARSENAL

        Question. I would like to take this opportunity to tell you of my
    strong support for the Army Arsenals, the Rock Island Arsenal in
    particular. The Arsenals play a very important role in protecting our
    defense industrial base, yet have languished in a ``Catch-22''
    situation of having to cover costs of extra capacity that is being held
    in reserve in case of war. I would welcome your support for the role of
    the arsenals.
        Recent efforts by the Army Materiel Command to urge Army program
    managers to use the capabilities at the arsenals has resulted in the
    first significant hire of workers at the Rock Island Arsenal in over a
    decade. This policy helps arsenals maintain the skills and capabilities
    needed to meet national mission requirements. It also largely does not
    affect private industry because it taps the arsenals for work that is
    mostly specialized and not done easily by private manufacturers. Can we
    count on you to continue this policy?
        Answer. We will continue this policy. In October 1999, the Army
    issued written guidance that clarified longstanding policy requiring
    all Army acquisition organizations, including program managers, to give
    preferential cost treatment to Army arsenals and factories when making
    source selections for direct sources of supply. This policy follows
    generally the Comptroller General's consistent interpretations of the
    Army Arsenal Act. Subsequently, in February 2000, the Secretary of the
    Army initiated a review of mission needs that drive retention of
    industrial reserve capacity with a particular focus on meeting those
    needs without distorting the economics of program acquisition
    decisions. RAND has been asked to recommend alternatives for the Army.
    This should lead to a comprehensive arsenal and ammunition plant
    strategy.

                            155 MM HOWITZER PROGRAM

        Question. I am troubled by the significant problems in the 155 mm
    Lightweight Howitzer program. Two successive GAO reports show
    continuing and growing problems that raise serious questions about
    whether this system will ever be built. We now have a gun that may
    always have cracks in important titanium components and that may be
    impossible to accurately aim. I am also concerned that the design flaws
    will make the Howitzer very difficult to manufacture. This is a vital
    capability that many of our young soldiers will have to stake their
    lives on. Have you looked at this program? Have you considered
    terminating the program and re-competing it?
        Answer. The Lightweight 155 mm Towed Howitzer (LW155) will provide
    a lightweight, highly mobile and deployable fire support system to our
    expeditionary forces and brigade combat teams. The Marine Corps has
    made a significant investment in this program and the issues identified
    by the GAO have been addressed in the current design of the weapon.
        Initial contractor testing on the first weapon (August 2000)
    revealed one minor crack in the spade. The crack was repaired in the
    field and the weapon continued firing without recurrence. Subsequently,
    the spade design was strengthened and there have been no additional
    issues with regards to cracking in the spade or elsewhere on the
    weapon.
        Accuracy of the weapon remains a risk area, however there have been
    significant improvements made during development by stiffening the
    structure, tightening tolerances, improving the fire control linkage
    and insulating key components from thermal effects. The adequacies of
    these improvements are being assessed as part of the ongoing
    developmental testing.
        BAE SYSTEMS has already delivered five weapons. Three additional
    weapons will be delivered by year-end, and they have selected their
    U.S. partners to produce more than 70 percent of the LW155 in the
    United States. They have resolved the initial issues with weld
    distortion and have introduced castings to improve manufacturability
    and reduce cost. To mitigate the risk associated with transitioning
    production from the United Kingdom to the United States, the current
    contract with BAE SYSTEMS was modified to incorporate the manufacture
    of two pilot production weapons using the selected U.S. production
    partners. The Pilot Production effort will provide additional data to
    demonstrate readiness for production.
        While it is fair to say that this program has had some
    difficulties, issues of this nature are not uncommon for programs at
    this stage of development. It is in the best interest of the Marine
    Corps and the Army to assess the results of the ongoing testing to
    confirm the program's readiness to support a low rate production
    decision late next year.

                      FUTURE STRATEGIES AND BASE CLOSURES

        Question. Many defense planners say that the United States may have
    to respond to an ``anti-access strategy'' by potential enemies which
    will make it more difficult to maintain our forward bases in certain
    hot spots around the world, making us rely on long-range systems to
    project military power. If the United States will have to pull back
    from some foreign bases to bases in the continental United States, it
    seems that, in 10 or 15 years, we may need some of the bases some think
    we could do without today. Did you consider this issue when you
    recommended another round of base closures?
        Answer. Yes, we did. A provision regarding overseas basing
    considerations, which was included in the Administration's proposal, is
    also incorporated in the Senate version of pending base closure
    legislation. That provision requires that the Department consider the
    anticipated continued need for and availability of military
    installations worldwide. In evaluating the need for military
    installations inside the United States, this provision also requires
    the Department to take into account restrictions on the use of military
    installations outside the United States and the potential for future
    prohibitions or restrictions on the use of such military installations.

                  BALLISTIC MISSILE TESTING AND THE ABM TREATY

        Question. Phillip Coyle, former Pentagon Director of Operational
    Test and Evaluation said there is no reason presented by the current
    missile defense test schedule that the United States would need to
    withdraw from the Anti-Ballistic Missile (ABM) Treaty this year
    specifically, causing you to say that we may need to if no agreement
    can be reached with Russia?
        Answer. The Administration redesigned the missile defense program
    to a robust research, development and testing program designed to give
    us deployment options in the 2004 to 2008 period. As a result, the new
    program requires the ability to do the following: use all available
    sensors to support missile defense testing; pursue all basing modes
    (air, sea, mobile-land, and space); share ARM technology with friends
    and allies, testing without any distinction between shorter and longer-
    range defense; concurrent testing of ARM and non-ARM components; and
    finally, no numerical or geographic restrictions on test assets.
        The assertion that the ARM Treaty is not currently hindering our
    test program not is incorrect. On October 25, 2001, we announced that
    four missile defense test activities planned for this fall are
    cancelled because they might have violated the ABM Treaty. Three of the
    test activities involved the use of sea-based radars aboard IJ.S. Navy
    Aegis ships to track missiles and a Titan II space launch vehicle,
    while the fourth activity involved the use of a ground-based radar at
    Vandenberg Air Force Base in California to track a missile during an
    upcoming missile defense flight test.
        Since taking office, the Bush Administration has stressed that we
    will not violate the ARM Treaty as long as we are a party to the
    agreement. The President has directed the Defense Department to examine
    all available technologies and basing modes for missile defense and to
    construct the most efficient and effective testing program, without
    respect to the ARM Treaty. As the Administration has said for several
    months, because we have adopted this approach, our missile defense
    program would inevitably encounter the constraints of the ARM Treaty,
    which has now occurred.

             RUSSIA'S SECOND STRIKE CAPABILITY AND MISSILE DEFENSE

        Question. A panel of scientists released a report in June called,
    Toward True Security, A U.S. Nuclear Posture for the Next Decade, which
    reported that, on any given day, Russia actually only fields 100
    strategic weapons that it can consider safe from a U.S. first strike.
    Why then, wouldn't even a relatively modest missile defense system be
    considered by Russia to neutralize their small deterrent capability?
        Answer. The success of U.S. policy is not now, nor has it ever
    been, based on carrying out a nuclear first strike on Russia. U.S.
    missile defenses will not pose a threat to the Russian strategic
    deterrent even at drastically reduced levels. The missile defense
    system we intend to deploy will be capable against a few handfuls of
    RVs, not a large-scale attack. Furthermore, while Russian strategic
    nuclear capability may decline to 2,000 weapons over the next decade,
    it will still be a significant force.
        Further, the Cold War is over and Russians are seeking the benefits
    of democracy. Our foreign policy is designed to encourage Russia's
    continuing moves towards democracy and free enterprise as we build an
    entirely new relationship based on mutual trust, friendship and
    cooperation.

                                    VIEQUES

        Question. I believe it is time, now, for the United States to pull
    out of Vieques. The handwriting has been on the wall for a long time
    now that it was time for the Navy to find alternative training
    arrangements.
        What is DOD doing to find alternatives to Vieques?
        Answer. The real issue here is effective training for our Sailors
    and Marines. The Department of the Navy has a study in progress to
    identify combinations of methods, places, and technologies that could
    provide the equivalent readiness levels now attained using the range on
    Vieques. The results are due out in the Spring of 2002 and it is
    premature to predict the study findings.
        A previous study was unable to find a single site alternative to
    Vieques, and that conclusion, by all indications, remains valid. In
    addition to the impact area on Vieques, the collocated sea, air, and
    land maneuver space is valuable to national defense readiness.
                                     ______

                   Questions Submitted by Senator Harry Reid

                         SHORT-TERM AND LONG-TERM NEEDS

        Question. The Defense Department needs to address both short-term
    and long-term needs. These include quality of life, readiness,
    modernization, transformation, and missile defense. How will priorities
    be set in light of potential budget shortfalls? In other words, what
    programs would be most seriously impacted by cuts in the defense
    budget? Is missile defense sacrosanct?
        Answer. My discussions with congressional leaders indicate that
    they we all share the conviction that we must not shortchange U.S.
    defense. If shortfalls occur, the most likely programs hurt would be
    long-term modernization to transform America's armed forces. If cuts
    were required, no programs should be considered sacrosanct.

                              F-22 STEALTH FIGHTER

        Question. During a visit to the Hill earlier this year, Air Force
    General David Deptula said the F-22 provides a huge asymmetric fighting
    advantage for U.S. pilots. What do you see as the role of the F-22
    stealth fighter in the force structure? Is it an essential element of
    defense transformation?
        Answer. The F-22 will fulfill a wide and diverse array of roles in
    the military's force structure. In military operations, the F-22 will
    provide air superiority to all components of the Joint Force, be
    instrumental in attacking mobile targets, and be capable of overcoming
    anti-access threats. The F-22's integration of advanced stealth,
    supercruise, and fused data avionics make it capable of attacking all
    types of targets across the width and breadth of any high-threat
    environment theater. Based on its capabilities, it should come as no
    surprise that recent press accounts acknowledge that the Secretary of
    the Air Force plans to make the F-22 the weapon system of choice within
    the Air Force for hunting and destroying mobile targets. While gaining
    access through reliance on advanced stealth and supercruise, the F-22's
    fused avionics will link off-board and on-board sensors with the most
    lethal, precise, and autonomous munitions in the U.S. arsenal to permit
    destruction of even the most challenging targets.
        The characteristics and capabilities that are distilled into the F-
    22, basically result in a weapon system that synthesizes what was
    previously required of many different aircraft. The advanced stealth,
    supercruise, and fused avionics of the F-22 are all force multipliers
    that allow a single F-22 to achieve unprecedented operational effects
    and multiple or numerous F-22s to achieve strategic effects.
        The advent of previous stealth fighters into the force structure
    had a similar strategic effect for the United States. The use of the F-
    117 stealth fighter in Desert Storm is a prime example. The F-22's
    stealth capability is a generation ahead of the F-117 and even more
    advanced than the B-2 guaranteeing the preservation of a key asymmetric
    advantage of the United States. Open source accounts reveal that the F-
    22's radar cross section (RCS) is just the size of a marble compared to
    the F/A-18's beach ball size. This advanced generation of stealth
    permits the F-22 to operate in threat environments posed by advanced
    SAMs, like the S-300 series and double-digit types (SA-10, -12, -20)
    that legacy systems simply cannot survive within in the future.
        The F-22 is the only aircraft in the world capable of supercruise--
    flying supersonic without a gas-guzzling and high infrared source
    afterburner. Supercruise provides the F-22 with many force multiplying
    effects. The ability to fly supersonic and not rely on an afterburner
    to do so permits the F-22 in effect to increase its high-speed range
    over legacy fighters since it does not burn up its fuel at as fast a
    rate. Also, when combined with the F-22's high altitude capability
    (10,000 feet above most other aircraft) supercruise provides a
    ``booster'' effect to air-to-air combat increasing the range of its
    missiles by 50 percent due to additional velocity. Supercruise permits
    the F-22 to engage in warfights where it is outnumbered and attack from
    a position of safety.
        The integrated or fused avionics of the F-22 is another unique
    force multiplying characteristic. The fused avionics of the F-22 allow
    the routing of all the sensors through a central computer process that
    will analyze all inputs and present a simplified and accurate picture
    to the cockpit on an active-matrix liquid crystal display. This will
    provide a pilot maximum situational awareness and a reduced taskload.
    Fused avionics also give the F-22 electronic warfare capabilities
    possessed by the EA-6B and F-16CJ. The F-22's dedicated radar system
    provides 360 degree coverage in all bands and detect emitters at ranges
    exceeding 250nm, while its passive system permits the tracking and
    shooting of multiple aircraft by one undetectable F-22. The ``Raptor''
    will have a ``first-look, first-shoot, first-kill'' capability on
    multiple targets. Further improvements in the F-22's fused avionics
    capability and the adoption of new operation concepts will result in
    next generation approaches to Suppression of Enemy Air Defenses (SEAD)
    and Destruction of Enemy Air Defenses (DEAD) along with ``hunter-silent
    killer'' attacks against mobile targets using two F-22s and their
    associated datalinks.
        In conclusion, with its unique characteristics the F-22 is the
    premiere multi-role weapon system of the United States Air Force. It
    will assume the duties of multiple past legacy platforms and meet them
    readily, ensuring that the United States asymmetric advantage in
    aerospace power persists into the 21st century. The F-22's advanced
    capabilities ensures its place in the future force structure as a ``go-
    to'' system to meet the 21st century requirements for destroying
    targets and assuring air superiority. The F-22 is needed to give the
    U.S. military the freedom to attack and freedom from attack in high
    threat environments. As important as its role in the future force
    structure is the F-22's role in the new defense strategy of the nation.
        The 2001 Quadrennial Defense Review (QDR) Report outlined a new
    defense strategy, built around four defense policy goals: Assuring
    allies and friends; dissuading future military competition; deterring
    threats and coercion against U.S. interests; and if deterrence fails,
    decisively defeating any adversary.
        The F-22 while just one weapon system in the nation's national
    security toolbox supports each one of these pillars of the new defense
    strategy. The F-22 has capabilities that no other aircraft in the world
    possesses. Our allies and friends around the globe do not have the will
    or capability to provide the type of air superiority or target
    destruction effects that the U.S. military does. The fact is that when
    needed, American allies rely upon us to provide unmatched air
    superiority and overwhelming yet precise attack capability from the
    air. The F-22 assures allies that such reliance on the United States
    should continue.
        The concept of dissuasion is a recent addition to the strategic
    lexicon of the United States. The QDR acknowledges that the United
    States can exert influence over the nature of future military
    competitions and complicate potential adversaries' future military
    planning in part by maintaining or enhancing advantages in key areas of
    military capability. In other words, this influence can ``dissuade'' a
    future adversary from pursuing a certain military modernization effort.
    The F-22's unparalleled effectiveness against advanced Surface-to-Air-
    Missiles (SAMs) and foreign aircraft potentially will assist in
    dissuading nations from pursuing development and procurement of such
    systems, particularly if a large number of F-22s are fielded quickly by
    the United States.
        As the public advertisements for the Raptor state, ``the first
    thing it kills is the enemy's appetite for war.'' This is pure
    deterrence. The F-22 ensures the United States will go for overmatching
    not just meeting its future opponents both in the air and on the
    ground. Knowing this, potential enemies may disengage from threatening
    U.S. interests, being deterred. However, when not deterred the enemies
    of the United States will face the prospect of decisive defeat. The F-
    22's role in being part of imposing that decisive defeat will be great.
    No matter what the F-22 is contributing whether it be the destruction
    of advanced SAMs or defense against cruise missiles, to the pursuit and
    annihilation of mobile targets or protection of joint and coalition
    forces, it will be needed should deterrence fail.
        Not only is the F-22 capable of completing multi-mission roles and
    being a key tool in implementation of the new defense strategy, but it
    is also an essential element of defense transformation. The F-22's
    incorporation into the force structure will permit the eventual
    retiring of legacy air systems to old to operate in peacetime and to
    vulnerable to fly in wartime. The F-22 will be easier to operate.
    Lastly, through the use of new operational concepts and the innovative
    integrating of technologies the F-22 will spearhead another
    transformation of warfare.
        The Air Force approach to transformation is one of consistency and
    completeness. The Air Force defines transformation as fundamental
    change involving three principal elements and their interactions with
    one another: Advanced technologies, which, because of the new
    capability they yield, enable new concepts of operation that produce
    order-of-magnitude increases in our ability to achieve desired military
    effects, and organization change that codifies the changes in the
    previous elements or significantly enhances our ability to execute our
    national security strategy from the Air Force point of view, military
    transformation involves much more than the acquisition of new systems.
        For this reason, although the F-22 is an essential element in the
    current defense transformation it is by no means the only element. The
    F-22 paired with small-diameter bombs capable seeking mobile targets is
    more transformational than an F-22 armed with current or legacy
    munitions. The air superiority provided by the F-22 is worthless
    without future ground combat systems or other air combat systems
    operating within it. New Intelligence,Surveillance and Reconnaissance
    (ISR) platforms both manned and unmanned are needed along with new
    space-based systems. Without new concepts of operations such as the
    Global Strike Task Force, the F-22's operational role with other
    systems such as the B-2 and JSF remains undefined.
        The F-22 is a key element of the Air Force's continuing
    transformation. The F-22's advanced capabilities allows the Air Force
    to replace multiple systems with it, and still fight in different and
    more effective ways. The F-22 signifies a move away from the one-for-
    one weapon system replacement approach too often used as procurement
    strategies. The F-22 will transform the way the Air Force and the
    United States fights wars. The F-22 as a provider of air superiority
    will paralyze and neutralize an enemy's air defenses at the outset of
    war, making follow-on military operations incomparably less risky and
    more effective. As a strategic strike asset, the F-22 will deliver
    several precision weapons with high accuracy and low risk across the
    breadth and width of an enemy territory against time-sensitive targets.
    Simply stated, the F-22 provides the United States with an asymmetric
    advantage it cannot forgo.

                               SIERRA ARMY DEPOT

        Question. The Sierra Army Depot, just 55 miles from Reno, was
    California's leading air polluter during 1999 and poses a significant
    health threat to northern Nevada. The Army continues to use open
    burning and detonation to dispose of munitions, which according to the
    EPA, discharges millions of pounds of toxic chemicals into the air
    every year. I'm requesting support in this year's defense budget for a
    project at the Hawthorne Army Depot in Nevada to develop a safe viable
    alternative to open detonation of munitions. What are the Department's
    plans to develop safe and environmentally friendly technology to
    demilitarize large quantities of ammunition/explosives?
        Answer. The report implicating Sierra Army Depot as California's
    leading air polluter in 1999 was a mistake based on incorrect
    assumptions. The corrected data was resubmitted showing that Sierra was
    never the leading air polluter. The Department of Defense is committed
    to developing alternative technologies for the safe, environmentally
    friendly demilitarization of excess, obsolete, or unserviceable
    ammunition and explosives and has been engaged in an active research,
    development, testing, and evaluation program since the early 1990's.
    Hawthorne Army Depot, for example, is home to the Western Area
    Demilitarization Facility (WADF) which has the capability to
    demilitarize ammunition through resource recovery versus destructive
    methods. In fiscal year 2001, funds were received to initiate
    optimization of the hot gas decontamination facility at WADF, thereby
    greatly enhancing WADF and DOD's capability to explore fully
    alternative technologies. Work on the project continues.

                                NEW FORCE-SIZING

        Question. Based on what we read in the press, the QDR will spell
    out a new force-sizing requirement of being able to win one war
    decisively, while repelling and defeating aggression in another part of
    the world. If the United States isn't prepared to fight a war on two
    fronts, doesn't that provide an invitation to China to initiate a major
    conflict with Taiwan when the United States is engaged in a major
    conflict in another part of the world?
        Answer. Under the new force-sizing construct in the 2001 QDR
    Report, U.S. forces will be shaped to defend the United States, deter
    aggression and coercion forward in critical regions, swiftly defeat
    aggression in overlapping major conflicts, decisively defeat the
    adversary in one of those conflicts, and conduct a limited number of
    smaller-scale contingency operations.
        The new construct serves as a bridge from today's force, developed
    around the threat-based, two major theater construct, to a further,
    transformed force. The United States will continue to meet its
    commitments around the world, including Southwest and Northwest Asia,
    by maintaining the ability to deter aggression in two critical areas in
    overlapping timeframes. The United States is not abandoning planing for
    two conflicts to place for fewer than two. On the contrary, DOD is
    changing the concept altogether by planning for victory across a
    spectrum of possible conflict.
                                     ______

                Questions Submitted by Senator Dianne Feinstein

                        NATIONAL MISSILE DEFENSE PROGRAM

        Question. As I understand it, one of the problems in convincing
    China that the National Missile Defense (NMD) is not aimed at them is
    that regardless of what architecture is under consideration even a
    rudimentary system is well configured to counter the threat facing the
    United States from China's nuclear missile forces. What is your
    understanding of this issue? If U.S. development and deployment of NMD
    causes China to seek to ``break out'' and deploy additional nuclear
    missiles, will NMD have served its objective of making the United
    States more secure from the threat of nuclear attack, or will it, in
    fact, have made us less secure? Are there alternate NMD architectures
    that might address some of China's concerns?
        Answer. The United States has been working to make clear to China
    that the U.S. missile defense program does not threaten them. Our
    missile defense program is designed to counter the comparatively
    limited missile threat from rogue states and the possibility of an
    accidental or unauthorized launch. Only those foreign actors with
    hostile intent towards the United States and its interests have reason
    to be concerned about U.S. missile defenses.
        China's modernization efforts predate the U.S. missile defense
    program, and China will increase the size and capabilities of its
    nuclear arsenal regardless of U.S. BMD-related actions. Thus, linking
    the modernization of China's offensive nuclear forces to U.S. missile
    defense efforts is misleading. In our continuing consultation with the
    Chinese, we have told them that their ongoing modernization efforts are
    unnecessary and injurious to regional stability. Missile defense--which
    is one element of a broader U.S. strategy to combat the proliferation
    of missiles and weapons of mass destruction--can contribute to that
    stability.

                             MISSILE DEFENSE PLANS

        Question. According to a story earlier this year in the Russian
    periodical Nezavisimaya Gazeta, Russia and China have held talks on a
    defense treaty designed ``to oppose U.S. influence and to counter the
    Pentagon's plans to create an anti-missile shield in America and a part
    of Asia.'' Are you concerned that U.S. plans for missile defense may
    drive increased Russian-Chinese security cooperation? How should the
    United States react to closer Russian-Chinese security ties?
        Answer. Since that story appeared, Russia has indicated a
    willingness to move forward on its relationship with the United States
    irrespective of U.S. plans to move beyond the ABM Treaty. The United
    States has been regularly discussing our missile defense plans with
    both Russia and China. These discussions are part of an effort to
    create a new strategic framework. We are encouraged by our progress to
    date and are confident that this new framework can be achieved.

                            NATIONAL MISSILE DEFENSE

        Question. According to a September 2, 2001 story in the Washington
    Post, an administration official indicated that as a ``sweetener'' for
    China to accept U.S. plans to test and deploy NMD, the United States
    would ``signal that it recognizes both sides might want to resume
    nuclear weapons testing in the future.'' An article in The New York
    Times, also on September 2, 2001, indicated that the Administration
    planned to abandon its objections to a Chinese nuclear and missile
    buildup in an effort to overcome China's opposition to NMD. What is the
    Administration's policy regarding engaging China on National Missile
    Defense? Has or will the Administration signal to China, either tacitly
    or otherwise, that it can go forward with nuclear testing or a nuclear
    or missile buildup? Are you concerned that such a course might set off
    a nuclear arms race in Asia? If China tests nuclear weapons or seeks to
    build up its nuclear or missile forces, what is your expectation of how
    India might react? Pakistan? Other countries in the region?
        Answer. These press stories are incorrect. The United States will
    not seek to overcome China's opposition to missile defense by telling
    the Chinese that we do not object to an expansion of their nuclear
    ballistic missile force or that we would accept their resumption of
    nuclear testing. The Administration's policy is to reduce the level of
    offensive nuclear weapons in the world, to lessen the risk of nuclear
    war, and to protect the United States and its military forces, allies,
    and friends from the threat of ballistic missile attack. In that
    context, the Administration is committed to holding intensive
    discussions with China.
                                     ______

                    Questions Submitted by Senator Herb Kohl

                            MISSILE DEFENSE PRIORITY

        Question. As we all know, our budget is turning out to be much
    tighter than we imagined it would be earlier this year. We have very
    little money to work with for fiscal year 2002, and a host of
    priorities on which we all agree we should spend significant funds--a
    prescription drug benefit, education reform, NIH research, crime
    fighting, etc. Not the least of these priorities are your plans to
    modernize our nation's defense system.
        Given all these great needs, and our dwindling federal resources,
    can you explain to me why now the time to pursue the possibly
    unattainable goal of completely walling ourselves off from outside
    threats with a massive, untested missile defense system? Is this really
    this best time--financially and in terms of the threats that we
    actually face--to take such a high cost gamble?
        Answer. The priority the Department places on missile defense
    reflects the current Administration's understanding of the growing
    threat the United States faces from short-, medium-, and long-range
    ballistic missiles. While we are just beginning to field systems to
    reliably counter the shorter-range threats, there is still much work to
    be done before we will be in a position to deploy capabilities to
    protect United States and allied cities and troops against the emerging
    longer-range threats from rogue states, whose leaderships may use these
    offensive capabilities for purposes of terror, coercion, or aggression.
        While we currently have deployed many systems to counter threats
    from the land, sea, and air, and we have initiatives and operations to
    take care of numerous other defense needs, today we have no capability
    against longer-range threats against the American population. Nor do we
    currently have a capability to defeat the medium- and intermediate
    threats that could threaten our troops and allied and friendly cities
    this decade. Much like the threat we expect to face, the Ballistic
    Missile Defense System we are endeavoring to deploy is unprecedented.
        The Administration will pursue a robust missile defense research,
    development, test, and evaluation (RDT&E) program to acquire the
    capabilities to deploy limited, but effective missile defenses as soon
    as possible to protect the United States, our deployed forces, and our
    friends and allies. The proposed missile defense funding for fiscal
    year 2002 represents our commitment to developing a rigorous test
    program, which will be essential to our ability to determine which
    technologies and basing modes will be most effective against what by
    all measures is a very dynamic threat. Early deployed capabilities may
    be expected to provide more protection than we currently have.
        Missile defense technologies have been under development for years.
    Many of the technologies required to build an effective BMD system are
    in hand and are improving year by year. The challenge before missile
    defense developers is in engineering the system. We will increase our
    knowledge of system capabilities over time through our RDT&E
    activities, and especially our testing program. These activities will
    give us a sound understanding of the technological and engineering
    possibilities inherent in the system we intend to deploy.

                                ADDITIONAL FUNDS

        Question. According to a recent editorial the budget you have sent
    to Congress is larger after adjusting for inflation than some of the
    budgets you prepared in the Ford Administration. With spending at 90
    percent of the Cold War levels--but with no threat like the former
    Soviet Union in sight, why do we need the extra $18 billion in funds
    for fiscal year 2002 just recently requested by the Administration?
        Answer. The $18 billion is needed to begin to bolster our readiness
    and capabilities to counter 21st century threats like terrorism.

                                   REDUCTIONS

        Question. If we cannot find the extra $18 billion you have
    requested without severely cutting back other budgeted priorities, can
    you make reductions in your own budget to cover these new initiatives?
        Answer. If the President's full request was not appropriated, the
    Department's alternatives would be to try to find reductions that would
    not undermine current high priorities like fighting terrorism (almost
    impossible) or urging the President to request supplemental fiscal year
    2002 appropriations.

                              MILITARY HEALTH CARE

        Question. Part of the 2001 Supplemental included funds for military
    retiree health care. Many retirees in the state of Wisconsin have
    contacted my office because they cannot find health care providers
    willing to accept TRICARE Prime. Wisconsin is a primarily rural state
    with no active duty bases so doctors are not familiar with DOD health
    programs. What is the Administration doing to promote TRICARE Prime and
    ensure the retirees have choice no matter where they live?
        Answer. We are working hard to assure an adequate provider network
    in Wisconsin. The Prime service area now includes 403 specialists and
    166 Primary Care Managers.
        There are a number of efforts ongoing within Wisconsin to improve
    access for all of our beneficiaries in the state. In the majority of
    highly populated areas, TRICARE networks are in place. There is a
    TRICARE Service Center located in the Royce Federal Plaza in Milwaukee
    that assists beneficiaries with information about providers who accept
    TRICARE. They may be reached at 1-800-941-4501 during normal business
    hours. As part of the ongoing effort to enhance services in rural
    areas, TRICARE lead agent staff from Region 5 are now working with the
    County Veterans Services (CVS). The CVS will work closely with Humana
    Military Healthcare Services and Region 5 staff to help inform people
    about TRICARE in their home counties.
        Humana is also working with the Department of Veterans Affairs
    (DVA) to offer more choice to TRICARE beneficiaries. Negotiations are
    underway in Veterans Integrated Service Network (VISN) 12, which
    includes facilities in Chicago and the state of Wisconsin. The VISN 12
    network includes three DVA medical centers and several outpatient
    clinics. This contractual arrangement will allow additional network
    choices for TRICARE beneficiaries in the state of Wisconsin.

                                OPERATIONS TEMPO

        Question. Patrolling the no-fly zones in Northern and Southern Iraq
    seem to be the most exhausting and difficult missions for the
    services--especially since these missions have gone on for almost ten
    years. Is the Administration developing alternative methods for
    accomplishing these missions that do not entail increasingly dangerous
    overflights?
        Answer. In the aftermath of the September 11 attacks, President
    Bush is ruling out no alternatives with respect to troubled regions--
    notably including the region in and around Iraq. Still, the operations
    tempo of our armed forces is increasing and likely to remain high as we
    focus on defeating global terrorism.

                BASE CLOSURE AND EFFICIENT FACILITIES INITIATIVE

        Question. I am glad to see the Administration has outlined a
    proposal to reduce unneeded defense infrastructure. Another round of
    base closures has the potential to save the Department of Defense
    billions of dollars in the long run. Is the Administration's Efficient
    Facilities Initiative more insulated from political influence that the
    previous base closure rounds? What impact will environmental pollution
    have in determining which bases are targeted for closure?
        Answer. Establishing an independent, bi-partisan Commission
    provides the insulation from political influence. Similarly, the
    requirement for both the President and Congress to vote Commission
    recommendations on an ``all or nothing'' basis insures fairness in the
    recommendation and approval phases. Additionally, the base realignment
    and closure (BRAC) legislation recently passed by the Senate contains
    two provisions to further enhance fairness: (1) to emphasize the
    importance of military value over any other consideration, the Senate
    version requires military value to be the primary consideration in
    making recommendations for base closures and realignments; and, (2) to
    require that privatization in place must be specified in the Commission
    recommendation as a method of closure or realignment and that it be the
    most cost effective method of implementation, if the Department would
    choose this avenue to implement a base closure.
        Regarding the impact of environmental pollution during a future
    BRAC round, the environmental impact was one of the eight criteria used
    in the previous rounds for selecting military installations for closure
    and realignment. However, the Department gave priority consideration to
    the first four criteria, collectively referred to as military value. By
    policy, environmental costs at closing bases were not to be considered
    in the cost of closure calculations. Using environmental costs as a
    determining factor would lead the Department to the perverse logic of
    closing only the cleanest facilities. The Department has a continuing
    legal obligation for environmental restoration regardless of whether a
    base is closed or realigned. DOD budgeted about $7 billion during the
    1990-2001 implementation period of the four BRAC rounds for
    environment. Factoring these costs, as well as the other implementation
    costs for these rounds, still yields net savings during this period of
    $16 billion.
                                     ______

                   Questions Submitted by Senator Ted Stevens

                        ENGAGEMENT POLICIES AND PROGRAMS

        Question. Secretary Rumsfeld: The Department of Defense has
    increased its engagement policies and programs throughout the world to
    support the United States' interests overseas. Each of the regional
    CINC execute programs to enhance cooperation and build relationships
    through mutual understanding. The engagement policies are particularly
    helpful in the Asia-Pacific region, which lacks a formal NATO-type
    defense framework. Over the years, the Pacific engagement program has
    increased the goodwill and influence of the United States and provided
    important access throughout the region. What is your view of Pacific
    command's engagement programs and policies?
        Answer. The President's fiscal year 2002 defense budget request did
    sustain key programs to support U.S. interests in the Asia-Pacific
    region. In the aftermath of the September 11 attacks, my staff will
    need to reevaluate all our major regional programs.

                                  KEY PROGRAMS

        Question. Does the fiscal year 2002 defense budget sustain the key
    programs to support U.S. interests in the Asia-Pacific region?
        Answer. The President's fiscal year 2002 defense budget request did
    sustain key programs to support U.S. interests in the Asia-Pacific
    region. In the aftermath of the September 11 attacks, my staff will
    need to reevaluate all our major regional programs.
                                     ______

                Questions Submitted by Senator Pete V. Domenici

      PERCENT OF GROSS DOMESTIC PRODUCT (GDP) AS A MEASURE OF THE DEFENSE
                                    SPENDING

        Question. Some in the Defense Department have pointed out that the
    Cold War average of defense spending has been 5 percent of the Gross
    Domestic Product; it is now at 3 percent of GDP. Some urge that
    defense's share of GDP be increased to 3.5 or even 4 percent.
        Increasing defense spending from the current 3 percent to 3.5
    percent sounds modest, but it actually is a significant increase, is it
    not? (Committee staff calculate a defense budget at 3.5 percent of GDP
    to be about $380 billion, a $37 billion increase over the currently
    proposed $343 billion.)
        Answer. Increasing defense spending to 3.5 percent of GDP indeed
    would be significant.
        Question. In some past years, the defense budget was smaller, and
    the economy was much smaller. A percent of GDP calculation would have
    shown a smaller defense budget to be a higher percent of GDP. For
    example, in 1941 when the economy was much weaker, defense spending was
    very small, and Japan attacked Pearl Harbor, defense comprised 5.6
    percent of GDP.
        Moreover, the percent of GDP for defense can increase not just by
    raising defense spending but also when defense spending is level and
    the economy is contracting. For example, if this country goes into
    recession and defense spending remains constant, the percent of GDP for
    defense may increase well above 3.5 percent.
        Percent of GDP is a strange measure of defense spending. It can
    show increases when defense spending is stagnant or even shrinking.
    Conversely, it can show decreases when defense spending is increasing.
        What are your views on the use of share of GDP as a measure of
    defense spending? Why do some in DOD use it?
        Answer. The use of share of GDP is a good, not perfect measure of
    defense spending. It is useful because it takes factors out of
    inflation and it takes into account the size of the U.S. economy as
    measured by GDP.

                CONSEQUENCES OF NOT SUPPORTING BUDGET AMENDMENT

        Question. Chairman Conrad (and Senator Levin [Chairman of Armed
    Services]) have made it clear they may not agree to increase the 2002
    defense budget by the additional $18.4 billion the President has
    requested. They explain that this additional spending could mean a
    ``raid'' on the Medicare ``surplus'' and perhaps also the Social
    Security ``surplus.''
        If the Chairman of the Budget Committee refuses to release the
    Reserve Fund in the Budget Resolution to accommodate the President's
    2002 budget amendment and if the Senate refuses to approve the
    additional spending by the 60 votes that would be needed to overcome
    that decision by Chairman Conrad, what would be the consequences?
        Answer. Failure to fully fund the President's fiscal year 2002
    request would devastate military force readiness and seriously hamper
    our ability to counter terrorism and other 21st century threats.
        Question. Where would the Defense Department make the necessary
    reductions, if it were given a choice?
        Answer. I do not know where we would make reductions without real
    damage. I expect I would urge the President to request supplemental
    fiscal year 2002 appropriations, given the urgency of moving decisively
    against global terrorism.
        Question. What would be the consequences for your ``Strategic
    Review?'' Readiness and training?
        Answer. The consequences would be widespread and deep damage to our
    strategy and readiness to focus more effectively on 21st century
    threats like terrorism.
        Question. The ability to support ongoing deployments such as in the
    Balkans? the Persian Gulf? the Middle East?
        Answer. The consequences would be severe.
        Question. The financial management reform that the Chairman of the
    Appropriations Committee, Senator Byrd, has urged?
        Answer. We would continue full speed ahead with financial
    management reform, since that does not depend heavily on current year
    funding.

                        DEFENSE HEALTH PLAN COST GROWTH

        Question. Since 1994, DOD budget requests have underfunded the
    Defense Health Program. For example, in 2000, Congress was forced to
    add $1.3 billion to pay actual Defense Health Program costs. In the
    2001 Supplemental, DOD requested an additional $1.4 billion to pay
    actual costs; the House increased that amount to $1.6 billion; the
    Senate increased it to $1.5 billion.
        For the 2002 budget, DOD requested an additional $3.9 billion to
    pay new benefits to military retirees added by Congress (CBO had
    estimated the cost of these benefits at just $1.7 billion, [DOD
    anticipates a higher participation rate]). DOD also added another $2.6
    billion to pay for what are anticipated to be actual costs.
        The 2002 budget resolution assumed an additional $1.4 billion for
    the Defense Health Program in 2001, the full $3.9 billion estimated by
    DOD to pay new benefits for military retirees legislated by Congress,
    and up to an additional $3.1 billion for full Defense Health Program
    costs, all in 2002.
        The total Defense Health Program is currently estimated at $17.9
    billion in the Operations and Maintenance budget for 2002. This amount
    does not include the salaries of Defense Health Program personnel,
    which approximates an additional $5 billion in the Military Personnel
    budget.
        Question. Why are the Defense Health Programs accelerating as fast
    as they are?
        Answer. The fiscal year 2002 Defense Health Program (DHP)
    President's Budget was submitted at $17.6 billion for Operations and
    Maintenance funding which represents a $5.9 billion increase over
    fiscal year 2001. Congress provided a new TRICARE for Life benefit that
    represents $4.1 billion of the increase. The bulk of the remaining
    increase is explained by the 15 percent growth in the pharmacy budget
    and an increase in the cost of purchasing health care from the civilian
    sector.
        Question. What additional Defense Health Program cost growth do you
    anticipate in the future?
        Answer. In the future, the DHP is likely to see upward cost growth
    pressure in several areas. It seems unlikely that the cost of pharmacy
    supplies will decrease below double-digit growth rates over the next
    five years. Nor does it seem likely that the cost of purchased health
    care will decrease much below current rates of growth, which are in the
    range of 12 percent, over the same period of time.
        As the government focuses upon Homeland Defense and asymmetric
    warfare threats, the Department will need to review our current budgets
    for equipment, training, and facilities to effectively counter
    chemical/biological and similar threats. The DHP maintains about 80
    hospitals and hundreds of clinics worldwide. The cost to harden and
    secure these facilities to acceptable standards will be high.
        Question. What cost growth containment are you considering?
        Answer. The DHP is striving to evaluate performance through the use
    of relevant, reliable metrics. This process should lead to decisions at
    all levels that emphasize economic efficiencies. The DHP will continue
    to achieve efficiencies in the cost of providing heath care through
    improved contracting practices to procure supplies and equipment and
    through improved contract vehicles to procure purchased health care.
    There will be a strategic review of the DHP's MILCON plan to ensure it
    is consistent with the Department's policy and reflects the most
    appropriate use of these resources. The DHP will continue to insist
    that Information Management and Information Technology (IM/IT)
    procurements are cost effective and utilize commercially available
    software where appropriate. We are currently developing and testing
    several new programs to distribute resources more effectively. The
    Department is currently implementing Activity Based Costing (ABC) that
    will enable the TRICARE Management Activity to carefully review DHP
    costs and tie obligations to performance. We are also testing a plan to
    better utilize our Military Treatment Facility resources within
    geographic regions through a program to empower them to optimize
    resources across the region. In cooperation with the Defense Financing
    and Accounting Service, the DHP is working to improve the efficiency of
    its financial systems. Controlling the growth in health care cost
    growth is a high priority of the DHP.
                                     ______

               Questions Submitted by Senator Christopher S. Bond

                                      C-17

        Question. The need for additional strategic airlift assets has been
    widely discussed and reinforced with the MRS-05 study (Mobility
    Requirements Study completed late 2000 showing we need additional
    airlift). The current budget proposal does not include a request for a
    follow-on multi-year procurement program or funding for advance
    procurement for a new multi-year acquisition program for the C-17. It
    has been reported that by establishing such a follow-on multi-year
    program for the current production run which ends this year we can save
    in the neighborhood of $20 million per aircraft. If we establish a new
    MYP and purchase another 60 aircraft, which we can certainly justify in
    terms of stated requirements, we will realize a savings to the taxpayer
    of $1.2 billion!
        If we're to fund the future defense force in a fiscally tight
    environment wouldn't it seem prudent to fund advance procurement for
    the C-17 for fiscal year 2002 and establish a Multi-Year Procurement
    for the C-17?
        Answer. The Air Force supports the fiscal year 2003 C-17 follow-on
    multi-year procurement (MYP) program and the Commercial Application of
    Military Airlift Aircraft (CAMAA) program. The Air Force acknowledges
    that this was not evident in our recent budget submission, however, the
    Air Force just received Department of Defense (DOD) support for these
    programs.
        We support the intention of the language written by both the House
    Armed Services Committee (HASC) and the Senate Armed Services Committee
    (SASC). We will continue to support the committees through conference
    as they draft the final authorization bill language. In addition, the
    Air Force has provided draft language to HASC, SASC, Senate
    Appropriations Committee (SAC), and House Appropriations Committee
    (HAC) for review and potential inclusion into the fiscal year 2002
    Defense Acts. This potential language will enable the Air Force to
    pursue a fiscal year 2003 MYP and CAMAA.

                               GUARD AND RESERVES

        Question. What criteria or protocols are exercised in determining
    the value and relevance of Guard and Reserve structure that enable that
    structure to be factored into the National Military Strategy?
        Answer. The Defense Quadrennial Review Study directed the
    Department to undertake a comprehensive review of Active and Reserve
    mix, organization, priority missions, and associated resources. It
    indicated that the review would build on recent assessments of Reserve
    component issues that highlighted emerging roles for the Reserve
    components in the defense of the United States, in smaller
    contingencies, and in major combat operations.
        The review will commence immediately and will identify a range of
    innovative options concerning active and reserve force mix. An interim
    report will be completed by 1 March 2002. The final report will be
    completed by May 2002.
        Question. Recent developments indicate severe fiscal constraints
    for defense spending. To what extent has the lack of resources for
    defense competed with strategy-based decision making in determining the
    size and shape of our military forces and, significantly, the roles and
    missions for the National Guard and Reserve?
        Answer. The lack of resources drives many of the decisions with
    regard to priority, resourcing, force structure types, and basing. The
    roles and missions of the Guard and Reserve are considered right along
    with the active component. The Military construction (MILCON) and Real
    Property Maintenance accounts have been bill payers for other DOD
    priorities for many years. However, for the first time in over two
    decades, the President's fiscal year 2002 Reserve component MILCON
    request begins to buy back that deficit by addressing three basic
    basing elements. First is the reduction of approximately 20 percent of
    the infrastructure through the Efficient Facilities Initiative. Next is
    to focus the resources on a 67 year plant replacement cycle, and to fix
    those facilities in a C-3 and C-4 (less than minimum) facilities
    readiness status. This approach is considered to be a good first step,
    one that when coupled with other aspects of funding is positioned to
    affect the quality of life, recruitment and retention of the force.
        Question. What is your long-term view of the role of the Guard and
    Reserve in war-fighting plans and how would the Guard and Reserve be
    included in the process?
        Answer. The Guard and Reserve have demonstrated their capability to
    contribute to virtually every scenario in the war-fight. Every CINC has
    plans to employ Reserve components over a wide range of requirements.
    Six of the eight Army National Guard Divisions are part of the new
    Joint Strategic Capabilities Plan. These divisions will be considered
    in war planning conducted by the CINC's staff. The current Air Bridge
    could not function without the Guard and Reserve, nor could the
    increased security demands be filled without their presence. The Guard
    and Reserve will continue to be an integral part of any plan or
    execution for the foreseeable future.

                                  B-1 PROGRAM

        Question. The decision to remove the B-1 program from the Guard and
    use the alleged savings to modernize the B-1 program in the active
    component is a process by which the Guard structure is being sacrificed
    to modernize active component equipment. Are we likely to see this
    process continue as we attempt to modernize equipment across the board?
        Answer. No. The decision to reduce the Air National Guard force
    structure is not based on credibility or lack thereof of the reserve
    component. The decision is based on a requirement to maintain the B-1
    as viable, survivable and lethal throughout the next decade. Our
    studies have indicated that 60 fully capable B-1s, in synergy with the
    remaining bomber fleet, will meet the nation's global security
    requirements we foresee today. Consolidation savings were generated by
    reducing duplicative small scale operations and in this case, two of
    the three units were Air National Guard. It is still an important Air
    Force priority to capture the superb experience, capability and service
    the Air National Guard men and women bring to the Air Force combat
    mission.
                                     ______

              Questions Submitted by Senator Kay Bailey Hutchison

                           PAC-3 TECHNOLOGY FOR SM-5

        Question. One method potentially worth examining concerning missile
    defense is integrating the proven seeker technology from the Patriot
    PAC-3 into the SM-5 STANDARD missile. Such an approach may both
    expedite fielding of the Navy's area-wide defense system, and reduce
    the expense of what may be an otherwise redundant development effort.
        Will you ask the Navy to explore this idea?
        Answer. We are committed to exploring every potential avenue for
    accelerating the delivery of a Navy Area Theater Ballistic Missile
    Defense capability to the field. The Ballistic Missile Defense
    Organization and the Navy are exploring the integration of PAC-3 seeker
    technology onto the standard missile. Integration of PAC-3 technology
    may be feasible and ongoing analysis is focused on identifying and
    quantifying in terms of cost, schedule and performance, the merit of
    adopting such an approach.
        The SM-5 missile is a Navy science and technology initiative for an
    advanced interceptor optimized for Land Attack Cruise Missile Defense
    and Offensive Counter Air missions. Working with the Army for the past
    several years, the SM-5 technology demonstration team has already used
    applicable PAC-3 technology. SM-5 expands the PAC-3 seeker design
    concept with advanced signal processing to counter future stressing
    threats and incorporated a pre-terminal semiactive capability to
    improve long-range accuracy. Funding for this initiative is expected to
    be an in-core element of the Navy PR03 budget, to include a live-fire
    demonstration in fiscal year 2005; however, no program of record for
    SM-5 engineering, manufacture, and design or fielding exists at
    present.

                              SPECTRUM MANAGEMENT

        Question. Last week you and General Shelton sent a letter to the
    Congress regarding third generation wireless communications. In that
    letter you indicated that if the Department were to be forced to
    relocate from the Federal Government band of 1755-1850 MHz, such an
    action would have serious consequences on our National security and
    increase the risk to our military personnel. How is this so?
        Answer. The letter sent to Congress indicated that if DOD were
    forced to relocate from the Federal band of 1755-1850 MHz prematurely,
    without a number of conditions being satisfied such as DOD relocation
    timelines, such action would have serious consequences to our National
    security and increase the risk to our military personnel. The
    conditions that must be met are provision of comparable alternate
    spectrum for systems to migrate to, timely cost reimbursement to pay
    for the relocation, and protection of existing DOD operations
    throughout any transitional period to avoid harmful interference
    between DOD systems and third generation (3G) systems. Initial studies
    by the DOD indicate that adequate comparable government spectrum may
    not be available.
        The consequences of not satisfying the proposed conditions will be
    a degradation in DOD's ability to conduct missions associated with
    critical military systems that currently use this band. This mission
    degradation will result from unacceptable operational restrictions
    resulting from interference to and from 3G systems. The DOD systems
    currently requiring the use of this band provide a range of
    capabilities from the control of airborne precision strike munitions to
    tactical radio communications networks used by the Army and Marine
    Corps, to air combat training systems used to prepare U.S. fighter
    pilots to execute and survive missions over hostile territory, to space
    systems that provide communications, navigation, intelligence and
    weather support to U.S. forces. Without these systems, military
    personnel will face increased vulnerabilities in hostile situations,
    and the military options available to our nation's leaders will be
    substantially limited, causing a serious impact to National security.
        Question. Why can't DOD migrate from this band prior to the next
    decade?
        Answer. Many of the DOD major terrestrial systems that use the
    1755-1850 MHz band are combat related. There are no commercial off-the-
    shelf (COTS) systems available to replace these systems. The DOD
    process of modifying or replacing current systems would involve the
    steps of requirements validation, establishing acquisition programs,
    budgeting funds, executing contracts, system design, testing the new
    systems, training personnel, and fielding new systems. Completing this
    process simultaneously for multiple major terrestrial systems operating
    in the band would be difficult to accomplish even by the 2010 date
    specified by DOD for non-space systems. Additionally, for space
    systems, the timeline of at least 2017 is based on the life expectancy
    of most satellite systems currently in space or about to be launched.
    Operational spacecraft cannot be modified on-orbit and must be allowed
    to continue operations to satisfy a variety of DOD missions that
    provide communications, navigation, meteorological data, surveillance
    and intelligence. Abandoning the use of operational spacecraft and
    their associated ground support infrastructure would cause serious loss
    of DOD capability that would jeopardize National security and the
    welfare of DOD personnel and destroy our ability to wage the war
    against terrorism.

                     AIR FORCE PILOT TRAINING REQUIREMENTS

        Question. The following statement is an excerpt from the Secretary
    of Defense's justification for closing Reese Air Force base in Texas:
        ``The Air Force has more undergraduate flying training bases than
    necessary to support Air Force pilot training requirements.'' That is
    now an ironic statement considering that the Air Force is 1,200 pilots
    short even though its undergraduate flight training infrastructure is
    maxed-out.
        Isn't this illustrative of how difficult it is to accurately
    forecast military requirements even in just a few years into the
    future?
        Answer. It is difficult to accurately forecast military
    requirements, and forecasting pilot requirements is no exception. Reese
    AFB, Texas, and Williams AFB, Arizona, were closed for two principal
    reasons. First, it was thought that the Air Force could reduce its
    forces since the threat had diminished (e.g., dissolution of the USSR,
    reduction of Iraq's military). With fewer operational forces--for
    instance, active operational fighter and bomber aircraft have been
    reduced by over half in the past 10 years--the requirement for pilots
    and associated training was reduced. Second, Congressional legislation
    directed Joint undergraduate flying training where practical. The
    result of the legislation is the Joint Primary Aircraft Trainer System
    (JPATS). This comprehensive training package, in the process of being
    fielded, includes the T-6 Texan II, simulators and associated ground
    based training devices, scheduling software, academic courseware, and
    contractor logistic support. The JPATS system will replace the Air
    Force T-37B and the Navy T-34C. Additionally, the Air Force is
    currently fielding the T-38C, an enhanced aircraft with up-to-date
    avionics to be used for teaching advanced flying training and fighter
    fundamentals to our future pilots.
        In the mid 1990's it became apparent that reduced retention, due to
    the high demand from the airline industry for pilots, and the higher
    than anticipated operational tempo (fivefold higher in the late 1990's
    than in the late 1980's), were putting a strain on our reduced forces.
    When combined with reduced pilot production, it became clear that an
    increase in pilot production was needed. Chief of Staff of the Air
    Force (CSAF) set the goal of 1,100 for annual pilot production. While
    the Air Force is able to meet the 1,100 pilot training annual
    requirement with its present infrastructure (T-37, T-1, T-38 aircraft
    and dedicated training bases), the standup of Moody AFB, GA as a
    training base will give us even more capability. Moody AFB will be the
    first Air Force base to utilize the JPATS methodology for training
    pilots. Moody AFB will specialize in JPATS training for the T-6
    introductory trainer, while also utilizing the T-38C for training our
    pilots in fighter fundamentals. This differs from our other pilot
    training bases that have a more comprehensive training mission of
    introductory (T-6), advanced (T-1 and T-38), and fighter fundamentals
    (T-38C). Moody AFB gives us the capacity to produce even more pilots by
    surging without overstressing our established flight training
    infrastructure.

                                    FUNDING

        Question. A number of articles have appeared which assert that two
    Army Divisions, two Carrier Battle Groups and two Air Force Wings may
    be cut. How can this committee appropriate funds with and confidence
    that the programs we are funding will survive the QDR process?
        Answer. The 2001 QDR was released on October 1, 2001, and so the
    committee can review it before appropriating funds.
                             reprogramming request
        Question. Should we expect to see a massive reprogramming request?
        Answer. No. The QDR's impact on the fiscal year 2002 budget will
    not be so great as to require a massive reprogramming request.
                                     ______

                Questions Submitted to General Henry H. Shelton

              Questions Submitted by Senator Kay Bailey Hutchison

                             SURVIVOR BENEFIT PLAN

        Question. I appreciate your strong support for legislation I
    introduced in June which would allow DOD to posthumously retire those
    service members who die in the line of duty. As you said in your
    letter, imminent deaths are the ultimate disability. Our military
    families should not be penalized because a loved one was not yet vested
    in the military retirement system. This is the only system that
    requires a person to serve at least twenty years before they are
    vested. Our Bill would allow the Departments to consider those who have
    made the ultimate sacrifice to our country to fully vest upon death.
        Do the Services share your support for this legislation? Are they
    able to find their share (approx. 2 million) per year to solve this
    inequity?
        Answer. The Services support providing Survivor Benefit Plan
    annuities to families of Service members who die on active duty.
    Legislation that would alleviate the inequities between the benefits
    provided to survivors of active duty members who die instantly, and
    those who die after being disability retired, is the right thing to do.
        OSD, the Joint Staff, and the Military Departments have been
    considering a legislative initiative to accomplish these objectives as
    part of the fiscal year 2003 Unified Legislation and Budgeting process.
    However, the specific elements of the proposal being developed have not
    yet been agreed upon, nor specific language adopted.
        Finally, the funding associated with such a proposal is not
    included in the Military Department budgets. One of the Services' major
    concerns, as well as mine, is adding an increase to the Services'
    budgets without identifying a source for the necessary funding.
              environmental impacts limiting testing and training
        Question. Members of the subcommittee have become increasingly
    aware of the growing impact environmental concerns have on our
    Services' ability to thoroughly and realistically train its forces.
        Would you please describe those impacts and your recommendations on
    remedying the situation?
        Answer. This is a critical training readiness issue. Historically,
    specific encroachment issues have been addressed at individual ranges,
    most often on an ad hoc basis. We have won some of these battles, and
    lost others, but in the aggregate we are losing ground, sometimes
    literally. The myriad forms of encroachment our ranges face threaten to
    complicate and in some cases severely restrict our ability to conduct
    critical training. The overall trends are adverse, because the number
    of external pressures is increasing, and the readiness impacts are
    growing. Future testing and training needs will only further exacerbate
    these issues, as the speed and range of test articles and the number of
    training scenarios increase in response to the need to match real-world
    situations that our forces will face when deployed. This is why we must
    begin to address these issues in a much more comprehensive and
    systematic fashion. It will also be important to work with regulators,
    special interests, other federal agencies, and communities in order to
    clearly define the issues from all viewpoints and to reach mutually
    acceptable solutions, whenever possible.
        The Senior Readiness Oversight Council (SROC) determined that DOD
    needs a comprehensive and coordinated approach to address range
    sustainability with an emphasis on: (1) Endangered Species Act, (2)
    unexploded ordnance (UXO), (3) frequency spectrum encroachment, (4)
    maritime sustainability, (5) national airspace system, (6) air quality,
    (7) airborne noise, (8) urban growth, and (9) outreach. The DOD
    strategy for range sustainment will include a comprehensive
    sustainability framework that addresses the test and training mission,
    regulatory requirements, community support, and the range capabilities
    used to support the mission. Currently, the Sustainable Range Working
    Group (SRWG) is coordinating efforts to finalize a DOD sustainability
    directive that will lay the foundation for this comprehensive strategy.

                               RESOURCE SHORTFALL

        Question. When this subcommittee received the testimony of the
    CINC's, they expressed concern over a lack of preferred munitions for
    training and operations.
        How does this resource shortfall affect the readiness of our Armed
    Forces?
        Answer. The lack of preferred munitions for training and operations
    has been highlighted as a CINC concern in the Joint Monthly Readiness
    Review process and reported by the Department in the Quarterly
    Readiness Report to Congress. Although the shortfall of preferred
    munitions is a concern, current inventories are fully adequate to
    support a Major Theater War (MTW) scenario. Other less accurate
    munitions may need to be used should a second MTW arise concurrently,
    and the use of these substitute munitions would increase the risk of
    meeting operational timelines and objectives in the second war. To
    address these concerns, funding for preferred munitions was increased
    in the President's fiscal year 2002 budget.

                             CONCLUSION OF HEARINGS

        Senator Inouye. This concludes our scheduled hearings for
    the year, and I want to thank the members of the committee for
    their participation. This subcommittee will stand in recess
    subject to the call of the chair. Thank you very much.
        [Whereupon, at 12:45 p.m., Wednesday, September 5, 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
    Achgill, Dennis, American Society of Mechanical Engineers
      International..................................................   800
        Prepared statement...........................................   801
    Atkins, Richard N., M.D., National Prostate Cancer Coalition.....   725

    Bacon, James L., Program Manager for Chemical Demilitarization
      Program, Department of Defense.................................   443
        Questions submitted to.......................................   481
    Barnes, Joe, Director of Legislative Programs, Fleet Reserve
      Association....................................................   772
        Prepared statement...........................................   773
    Bester, Brigadier General William T., Chief, Army Nurse Corps,
      U.S. Army, Defense Health Programs, Department of Defense......   255
        Prepared statement...........................................   268
        Questions submitted to.......................................   337
    Blair, Admiral Dennis C., U.S. Navy, Commander in Chief, U.S.
      Pacific Command, Department of Defense.........................   399
        Prepared statement...........................................   403
    Bond, Hon. Christopher S., U.S. Senator from Missouri:
        Prepared statement...........................................   648
        Questions submitted by....667, 673, 678, 682, 686, 1004, 1009, 1084
        Statements of.............................................962, 1026
    Boudjouk, Philip, Ph.D., Chairman, Coalition of EPSCoR States....   763
        Prepared statement...........................................   765
    Brannon, Brigadier General Barbara C., Director of Nursing
      Services, Office of the Surgeon General, U.S. Air Force,
      Defense Health Programs, Department of Defense.................   255
        Prepared statement...........................................   263
        Questions submitted to.......................................   342
    Burke, Donald, M.D., Chairman, Legislative Task Force, American
      Society of Tropical Medicine and Hygiene.......................   752
        Prepared statement...........................................   752
    Bursell, Sven, M.D., Joslin Diabetes Center......................   717
        Prepared statement...........................................   718
    Byrd, Hon. Robert C., U.S. Senator from West Virginia, questions
      submitted by.................................................298, 689

    Carlton, Lieutenant General Paul K., Surgeon General, U.S. Air
      Force, Defense Health Programs, Department of Defense..........     1
        Prepared statement...........................................   220
        Questions submitted to.......................................   320
    Clark, Vernon E., Chief of Naval Operations, U.S. Navy,
      Department of the Navy, Department of Defense..................   966
        Prepared statement...........................................   968
        Questions submitted to.......................................  1002
    Coalition of Oklahoma Institutions of Higher Education Center for
      Aircraft and Systems/Supporting Infrastructure, prepared
      statement......................................................   857
    Cochran, Hon. Thad, U.S. Senator from Mississippi:
        Prepared statement...........................................   401
        Questions submitted by...............................481, 907, 1009
        Statements of........................................869, 961, 1024
    Craig, Hon. Larry E., U.S. Senator from Idaho, prepared
      statements...................................................884, 962
    Cunnion, Stephen O., M.D., Captain, U.S. Navy [retired],
      Glaxosmithkline................................................   850
        Prepared statement...........................................   851

    Davis, General Russell C., U.S. Air Force, Chief, National Guard
      Bureau, Department of Defense..................................   567
        Prepared statement...........................................   573
        Questions submitted to.......................................   682
    Dean, Chief Master Sergeant Richard M., U.S. Air Force [retired],
      Legislative Assistant, Air Force Sergeants Association.........   710
        prepared statement...........................................   711
    Domenici, Hon. Pete V., U.S. Senator from New Mexico:
        Prepared statement...........................................     5
        Questions submitted by....................................908, 1082
        Statements of...............................................4, 1022
    Duggan, Dennis Michael, Deputy Director, National Security-
      Foreign Relations Division, The American Legion................   819
        Prepared statement...........................................   820
    Durbin, Hon. Richard J., U.S. Senator from Illinois, questions
      submitted by................................................699, 1074

    England, Hon. Gordon R., Secretary of the Navy, Department of the
      Navy, Department of Defense....................................   959
        Biographical sketch..........................................   966
        Prepared statement...........................................   964
        Questions submitted to.......................................   999
        Statement of.................................................   963

    Feinstein, Hon. Dianne, U.S. Senator from California:
        Questions submitted by....................................888, 1079
        Statements of.............................................870, 1025
    Florida State University, prepared statement.....................   859
    Foil, Martin B., Jr., National Brain Injury Research, Treatment
      and Training Foundation........................................   732
        Prepared statement...........................................   734

    Goldberg, Joan, Executive Director, American Society for Bone and
      Mineral Research on behalf of the National Coalition for
      Osteoporosis and Related Bone Diseases.........................   768
        Prepared statement...........................................   770
    Grimes, Harold G., Sr., National Commander, Uniformed Services
      Disabled Retirees..............................................   741
        Prepared statement...........................................   743

    Hanson, Marshall, Director of Legislation, Naval Reserve
      Association....................................................   842
        Prepared statement...........................................   843
    Harkin, Hon. Tom, U.S. Senator from Iowa, questions submitted by.  943,
                                                                  953, 1071
    Harnage, Bobby L., Sr., National President, American Federation
      of Government Employees, AFL-CIO...............................   803
        Prepared statement...........................................   804
    Henderson, James Eli, Associate Commissioner, Calhoun County,
      Alabama........................................................   501
        Prepared statement...........................................   504
    Henderson, Rogene F., Ph.D., Lovelace Respiratory Research
      Institute......................................................   730
        Prepared statement...........................................   731
    Hendrix, Mary J.C., Ph.D., President, Federation of American
      Societies for Experimental Biology.............................   701
        Prepared statement...........................................   703
    Herriot, James W., Ph.D., Vice President, Bios Group,
      Incorporated...................................................   816
        Prepared statement...........................................   818
    Hershkowitz, Louise E., CRNA, American Association of Nurse
      Anesthetists...................................................   743
        Prepared statement...........................................   745
    Hinestrosa, Maria Carolina, Board Member, National Breast Cancer
      Coalition......................................................   779
        Prepared statement...........................................   781
    Hollings, Hon. Ernest F., U.S. Senator from South Carolina:
        Questions submitted by................................296, 318, 332
        Statement of.................................................  1022
    Hutchison, Hon. Kay Bailey, U.S. Senator from Texas:
        Questions submitted by.......................................  290,
                 312, 325, 667, 901, 946, 954, 1001, 1006, 1011, 1085, 1087
        Statements of...............................................4, 1028

    Inouye, Hon. Daniel K., U.S. Senator from Hawaii:
        Opening statements of...........................867, 911, 959, 1015
        Prepared statements..........................................3, 255
        Questions submitted by.......................................  329,
                    337, 340, 342, 396, 442, 475, 904, 949, 999, 1002, 1007
        Statements of.................................2, 346, 400, 446, 534

    Jones, General James L., Commandant of the Marine Corps, U.S.
      Marine Corps, Department of the Navy, Department of Defense....   971
        Prepared statement...........................................   975
        Questions submitted to.......................................  1007
    Juvenile Diabetes Research Foundation International, prepared
      statement......................................................   865

    Kinney, Rufus, on behalf of Families Concerned About Nerve Gas
      Incineration, Anniston, Alabama................................   511
        Prepared statement...........................................   514
    Knapp, Deirdre J., Ph.D., American Psychological Association.....   707
        Prepared statement...........................................   708
    Ko, Harvey, Ph.D., Coalition for National Security Research......   737
        Prepared statement...........................................   739
    Kohl, Hon. Herb, U.S. Senator from Wisconsin:
        Questions submitted by.......................................  1080
        Statement of.................................................  1024
    Kulungowski, Meg, Senior Issues Specialist, National Military
      Family Association.............................................   755
        Prepared statement...........................................   756

    Lautenbacher, Conrad C., Jr., Vice Admiral, U.S. Navy [retired],
      President, Consortium for Oceanographic Research and Education.   797
        Prepared statement...........................................   798
    Leahy, Hon. Patrick J., U.S. Senator from Vermont:
        Questions submitted by...........................299, 695, 698, 906
        Statement of.................................................  1018
    Lindell, Brenda, on behalf of Families Concerned About Nerve Gas
      Incineration, Anniston, Alabama................................   508
        Prepared statement...........................................   510
    Lord, Commander Mike, U.S. Navy [retired], co-chair, The Military
      Coalition Health Care Committee................................   826
        Prepared statement...........................................   827

    Martin, Rear Admiral Kathleen L., Director, Navy Nurse Corps,
      U.S. Navy, Defense Health Programs, Department of Defense......   255
        Prepared statement...........................................   259
        Questions submitted to.......................................   340
    McCarthy, Major General Dennis M., Director, Reserve Affairs
      Division, U.S. Marine Corps Reserve, Department of the Navy,
      Department of Defense..........................................   541
        Prepared statement...........................................   543
        Questions submitted to.......................................   673
    McConnell, Hon. Mitch, U.S. Senator from Kentucky, statement of..   444
    Mix, Robert R., Executive Director of Government Affairs,
      Noncommissioned Officers Association on behalf of the National
      Military and Veterans Alliance.................................   834
        Prepared statement...........................................   836
    Morris, Robert V., Executive Director, Fort Des Moines Memorial
      Park and Education Center......................................   815
        Prepared statement...........................................   816
    Nelson, Vice Admiral Richard A., Surgeon General, Medical Corps,
      U.S. Navy, Defense Health Programs, Department of Defense......     1
        Prepared statement...........................................   210
        Questions submitted to.......................................   301
    Nelson, William G., Ph.D., Association for the Cure of Cancer of
      the Pros-
      tate...........................................................   725
        Prepared statement...........................................   727
    Northwestern University, prepared statement......................   862

    Olanoff, Chief Master Sergeant Mark H., U.S. Air Force [retired],
      National Legislative Director, The Retired Enlisted Association   722
        Prepared statement...........................................   723

    Parker, Michael, Program Manager for Assembled Chemical Weapons,
      Chemical Demilitarization Program, Department of Defense.......   443
        Prepared statement...........................................   456
        Questions submitted to.......................................   485
    Partridge, Colonel Charles C., U.S. Army [retired], National
      Association for Uniformed Services.............................   839
        Prepared statement...........................................   840
    Peake, Lieutenant General James B., Surgeon General, U.S. Army,
      Defense Health Programs, Department of Defense.................     1
        Prepared statement...........................................   231
        Questions submitted to.......................................   279
    Pearce, Eli, Ph.D., President-elect, American Chemical Society...   785
        Prepared statement...........................................   786
    Peccei, Roberto, Ph.D., Vice Chancellor for Research, UCLA, on
      behalf of Association of American Universities.................   813
        Prepared statement...........................................   814
    Plewes, Major General Thomas J., Chief, Army Reserve and
      Commanding General, United States of America Reserve Command,
      Department of the Army, Department of Defense..................   523
        Prepared statement...........................................   525
        Questions submitted to.......................................   663

    Ralston, General Joseph W., Commander-in-Chief, United States
      European Command, North Atlantic Treaty Organization Issues,
      Department of Defense..........................................   345
        Opening remarks of...........................................   347
        Prepared statement...........................................   356
    Regan, Lt. Col. Kevin, U.S. Marine Corps Reserve on behalf of the
      Ovarian Cancer National Alliance, prepared statement...........   864
    Reid, Hon. Harry, U.S. Senator from Nevada:
        Prepared statement...........................................  1029
        Questions submitted to.......................................  1076
    Roche, Hon. James G., Secretary, Department of the Air Force,
      Department of Defense..........................................   867
        Biographical sketch..........................................   874
        Prepared statement...........................................   872
        Questions submitted to.......................................   888
    Rumsfeld, Hon. Donald H., Secretary of Defense, Office of the
      Secretary of Defense, Department of Defense....................  1015
        Prepared statement...........................................  1036
        Questions submitted to.......................................  1071
    Ryan, General Michael E., Chief of Staff, Department of the Air
      Force, Department of Defense...................................   867
        Prepared statement...........................................   872
        Questions submitted to.......................................   904

    Salter, Russell, Director, Chemical and Radiological Preparedness
      Division, Federal Emergency Management Agency..................   487
        Prepared statement...........................................   489
    Schultz, Major General Roger C., Director, Army National Guard,
      Department of the Army, Department of Defense..................   585
        Prepared statement...........................................   585
        Questions submitted to.......................................   694
    Shelby, Hon. Richard C., U.S. Senator from Alabama:
        Prepared statement...........................................  1021
        Questions submitted by......................311, 325, 473, 483, 485
        Statements of........................................401, 444, 1020
    Shelton, General Henry H., USA, Chairman, Joint Chiefs of Staff,
      Department of Defense..........................................  1041
        Prepared statement...........................................  1046
        Questions submitted to.......................................  1087
        Tribute to...................................................  1030
    Sherrard, Major General James E., III, Chief, Air Force Reserve
      and Commander, United States Air Force Reserve Command,
      Department of the Air Force, Department of Defense.............   548
        Prepared statement...........................................   550
        Questions submitted to.......................................   678
    Shinseki, General Eric K., Chief of Staff, United States Army,
      Department of the Army, Department of Defense..................   911
        Opening remarks..............................................   913
        Prepared statement...........................................   915
        Questions submitted to.......................................   949
    Specter, Hon. Arlen, U.S. Senator from Pennsylvania:
        Questions submitted by..........................482, 485, 945, 1000
        Statement of.................................................  1027
    Spiegel, Jayson L., Executive Director, Reserve Officers
      Association of the United States...............................   787
        Prepared statement...........................................   789
    Stevens, Hon. Ted, U.S. Senator from Alaska:
        Opening statements of....................1, 345, 399, 443, 523, 701
        Questions submitted by.......................................  279,
                     301, 320, 437, 663, 671, 673, 678, 682, 694, 696, 1082
        Statements of...................................868, 913, 960, 1017

    Taylor, Robert, M.D., Ph.D., co-chair, Government Affairs and
      Advocacy Committee, Research Society on Alcoholism.............   749
        Prepared statement...........................................   750
    Totushek, Rear Admiral John B., Chief, Naval Reserve and
      Commander, U.S. Naval Reserve Force, Department of the Navy,
      Department of De-
      fense..........................................................   534
        Prepared statement...........................................   537
        Questions submitted to.......................................   671

    University of Medicine and Dentistry of New Jersey, prepared
      statement......................................................   860
    University of Miami, prepared statement..........................   853

    Violi, Ron, Joslin Diabetes Center...............................   717

    Weaver, Major General Paul A., Jr., Director, Air National Guard,
      Department of the Air Force, Department of Defense.............   622
        Prepared statement,..........................................   625
        Questions submitted to,......................................   696
    Westphal, Hon. Joseph, Acting Secretary of the Army, Chemical
      Demilitarization Program, Department of Defense................   443
        Opening statement by.........................................   447
        Prepared statement...........................................   449
        Questions submitted to.......................................   473
    White, Thomas E., Secretary of the Army, Department of the Army,
      Department of Defense..........................................   911
        Opening remarks..............................................   912
        Prepared statement...........................................   915
        Questions submitted to.......................................   943
    Williams, Craig, Director, Chemical Weapons Working Group........   495
        Prepared statement...........................................   498
    Wilson, James L., Attorney, Wilson & Drexler, P.C., prepared
      statement......................................................   864
    Wolff, Liesel, Legislative Assistant, People for the Ethical
      Treatment of Animals...........................................   847
        Prepared statement...........................................   848

    Zakheim, Dr. Dov, Comptroller, Office of the Secretary of
      Defense, Department of Defense.................................  1015

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF DEFENSE

                       Chemical Demilitarization Program

                                                                       Page
    Accomplishments and priorities...................................   451
    Additional committee questions...................................   473
    Alternative destruction technologies.............................   481
    Alternative technologies...................462, 466, 475, 478, 484, 485
    Anniston timetable...............................................   471
    Assembled chemical weapons assessment (ACWA) technology..........   485
    Challenges.......................................................   455
    Chemical Demilitarization Program:
        Description of the...........................................   450
        Managing the...............................................469, 480
        Priority of the..............................................   468
    Chemical Stockpile Emergency Preparedness Program (CSEPP)........   460
    Chemical Weapons Convention commitment...........................   446
    Chemical weapons disposal........................................   459
        Meeting the program schedule.................................   475
    Construction costs...............................................   465
    Cost savings.....................................................   482
    Demilitarization costs...........................................   445
    Destruction schedules and projections..........................463, 465
    Destruction timelines, costs, and variables......................   470
    Emergency preparedness.........................................474, 483
    Environmental and regulatory requirements, meeting and exceeding.   454
    Environmental impact statements..................................   459
    Environmental Protection Agency:
        Changes in regulations of the................................   458
        Regulations..................................................   458
    Facility closure issues and environmental costs, managing
      unidentified...................................................   454
    Johnston Atoll chemical agent disposal system (JACADS), closing..   480
    Johnston Island: Completing chemical weapons disposal............   479
    Major accomplishments............................................   448
    Major challenges.................................................   474
    Management structure.............................................   473
    Medical studies..................................................   483
    Mission, maintaining funding necessary to fulfill................   455
    Panelists, welcoming of..........................................   444
    Partnering with our communities..................................   454
    Program cost growth..............................................   458
    Program costs....................................................   455
    Program management structure.....................................   461
    Program schedule, meeting the....................................   482
    Program status...................................................   451
    Public outreach efforts..........................................   474
    Public safety..................................................461, 472
        Storing chemical weapons.....................................   477
    Safety...........................................................   454
        Assessment...................................................   462
    Schedules, completion............................................   468
    Storage, risk of continued.......................................   482
    Technology approach..............................................   451

                            Defense Health Programs

    A healthy, fit, and medically protected force....................   231
    Additional committee questions...................................   279
    American troops, health of.....................................297, 333
    Applications, processing.........................................   272
    Bio-chemical terrorism...........................................   329
    Blood-related disease research.................................296, 332
    Budget blueprint.................................................   249
    Certified registered nurse anesthetists (CRNA)...................   273
    Civilian health personnel recruitment.....................318, 338, 343
    Compensation.....................................................     6
    Defense Health Program (DHP):
        Full funding of the...................................282, 304, 322
        Funding shortfalls, current year......................280, 302, 320
    Department of Veterans Affairs, joint initiatives with the.......   218
    Direct care system...............................................   249
    Equipment, transfer of unused....................................   252
    Flight nurse training............................................   275
    Global:
        Expeditionary medical system.................................   219
        Settlement...................................................   253
    Healthcare needs.................................................   288
    Hospital system..................................................   299
    Joint medical command............................................   252
    Kosovo...........................................................   246
    Mail Order Pharmacy Program......................................   218
    Medical personnel.........................................293, 315, 327
    Medical recruiting and retention..........................286, 308, 324
    Mental health care...............................................   250
    Military bonus system............................................   262
    Military healthcare facilities, access to........................   325
    Mission..........................................................   229
    Nurse anesthetists...............................................   273
    Nurses:
        Advanced practice in the military.....................337, 340, 343
    Nursing:
        Shortage...................................................257, 261
        Specialty....................................................   267
        Training.....................................................   263
    Optimization of care......................................339, 340, 343
    Organizational reform.....................................286, 307, 323
    Outcomes management project......................................   298
    Personel issues..................................................   248
    Readiness........................................................   262
    Recruiting.......................................................   261
        Programs.....................................................   275
    Reserve Officer Training Corps...................................   278
    Shortfall......................................................243, 245
        Funding......................................................   244
    Soldier and the military family, manage the health of the........   236
    Specialists, retention of........................................   251
    Stable funding...................................................   209
    Supplemental.....................................................     6
        Fiscal year 2000......................................279, 301, 320
    Third party collections...................................295, 317, 329
    Trained and equipped medical force, deploy a.....................   234
    Tri-Service Nursing Research Program...........................340, 342
    TRICARE:
        Benefits.....................................................   217
        Business practices....................................290, 312, 325
        Expenditures.................................................   242
        For life....................................281, 291, 303, 314, 321
        Payments.....................................................   241
        Recent satisfaction survey............................286, 307, 323
    Uniformed Services University of Health Sciences.................   245
    Venture capital..................................................   276
        For the direct care system............................283, 305, 322
    War readiness skills, maintaining................................   332

                          Department of the Air Force

    Additional committee questions...................................   887
    Aging infrastructure and physical plant recapitalization.........   873
    Air Force Way (AFWAY)............................................   907
    Airborne laser...................................................   905
        Program......................................................   880
    Airlift requirements of offshore States..........................   878
    Asia-Pacific region..............................................   889
    B-1..............................................................   901
    B-2..............................................................   883
        Spirit stealth bomber........................................   905
    Bombers..........................................................   879
    BRAC.............................................................   903
        Issue........................................................   904
    Budget:
        Fiscal year 2002.............................................   886
        Information..................................................   886
    C-5..............................................................   878
    C-17.............................................................   876
        Aircraft.....................................................   907
    Commissaries, closure of.........................................   902
    F-22...........................................................875, 904
        Beddown......................................................   885
        Testing program..............................................   876
    Force structure..................................................   908
    Guard and Reserve................................................   903
    Intelligence, surveillance, and reconnaissance (ISR).............   895
    Jackson C-17 conversion..........................................   907
    Joint Strike Fighter.............................................   901
    KC-135...........................................................   906
        Tankers......................................................   879
    Mobility requirements study......................................   876
    Modernization....................................................   873
    Mountain Home Air Force Base.....................................   885
    Multiyear procurement............................................   877
        Schedule.....................................................   877
    Operation Allied Force (Kosovo) lessons of.......................   898
    People...........................................................   873
    Pilot training bases.............................................   881
    Quality of life..................................................   872
        Issues.......................................................   899
    Readiness......................................................872, 873
    Recruiting.......................................................   874
    Science and technology budgets...................................   908
    Security environment, new........................................   888
    Strategic bombers................................................   894
    Supplemental appropriations......................................   875
    Tactical aircraft................................................   891
    Terrorism........................................................   882
    Threats and missions, new........................................   882
    Transformation and modernization.................................   900
    V-22 Program.....................................................   903
    Weapon system....................................................   902
    X-33 space plane.................................................   880

                             Department of the Army

    Active component/Reserve component integration...................   924
    Active duty divisions............................................   956
    Additional committee questions...................................   943
    Armored security vehicle (ASV)...................................   952
    Army:
        Aviation.....................................................   935
        Museum.......................................................   945
            And Grizzly system.......................................   922
        Training and manning.........................................   951
    Base closure...................................................933, 947
    Comanche software support........................................   936
    Conus housing privatization......................................   946
    Crusader.......................................................938, 950
    Deployed troop morale, training, and readiness...................   933
    Deployment duration..............................................   928
    Digitization.....................................................   954
    Environmental concerns...........................................   955
    Family housing...................................................   926
    Force structure..................................................   926
    Funding:
        Challenges...................................................   942
        Deferred.....................................................   924
    Grizzly..........................................................   945
    High mobility trailers and waste.................................   944
    Information sharing..............................................   956
    Infrastructure, aging............................................   957
    Installation security............................................   947
    Interim Brigade combat team fielding.............................   922
    Interim force....................................................   949
    Iowa Army Ammunition Plant.......................................   943
    Legacy Force.....................................................   949
        Modernization................................................   925
    Medium tactical vehicles (FMTV) funding, family of...............   957
    National training center.........................................   931
    Objective force fielding.........................................   924
    155 mm light-weight howitzer..............................931, 932, 953
    Overseas housing privatization...................................   946
    Reserve component:
        Performance..................................................   929
        Utilization..................................................   948
    Rock Island Arsenal..............................................   944
    Theater high altitude area defense (THAAD) program acceleration941, 942
    Transformation...................................................   951
        Army National Guard role in..................................   928
        Challenges.................................................911, 950
        Models.......................................................   950
        Status.......................................................   954
    Unexploded ordnance..............................................   937
    Unutilized plant capacity........................................   953
    Waste, elimination of............................................   934
    Well being.......................................................   946

                             Department of the Navy

    Additional committee questions...................................   998
    Amphibious sealift...............................................   998
    Amphibious ship stationing and lift..........................1003, 1008
    AV-8B Harrier...........................................996, 1005, 1010
    Cooperative engagement capability............................1000, 1003
    DD-21..........................................................982, 990
        Land attack destroyer........................................  1002
    Defense supplemental.........................................1004, 1009
    EA-6B............................................................   987
    F/A-18 G.....................................................1005, 1011
    F/A-18E/F...............................................994, 1004, 1010
    Futenma Marine Corps Air Station.................................   996
    Joint Strike Fighter.....................................983, 999, 1007
    Missile defense..................................................   991
    Modernization....................................................   978
        Programs.....................................................   991
    Naval forces, the context for....................................   969
    Navy surface fire support....................................1004, 1008
    Our marine warrior culture.......................................   981
    Pilot training...................................................   995
    Prior year shipbuilding cost growth..............................   999
    Priorities and challenges........................................   969
    Readiness......................................................977, 993
    Retention........................................................  1007
    Supplemental.....................................................   984
    T-45.........................................................1005, 1006
    T-45 TS..........................................................  1010
    Training and education...........................................   981
    Training ranges..................................................  1006
    V-22....................................................985, 1000, 1008
    Vieques..........................................................   988
    Vision...........................................................   975

                             National Guard Bureaus

    Additional committee questions...................................   663
    AEF rotations....................................................   696
    AFRC unfunded miscellaneous equipment list (fiscal year 2002)....   655
    Aircraft upgrades................................................   645
    America Connected with...........................................   574
    Army:
        Aviation modernization plan..................................   686
        Guard aviation assets........................................   694
        Guard Flying Hour Program....................................   694
        National Guard:
            Fiscal Year 2002 Posture Statement.......................   586
            Requirements.............................................   695
    Around the world, throughout our States, within our communities..   573
    Balkans tour length to the.......................................   695
    C-17.............................................................   624
        Aircraft at Jackson, Mississippi.............................   643
        Conversion...................................................   641
    C-130............................................................   699
    Civil support teams status and location of.......................   568
    Communications equipment (SINCGARS radios).......................   688
    Computer attacks.................................................   647
    Counterdrug mission..............................................   691
    Deployment expenses..............................................   640
    Deployments......................................................   660
    Equipment and communication......................................   650
    Executive summary................................................   573
    Expeditionary aerospace force..................................623, 637
    F-16.............................................................   624
    Family support...................................................   625
    First and emergency responder training...........................   693
    Force:
        Manning the..................................................   595
        Resourcing the...............................................   607
        Sustaining the...............................................   604
        Training the.................................................   612
    Forward..........................................................   586
    Full-time:
        Manning....................................................643, 686
        Support......................................................   595
    Funding shortfalls...............................................   696
    Guard:
        And Reserve equipment........................................   697
        Equipment....................................................   685
        Equipping the................................................   599
        Military construction........................................   685
        Missioning the...............................................   590
    Hart-Rudman......................................................   689
    Health insurance.................................................   644
    Homeland security..............................................575, 690
        Mission......................................................   691
    KC-135.........................................................624, 698
    Knowledge infrastructure.........................................   608
    M109A6 procurement...............................................   695
    Manning requirements.............................................   643
    MILCON funding...................................................   694
    Military construction............................................   688
        Requirements.................................................   642
    Missions difficulties in support of..............................   683
    Modernization....................................................   623
    Morale...........................................................   636
    National Guard:
        Counterdrug Program..........................................   692
        Force structure and equipment................................   693
        Posture statement for fiscal year 2002.......................   573
        Reserve equipment account..................................682, 687
    National military strategy support of our........................   682
    On guard for the 21st century....................................   584
    Operational Tempo (OPTEMPO) increased............................   638
    Operations Tempo.................................................   623
    Our strategic vision.............................................   573
    Pay and allowances...............................................   638
    PERSTEMPO........................................................   697
    Preparing for the future.........................................   588
    Quality installations............................................   617
    Quality of life..................................................   620
    Readiness........................................................   602
        And relevance................................................   578
    Real property maintenance........................................   697
    Recruiting.....................................................633, 638
        Resources....................................................   684
    Reserve affairs..................................................   662
    Retention........................................................   624
    Rotation policy..................................................   682
    Strategic integration............................................   574
    Student Loan Repayment Program...................................   635
    Success Organizing for...........................................   598
    The Guard today..................................................   587
    Tour length policy...............................................   685
    Weapons of mass destruction......................................   567

                   North Atlantic Treaty Organization Issues

    A changing and challenging strategic environment.................   357
    Additional committee questions...................................   396
    Aircraft radio security..........................................   385
    AOR responsibilities.............................................   379
    Army transformation..............................................   384
    Balkan region, future stability in the...........................   389
    Barracks and military family housing.............................   355
    Bosnia...........................................................   350
    Engagement.....................................................358, 376
    Ethnic demographics..............................................   352
    EUCOM's area of responsibility...................................   347
    Europe:
        Force structure in...........................................   376
        Stationing of U.S. forces in.................................   377
    European security and defense identity...........................   396
    European union defense force, creation of........................   378
    FYROM (Macedonia) unrest in,.....................................   392
    FYROM/Kosovo border, NATO activities on..........................   380
    Ground safety zone...............................................   353
    HIV/AIDS in Africa...............................................   390
    Host nation support..............................................   393
        For U.S. military, origins of................................   375
    Intelligence and communications infrastructure...................   372
    Key theater missions and challenges..............................   361
    Kosovo/FYROM border:
        Conflict on..................................................   353
        Number of deployed NATO troops in............................   381
    Macedonia (FYROM):
        Conflict in..................................................   396
        Escalation of fighting in....................................   382
        Supply route requirements in.................................   375
    Modernization and personnel issues...............................   370
    National Guard and Reserves......................................   391
    National missile defense.......................................386, 389
    NATO:
        Allies force structure.......................................   376
        Force protection.............................................   384
        Inoperability................................................   382
        Military construction (Milcon)...............................   394
        Relevancy of.................................................   392
    NATO/EU cooperation on defense force creation....................   379
    Non-combat education operations..................................   377
    Operation Northern Watch.........................................   349
    Real property maintenance military construction, funding for.....   354
    Resources........................................................   373
    Secretary's strategic review.....................................   377
    Supplemental funding, need for...................................   386
    Terrorist missile threat.........................................   390
    Training and readiness, affect of Balkan operations on...........   388
    Vehicles, use of unmanned........................................   380
    War criminals, NATO's role in the arrest of......................   381

                       Office of the Secretary of Defense

    ABM Treaty.......................................................  1069
    Additional committee questions...................................  1071
    Additional funds.................................................  1080
    Air Force pilot training requirements............................  1086
    Allies, interoperability with....................................  1058
    B-1 program......................................................  1085
    Ballistic missile testing and the ABM Treaty.....................  1075
    Base closure and efficient facilities initiative.................  1081
    Base closures....................................................  1052
    Bizarre thinking.................................................  1019
    Budget:
        Amendment, consequences of not supporting....................  1083
        Priorities...................................................  1031
        Request, overview of fiscal year 2002........................  1031
    C-17.............................................................  1084
    Chemical demilitarization........................................  1056
    China policy, no change in.......................................  1030
    Chinese military capabilities....................................  1054
    Defense:
        Budget increase, source of...................................  1067
        Health plan cost growth......................................  1083
        Spending, need for added.....................................  1051
    DOD spending.....................................................  1063
    Engagement policies and programs.................................  1082
    Environmental impacts limiting testing and training..............  1088
    F-22 stealth fighter.............................................  1076
    Funding..........................................................  1087
    Future strategies and base closures..............................  1075
    Gross domestic product (GDP) as a measure of the Defense
      spending, percent of...........................................  1082
    Guard and Reserves...............................................  1084
        Contributions of.............................................  1065
    Intelligence and communications transformation...................  1049
    Interim brigade combat teams.....................................  1054
    Iowa Army Ammunition Plant (IAAP)................................  1071
    Joint force, building tomorrow's.................................  1047
    Key programs.....................................................  1082
    Military health care.............................................  1081
    Missile defense:
        Deployment...................................................  1067
        Plans........................................................  1079
        Priority.....................................................  1080
        Rationale for................................................  1062
    National Missile Defense Program.................................  1079
    Navy shipbuilding............................................1053, 1064
    New force-sizing.................................................  1078
    Nuclear testing..................................................  1030
    155 mm Howitzer Program..........................................  1074
    Operations tempo.................................................  1081
    PAC-3 technology for SM-5........................................  1085
    Postponed procurement programs...................................  1052
    QDR and force structure..........................................  1070
    Reductions.......................................................  1081
    Reprogramming request............................................  1087
    Reserve components, modernization and the........................  1056
    Resource shortfall...............................................  1088
    Rock Island Arsenal..............................................  1074
    Russia's second strike capability and missile defense............  1075
    Short-term and long-term needs...................................  1076
    Sierra Army Depot................................................  1078
    So-called rogue nations..........................................  1068
    Spectrum management..............................................  1086
    Survivor benefit plan............................................  1087
    Sustaining a quality force.......................................  1046
    Transformation...................................................  1048
        Other issues.................................................  1049
    U.S. national security, meeting threats to.......................  1073
    U.S. nuclear stockpile, safety and reliability of................  1060
    Vieques..........................................................  1076
    Weapons of mass destruction......................................  1061

                                    Reserves

    Additional committee questions...................................   663
    Aerospace expeditionary force....................................   680
    Aircraft upgrades................................................   535
    An enviable force................................................   540
    Army Reserve unit readiness......................................   668
    Army Reservists additional.......................................   665
    Balkans tour lengths to the......................................   667
    Equipment:
        Maintenance and storage program..............................   667
        Requirements and shortfalls current..........................   669
    Expeditionary aerospace force....................................   548
    Fiscal year 2001 funding.......................................663, 678
        Outlook improved.............................................   540
    Fleet support priorities.........................................   536
    Full-time support................................................   533
    Future roles and missions........................................   547
    Highlights of 2000...............................................   551
    Information technology...........................................   536
    Infrastructure...................................................   546
    Legacy weapons systems.........................................542, 545
    Manpower.........................................................   535
    Marines and their families.......................................   543
    Military construction funding current rate of....................   666
    Modernization..................................................546, 555
    National Guard and Reserve equipment account...................667, 673
    New missions.....................................................   556
    OPTEMPO and readiness............................................   553
    Paying dividends today!..........................................   537
    People...........................................................   526
    Pilot retention..................................................   560
    Readiness......................................................527, 549
    Recruiting.......................................................   560
        And retention.........................................526, 549, 552
            Status...................................................   679
                Fiscal year 2001.....................................   664
        Nonprior.....................................................   560
            Service people...........................................   557
    Relevance........................................................   528
    Reserve forces:
        Equipment....................................................   666
            Compatibility............................................   681
        Military construction underfund..............................   666
    Reserve:
        MILCON.......................................................   680
        Pilots.......................................................   680
        Repair and construction of centers...........................   669
    Reserves.........................................................   679
        Overusing the................................................   663
    Resourcing.......................................................   531
    Sentinel battlefield radar.......................................   563
    Tax reform.......................................................   562
    Terrorism........................................................   563
    Top five priorities..............................................   538
    Training.........................................................   535
    War-fighting capabilities........................................   541

                              U.S. Pacific Command

    Additional committee questions...................................   437
    Air and sealift improvements.....................................   403
    All calls........................................................   422
    Army transformation..............................................   423
    Asia-Pacific Center for Security Studies.........................   420
    Asia-Pacific region, developments in the.........................   403
    China............................................................   433
        Military engagement with.....................................   439
    East Timor.......................................................   440
    Ehime Maru incident..............................................   423
    Enhanced military engagement.....................................   421
    Exercise NORTHERN EDGE...........................................   442
    Force structure..................................................   439
    Funding shortfalls, fiscal year 2001.............................   429
    Indonesia........................................................   427
        United States activities with................................   428
    Intelligence:
        Assets in the Pacific........................................   442
        Dissemination................................................   425
        Gathering....................................................   424
    International military education and training....................   421
    Korean Peninsula.................................................   441
    Milcon-family housing............................................   431
    Military-to-military contacts....................................   421
    North Korea....................................................435, 441
    Northern Edge funding............................................   432
    Operating challenges.............................................   437
    Strategic review.................................................   437
    Taiwan:
        Arms sales...................................................   435
        Defense......................................................   426
    Theater missile defense..........................................   425
    U.S. Pacific Command priorities..................................   408
    USPACOM military incidents.......................................   403