[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



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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

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