    [Senate Hearing 107-696]
    [From the U.S. Government Publishing Office]

                                                     S. Hrg. 107-696, Pt. 6

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2003

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

                                    HEARING

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                    S. 2225

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2003 FOR MILITARY
        ACTIVITIES OF THE DEPARTMENT OF DEFENSE, TO PRESCRIBE MILITARY
        PERSONNEL STRENGTHS FOR FISCAL YEAR 2003, AND FOR OTHER PURPOSES

                                   ----------

                                     PART 6

                                   PERSONNEL

                                   ----------

                   FEBRUARY 13, MARCH 13, 20, APRIL 11, 2002

             Printed for the use of the Committee on Armed Services

                                                     S. Hrg. 107-696, Pt. 6

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2003

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

                                    HEARING

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                    S. 2225

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2003 FOR MILITARY
        ACTIVITIES OF THE DEPARTMENT OF DEFENSE, TO PRESCRIBE MILITARY
        PERSONNEL STRENGTHS FOR FISCAL YEAR 2003, AND FOR OTHER PURPOSES

                                   __________

                                     PART 6

                                   PERSONNEL

                                   __________

                   FEBRUARY 13, MARCH 13, 20, APRIL 11, 2002

             Printed for the use of the Committee on Armed Services

                       U.S. GOVERNMENT PRINTING OFFICE
    81-927 PDF                  WASHINGTON : 2002
    ----------------------------------------------------------------------
    For sale by the Superintendent of Documents, U.S. Government Printing
    Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
    area (202) 512-1800 Fax: (202) 512-2250  Mail: Stop SSOP,
    Washington, DC 20402-0001

                          COMMITTEE ON ARMED SERVICES

                         CARL LEVIN, Michigan, Chairman

    EDWARD M. KENNEDY, Massachusetts     JOHN WARNER, Virginia,
    ROBERT C. BYRD, West Virginia        STROM THURMOND, South Carolina
    JOSEPH I. LIEBERMAN, Connecticut     JOHN McCAIN, Arizona
    MAX CLELAND, Georgia                 BOB SMITH, New Hampshire
    MARY L. LANDRIEU, Louisiana          JAMES M. INHOFE, Oklahoma
    JACK REED, Rhode Island              RICK SANTORUM, Pennsylvania
    DANIEL K. AKAKA, Hawaii              PAT ROBERTS, Kansas
    BILL NELSON, Florida                 WAYNE ALLARD, Colorado
    E. BENJAMIN NELSON, Nebraska         TIM HUTCHINSON, Arkansas
    JEAN CARNAHAN, Missouri              JEFF SESSIONS, Alabama
    MARK DAYTON, Minnesota               SUSAN COLLINS, Maine
    JEFF BINGAMAN, New Mexico            JIM BUNNING, Kentucky

                         David S. Lyles, Staff Director
                  Judith A. Ansley, Republican Staff Director

                                     ______

                           Subcommittee on Personnel

                         MAX CLELAND, Georgia, Chairman

    EDWARD M. KENNEDY, Massachusetts     TIM HUTCHINSON, Arkansas
    JACK REED, Rhode Island              STROM THURMOND, South Carolina
    DANIEL K. AKAKA, Hawaii              JOHN McCAIN, Arizona
    BILL NELSON, Florida                 WAYNE ALLARD, Colorado
    JEAN CARNAHAN, Missouri              SUSAN COLLINS, Maine

                                      (ii)

                                C O N T E N T S

                                  ----------

                        CHRONOLOGICAL LIST OF WITNESSES
          Active and Reserve Military and Civilian Personnel Programs
                               february 13, 2002

                                                                       Page

    Chu, Dr. David S.C., Under Secretary of Defense for Personnel and
      Readiness......................................................     6
    Brown, Hon. Reginald J., Assistant Secretary of the Army for
      Manpower and Reserve Affairs...................................    23
    Navas, Hon. William A., Jr., Assistant Secretary of the Navy for
      Manpower and Reserve Affairs...................................    32
    Dominguez, Hon. Michael L., Assistant Secretary of the Air Force
      for Manpower and Reserve Affairs...............................    40
    Tilley, Sgt. Maj. Jack L., USA...................................    50
    McMichael, Sgt. Maj. Alford L., USMC.............................    56
    Herdt, Master Chief Petty Officer James L., USN..................    60
    Finch, Chief Master Sergeant Frederick J., USAF..................    64
    Duehring, Craig W., Principal Deputy Assistant Secretary of
      Defense for Reserve Affairs....................................    83
    Davis, Lt. Gen. Russell C., ANG, Chief, National Guard Bureau....    93
    Bambrough, Maj. Gen. Craig, USAR, Deputy Commanding General, U.S.
      Army Reserve Command...........................................   100
    Totushek, Vice Adm. John B., USNR, Commander, Naval Reserve Force   111
    Sherrard, Lt. Gen. James E., III, USAF, Chief, Air Force Reserve.   117
    McCarthy, Lt. Gen. Dennis M., USMCR, Commander, Marine Forces
      Reserve........................................................   124

                             Defense Health Program
                                 march 13, 2002

    Winkenwerder, Hon. William, Jr., Assistant Secretary of Defense
      for Health Affairs; Accompanied by Thomas F. Carrato, Executive
      Director, Tricare Management Activity..........................   154
    Mayo, Rear Adm. Richard A., USN, Command Surgeon for United
      States Pacific Command.........................................   171
    Green, Brig. Gen. Charles B., USAF, Command Surgeon for United
      States Transportation Command..................................   175
    Maul, Col. Ronald A., USA, Command Surgeon for United States
      Central Command................................................   177
    Hall, Capt. Richard B., II, USN, Command Surgeon for United
      States European Command........................................   181
    Jones, Col. Stephen L., USA, Command Surgeon for United States
      Southern Command...............................................   185

               Recruiting and Retention in the Military Services
                                 march 20, 2002

    Gwyn, Sgt. Lindsey E., USA, United States Army Recruiter.........   215
    Piatek, Electrician's Mate First Class Petty Officer Bruce, USN,
      United States Navy Enlisted Recruiter..........................   215

                                     (iii)

    Parker, Gunnery Sergeant Ryan L., USMC, Noncommissioned Officer
      in Charge, RSS Marietta, Georgia...............................   216
    Quintana, Technical Sergeant Gabriel, USAF, United States Air
      Force Enlisted Recruiter.......................................   216
    Le Moyne, Lt. Gen. John M., USA, Deputy Chief of Staff for
      Personnel/G1, United States Army; Accompanied by Maj. Gen.
      Michael D. Rochelle, USA, Commanding General, United States
      Army Recruiting Command........................................   225
    Ryan, Vice Adm. Norbert R., Jr., USN, Chief of Naval Personnel
      and Deputy Chief of Naval Operations (Manpower and Personnel);
      Accompanied by Rear Adm. George E. Voelker, USN, Commander,
      United States Navy Recruiting Command..........................   231
    Parks, Lt. Gen. Garry L., USMC, Deputy Commandant for Manpower
      and Reserve Affairs, United States Marine Corps; Accompanied by
      Maj. Gen. Jerry D. Humble, USMC, Commanding General, United
      States Marine Corps Recruiting Command.........................   240
    Brown, Lt. Gen. Richard E., III, USAF, Deputy Chief of Staff for
      Personnel, United States Air Force; Accompanied by Brig. Gen.
      Duane W. Deal, USAF, Commander, United States Air Force
      Recruiting Service.............................................   247

                          Military Personnel Benefits
                                 april 11, 2002

    Stewart, Derek B., Director, Defense Capabilities and Management,
      U.S. General Accounting Office.................................   281
    Abell, Hon. Charles S., Assistant Secretary of Defense for Force
      Management Policy..............................................   304
    Barnes, Master Chief Petty Officer Joseph L., USN (Retired),
      Director of Legislative Programs, Fleet Reserve Association....   324
    Raezer, Joyce W., Associate Director of Government Relations,
      National Military Family Association, Inc......................   332
    Lokovic, Chief Master Sergeant James E., USAF (Retired), Deputy
      Executive Director and Director, Military and Government
      Relations, Air Force Sergeants Association.....................   334
    Cline, Master Sergeant Michael P., USA (Retired), Executive
      Director, Enlisted Association of the National Guard of the
      United States..................................................   341
    Schwartz, Susan, D.B.A., Deputy Director of Government Relations/
      Health Affairs, the Retired Officers Association...............   348

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2003

                                  ----------

                          WEDNESDAY, FEBRUARY 13, 2002

                                   U.S. Senate,
                             Subcommittee on Personnel,
                                   Committee on Armed Services,
                                                        Washington, DC.

          ACTIVE AND RESERVE MILITARY AND CIVILIAN PERSONNEL PROGRAMS

        The subcommittee met, pursuant to notice, at 9:40 a.m. in
    room SR-232-A, Russell Senate Office Building, Senator Max
    Cleland (chairman of the subcommittee) presiding.
        Committee members present: Senators Cleland, Akaka, E.
    Benjamin Nelson, and Hutchinson.
        Committee staff member present: Cindy Pearson, assistant
    chief clerk and security manager.
        Majority staff members present: Maren Leed, professional
    staff member, and Gerald J. Leeling, counsel.
        Minority staff members present: Ambrose R. Hock,
    professional staff member; Patricia L. Lewis, professional
    staff member; and Richard F. Walsh, minority counsel.
        Staff assistants present: Dara R. Alpert and Nicholas W.
    West.
        Committee members' assistants present: Andrew
    Vanlandingham, assistant to Senator Cleland; Davelyn Noelani
    Kalipi, assistant to Senator Akaka; Eric Pierce, assistant to
    Senator Ben Nelson; John Gastright, assistant to Senator
    Thurmond; Christopher J. Paul and Dan Twining, assistants to
    Senator McCain; Robert Alan McCurry, assistant to Senator
    Roberts; and James P. Dohoney, Jr. and Michele A. Traficante,
    assistants to Senator Hutchinson.

           OPENING STATEMENT OF SENATOR MAX CLELAND, CHAIRMAN

        Senator Cleland. Good morning, everyone. We are delighted
    to have you here. Senator Hutchinson and I would like to say
    that at 9:50 there will be five stacked votes. We will continue
    the hearing, and anyone who is here may act as chairman, just
    so long as they do not declare war on Iraq until I get back.
    [Laughter.]
        Thank you all for coming. We hope that this hearing will
    give you the opportunity to tell us your current personnel
    status, your suggestions, and the challenges you face this
    year. This is your chance to tell us what we can do to give you
    the authority and resources you need. This is my sixth year on
    this subcommittee. As I look back over the past 5 years, the
    subcommittee has, I think, done a lot for our servicemen and
    women, and it has been done in a bipartisan way. Everybody has
    chipped in. Senator Hutchinson and others have been very
    attentive to their duties.
        I would like to express my sincere thanks to those who have
    served as Personnel Subcommittee chairs since I have been in
    the Senate--Senator Kempthorne, Senator Allard, and Senator
    Hutchinson. Every year, we have attempted to respond to the
    concerns of our servicemen and women. We heard service members
    say that their pay was inadequate and not competitive with the
    civilian market. We responded by approving pay raises that
    total some 20 percent over the last 5 years, and put into law a
    provision that requires pay raises at least 1/2 percent above
    inflation through fiscal year 2006.
        We heard the pleas of our service members that they were
    not fully reimbursed for off-post housing expenses. We
    responded by removing the requirement that members pay 15
    percent of the housing cost out-of-pocket, and authorized an
    increase in the basic housing allowance in order to reduce out-
    of-pocket housing expenses to zero by fiscal year 2005.
        We also directed the Secretary of Defense to implement a
    program to assist members who qualify for food stamps with
    special pay of up to $500 a month.
        We heard the concerns about the Redux retirement system. We
    responded by authorizing service members to choose between the
    traditional high three retirement system or to remain under
    Redux with a $30,000 bonus. We also authorized our military
    personnel to participate in the Thrift Savings Plan along with
    other Federal employees.
        We heard concerns about health care for our active duty
    members. We responded. We enacted provisions that improve the
    quality of health care and access to health care providers. We
    authorized TRICARE Prime Remote for families of active duty
    personnel assigned where military medical facilities were not
    available. We eliminated copayments for active duty personnel
    and their families when they received care under the TRICARE
    Prime option.
        We heard the military retirees when they called our
    attention to the broken promise of health care for life. We
    started with a series of pilot programs which included access
    to the Federal Employee Health Benefit Program, a TRICARE
    Senior Supplement, and Medicare's Subvention. Ultimately we
    found an even better answer, TRICARE for Life. Under this
    program, TRICARE pays virtually everything that Medicare does
    not pay. This is the best health care program for Medicare-
    eligibles in the United States. We are really proud of this
    program.
        Recruiting and retention ebbed and flowed during this 5-
    year period. We responded by authorizing special pays and
    bonuses as well as innovative recruiting initiatives. We also
    passed laws that will require high schools to give our military
    recruiters access to student directory information and the same
    access to students as the schools give to colleges and
    potential employers.
        We responded to concerns about our absentee military voters
    by passing laws making it easier for military personnel and
    their families to vote in Federal, State, and local elections,
    especially for us.
        Last year, after several years of intensive effort, we were
    able to pass an initiative that authorizes the service
    secretaries to permit service members with critical skills to
    transfer part of their GI Bill benefit to their family members
    in return for a service commitment. A companion provision
    authorizes the services to award education savings bonds in
    return for a service commitment. Used creatively, these
    provisions will give the services a very significant new arrow
    in their retention quivers.
        As you can see, we listen to your concerns. In your
    testimony today, please help us to identify issues you would
    like for us to address in a new way this year.
        Senator Hutchinson, do you have an opening statement?

                  STATEMENT OF SENATOR TIM HUTCHINSON

        Senator Hutchinson. I do, Mr. Chairman. You just delivered
    it. [Laughter.]
        I was going to recount a lot of the accomplishments that we
    have had over the last few years, and they are numerous. You
    have done an excellent job, and I want to applaud you. You
    mentioned the bipartisan spirit in which this subcommittee has
    worked historically, and as you went through the list of
    chairmen over the last few years I think that bipartisanship
    was reflected in how we have gone back and forth in the party
    leadership. We certainly share a bipartisan frustration with
    the way these votes are scheduled and the interruptions we are
    going to have today.
        I will not recount our accomplishments, as you did a very
    good job in talking about what we have done on transferability,
    what we have done on TRICARE for Life, how we have tried to
    address the pay raises, the 20-percent increase. We know there
    is still more to be done in closing that gap between our
    military pay and civilian pay, but we have taken some great
    strides.
        We have a lot to build on and a lot to be proud of in
    recent years, and what I am anxious to hear today is where we
    go from here and what should be our priorities.
        I also want to say, Mr. Chairman, how proud we are of the
    team that has led us in this war on terrorism. It has brought a
    lot of new attention to some of our personnel challenges. From
    top to bottom I think we are all proud of our Commander in
    Chief, of our Secretary of Defense, all of our Joint Chiefs of
    Staff, and our men and women in uniform across this globe. They
    have made us proud, and they have made the American people
    proud. They are doing a marvelous job, and I want to thank you.
        Mr. Chairman, we have a lengthy list of witnesses today,
    but I think they are going to provide us some valuable
    information as we look forward to a good end of this year. I
    look forward to working with you, as we have in the past, to
    move that agenda forward, to improve the quality of life for
    those who are willing to serve our country and the cause of
    freedom.
        Senator Cleland. Thank you very much, Senator Hutchinson,
    and I applaud as well the service members who are doing an
    outstanding job in the war on terrorism, particularly in
    Afghanistan.
        We would like to hear now from Senator Akaka, if you have
    an opening statement.

                  STATEMENT OF SENATOR DANIEL K. AKAKA

        Senator Akaka. Thank you very much, Mr. Chairman. I would
    like to say good morning and welcome to our witnesses who join
    us to review the active and Reserve military and civilian
    personnel programs in light of the fiscal year 2003 budget
    request. I have long supported, Mr. Chairman, initiatives to
    improve recruiting and retention and quality of life for our
    service members. These have a significant impact on the
    readiness of our Armed Services.
        I was pleased to see the emphasis in the budget request on
    people and quality of life. I remain concerned, however, about
    the lack of parity between the pay of DOD civilian workers and
    military service members. In my capacity as chairman of the
    Senate Governmental Affairs Subcommittee on International
    Security Proliferation and Federal Services, I have closely
    examined issues involving Federal employees. The civilian
    workforce plays a significant role in the support of our
    service members on active duty and the Reserves, and with the
    National Guard.
        If we are to continue making the significant gains in
    science and technology that have proven critical to our
    successful efforts in Operation Enduring Freedom, we must
    ensure that the Department has the depth of expertise necessary
    to maintain these programs. Therefore, Mr. Chairman, I look
    forward to working with the Department of Defense, the
    services, the military organizations, and my colleagues to
    address these issues, and I look forward to the testimony of
    our witnesses.
        Thank you very much, Mr. Chairman.
        Senator Cleland. Thank you, Senator Akaka. Thank you very
    much for your contribution to this subcommittee.
        Senator Nelson.

                STATEMENT OF SENATOR E. BENJAMIN NELSON

        Senator Ben Nelson. Thank you, Mr. Chairman. I do want to
    thank our distinguished panel for being here today and for the
    opportunity to talk about personnel issues. In increasing the
    pay of our military personnel 20 percent over the last few
    years, we have made some strides in improving military pay and
    addressing the disparity that has existed between civilian and
    military pay in our Armed Services.
        I am interested in whether you think, with the current
    budget, we have done enough, and if we have not, how much more
    we need to do. I am convinced that we perhaps have not done
    enough. Part of my concern comes from the fact that the current
    budget cuts some areas of military assets that I think are
    extremely important, such as training funds, for example, in
    the State of Nebraska. As the former head of the Guard in
    Nebraska, I am concerned when I find that the annual training
    funds for Nebraska are more than $2 million less for fiscal
    year 2002 than fiscal year 2001. Funding for technical schools
    is down more than 23 percent from 2 years ago. Training days
    funding has been reduced by 37 percent.
        I am sure there are explanations, and we will get to those
    with the panels that are here, but I am of the opinion that our
    assets are more than munitions and armaments and hard assets.
    They are, in fact, the personnel, and I am very concerned that
    while we have made progress, that we are not where we need to
    be. With this military budget that is being presented to us, we
    have an opportunity to do that, whether it is transformation or
    increasing funding for personnel. I think, in fact, we must
    invest our resources in our number 1 asset in the military, and
    that is the men and women who comprise our military.
        Thank you.
        Senator Cleland. Thank you, Senator Nelson. Thank you for
    your contribution to this subcommittee. Before I introduce the
    first panel, I ask that Senator Thurmond's statement be
    inserted for the record.
        [The prepared statement of Senator Thurmond follows:]
                  Prepared Statement by Senator Strom Thurmond
        Mr. Chairman, I join you in welcoming back each of our witnesses. I
    especially look forward to the testimony of the Senior Non-Commissioned
    Officers representing each of our military services. Not only do they
    have the benefit of a long and distinguished career, but also they
    interface daily with the heart and soul of our military, the soldiers,
    sailors, airmen, and marines.
        As we begin deliberations on the President's fiscal year 2003
    budget request, I believe it is appropriate that we hear from those who
    have the most intimate knowledge on the issues facing our dedicated and
    professional military and civilian personnel. I believe President
    Bush's budget recognizes the importance of providing adequate
    compensation and benefits. What is more important, the budget provides
    significant focus on improving the quality of life for our personnel. I
    am especially interested in hearing from our Senior Non-Commissioned
    Officers about the adequacy of military housing and the work
    environment. Congress, in particular the Armed Services Committee, has
    in the past years made these areas a particular point of focus and I am
    interested if we are getting the desired results.
        Mr. Chairman, as we have heard in past hearings with the Secretary
    of Defense and the Service Secretaries, that we have mobilized more
    than 60,000 Reserve and National Guard personnel for Operation Enduring
    Freedom and Operation Noble Eagle. We have heard that the success of
    these operations hinges on the skills and dedication of these citizen
    soldiers. However, there is a price to pay for that success and it is
    on the shoulders of the men and women who have forsaken their civilian
    jobs to serve the Nation. I hope the leaders of our Reserve components
    will not only discuss the impact the mobilization has on the individual
    service member, but also on what we can do to mitigate the impact.
        Mr. Chairman, in closing, I want to congratulate you for the manner
    in which you have asserted your leadership of this subcommittee. I look
    forward to working with you toward our common goal of providing for the
    welfare of the soldiers, sailors, airmen, and marines and their
    families.
        Thank you, Mr. Chairman.

        Senator Cleland. I would like to welcome our first panel.
    Good morning, Dr. Chu, Mr. Brown, Mr. Navas, and Mr. Dominguez.
    We are delighted you could be here this morning to discuss the
    needs of your services. I understand today is Mr. Brown's
    birthday. We will spare you the song. [Laughter.]
        I would like to take the opportunity to wish you a happy
    birthday, and we will be easy on you. I know each of you has
    prepared an extensive opening statement. Without objection,
    your prepared statements will be included in the record.
    Because of the large number of witnesses we want to hear from
    today, I would like to ask you to limit your opening remarks. I
    assure you that they will be read, and I would prefer you each
    just take a couple minutes to tell what you each consider to be
    the most important matter you want to bring to our attention.
        Dr. Chu, we will start with you, then Mr. Brown, followed
    by Mr. Navas, then Mr. Dominguez.
        Dr. Chu.

    STATEMENT OF DR. DAVID S.C. CHU, UNDER SECRETARY OF DEFENSE FOR
                        PERSONNEL AND READINESS

        Dr. Chu. Thank you, Mr. Chairman, members of this
    distinguished subcommittee. I appreciate the opportunity to be
    here today. We thank you for your continuing support of the men
    and women who serve in our Armed Forces.
        When the President of the United States at the turn of the
    century transmitted his budget request to Congress, he wrote,
    ``Good ships and good guns are simply good weapons, and the
    best weapons are useless save in the hands of men who know how
    to fight with them.'' Of course, that President was Theodore
    Roosevelt, and that was the turn of the 19th to the 20th
    century, but I think those words, as Senator Nelson suggests,
    are equally applicable today.
        Thanks to Congress and the steps you have cited, Mr.
    Chairman, in your opening remarks, the Department had a good
    set of results in both recruiting and retention in the last
    fiscal year just ended, fiscal year 2001.
        We did have some areas of weakness. The Air National Guard
    fell short of its recruiting goal; both the Army National Guard
    and the Naval Reserve were a little short in terms of their
    high school diploma graduate content; the Navy did not quite
    commission as many officers as it had hoped to; Air Force
    retention at the more experienced levels was not quite where we
    would like it to be; and in all services, both Active and
    Reserve components, we have issues of skill and specialty
    shortages, all very consistent, I think, with the concerns
    Senator Nelson expressed.
        In short, we did well overall, but there is not a large
    margin here relative to the Nation's needs, hence the request
    in the President's budget for a 4.1 percent basic pay raise for
    all in uniform, and an additional amount, much like the
    increase you approved last year, targeted at the mid-career
    folks, both enlisted and officer ranks.
        At the same time, we are making a vigorous effort to carry
    out the provisions you passed regarding access to high schools.
    That survey is ongoing. We would ask some relief from Congress
    in terms of the grade of the officer that conducts the visit,
    quite frankly, because there are so many visits to conduct, I
    regret to say, and we would like to be able to use any field
    grade officer in that role.
        We recognize that it is not just the military member that
    we must recruit and retain, that the partnership of the country
    with its warfighters is built on the fact that the family as
    well as the member makes the decision to join and stay in the
    military. The Department has undertaken a comprehensive review
    of its quality-of-life programs with an eye to strengthening
    the social compact between ourselves and those in uniform.
        Perhaps the most important single element of that compact
    is, as the opening remarks suggested, the military health
    system and the health program you mentioned, Mr. Chairman. We
    believe we budgeted realistically for the health system for
    fiscal year 2003 in the budget request in front of you. We are
    pleased with the initial results and the implementation of
    TRICARE for Life, but we recognize the challenge in front of
    us. Maintaining that success, I think, will hinge on the
    quality of the next generation of TRICARE contracts that we
    will be letting for bid very soon.
        We appreciate the flexibility you gave us in last year's
    authorization act. In that regard, we would ask that you make
    that flexibility permanent and that you assist us in removing
    the reprogramming limits that were imposed in terms of moving
    money among health accounts now and in the future. At the same
    time, very consistent with Senator Akaka's remarks, we
    recognize the work of defense civilians has never been more
    crucial than now in our war on terrorism. Our civilians manage
    finances and provide intelligence and assure that we have the
    best technology to perform our tasks, supporting the national
    defense strategy.
        We recognize that the last 12 years of downsizing and
    change in the Department's mission have resulted in skill and
    age imbalances in the civilian workforce. Over the past several
    years, the average age of the civilian workforce has increased.
    The percentage of employees in the age group 51 to 60 has risen
    by nearly one-third, with the result, not surprisingly, that
    slightly over half the workforce will be eligible to retire in
    the next 5 years.
        We in the Department are trying to take a strategic
    approach to how we manage both the military and civilian
    workforce, and some of our proposals in that regard will be
    reflected in the legislative package that we will shortly be
    sending to Congress.
        That concludes my opening remarks, Mr. Chairman. I look
    forward to your questions.
        [The prepared statement of Dr. Chu follows:]
                    Prepared Statement by Dr. David S.C. Chu
                                  introduction
        Mr. Chairman and members of this distinguished subcommittee, thank
    you for the opportunity to be here today and thank you for your
    continuing support of the men and women who serve in our Armed Forces.
        As Secretary Rumsfeld recently testified, ``if we are to win the
    war on terror, and prepare for the wars of tomorrow, we must take care
    of the Department's greatest asset: our men and women in uniform.
    `Smart weapons' are worthless to us unless they are in the hands of
    smart soldiers, sailors, airmen, and marines.'' The Department of
    Defense is competing with the private sector for the best young people
    our Nation has to offer.
        The Defense family has changed over the last decade. U.S. military
    and civilian personnel are more senior, educated, and diverse. More
    military spouses work, and they are better educated than they were 10
    years ago. DOD's transformation of personnel policies and programs must
    address these changing demographics and the expectations of a 21st
    century military force. The Department must keep its ``side of the
    bargain'' by providing relevant programs and policies for the families
    who support members of the Armed Forces.
        DOD has embarked on a strategic approach to managing its military
    (Active and Reserve) and cvilian force. Today, I would like to outline
    these initiatives, as well as discuss the challenges we face.
                               military personnel
        America's military today is recognized as the most capable ever
    fielded. As has been proven so vividly in recent months, our successes
    and sacrifices are key to providing a global environment in which the
    ideals of democracy and the global economy can flourish.
        Recruiting and retention are cornerstones of military force
    capability and continue to be challenges for the department. We have
    fielded more recruiters than ever before, and added funds for
    recruiting and retention efforts than we ever have to keep us on track
    toward achieving our recruiting and retention goals. While we have had
    good results in recent years, and in fiscal year 2001 specifically,
    many challenges still lie ahead.
    End Strength
        At the end of fiscal year 2001, the Department of Defense as a
    whole exceeded its end strength target for the active force by almost
    3,000 service members. All individual service components met or
    exceeded their goals, except the Air Force, which fell short by about
    3,500 personnel.
        The requested active duty military end strength for fiscal year
    2003, as reported in the service budget submissions, show a net
    increase of 2,300 from the fiscal year 2002 authorization. The Army
    continues at an end strength of 480,000; the Navy projects a slight
    decrease from 376,000 to 375,160; the Marine Corps increases from
    172,600 to 175,000; and Air Force remains steady at 358,800. The Marine
    Corps' fiscal year 2003 budget request included 2,400 spaces above the
    fiscal year 2002 President's budget. These forces are needed to stand
    up an Antiterrorism Marine Expeditionary Brigade--an Active Force
    responsibility.
        In the aggregate, the Reserve components experienced much success
    in achieving end strength in 2001. This success was due to excellent
    recruiting during a very challenging period and excellent retention in
    all components. The individual components all finished the year within
    1 percent of authorized levels. Increases in the recruiter force,
    expanded bonus programs, enhanced advertising campaigns, increased
    focus on retention resources, and increased use of the MGIB-SR kicker
    education benefit all contributed to this success.
    On Reducing/Eliminating Low Density/High Demand Units
        As a result of our recent combat experiences in Afghanistan, I
    believe it is time we increase our support to Low Density/High Demand
    units so they may meet the demands placed upon them. For years, the
    Department has been accepting risk in these weapon systems and it is
    time we resolved this issue. It is imperative that we commit the
    necessary resources to address these critical shortfalls as soon as
    possible.
    Stop Loss
        Stop loss, which refers to the involuntary extension on active duty
    of service members in times of war or national emergency when the need
    arises to maintain the trained manpower resident in the military
    departments, has been implemented somewhat differently by each service,
    based on specific requirements.
        For officers, the Army instituted a limited program impacting only
    pilots and special operations officers. Affected Navy officers include
    the special operations community, limited duty security officers,
    physicians in certain specialties and the nurse corps. The Marine
    Corps' implementation applies to C-130 aviators and infantry officers.
    The Air Force's initial program applied stop loss restrictions to all
    officer skills; it is now releasing many career fields and tailoring
    the list of affected specialties.
        For the enlisted forces, the Army implemented its program in
    increments. The initial increment included soldiers primarily assigned
    in Special Forces specialties; the second increment expanded the
    program to include Army Guard and Army Reserve personnel in the same
    specialties already stopped in the Active Force and added three
    additional specialties (enlisted and officer psychological operations,
    and enlisted supply and services) to the program. The Army is currently
    working on the details of a third increment for immediate
    implementation.
        The Navy enlisted program affected sailors in 10 different
    specialties deemed critical to current operations, including SEALs,
    special warfare combatant craft crewman, explosive ordnance disposal
    specialists, and linguists who speak Hebrew, Russian, Serbian,
    Albanian, Arabic, and other Arabic dialects.
        The Marine Corps implemented an incremental program that coincided
    with current operations that the Marine Corps was tasked to support.
    The first increment addressed marines assigned to Marine Forces
    Atlantic, as they were needed to staff the newly formed anti-terrorism
    brigade. The second increment included marines assigned to C-130
    aircrew positions across the Corps. The initial Air Force program
    applied to all enlisted skills. As with its officer program, the Air
    Force is currently releasing many enlisted specialties from the
    program.
    Recruiting
        Our success in maintaining a military second to none depends on
    attracting and retaining people with the necessary talent, character,
    and commitment to become leaders and warriors in the Nation's Armed
    Forces. An asset is that the military ranks first as the most respected
    American institution. However, while the quality, dedication, and
    professionalism of the men and women in uniform command such respect
    from all Americans, this respect currently does not translate to an
    increased willingness to enlist or to encourage others to serve.
        It is essential that public and private sector leaders at every
    level step up to the challenge of generating awareness of telling our
    young people the important role they can play by serving in the
    military.
    Fiscal Year 2001 Enlisted Recruiting Results
        During fiscal year 2001, the military services recruited 257,882
    first-term enlistees and an additional 79,496 individuals with previous
    military service for a total of 337,378 recruits, attaining 101 percent
    of the DOD goal of 334,540 accessions. All Active and Reserve
    components, except the Air National Guard, achieved their numeric
    goals.
        The fiscal year 2001 recruiting success did not come easily;
    rather, it can be attributed to an extraordinary investment of time,
    talent, and money. In fiscal year 2001, the cost-per-recruit increased
    again--reaching an all time high of $11,652. The number of field
    recruiters remained at its highest point in the last decade with just
    over 15,000 production recruiters. The services continue to offer
    bonuses in more skills and have implemented several test programs in an
    effort to expand the recruiting market.
        In addition to monitoring our overall numerical goals, we continue
    to keep a close watch on the quality of new service members. Years of
    research and experience tell us that recruits with a high school
    diploma are more likely to complete their initial term of service.
    Additionally, research shows a strong correlation between above average
    scores on the enlistment test and on-the-job performance.
        The quality of new recruits remained high in fiscal year 2001,
    although the Army National Guard and Naval Reserve fell short of the
    desired high school diploma graduate (HSDG) rate. DOD-wide, 91 percent
    of new recruits were high school diploma graduates (against a goal of
    90 percent) and 66 percent scored above average on the Armed Forces
    Qualification Test (versus a desired minimum of 60 percent). The
    following table provides details.

                                            FISCAL YEAR 2001 NUMERIC RESULTS
    ----------------------------------------------------------------------------------------------------------------
                                                                                                     Percent
                                                          Goal       Achieve     Percent   -------------------------
                                                                                                HSDG      Cat I-IIIA
    ----------------------------------------------------------------------------------------------------------------
    Army.............................................      75,800      75,855         100           90           63
    Navy.............................................      53,520      53,690         100           90           63
    Marine Corps.....................................      31,404      31,429         100           96           64
    Air Force........................................      34,600      35,381         102           99           75
                                                      --------------------------------------------------------------
      Active Total...................................     195,324     196,355         101           93           66
    ----------------------------------------------------------------------------------------------------------------
    Army National Guard..............................      60,252      61,956         101           86           60
    Army Reserve.....................................      34,910      35,522         102           90           66
    Naval Reserve....................................      15,250      15,344         101           89           73
    Marine Corps Reserve.............................       8,945       9,117         102           96           76
    Air National Guard...............................      11,808      10,258          87           96           79
    Air Force Reserve................................       8,051       8,826         110           93           73
                                                      --------------------------------------------------------------
      Reserve Total..................................     139,216     141,023         101           89           66
    ----------------------------------------------------------------------------------------------------------------
        DOD Total....................................     334,540     337,378         101           91           66
    ----------------------------------------------------------------------------------------------------------------

    Reserve Component Recruiting
        For 2002, all Reserve components are focusing continued efforts on
    managing departures in addition to maintaining aggressive enlistment
    programs by targeting both enlistment and re-enlistment incentives on
    critical skill areas. Each of the components has implemented several
    recruiting incentives and developed initiatives to make National Guard
    and Reserve service attractive. This is critical to retaining trained,
    experienced personnel which is increasingly important in this difficult
    recruiting environment. Although limited stop loss will assist in
    managing departures, the Reserve components will continue to optimize
    use of retention incentives while expanding their recruiting efforts,
    particularly in the prior service market.
        As one example of Reserve component recruiting initiatives, we are
    seeking an increase in the time we can retain an individual in the
    Reserve delayed training program. Increasing the delayed training
    program from 270 days to 365 days will enable Reserve recruiters to
    begin working the high school and college markets earlier.
        Fiscal Year 2002 Year-to-Date Results
        Through the first quarter of this fiscal year (October to December
    2001), the services achieved 105 percent of their shipping mission,
    enlisting 74,965 young men and women. All Active and Reserve
    components, except the Naval Reserve, met or exceeded their first
    quarter goals. The Naval Reserve has achieved 93 percent of its goal-
    to-date. All service components expect to achieve their recruiting
    goals this fiscal year, with the possible exception of the Air National
    Guard. Overall, recruit quality in both the Active and Reserve
    components remains high.
        Many people have asked if the terrorist attacks of September 11
    resulted in an easier recruiting environment. To date, we have not seen
    a change in enlistment contracts signed.
        Initial survey results, including our most recent youth poll
    administered in October 2001, did indicate that more young people
    considered joining the military after the terrorist attacks of
    September 11, 2001. The results also show an increase in propensity
    levels (the percent of young people who report they ``definitely'' or
    ``probably'' will serve in the military). In addition, services
    reported an increase in the volume of enlistment leads generated.
    However, many of the people who expressed an interest in the military
    were not qualified for service. Despite the high levels of patriotism,
    there is no data to indicate that these perceptions have translated
    into an easier recruiting environment.
    Officer Programs
        Active duty officers come from service academies, Reserve Officer
    Training Corps (ROTC) programs at colleges and universities, Officer
    Candidate School/Officer Training School (OCS/OTS) as run by each
    service, and via direct appointment for physicians and other medical
    specialists, attorneys, and chaplains. The Army and Air Force met their
    numerical commissioning requirements in fiscal year 2001, while the
    Navy was at 96 percent of goal and the Marine Corps was short 20
    officers (99 percent of goal). However, both the Navy and Air Force
    continued to experience shortfalls in certain specialties, usually
    those that require a specific educational background. The Navy missed
    its goals in pilots, naval flight officers, civil engineers, chaplains,
    and most medical and medical support specialties. The Air Force was
    short navigators, intelligence officers, weather officers, physicists,
    and engineers. Both services have faced this problem for the past
    several years and the Department is appreciative to the committee for
    the recently authorized officer critical skills accession bonus. All
    services currently are determining the most effective way to use this
    bonus.
        During fiscal year 2001, the Reserve components essentially
    achieved their officer accession goals despite the challenging
    recruiting climate. The Army National Guard, the Army Reserve, and the
    Marine Corps Reserve made their stated goals within a few officers, and
    the Naval Reserve over-produced by 154 officers. The Air Force Reserve
    missed its stated officer gains goal by 196 officers. (The Air National
    Guard has had data processing problems since June 2001; therefore, its
    officer gains data are not complete at this time.)
        Active duty officer accessions are on track in all services for
    numerical success this year, but the Navy and Air Force continue to be
    concerned about the specialty mix even as they implement the accession
    bonus to address the problem in the long term.
        The struggle for sufficient Reserve officer opportunities will
    continue. Several challenging factors include Active component use of
    stop loss during the first part of the fiscal year, limited opportunity
    for further short-term expansion of internal OCS programs, and
    increased officer commissioning goals. When Active component goals
    increase, there frequently is a corresponding decrease in the number of
    gains to the Reserves. It will take a coordinated effort by both Active
    and Reserve components to achieve future Reserve officer appointment
    goals.
    Expanding the Target Market
        The Department is continuing to work to identify ways to expand our
    target market. Today, nearly two-thirds of high school seniors enroll
    in college immediately after graduation. Enlistment often is viewed as
    an impediment to further education. High-quality youth (high school
    graduates with above average aptitude) are increasingly interested in
    attending college.
        In February 2000, the Army launched its ``College First'' pilot
    test which is designed to identify better ways to penetrate the
    college-oriented market. At the end of fiscal year 2001, the Army had
    almost 700 program participants. We appreciate congressional support of
    ``College First'' as recent increases in the stipend should make this
    program more viable, and we hope that Congress will remain open to
    further changes that will enhance the program's chance of success.
        Other current policies are designed to attract high school
    graduates using post-service college incentives (e.g., Montgomery GI
    Bill, college fund ``kickers'') as well as enlistment bonuses and loan
    repayment programs. In addition, services enlist those with college
    experience at higher grades than high school seniors. Our future
    strategies must communicate that the military facilitates future
    education by providing discipline, drive, and financial means as well
    as exploit opportunities to pursue college-level course work.
        In addition to targeting the college market, we have several on-
    going pilot programs designed to tap the high aptitude, non-high school
    diploma graduate market. The National Defense Authorization Act for
    Fiscal Year 1999 directed a 5-year project to attract more home
    schooled graduates and ChalleNGe-GED holders to the military by
    treating them as high school diploma graduates for enlistment purposes.
        Early analysis indicates that results in those experiments are
    mixed. Twelve month attrition rates for ChalleNGe-GED holders appear to
    be similar to those of high school diploma graduates for Army and
    Marine Corps enlistees, but considerably higher for Navy and Air Force
    enlistees. The 12-month attrition rates of home schooled youth are
    similar to those of high school diploma graduates in all services,
    except for Navy and Marine Corps home schooled enlistees with below
    average aptitude scores; their attrition rates are quite high (20-26
    percent). As the sample size continues to increase throughout the pilot
    test, we will assess the military performance and attrition behavior of
    the home schooled and ChalleNGe recruits to determine their appropriate
    enlistment priority.
        We have also examined the enlistment propensity of home schooled
    youth and ChalleNGe participants. We find that home schooled youth have
    lower enlistment propensity (for any service) and are less likely to
    have parents who support military enlistment for their child. We have
    provided the services with suggestions for ways to contact home
    schooled youth. On the other hand, youth in the ChalleNGe program have
    high enlistment propensity. We continue to monitor these programs.
        In addition to these pilot programs, the Army also launched a 4-
    year pilot test called GED Plus in February 2000. This program provides
    individuals who left high school before obtaining their diploma with an
    opportunity to earn a GED and enlist in the military. Since GED Plus
    graduates are required to have above average enlistment test scores,
    job performance should not be adversely affected. The Army currently is
    evaluating interim results of this program. An important component of
    recruiting centers on early and accurate identification of individuals
    with criminal arrest histories. We are exploring ways to improve access
    to offense records, including juvenile offense records, at the least
    cost.
        The events of September 11, 2001, have shown that there is enormous
    interest by Americans wanting to serve the country in some capacity.
    Many proposals on various ways for people to serve through national or
    community service are now surfacing, including proposals for men and
    women to join the military for short-term periods. In particular, a
    bill entitled the ``Call to Service Act of 2001'' focuses on a myriad
    of programs designed to promote and expand service to country. One
    section of the bill would offer an $18,000 bonus to young people who
    serve 18 months on active duty followed by 18 months in the Selected
    Reserve.
        While we applaud the idea of giving more Americans the opportunity
    for military service, we must balance the effect of this kind of
    program with other enlistment incentives and the needs of the services.
    For example, some new recruits receive enlistment bonuses because they
    possess critical skills needed in the military. Typically, these
    bonuses average about $6,000. A few enlistees will receive bonuses
    approaching $18,000, but only if they enlist in critical skills for at
    least 4, but normally 6 years. I hope the committee will carefully
    consider any short-term enlistment proposals in the context of overall
    manning policy, lest they undercut the continuing success of the
    volunteer force.
    Recruiter Access to High Schools
        As the services reduced their size by one-third over the past
    decade, fewer citizens were exposed to the military; therefore, many of
    those best able to advise youth about post-high school options--
    teachers, counselors, coaches, parents--have little first-hand
    experience with today's military. Those adult influencers may
    underestimate the military's value as a powerful foundation for success
    in any endeavor. This reinforces the need for access to high school
    campuses and student directory information by professional military
    recruiters. This committee has recently urged greater cooperation
    between those high schools and military recruiters, for which we are
    grateful.
        The National Defense Authorization Act for Fiscal Year 2000
    requires that high schools allow military recruiters the same degree of
    access to students that is provided to universities generally, or to
    other employers. Failing such cooperation, the law asks that a senior
    officer (e.g., colonel or Navy captain) visit the school. If the
    problem is not resolved within 2 months, the Department notifies the
    State Governor, and for problems unresolved within 1 year, the
    Department notifies Congress of any schools which continue to deny
    campus access or directory information to at least two services. The
    expectation is that each public official learning of a problem would
    work with the offending school to resolve it.
        In the National Defense Authorization Act for Fiscal Year 2002,
    Congress further strengthened the language requiring schools to provide
    access to students equal to that afforded other potential employers,
    and mandated that schools provide student directory information to
    military recruiters unless the parent or student has denied such
    release in writing. We appreciate this clarifying language, and believe
    it will significantly improve our ability to work with many of the
    schools which currently deny access.
        Shortly following enactment of the October 2000 statute, the
    Department began development of a national database that allows
    military recruiters to document the recruiter access policies of local
    high schools. Preliminary data suggest that between 2,000 and 3,000
    secondary schools nationwide (about 10 to 15 percent of all high
    schools) ultimately will be identified as ``problem'' schools under the
    definitions set forth in current law.
        The services now are preparing to undertake visits by the colonels
    and captains and look forward to productive discussions with local
    educators to identify ways to meet the expectations set forth by
    Congress. However, given the large number of schools which we expect
    may continue to deny appropriate access, the services are concerned
    about their ability to make a sufficient number of such senior officers
    available within the specified time frame. We are considering a request
    for the fiscal year 2004 legislative cycle which would reduce the rank
    of the visiting officer to a field grade (i.e. major, lieutenant
    commander or above) so that the services could carry out the spirit of
    this legislation in a more timely manner, with less burden on their
    limited recruiting resources.
    Recruiting Outlook
        We do not expect the competitive recruiting market to ease. We must
    equip recruiters to succeed in the challenging and changing market
    which includes fewer influencers familiar with the military, and more
    college-oriented students.
    Retention
        While bringing quality people into the force is the essential first
    step, equally important in maintaining a healthy military is retaining
    the appropriate numbers of people in the right skill areas. As with the
    recruiting environment, retention in recent years has been extremely
    challenging. However, Congress' and the Department's investment in
    retaining quality people yielded promising results in fiscal year 2001.
        For the enlisted force, the Army, Navy, and Marine Corps all
    achieved desired levels of aggregate retention. The Air Force missed
    its aggregate retention goal by approximately 1,700 airmen; however, it
    did meet first term retention goals for the first time in 3 years and
    held steady on second term retention. The improved results for all
    services are due in large part to strong service retention programs,
    including monetary and non-monetary incentives to encourage enlisted
    members to stay in the force.
        The enlisted retention outlook for fiscal year 2002 is promising.
    The Army, Navy, and the Marine Corps exceed or are close to their
    specific retention goals and will likely achieve aggregate annual
    retention goals. Air Force retention data are not available at this
    time, but the Air Force has robust monetary and non-monetary retention
    programs in place and expects to see improved retention this fiscal
    year.
        Overall enlisted retention trends are promising, but despite
    success in meeting the numeric goals, shortages in a number of
    technical enlisted specialties persist in all services. Shortage skills
    include communications/computer specialists, aviation maintainers,
    information technology specialists, electronics technicians,
    intelligence linguists, and air traffic controllers.
        Retention challenges exist within the officer ranks as well.
    Officer retention challenges from fiscal year 2001 that are expected to
    continue into fiscal year 2002 include primarily those career fields
    whose technical and scientific skills are easily transferable to the
    private sector. We are hopeful that the Critical Skills Retention Bonus
    (CSRB) Program, enacted by Congress in the Fiscal Year 2001 Defense
    Authorization Act, will improve retention in targeted critical skills.
    The first service to submit a proposed CSRB program for approval is the
    Air Force. It has identified officers holding skills as Developmental
    Engineers, Scientific/Research Specialists, Acquisition Program
    Managers, Communication-Information Systems Officers, and Civil
    Engineers as those who would be eligible for retention bonuses upon
    completion of their initial active duty service obligations.
    Education Benefits
        In the Fiscal Year 2002 NDAA, Congress authorized two new programs
    designed to promote reenlistments and extensions in critical
    specialties--Montgomery GI Bill (MGIB) Transferability and an education
    savings bond plan. Neither of these programs came with additional
    appropriations nor are funds included in current service budgets or
    programs. Nonetheless, we welcome the opportunity to explore the
    viability and usefulness of the programs and are currently discussing
    how best to implement them.
    Compensation
        While bonuses and benefits are necessary tools, competitive pay for
    all personnel continues to be among the key components in our efforts
    to attract and retain top quality, highly skilled men and women. In
    addition to basic pay, compensation includes all pays and allowances,
    such as housing and subsistence allowances, and special and incentive
    pays. We are grateful to Congress for its work in improving each of
    these areas, especially during the last fiscal year. The largest
    military pay raise in 20 years and significant progress in reducing
    out-of-pocket housing costs for service members and their families send
    a clear signal that our Nation values the courage and sacrifice
    required of military service.
        Over half of today's service members in grades E-5 and above have
    at least some college, while over 20 percent of personnel in grades E-8
    and above have college degrees, based on a DOD survey. Private sector
    pay for individuals with some college falls above military pay scales
    at many points. We therefore applaud Congress' direction on the fiscal
    year 2002 pay raise to target additional raises for NCOs, as well as
    mid-level officers, greater than required by law.
        In addition to maintaining efforts to achieve competitive pay
    tables, the Department recommends continuing to increase military
    housing allowances significantly, with the goal of eliminating average
    out-of-pocket costs by 2005. Building on the current year's increases,
    the fiscal year 2003 budget requests further improvements in the
    allowance, reducing the average out-of-pocket costs from 11.3 percent
    to 7.5 percent. Understandably, service members view the housing
    allowance as one of the key elements of their total compensation
    package. Therefore, the Department has worked tirelessly to improve its
    data collection to ensure the allowance accurately reflects the housing
    markets where service members and their families reside.
        In concert with Congress' effort to address the issue of service
    members on food stamps, the Department is continuing to monitor
    aggressively the Family Subsistence Supplemental Allowance (FSSA)
    program, which was implemented in May 2001. The number of military
    personnel on food stamps has steadily decreased from 19,400 (9 tenths
    of 1 percent of the force) in 1991 to an estimated 4,200 (3 tenths of 1
    percent of the force) in 2001. In 2002, with FSSA in place, we
    anticipate the number of members on food stamps will be reduced to
    2,100 (1.5 tenths of 1 percent of the force). We expect this reduction
    to occur both because of the large fiscal year 2002 pay raise, and also
    because most FSSA-eligible members will choose to take the allowance.
    Currently, approximately 2,500 service members are FSSA eligible.
        Although it would be ideal if no service member had to rely on the
    use of food stamps, 100 percent participation by those individuals in
    FSSA may not be achievable. FSSA participation has a detrimental effect
    on eligibility for other income-based social aid programs. For example,
    when a member starts receiving FSSA, the additional monthly income may
    render the family's children ineligible for the Free and Reduced School
    Lunch Program. Additionally, for some, there remains a stigma attached
    to admitting to the chain of command the need for more money. A FSSA
    website has been established to educate personnel and address their
    concerns, and each service has trained personnel available to offer
    personal assistance.
        Since Operation Enduring Freedom resulted in service members moving
    into new operational areas and settings, the Department has been
    aggressively addressing their compensation needs. Military personnel in
    Afghanistan, Kyrgykzstan, Jordan, Pakistan, Tajikistan, Uzbekistan, and
    those serving at Incirlik AB, Turkey in direct support of operations in
    Afghanistan receive Combat Zone Tax Benefits. Members in these
    countries also receive $150 per month in Imminent Danger Pay.
    Additionally, these individuals qualify for Hardship Duty Pay-Location
    at the rate of $50 or $100 per month, depending on conditions in their
    particular location. Deployed members are housed in Government-provided
    quarters and generally continue to receive the housing allowance
    applicable to their home station. Their food is paid for out of the
    subsistence portion of their per diem allowance, so they retain their
    full Basic Allowance for Subsistence. As an example, a typical E-6,
    married with two children, serving in Afghanistan will see a positive
    difference of nearly $600 per month compared with a continental United
    States (CONUS) station. The Department is committed to ensuring service
    members and their families are cared for through appropriate
    compensation while the members are deployed serving their country in
    dangerous locations.
        Like Congress, the Department is concerned with the cost
    effectiveness of multiple entitlement systems to compensate former
    members who incur disabilities while serving in the Armed Forces. At a
    minimum, there are some issues of consistency among selected
    individuals in different circumstances relative to their post-military
    employment. Therefore, the Department intends to review the issues and
    report to Congress as to whether changes are appropriate.
        In fiscal year 2002, in addition to the pay and allowance
    increases, the Department implemented a new authority provided by
    Congress to allow the uniformed forces to participate in the Thrift
    Savings Plan (TSP). This opportunity represents a major initiative to
    improve the quality of life for our service members and their families,
    as well as becoming an important tool in our retention efforts. In its
    first 3 months of operation, TSP attracted nearly 133,000 enrollees.
    The Department estimated that 10 percent of service members would
    enroll in the first year. Given the initial success, we now expect to
    exceed those figures.
        Overall, military compensation has made great strides in the last
    year, with several continued improvements on the way. We appreciate
    these significant actions by Congress, acknowledging the sacrifices and
    dedication of our uniformed personnel.
    Human Resource Strategy
        The continuing challenges in recruiting and retention underscore
    the need to reexamine virtually every aspect of personnel management
    policies. In its transformation, the Department is developing a
    comprehensive mix of policies, programs, and legislation to ensure that
    the right number of personnel have the requisite skills and abilities
    to execute assigned missions effectively.
        The theme evident in my comments here today is the tremendous and
    continuing challenge the Department of Defense faces in maintaining the
    military force necessary to meet the demands of our Nation's defense.
    The Department of Defense must recruit, train, and retain people with
    the broad skills and good judgment needed to address the dynamic
    challenges of the 21st century, and we must do this in a competitive
    human capital environment. Last year, the Secretary of Defense called
    for a comprehensive human resources strategic plan that will recommend
    the best mix of policies, programs, and legislation to ensure that the
    right number of military personnel have the requisite skills and
    abilities to execute assigned missions effectively and efficiently.
        The need for a military human resource strategy has never been
    stronger. Our military personnel human resource strategic plan sets the
    military personnel legislative and policy priorities for the Department
    of Defense for the next several years. The plan details objectives,
    supporting actions, and measures of effectiveness within defined lines
    of operation. It assigns tasks, establishes milestones, identifies
    resource requirements and facilitates synergy of a wide range of
    military personnel issues. This plan is a living document intended to
    serve as a planning reference and management tool for Department of
    Defense military human resource managers. Under continuous assessment
    and refinement, this plan will serve as the focal point for all ongoing
    and future military personnel legislative and policy efforts.
        Our military human resource strategic plan has five focus areas:
    (1) increasing America's understanding of the mission of today's
    military and its importance to the Nation; (2) recruiting the right
    number and quality of people; (3) developing, sustaining and retaining
    the force; (4) transitioning members from active service; and (5)
    sustaining the strategic development process to keep the plan current
    and viable.
        The plan will examine some challenging matters, including
    possibilities such as removing the cap on career length, expanding
    entry programs, and enabling a seamless flow from Reserve components to
    active duty and return. These initiatives and others like them will
    provide the Department of Defense the flexibility to more efficiently
    manage our personnel assets.
        While our Armed Forces have long protected our country's interests
    abroad from installations around the globe, we now face an increased
    requirement to support the national defense from within our own
    borders. As we adapt our operations to this changing environment, so
    must we prepare our people to adapt for new missions. Toward that end,
    our human resource strategic plan will prove to be our guide.
    Training Transformation
        Our military services have long been recognized as world-class
    trainers--arguably one of the United States' greatest advantages over
    potential adversaries. It is our goal to maintain that advantage in the
    future. Present training methods and capabilities, however, are built
    around Cold War strategies.
        The 2001 Quadrennial Defense Review recognized that training
    transformation would be the key enabler to achieving the operational
    goals of the overarching transformation of the Department of Defense.
    Among the principal determinants of that transformation are a new and
    continuously changing threat environment, the need for improved and
    expanded ``jointness,'' and the opportunities offered by advanced
    technologies. As Secretary Rumsfeld has noted, ``achieving jointness in
    wartime requires building that jointness in peacetime. We need to train
    like we fight and fight like we train and, too often, we don't.''
    Managing Time Away From Home (Personnel TEMPO)
        Deployments are part of military life and could well increase as
    the war on terrorism unfolds. We are fully aware, however, of the
    effects of excessive time away from home on the morale, quality of life
    and ultimately, the readiness of service members. Consequently, we have
    implemented revised personnel tempo (PERSTEMPO) guidance and we are
    working to control explicitly the amount of time DOD personnel are
    deployed away from home station or stationed outside the U.S. The
    services began collecting data under the revised PERSTEMPO system in
    fiscal year 2001. This new system, and the data collected, is
    undergoing a validation and verification process by the services, and
    it is anticipated that the new system will be fully implemented by the
    end of fiscal year 2002. The new system will standardize definitions
    requiring that PERSTEMPO be measured at the individual level and that a
    ``deployed day'' be a day when, in the performance of official duties
    (training, operations, or Temporary Additional Duty) an individual does
    not return to his or her regular billeting area at his or her permanent
    duty station. This new system will contribute significantly to the
    Department's efforts to assess and mitigate force management risk.
                                quality of life
        President Bush, in one of his first actions last year, issued a
    National Security Presidential Directive to improve military quality of
    life. Secretary Rumsfeld reiterated the President's commitment, stating
    that the Department must forge a new social compact with its
    warfighters and those who support them--one that honors their service,
    understands their needs, and encourages them to make national defense a
    lifelong career. The demographic changes in today's military--60
    percent of troops have family responsibilities--foster the need for
    such a new social contract that promotes a strong military community
    and culture. The Department has undertaken a comprehensive and
    systematic review of quality of life programs, and charted a course for
    the future.
        The partnership between the American people and our warfighters is
    built on the tacit agreement that families, as well as the member,
    contribute to the readiness and strength of the American military.
    Military members and their families make sacrifices in the service of
    our country and face special challenges. A new social compact must
    recognize the reciprocal ties that bind service members, the military
    mission and families, and responds to their quality of life needs as
    individuals and as members of a larger community. The Department has
    made a renewed commitment to underwrite family support programs and to
    provide quality education and life-long learning opportunities.
    Affordable, available child care and youth activities, connections with
    family and friends, and spouse employment within the mobile military
    lifestyle must also be part of the equation.
    Family Support and Spouse Employment
        There is an integral link between military family readiness and
    total force readiness. We are re-focusing family support programs to
    address the two-thirds of active duty families who live off-base, and
    our Reserve families. We envision an outreach strategy that will
    explicitly articulate to service members and their families just how
    important they are. To better underwrite our support to families, the
    President's budget request increases funding for family centers by 8.5
    percent or $17 million.
        The DOD successfully demonstrated this strategy in the aftermath of
    the September 11 terrorist attack on the Pentagon. The entire
    Department joined efforts to establish a Pentagon Family Assistance
    Center (PFAC). We provided unprecedented outreach support to the
    families of the victims who were killed or injured in the attack.
    Personnel from DOD, joint military service staffs, and Government and
    non-Government agencies worked in concert to provide the necessary
    support services, information, and care to meet the immediate and long-
    term needs of the families. Over 2,400 staff and volunteers donated
    their time and services to the mission.
        To support the families of military personnel involved in Operation
    Enduring Freedom, the military departments activated long-standing
    deployment support programs including information and referral, crisis
    intervention, and return and reunion programs. We paid particular
    attention to communications programs such as Air Force Crossroads, Navy
    LifeLines, Virtual Army Community Service, Hearts Apart, morale calls,
    e-mail, and Web-based streaming video. The Reserve components
    established toll-free numbers for family members of National Guard and
    Reserve units. In addition, the Air Force Reserve made child care
    available to reservists and their families.
        An essential element of the quality of life framework is improving
    the financial stability of our military families. For this reason, we
    are embarking on a financial literacy campaign that includes improving
    personal and family financial training. As with most of America's young
    adults, those entering the military have little understanding of the
    basic tenets of personal financial management and little to no
    practical experience managing their own money. As a consequence, they
    often develop poor financial management habits and many become burdened
    with credit card debt. The military services recognize the need to
    increase the amount of training and assistance provided to service
    members and their families to ensure they can sustain a financially
    secure quality of life.
        At the same time, DOD underscored its commitment to the financial
    well-being of military families through increased emphasis on spouse
    employment. The 2002 NDAA directed DOD to examine its spouse employment
    programs in the context of Federal, State, and private sector programs.
    We welcome this instruction from Congress and the opportunity to create
    new benchmarks for our programs, while continuing to enhance the career
    options of military spouses through inter-department and private sector
    partnerships.
    Child Care and Youth
        Providing quality, affordable child care to the Total Force remains
    a high priority throughout the Department of Defense. The President's
    fiscal year 2003 budget request increases the child care funding by $27
    million, or 7 percent. Although we have child development programs at
    over 300 locations with 800 child development centers and over 9,000
    family child care homes, we still project a need for an additional
    45,000 spaces. We continue to pursue an aggressive expansion program
    through a balanced delivery system that combines center construction,
    an increased number of family child care homes, and partnerships with
    local communities. We are providing family child care both on and off
    the installation, encouraged by subsidies. Since 99.7 percent of DOD
    centers have been accredited, compared with less than 10 percent in the
    civilian sector, the military child development remains a model for the
    Nation.
        In support of the war effort, we expanded operating hours and
    developed innovative co-use practices among child development programs.
    Locations offered around-the-clock care, as necessary. Many reacted to
    the needs of geographically single parents by offering special
    operating hours and instituting projects for children to communicate
    with the absent parent.
        Teens also feel the impact of the pressures of the war. In the
    youth centers, we have added staff with special counseling skills to
    work with young people whose parent might be deployed for the first
    time. Teens received mentoring when parents worked extremely long duty
    days.
        The military community has made a strong commitment to provide
    positive activities and environments for youth. The computer centers,
    available in all youth programs, offer a means for young teens to
    communicate electronically with an absent parent. Tutors are available
    at the centers to help students complete school homework assignments in
    a supervised setting. This decreases the amount of unsupervised time,
    and increases the opportunities for relationships with caring adults.
    Educational Opportunities
        With the support of Congress, last year DOD provided $35 million to
    heavily impacted school districts serving military dependent students
    and an additional $10.5 million in grants to be used for repair and
    renovation of school buildings.
        The Department is actively working with public school districts and
    state education authorities to lessen the displacement and trauma
    experienced by children of military personnel who are forced to change
    schools frequently due to the reassignment of military members. Within
    the last 2 years we have brought together over 300 students, parents,
    military leaders, school personnel, and state policy makers to help
    address and give visibility to these issues which affect about 600,000
    children of active duty military personnel.
        In the area of educational opportunities for our service members,
    participation in the off-duty education program remains strong with
    enrollment in over 600,000 courses last year. Members were also awarded
    30,000 higher education degrees by hundreds of colleges and
    universities. This is an important benefit that service members say is
    part of their reason for joining. Tuition assistance policies are in
    place to increase support for off-duty education. Effective October 1,
    2002, tuition assistance for service members will increase to the point
    where virtually all of the cost of taking college courses will be borne
    by the Department. The services have increased funding by $69 million
    to implement the new authority.
    Troops to Teachers
        The Troops-to-Teachers Program has successfully injected the
    talents, skills, and experiences of military service members into
    public education. The program was recently expanded to include Selected
    Reserve members with 10 or more years of service as well as Reserve
    retirees with 20 or more years of service. Both the President and the
    First Lady have expressed support for Troops-to-Teachers and talked
    about the critical need for highly competent individuals to counter
    America's critical shortage of teachers. More than 4,000 participants
    have been hired to teach throughout all 50 States, and 70 percent of
    teachers hired through the program are still in public education after
    5 years. The Department has helped establish and financially support
    placement assistance offices in 25 States. The recent congressional
    appropriation of $18 million for this program will enable the
    Department to again award stipends to help former service members
    offset the cost of becoming certified and employed as elementary and
    secondary school teachers. This injects the best military leadership
    qualities into the American school systems.
    Department of Defense Education Activity
        The Department has a school system to be proud of, and we continue
    to address quality issues in the areas of curriculum, staffing,
    facilites, safety, security, and technology. Our dependent schools
    comprise two educational systems providing quality pre-kindergarten
    through 12th grade programs: the DOD Domestic Dependent Elementary and
    Secondary Schools (DDESS) for dependents in locations within the United
    States and its territories, possessions, and commonwealths, and the DOD
    Dependents Schools (DODDS) for dependents residing overseas. Today
    approximately 8,800 teachers and other instructional personnel serve
    more than 111,000 students in 224 schools. They are located in 14
    foreign countries, 7 States, Guam, and Puerto Rico. Students include
    both military and civilian Federal employee dependents.
        The quality of DOD schools is measured in many ways, but most
    importantly, as in other school systems, by student performance. DOD
    students regularly score significantly above the national average in
    every subject area at every grade level on nationally standardized
    tests.
        In addition, students participate in the National Assessment of
    Educational Process (NAEP) tests. NAEP is known as ``the Nation's
    Report Card'' because it is the only instrument that permits a direct
    comparison of student performance between student groups across the
    country. DODEA students, and in particular its African-American and
    Hispanic students, score exceptionally well on this test, often
    achieving a first or second place national rank. This outstanding
    performance led the National Education Goals Panel to commission
    Vanderbilt University to study the instructional program, teaching, and
    other aspects of DODEA schooling to identify the variables that
    contribute to the students' success. The findings, which were published
    in October 2001, received extensive national coverage.
        DODEA's 2001 graduates were awarded nearly $28 million in
    scholarship and grant monies; 29 percent was for attendance at military
    academies and 31 percent for ROTC scholarships. Graduates in 2001
    reported plans to attend 762 different colleges and universities
    worldwide.
        To meet the challenge of the increasing competition for teachers,
    DOD has an aggressive U.S. recruitment program. The program emphasizes
    diversity and quality, and focuses on placing eligible military family
    members as teachers in its schools.
    Domestic Violence
        I am pleased to report that the Department continues to make
    significant progress in dealing with the issue of domestic violence in
    our military communities. The Department reviewed the first report and
    strategic plan of the Defense Task Force on Domestic Violence and
    anticipates receipt of the task force's second report. The Department
    fully supports the majority of the task force's recommendations. We are
    revising DOD policy to incorporate these recommendations.
        The task force's primary recommendation was that the Department
    issue a memorandum challenging DOD senior leadership to ensure that DOD
    does not tolerate domestic violence and to address this national social
    problem more aggressively. We have issued such a memorandum. We have
    also established the basis for a central data base that tracks
    incidents of domestic violence in the military community and
    commanders' actions when the offender is a service member. We continue
    to refine the database.
        We are confident that, working together with the task force, we
    will continue to make significant progress in our prevention of and
    response to domestic violence in the military.
    Morale, Welfare, and Recreation (MWR)
        Morale, Welfare, and Recreation programs are proven to be important
    to military communities, providing fitness and recreational
    opportunities for service members and their families. The 469 fitness
    centers in DOD have the highest use rate of any MWR program, with 80
    percent of active duty military using them at least once monthly, and
    52 percent using them 6 times or more per month. The Department views
    improving fitness programs as a high priority, not only due to their
    popularity, but also because of their importance to the maintenance of
    a service member's physical readiness. Physical fitness is critical to
    providing forces that are more resistant to illness, less prone to
    injury and the influence of stress, and better able to recover quickly
    should illness or injury occur. Our fitness specialists are working
    with health promotion and physical training specialists to make this
    vision a reality. To accomplish this, the fitness center infrastructure
    will require upgrade to bring them to acceptable standards.
    Commissaries and Military Exchanges
        Military members and their families consider their commissary
    privilege to be one of their top two non-cash benefits, second only to
    health care. The Defense Commissary Agency (DeCA) operates the
    worldwide system of 281 commissaries. DeCA provides a 30 percent
    savings on comparable market baskets in the private sector. Beginning
    in fiscal year 2002, legislative authority permits funding of most DeCA
    operations from appropriations, thereby leaving the Surcharge Trust
    Fund available for capital investment. As a result of this change, the
    fiscal year 2002 major construction program contains 10 commissary
    projects at a total surcharge cost of $98 million--a significant
    increase from prior years.
        We are looking at various ways to reduce the appropriated fund
    subsidy to commissaries. We want to improve how the benefit is
    delivered, with the objective being to obtain the same benefit at
    reduced cost to the taxpayer. We will work closely with the
    congressional oversight committees as we explore this issue.
        Military exchanges also form a significant portion of the community
    support program. They are the ``home town store'' for our service
    members and families assigned stateside, overseas, in remote locations
    and to deployment sites around the world--including 16 tactical field
    exchanges supporting Operation Enduring Freedom. It is important to
    troops and families stationed around the globe to have American goods
    and services. Being a long way from home should not mean giving up what
    is familiar and what adds comfort to often difficult lifestyles.
    Today's exchanges operate at 694 locations worldwide, with annual sales
    of $10 billion.
        Exchanges offer quality goods at significant savings, and then pass
    the majority of their profits back to the MWR program to support
    essential, morale-building programs and to make capital improvements.
    Our practice of using exchange earnings to support MWR programs is well
    established; the exchanges provide over $330 million annually.
        The Department is taking a very close look at the exchange business
    practices and organizations to maximize efficiencies and improve
    customer service and savings. We are looking closely at the services'
    plans to ensure that the alternatives pursued reduce costs while
    improving customer service, ensuring competitive pricing and continued
    support for MWR.
        Finally, as part of the new social compact with service members, we
    will better define, measure, and communicate the savings and services
    provided to DOD personnel by the commissaries and exchanges.
    Military Funeral Honors
        Since the signing of the National Defense Authorization Act for
    Fiscal Year 2000, the Department has worked tirelessly to ensure that
    our Nation's veterans receive military funeral honors. It is our
    national obligation to demonstrate the Nation's gratitude to those who,
    in times of war and peace, have faithfully defended our country. The
    rendering of a final tribute and recognition to our Nation's veterans
    is an important tradition in the Department of Defense. Faced with one
    of the largest active and Reserve military drawdowns in history, and
    the increasing numbers of World War II-era veterans' deaths, this has
    been a challenging mission, but one to which we remain committed.
        Our recent policy directive clearly delineates the military
    services' responsibility to provide military funeral honors upon
    request. Additionally, we distributed a military funeral honors kit to
    every funeral director in the country and activated a military funeral
    honors web site. Each has significantly enhanced the ability of the
    military services to respond to requests.
        Recently, we initiated another program called the Authorized
    Provider Partnership Program. This program allows us to partner with
    members of veterans service and other appropriate organizations to
    augment the funeral honor detail. The program will enhance our ability
    to provide additional elements to the funeral ceremony. The Authorized
    Provider Partnership Program symbolizes the continuity of respect for
    deceased veterans for those who are serving and those who have served
    in the Armed Forces. Our overall and sustained goal remains the same:
    to render appropriate tribute to our Nation's veterans and honor those
    who serve.
                            total force integration
        On September 11, the response of our National Guard and Reserve men
    and women was both quick and complete. They volunteered and responded
    to the Nation's needs without hesitation. Many reported to their
    armories and Reserve Centers without being asked. Before the fireball
    disappeared from above the Pentagon, Air National Guardsmen and Air
    Force, Navy, and Marine reservists were patrolling the skies over
    Washington DC, New York, and several other American cities. At the same
    time New York guardsmen were on the streets of lower Manhattan
    assisting New York emergency service workers. Maryland, Virginia, and
    District of Columbia guardsmen were patrolling the hallways and
    exterior of the still burning Pentagon on September 11. By the next
    morning over 6,000 guardsmen and reservist were on duty--all
    volunteers.
        Today, we have over 85,000 National Guard and Reserve men and women
    supporting Operations Noble Eagle and Enduring Freedom. They are
    performing force protection and security duties here in the United
    States, flying refueling missions over central Asia, and are on the
    ground in Afghanistan. At the President's request, about 7,000 Army and
    Air National Guardsmen are protecting our airports.
        The Total Force policy and our integration efforts of the past
    decade are paying great rewards today. On no notice, America's National
    Guard and Reserve were ``ready to roll.'' Their enthusiasm for the
    mission remains high. They are in it for the long haul. We are
    judiciously managing the force to ensure fair and equitable treatment
    of our Reserve component members, but the bottom line is they are
    committed and capable warriors in the war on terrorism.
        When we call upon the Guard and Reserve, we need to make sure their
    service is productive and meaningful, and that we make every effort to
    take care of them and their families. With the help of Congress, there
    have been many improvements in protections and benefits for mobilized
    reservists and their families since the Persian Gulf War.
        Yet there is more we can and need to do. The transition to a
    different healthcare system is sometimes not as smooth as we would
    like. To help ease that transition, the Department has undertaken a
    demonstration project that: (1) waives the TRICARE deductible fees, (2)
    removes the requirement to obtain a non-availability statement before
    being treated outside military medical treatment facilities, and (3)
    authorizes healthcare payments up to 15 percent above the allowable
    charges for care provided for non-participating TRICARE providers.
        We have also encouraged the secretaries of the military departments
    to exempt the service performed by those who volunteer for duty in
    support of Operations Enduring Freedom and Noble Eagle from counting
    toward the Uniformed Services Employment and Reemployment Rights Act 5-
    year limit.
        We also recognize that the process for employing Reserve component
    members, given the wide array of different duty categories and statuses
    in which they can serve, is unnecessarily complex and confusing. We
    have undertaken a comprehensive review to determine if greater
    efficiencies and increased flexibilities are possible in the process of
    employing National Guard and Reserve units and individuals. Associated
    compensation and benefits are also being addressed to identify and
    eliminate disparities between the Active and Reserve components.
        The increased reliance on the Reserve components to support
    national security directly affects the civilian employers of Guard and
    Reserve members. The Reserve commitment is no longer one weekend a
    month and 2 weeks during the summer--which was the traditional training
    regimen for the Reserve components. We have now established a new
    paradigm in which we call upon reservists to leave their civilian jobs
    more frequently to perform military duty. This comes at a time when
    businesses are streamlining their workforce and are relying on their
    reservist-employees to be in the civilian workplace. This places a
    burden on civilian employers who must sustain their business operations
    with few employees, while their reservist-employees are fulfilling
    their military obligation and performing their military duties. From an
    employer perspective, this affects their bottom line. Whether a for-
    profit company or not-for-profit organization, the affect of drawing on
    their employees to serve in uniform is essentially the same for all
    employers. The employer must make difficult decisions such as
    redistributing the workload among other employees (overtime), hiring
    temporary replacements (additional payroll expense), or reducing
    production or services (reduced profit or decreased services provided).
        If the Department is to continue to call upon these shared human
    resources, we must determine what actions the Department can take to
    identify employers of Reserve component members. We must increase our
    focus on employer support efforts, improve communications between the
    Department and employers, identify future actions that will provide
    some relief for employers when we call upon their reservist-employees,
    and strengthen the relationship between the Department and employers
    that will enable us to continue to use our shared employees.
        Finally, the Secretary's call for transformation of the Department
    has offered new opportunities to look for innovative uses for the
    Reserve components. One area we are exploring is the growing shortage
    of cutting edge professionals in key areas such as biometrics and
    information technology that exists worldwide. One possibility might be
    to attract and retain individuals with cutting edge civilian skills in
    the Reserve components. Civilian industry would keep their skill sharp,
    yet they would be available when we needed them--putting the right
    person with the right skill in the right place at the right time. This
    may require building on or expanding some existing programs to better
    capitalize on civilian acquired skills; encouraging innovative forms of
    Reserve component participation such as virtual duty or remote duty;
    creating new ``critical specialty'' categories of Reserves that are
    incubators for new and emerging talent pools rather than way stations
    where reservists are managed; and identifying innovative ways to foster
    partnerships with leading edge firms in which we could share
    individuals with cutting-edge technology skills.
        There is an increased awareness of Reserve component equipment
    issues. The fiscal year 2003 budget request includes $2.34 billion in
    equipment procurement funding for the Reserve components, representing
    an increase of $680 million above the fiscal year 2002 President's
    budget. The fiscal year 2003 budget demonstrates a concerted effort by
    the Department to apply more resources for the Reserve components'
    equipping needs and to buy down the increased repair costs caused by
    aging equipment currently in the inventory.
        The fiscal year 2003 military construction investment for all
    Reserve components is $297 million. The President's budget request
    would provide new Armed Forces Reserve Centers, vehicle maintenance
    facilities, organizational maintenance shops, training and
    administrative facilities for the Reserve components. These new
    facilities begin to address the needed replacement of the Reserve
    components' infrastructure. The fiscal year 2003 budget provides a good
    start toward improving the quality of life for the Guard and Reserve by
    improving where they work and train.
                               civilian workforce
        The work of defense civilians has never been more crucial than now
    in our war on terrorism. Civilians develop policy, provide
    intelligence, buy and maintain weapons, manage finances, and assure
    that we have the best people and technology to perform those tasks in
    support of our national defense strategy. This frees service members to
    focus on warfighting duties and homeland defense and assures them of
    close and complete support. A strategic and modernized approach to the
    management of civilians is the cornerstone of these efforts.
        However, 12 years of downsizing and changes in the Department's
    mission have resulted in skill and age imbalances in the civilian
    workforce. Skills that were appropriate to yesterday's mission do not
    always support the demands of today. The average age of the civilian
    workforce has increased since 1998 from 41 years of age to 46. In that
    time, the percentage of employees in the 51-60 age group has increased
    by 31 percent. It's not surprising that 54 percent of the workforce
    will be eligible to retire in 5 years.
        Some have expressed concern that the combination of the pending
    retirements and the need for ever more sophisticated skills will result
    in a shortfall in critical personnel, particularly scientists,
    engineers, health care professionals, and acquisition employees. We
    view this not as a crisis but as an opportunity to restructure the
    workforce to support the Secretary's transformation of the Department.
        The challenge is to manage the transition of civilians out of the
    workforce, to recruit the needed talent, and to develop, nurture, and
    sustain the remaining workforce in a way that supports the
    transformational requirements of our defense strategy.
        Despite the large number of employees eligible to retire soon, many
    are eligible only for early retirements that require management action.
    Of the remaining employees who will be eligible for optional
    retirement, recent trends indicate that many will not retire in the
    first few years of their eligibility. Therefore, we will continue to
    need flexibility to release some employees with skills we no longer
    need before they might otherwise choose to leave.
        Recruiting employees with scarce technical skills puts us in direct
    competition with the private sector despite a softened economy. We
    acknowledge that in the recent past public service has not been
    attractive to the population we seek although we believe that there has
    been some change in that attitude since September 11. We also recognize
    that the perception of Government as a stable employer is not what it
    was before downsizing, and that the potential for future base closures
    affects the attitudes of applicants as well as current employees.
        Sometimes the talent we need already exists in our workforce and we
    need to be willing to invest in the development, training, and even re-
    training, of our employees, while also providing them with a high
    quality of life that will encourage them to remain with us.
        We have been aware for some time that the existing rules for
    managing the civilian workforce are not sufficient to meet the new
    challenges. The old rules were designed to provide necessary
    standardization and equity. Now we need to balance those with
    flexibility. During the difficult days following the terrorist attacks
    we were increasingly aware of the gap between the authorities we had
    and our need to respond quickly and decisively.
        There have been successes in working within the current system.
    Demonstration projects have shown positive results from experiments
    outside the old rules. However, simply increasing the number of
    demonstration projects rather than addressing the rules themselves is
    not the answer.
        Individual pieces of legislation enacted last year gave us some
    flexibility within the current system and legislation under
    consideration for next year could give us more. We intend to make good
    use of authority to expedite hiring, modernize compensation, pay for
    degrees, repay student loans, interact with industry, and provide
    scholarships for information technology. We will also continue our
    executive development through a restructured Defense Leadership and
    Management Program.
        To respond in a more comprehensive way, we have developed a
    strategic human resources plan that we believe will meet the challenges
    we face and will provide a unified framework for our efforts. This
    plan: promotes focused, well-funded recruiting to hire the best talent
    available; describes a human resources system that ensures the
    readiness of the integrated force structure; commits to promoting and
    sustaining an effective workforce that reflects the diversity of the
    American population; recommends investment in human capital; provides
    management systems and tools that support planning and informed
    decision-making; focuses the human resources community on the needs of
    its customers; and promotes work-life balance as an integral part of
    daily operations.
        Additionally, DOD is continuing efforts to improve the academic
    quality and cost-effectiveness of the education and professional
    development provided to its civilian workforce. We are working towards
    obtaining accreditation for all DOD institutions teaching civilians.
    DOD anticipates that eight additional institutions will have gained
    initial accreditation by the end of next year. We are also working
    towards implementing academic quality standards and metrics developed
    last year, as well as a data collection system. These will provide our
    institutions a mechanism for performance benchmarking and will give
    decision-makers accurate and timely information on the quality and
    cost-effectiveness of DOD institutions teaching civilians.
                                  health care
        An essential element of the new social compact is a high-quality,
    affordable, convenient Military Health System (MHS). The 8.3 million
    military beneficiaries supported by the MHS want high quality,
    affordable and convenient healthcare. With the numerous authorizations
    you provided in the National Defense Authorization Act for last year,
    these beneficiaries have begun to receive that kind of healthcare.
    Today, military beneficiaries have a comprehensive and generous
    benefit, a benefit that comprises one more element of the social
    compact we have with our military community.
        The MHS is far more than a benefit, however. This acknowledgement
    crystallized for all of us in the aftermath of the September 11
    terrorist attacks and of the bioterrorist actions involving anthrax.
    The capabilities of this system and its personnel contributed
    indispensably to the care and treatment of survivors and families and
    in assisting other Federal agencies in their responsibilities to
    identify remains as well as to identify and track anthrax samples. Some
    of these efforts continue even now.
    Military Health System Funding
        As we experience a new sense of urgency within the MHS to ensure
    the ability to operate in a contaminated environment, to be alert to
    potential exposures, and to treat casualties, we have budgeted
    realistically for the Defense Health Program (DHP) for fiscal year
    2003. These funds will support key initiatives to enhance chemical and
    biological preparedness and deployment health support systems.
        In the President's budget request for fiscal year 2003, the DHP
    submission is based on realistic estimates of delivering healthcare. It
    includes assumptions for growth rates in both pharmacy (15 percent) and
    private sector health costs (12 percent). Still, we need flexibility to
    manage our resources. We need the ability to make wise decisions that
    result in effective performance. We seek your assistance in making
    permanent the contract management flexibility you provided in the
    National Defense Authorization Act for Fiscal Year 2002 and in
    alleviating the restrictions on moving resources across budget activity
    groups.
        This budget request reflects implementation of accrual financing
    for the healthcare costs of Medicare-eligible beneficiaries, including
    their new TRICARE for Life benefits. This will entail both payments
    into the fund to cover the Government's liability for future healthcare
    costs of current military personnel and receipts from the fund to pay
    for care provided to eligible beneficiaries. Our budget reflects an
    increase to the military services' Military Personnel accounts to cover
    the Department's annual contribution. This alignment ensures
    consistency with the accrual funding for the military retirement
    pension costs under Title 10, chapter 74. We ask your help in modifying
    the language of NDAA 2001 and 2002, which currently direct that the
    Defense Health Program make the annual contribution to the accrual
    fund. It is the Military Personnel accounts that should make these
    payments, and have received increases for this purpose in the fiscal
    year 2003 budget request.
    Priorities for the Military Health System
        Force Health Protection and Medical Readiness
        Even before the events of September 11, the Quadrennial Defense
    Review had concluded that both terrorism and chemical and biological
    weapons would transform the strategic landscape for the Department. The
    terrorist acts of last fall placed us on a war footing and escalated
    the urgency of our need for preparedness. The MHS has underway numerous
    activities to ensure that preparedness, including formation of a high-
    level working group with Department of Health and Human Services
    representatives to improve collaboration on defense against biological
    and chemical terrorism. Deliberations continue on the future of the
    anthrax vaccine immunization program now that we have confidence in an
    assured supply of FDA-approved vaccine. The MHS has also placed renewed
    emphasis on training military healthcare personnel in recognizing
    symptoms of and refreshing treatment plans for exposure to chemical and
    biological agents.
        TRICARE
        This military health program benefit provides an essential and
    interdependent link between medical readiness and everyday healthcare
    delivery. Meeting the force health protection responsibilities of the
    MHS depends upon the success of TRICARE in providing both quality
    healthcare and challenging clinical experiences for military healthcare
    providers. Very important to this success is a stable financial
    environment. The President's fiscal year 2003 budget request for the
    DHP provides that stability.
        TRICARE's success also relies on incorporating best business
    practices into our administration of the program, specifically in
    regard to how our managed care contracts operate. Our new generation of
    contracts will encourage best business practices by the contractors
    without over direction by us. We have listened to the advice on how to
    structure these contracts and we are confident that the design will
    help us to continue providing high quality care. We enter this new
    generation of contracts with a commitment to our beneficiaries to earn
    their satisfaction and to have the minimum disruption possible.
        Implementation of TRICARE for Life has proceeded exceptionally
    well. As in all new program startups, we have experienced problems and
    setbacks. Nevertheless, we aggressively handle each one until we reach
    a satisfactory resolution. Since the October 1, 2001, start date, we
    have processed over four million claims and the overwhelming majority
    of anecdotal information we receive is that our beneficiaries are
    extremely satisfied with TRICARE for Life. They speak very highly of
    the senior pharmacy program as well. This program began April 1, 2001,
    and in these first 9 months of operation, 7.6 million prescriptions
    have been processed, accounting for over $382 million in drug costs.
        Coordination, Communication, and Collaboration
        The MHS has built many strong relationships among other Federal
    agencies--including Congress--professional organizations, contractors,
    and beneficiary and military service associations. These relationships
    facilitated the MHS's ability to respond in the aftermath of the
    terrorist actions of last fall. The MHS role in the new homeland
    security responsibilities will span an array of Federal, State, and
    local agencies and will demand effective cooperation among all
    involved. Our close working relationship with beneficiary associations
    and our contractors can be credited for the smooth implementation of
    TRICARE for Life.
        The MHS collaboration with the Department of Veterans Affairs dates
    back many years and much has been accomplished. Now it is time to
    refresh these collaborative efforts to maximize sharing of health
    resources, to increase efficiency, and to improve access for the
    beneficiaries of both departments. We will accomplish this through the
    VA-DOD Executive Council, where senior healthcare leaders proactively
    address potential areas for further collaboration and resolve obstacles
    to sharing. Healthcare sharing between these two departments became the
    subject of presidential interest when he established a Task Force to
    improve care for the Nation's veterans. Several subject matter experts
    from the MHS work with the Task Force and the Department to provide
    administrative support as well.
        Military Medical Personnel
        The Quadrennial Defense Review directs development of a strategic
    human resource plan to identify the tools necessary to size and shape
    the military force with adequate numbers of high-quality, skilled
    professionals. The MHS depends on clinically competent, highly
    qualified, professionally satisfied military medical personnel. In
    developing the MHS human resource plan, we have begun several
    initiatives to determine retention rates, reasons for staying or
    leaving the service, and what factors would convince one to remain in
    the military. The challenges of military service can be unique and
    tremendously rewarding personally and professionally.
        As the MHS engages in the many initiatives outlined above, it will
    become a stronger, more clearly focused enterprise centered on its
    primary mission responsibilities and have world-renowned stature within
    its reach.
                                   conclusion
        Mr. Chairman, this concludes my statement. I thank you and the
    members of this subcommittee for your outstanding and continuing
    support for the men and women of the Department of Defense. I look
    forward to working with you closely during the coming year.

        Senator Cleland. Thank you, Dr. Chu.
        Mr. Brown.

    STATEMENT OF HON. REGINALD J. BROWN, ASSISTANT SECRETARY OF THE
                 ARMY FOR MANPOWER AND RESERVE AFFAIRS

        Mr. Brown. Thank you, Mr. Chairman and members of the
    subcommittee. I am very pleased to be here today and to render
    testimony. Before doing so, I would like to thank you and your
    subcommittee for the help that you have provided us in enabling
    us to achieve the tremendous personnel successes last year.
        Because of your concern and that of your staff, you
    provided our men and women in uniform and our civilian
    workforce many useful tools. We appreciate the significant pay
    raise, the Thrift Savings Plan, the Montgomery GI Bill
    transferability, and the buy-down of the basic allowance for
    housing for our soldiers and their families, and we also
    appreciate TRICARE for Life and the National Mail Order
    pharmacy for our retirees. You can be assured that all of these
    programs will continue to help increase the overall well-being
    of our force.
        In the aftermath of September 11, the greatly increased
    security requirements here in our homeland and the challenges
    of fighting terrorism have served to emphasize the critical
    importance of Army recruiting. The Army continues to recruit in
    a highly competitive environment. The private and public
    sectors, to include post secondary educational institutions,
    are all vying for high quality men and women. Maintaining
    adequate resourcing for recruiting is essential so that we
    sustain our improvement over the past 2 years. In order that we
    can do so, recruiting will continue to be my first priority.
        The Army's recruiting requirements are developed from
    projected needs based upon the steady state of 480,000
    soldiers. The Army must recruit far more than any other
    service. To make this possible, the Army must continue to be
    equipped and resourced to succeed in this task. Properly
    resourced, we are confident that we can meet our recruiting
    goals.
        Senator Cleland. Mr. Brown, can you suspend? The
    subcommittee will stand in recess until Senator Hutchinson gets
    back from the vote. Because of the length of time it takes me
    to vote, I have about 5 minutes left, so the subcommittee will
    stand in recess until Senator Hutchinson returns. [Recess.]
        Senator Hutchinson. Mr. Brown, thank you and the entire
    panel for being patient with the interruptions. You may
    continue your statement.
        Mr. Brown. Thank you, sir.
        I would like to make a special mention in passing of the
    tremendous contribution that the Guard and Reserve have made to
    the Army's ability to accomplish its mission. Nearly 40,000
    Army Guard and Reserve soldiers are answering the call to duty
    today, supporting Operation Noble Eagle, Operation Enduring
    Freedom, Bosnia, Kosovo, Kuwait, Sinai, not to mention
    airports, border patrol, and other duties here in the homeland
    under State authorities. This involvement of the Guard and
    Reserve in our total force is testimony to our motto, ``An Army
    of One,'' and should be noted.
        I would also like to mention the tremendous importance of
    the 223,000 Army civilians who support military functions
    throughout the Army. They are an important part of our Army
    today. Our concerns for the remainder of fiscal year 2002 and
    beyond center around the momentum that was initiated by the
    administration and Congress last year to continue to improve
    the well-being of our soldiers through improved programs and
    initiatives. I am hopeful that your support and assistance will
    be with us as we demonstrate our collective commitment to
    fulfilling the manpower and welfare needs of the Army, Active,
    Reserve, civilian, and retired.
        Mr. Chairman, I look forward to taking your questions.
    Thank you.
        [The prepared statement of Mr. Brown follows:]
                  Prepared Statement by Hon. Reginald J. Brown
        Mr. Chairman and members of the subcommittee, on behalf of the men
    and women of the United States Army, we would like to thank you for the
    opportunity to appear before your subcommittee today to discuss the
    Active and Reserve military and civilian personnel programs of
    America's Army. As we move into the 21st century, the evolution of the
    all-volunteer Army continues, marked by dramatic changes and proud
    accomplishments. The Army of today is facing serious challenges in the
    proper manning and readiness of the force, but we feel we are taking
    the necessary steps, with your help, to ensure that it remains the best
    Army in the world. We would like to discuss several key issues.
                                   recruiting
        In the aftermath of September 11, the greatly increased security
    requirements here in the U.S. and the challenges of fighting terrorism
    serve to emphasize the critical importance of Army recruiting. The Army
    continues to recruit in a highly competitive environment. The private
    and public sectors, to include post-secondary educational institutions,
    are all vying for high quality men and women. Maintaining adequate
    resourcing for recruiting is essential to ensure that we sustain our
    improvement over the past 2 years. Recruiting will continue to be my
    first priority.
        The Army's recruiting requirements are developed from projected
    needs based on a steady state of 480,000 soldiers. The recruiting
    environment remains the toughest in the history of the all-volunteer
    force, with youth unemployment holding at record lows. Even with the
    slowing economy, youth unemployment has remained relatively steady.
    This makes for a very tight labor market. The Army must recruit far
    more than any other service. The Army must recruit quality applicants
    from the non-propensed market and the positively propensed market in
    order to meet its goals. To make this possible, the Army must continue
    to be equipped and resourced to succeed in this task. Properly
    resourced, the Army can meet its recruiting goals.
        For the second year in a row, the Army made mission and met or
    exceeded all three DOD quality goals in fiscal year 2001 with 90.2
    percent having a high school diploma, 63.2 percent scoring in the top
    50th percentile on the Armed Forces Qualification Test (categories I-
    IIIA) and only 1.9 percent scoring in category IV (26th to 30th
    percentile).
        To fulfill the fiscal year 2002 enlisted accession mission, the
    Active component must write 87,300 new contracts to cover the 79,000-
    accession requirements and build an adequate Delayed Entry Program
    (DEP) of 35 percent to start fiscal year 2003. The Army Reserve must
    access 41,757 and the Army National Guard, 60,504. These workloads
    combine to require productivity not seen since 1990, under more
    difficult market conditions.
        Through January 2002, we have exceeded our Active component
    accession requirements by 467. The Army National Guard and the U.S.
    Army Reserve are also exceeding their missions. We are fully engaged to
    meet this year's accession missions and believe we can accomplish all
    three components' missions. We are implementing initiatives to expand
    the recruiting market in cost effective ways, without degrading the
    quality of the force.
        We know that Hispanics are underrepresented in the Army relative to
    their share of the U.S. population. However, enlisted Hispanic
    population increased from 8.3 percent of the Army as of September 1999
    to 9.1 percent as of September 2000 and 9.7 percent as of September
    2001. The Commander of the U.S. Army Recruiting Command has developed a
    goal of 12 percent Hispanic contracts in fiscal year 2002. One program
    that the Recruiting Command has implemented to help accomplish this
    goal is the Foreign Language Recruiting Initiative (FLRI). The FLRI is
    a 2-year pilot program designed to increase the number of Hispanics in
    the Army. The Army will access 200 recruits per year during the 2-year
    pilot program. The program began January 2, 2002, and will provide
    quality individuals who speak Spanish with an opportunity to improve
    their ASVAB score and use of the English language. As of January 31,
    2002, Hispanics account for 12.1 percent of all fiscal year 2002
    contracts.
        To date we have implemented the ``College First'' test program and
    the ``GED Plus--the Army's High School Completion Program.'' There were
    673 enlistments in College First through fiscal year 2001 and 109 in
    fiscal year 2002 as of January 6, 2002. You granted us changes to the
    College First program for fiscal year 2002 that will improve the test
    and the ability to determine expansion to the bound-for college market.
    The GED Plus program achieved 3,449 accessions in fiscal year 2000, and
    exceeded the 4,000 (5,947 Total Regular Army) program limit in fiscal
    year 2001. As of January 6, 2002, there have been 2,838 accessions
    through this program.
        In fiscal year 2002 you gave us the opportunity to conduct an 18-
    month enlistment option pilot test designed to increase the
    participation of prior-service soldiers in the Selective Reserve and
    assistance in building the Individual Ready Reserve.
        Additionally, you directed us to conduct a test of contract
    recruiters replacing active duty recruiters in 10 recruiting companies.
    The Army is implementing this initiative. The plan is to bring on the
    10 company contractors throughout fiscal year 2002 and run the full
    test from fiscal year 2003 through fiscal year 2007. We have awarded
    this pilot program to two independent contractors each receiving
    contracts to perform the full complement of recruiting services,
    including prospecting, selling, and pre-qualifying prospective
    applicants for the Regular Army and Army Reserve, and ensuring that
    contracted applicants ship to their initial entry training starting
    this spring in selected locations across the country.
        Today's young men and women have more employment and educational
    opportunities than ever before. Competition for these young people has
    never been more intense. The enlistment incentives we offer appeal to
    the dominant buying motive of young people and they allow us to sell
    the skills most critical to our needs at the time we need them most.
    The flexibility and improvements you provided to our incentives in the
    past have helped us turn the corner regarding recruiting. The initial
    four $20,000 Enlistment Bonus specialties have seen dramatic increases
    in volume and quality fill. The combination of all incentives will help
    fill critical specialties as the Army continues its personnel
    transformation. The combined Montgomery GI Bill and Army College Fund,
    along with the Army's partnership with education, remain excellent
    programs for Army recruiting and an investment in America's future.
        While the actions we have taken will help alleviate some of the
    recruiting difficulties, we also know more work has to be done to meet
    future missions. We must continue to improve the recruiting efforts
    from developing a stable, robust resourcing plan to improving our core
    business practices. We must capitalize on the dramatic improvements in
    technology from the Internet to telecommunications and software. We
    must improve our marketing and advertising by adopting the industry's
    best business practices and seeking the most efficient use of our
    advertising dollars.
        Business practices, incentives, and advertising are a part of
    recruiting, but our most valuable resource is our recruiters. Day in
    and day out, they are in the small towns and big cities of America and
    overseas, reaching out to young men and women, telling them the Army
    story. We have always selected our best soldiers to be recruiters and
    will continue to do so. These soldiers have a demanding mission in
    making their individual goals. We owe it to these recruiters and their
    families to provide them the resources, training, and quality of life
    that will enable them to succeed.
        The Army appreciates Congress's continued support for its
    recruiting programs and for improving the well-being of our recruiting
    force. We are grateful for recent congressional initiatives to increase
    military pay and benefits and improve the overall well-being. We
    believe these increases will not only improve quality of life and
    retention, but will greatly enhance our recruiting effort, making us
    more competitive with private sector employers.
                               enlisted retention
        The Army's Retention Program continues to succeed in a demanding
    environment. Our program is focused on sustaining a trained and ready
    force and operates around five basic tenets:

             Reenlist highly qualified soldiers who meet the Army's
            readiness needs.
             Enlist or transfer qualified transitioning soldiers
            into a Reserve component unit based on the soldier's
            qualification and unit vacancy requirements within geographic
            constraints.
             Achieve and maintain Army force alignment by
            reenlisting qualified soldiers in critical skills.
             Maintain maximum command involvement at every echelon
            of command.
             Ensure that a viable and dynamic retention program
            continues is critical to the sustainment function of the Army's
            personnel life-cycle.

        Our retention efforts demand careful management to ensure that the
    right skills and grades are retained at sufficient levels that keep the
    Army ready to fulfill its worldwide commitments. Our Selective
    Retention Budget continues to provide this leverage, which ensures a
    robust and healthy retention program.
        Over the past several years, retention has played an even greater
    role in sustaining the necessary manning levels to support our force
    requirements. Retention has been a key personnel enabler, considering
    the difficult recruiting environment that has existed over that period.
    This past year was an excellent example of the delicate balance between
    our recruiting and retention efforts. Through a concerted effort by the
    Department of the Army, field commanders and career counselors; the
    Army not only made it's fiscal year 2001 mission, but finished the year
    by retaining 982 soldiers above that adjusted mission for a
    reenlistment percentage of 101.5 percent.
        This year we have a retention mission of 56,000. Although that
    mission is below the 64,982 soldiers who reenlisted last year, the
    decreasing separating soldier population will make that mission just as
    difficult. Last year the retention accomplishments equated to 67
    percent of all separating soldiers, which was a historic high for the
    Army. The mission this year requires us to equal that feat and retain
    once again 67 percent of all separating soldiers.
        The ultimate success of our retention program is dependent on many
    factors, both internal and external to the Army. External factors that
    are beyond our ability to influence include: the economy, the overall
    job market, and the world situation. While we are enthusiastic about a
    healthy economy and high employability of our soldiers in the job
    market, we are also aware that these factors play heavily on the minds
    of soldiers when it comes time to make reenlistment decisions. Our
    force today is more family oriented. Today the Army is 55 percent
    married. Army spouses, who are equally affected by these external
    factors as the service member, often have great influence over
    reenlistment decisions. The internal factors that we can influence
    include: benefit packages, promotions, the number of deployments,
    adequate housing, responsive and accessible health care, attractive
    incentive packages, and reenlistment bonuses. Not all soldiers react
    the same to these factors. These factors challenge our commanders and
    their retention non-commissioned officers (NCOs) to provide incentives
    to qualified soldiers that encourage them to remain as part of our
    Army.
        Our incentive programs provide both monetary and non-monetary
    inducements to qualified soldiers looking to reenlist. These programs
    include:

             The Selective Reenlistment Bonus, or SRB, offers money
            to eligible soldiers, primarily in the grades of Specialist and
            Sergeant, to reenlist in skills that are critically short or
            that require exceptional management.
             The Targeted Selective Reenlistment Bonus program, or
            TSRB, is a sub-program of the SRB that focuses on 11
            installations within the continental United States and Korea
            where pockets of shortages existed in certain military
            occupational specialties (MOS). The TSRB pays a reenlisting
            soldier a higher amount of money to stay on station at a
            location in the program or to accept an option to move.

        Both of these programs, which are paid from the same budget, play
    key roles in force alignment efforts to overcome or prevent present
    shortfalls of mid-grade NCOs that would have a negative impact on the
    operational readiness of our force. We use the SRB program to increase
    reenlistments in critical specialties such as Infantry, Armor, Special
    Forces, Intelligence, Communications, Maintenance, and Foreign
    Languages. The fiscal year 2001 SRB budget, as a result of the
    congressional markup, was increased by $44 million to $106.3 million.
        Non-monetary reenlistment incentives also play an important role in
    attracting and retaining the right soldiers. We continue to offer
    assignment options such as current station stabilization, overseas
    tours, and CONUS station of choice. Training and retraining options are
    also offered to qualified soldiers as an incentive to reenlist. By
    careful management of both the monetary and non-monetary incentive
    programs, we have achieved a cost-effective program that has proven
    itself in sustaining the Army's career force.
        The Army executes its retention mission through a network of highly
    dedicated and experienced professional NCOs (career counselors) who
    serve at the Brigade, Division, Corps and MACOM level. They are
    supported by unit-level personnel who provide retention support to
    their units as an additional duty. These soldiers and civilian
    personnel are directly responsible for making the Army's retention
    program successful.
        The Army's retention program today is healthy. Into the 2nd quarter
    of fiscal year 2002, as of January 31, 2002, we have reenlisted 109
    percent of our year-to-date mission and are on track to make the
    56,800-reenlistment mission that is required to sustain our 480,000
    soldier Army. Our Reserve component transition efforts during last year
    were also successful. We transferred 12,099 Active component soldiers
    into Reserve component (RC) units against a mission of 10,500 for a
    115.2 percent success rate. For fiscal year 2002 year-to-date, we have
    transferred 2,925 soldiers into RC units against a mission of 2,441 for
    a rate of 120 percent. The Army is expected to exceed its annual RC
    mission again this year.
        Despite these successes there are a growing number of concerns
    surrounding the direction and future success of the Army Retention
    Program. With the eligible separating population of soldiers decreasing
    during the next 3 years, the actual retention rate will have to be
    sustained at about 67 percent, which is 7 percent above what the Army
    has previously accomplished prior to fiscal year 1999. Additionally,
    MOS support skills, which include required language proficiency, signal
    communications, information technology, and maintenance, present a
    significant challenge caused by those external factors mentioned
    earlier (e.g., the economy, the job market, and increased PERSTEMPO).
    Even in the current economy, civilian employers are actively recruiting
    service members with these particular support skills. They are offering
    bonuses and benefit packages that we simply cannot expect to match
    under current bonus allocation rules and constrained budgets. Although
    retention in the aggregate is healthy, we continue to be concerned with
    retaining the right numbers of soldiers who possess these specialized
    skills.
        To achieve our retention mission, we concentrate our efforts
    primarily on first-term and mid-career soldiers. It is within these two
    mission categories that the foundation for the career force is built.
    However, retention decisions are significantly different between these
    two groups. First-term soldiers cite educational opportunities and
    availability of civilian employment as reasons for remaining in the
    Army or separating. Mid-career soldiers are affected more by health
    care, housing, compensation, and availability of commissary, exchange,
    and other post facilities. Consequently, a higher percentage of mid-
    career soldiers are married, although the number of married first-term
    soldiers continues to increase. We continue to monitor both groups
    closely for any change in reenlistment behavior. They are the key to
    continuing a successful retention program. First-term retention rates
    continue at historic levels, as they exceeded 52 percent during fiscal
    year 1999, fiscal year 2000, and fiscal year 2001. Mid-career rates
    continue to be above the pre-drawdown levels, at approximately 74
    percent. We consider these rates to be the minimum levels necessary to
    sustain the force. Non-retirement-eligible soldiers continue to remain
    in the Army at a 98 percent rate. However, retirement-eligible soldiers
    who are still retention-eligible are leaving the service at higher than
    expected rates. The Army is keeping the right number of soldiers in the
    force necessary to maintain our readiness. This is due in large part to
    the help from Congress, existing incentive programs, and the continued
    involvement by Army leaders at all levels.
                               officer retention
        It is anticipated that we will finish fiscal year 2002 at slightly
    below our Officer Budgeted End Strength of 77,800. We continue to
    monitor officer retention rates, particularly that of captains. Post-
    drawdown (1996-1999) captain loss rates remain slightly higher than
    pre-drawdown (1987-1988) loss rates (.9 percent difference); manning
    levels are constrained by deliberately under-accessed cohorts during
    the drawdown years. However, the impact of the captain shortage has
    been historically offset by a lieutenant overage, in aggregate number.
    The Army steadily increased basic branch accessions beginning in fiscal
    year 2000 with 4,000, capping at 4,500 in fiscal year 2002 and beyond,
    to build a sustainable inventory to support captain requirements.
        Administration and congressional support on pay table reform serve
    to redress the pay issue. We continue to promote captains above the
    DOPMA goal of 90 percent and are currently promoting all fully
    qualified lieutenants to captain at the minimum time authorized by
    DOPMA (42 months).
        Army initiatives to improve retention among its Warrant Officer
    AH64 (Apache) pilot population have stabilized attrition trends; a
    reduction from 12.9 percent in fiscal year 1997 to 8.6 percent in
    fiscal year 2001. Since fiscal year 1999 we have offered Aviation
    Continuation Pay to 665 eligible officers, of which 565 accepted (88
    percent take rate). Additionally, we have recalled 209 pilots since
    1997, and have 21 Apache pilots serving on active duty in selective
    continuation status.
                               reserve components
        The exemplary performance of our Army in these past months is
    testimony that we are indeed one Army . . . an Army whose components
    are practically indistinguishable from one another. I know our Nation
    is very proud of the performance of our Guard and Reserve Forces. I,
    who have seen them perform first-hand in contingency operations
    overseas and at home, at the Pentagon, am exceptionally proud of our
    forces.
        Let me tell you why I am so proud. Our citizen soldiers went into
    action immediately and decisively in the aftermath of September 11. In
    addition to the many individual heroes at the Pentagon and in New York
    City, many other great men and women came forward without hesitation.
    They were well trained and prepared to do their duty, a duty no one in
    the civilized world could have imagined.
        Whether as volunteers in the first few days after the attacks or
    whether called up under the partial mobilization, the soldiers of the
    Army Reserve and Army National Guard have come forward to serve proudly
    and honorably--just as our citizen-soldiers have always answered the
    Nation's call.
        I cannot go on without giving praise to those employers of our
    magnificent soldiers who believe and support the role our Reserve
    components provide in meeting our national security obligations.
    Likewise, we must recognize the family members who, through their
    unwavering support, allow our service members to serve with peace of
    mind.
        We have a highly motivated, professional Guard and Reserve Force
    performing real world missions alongside an equally motivated and
    professional Active Force. As of mid-January, we had over 4,000 Army
    Guard and Reserve soldiers engaged in the Balkan and Sinai operations.
        Our Guard and Reserve are respectively providing about 8,000 and
    6,200 soldiers in support of Operation Noble Eagle and nearly 4,700 and
    6,400 respectively for Enduring Freedom. Additionally, we have nearly
    11,000 Guard troops not in a Title 10 status but either a Title 32 or
    State Active Duty status supporting Operation Noble Eagle. That amounts
    to over 40,000 Army Guard and Reserve troops supporting Operations
    Noble Eagle and Enduring Freedom.
        I want to express appreciation for your support in this past
    National Defense Authorization Act (NDAA). The increase in full-time
    support authorizations, funding for military technicians and Active
    Guard and Reserve soldiers, and the increase in AGR controlled grades
    were especially critical.
                                   perstempo
        An increase in operational commitments and a reduced force
    structure have combined to increase the turbulence and uncertainty felt
    by the soldiers who serve our Nation. The increase in time spent away
    from home for our soldiers is directly related to the increase in unit
    and individual deployments and joint training exercises.
        The Army actively manages the effects of PERSTEMPO through force
    management options as well as through working with OSD to manage force
    requirements in response to contingency operations. Some initiatives to
    reduce PERSTEMPO include rotating units, selective use of Reserve
    component forces, global sourcing, use of contract civilians where
    possible, and a post-deployment stabilization policy.
        The Fiscal Year 2000/Fiscal Year 2001 National Defense
    Authorization Acts (NDAA) required the services to pay a high-
    deployment per diem allowance to service members for each day in which
    members are deployed in excess of 400 days in the preceding 730 days.
    The services have established a system to track and record the number
    of days a member of the Armed Forces is deployed.
        Section 991(d) of Title 10, U.S.C., authorizes the suspension of
    certain PERSTEMPO management constraints if required by national
    security interests. In the wake of the tragic events of September 11
    and Executive Order 13223, the services suspended the accrual of days
    for PERSTEMPO per diem; however, the services continue to track and
    report PERSTEMPO deployments for management purposes. The PERSTEMPO
    data collected by the Army since October 1, 2000 provides a glimpse of
    the level and diversity of deployment activity, but more data over a
    longer period of time is needed to assess the impact of PERSTEMPO on
    Army readiness and retention. The Army will continue to manage
    deployments with an emphasis on maintaining readiness, unit integrity,
    and cohesion while meeting operational requirements.
                               civilian personnel
        A critical component of our Army is our civilian workforce.
    Civilians have been, and will continue to be, a major contributor to
    military readiness. They provide continuity, expertise, and significant
    support to today's Army. They perform mission critical work in areas
    such as depot maintenance, supply, acquisition, transportation,
    training, deployment, medical care, research and development,
    engineering, and facilities operations, to name just a few.
        As of December 31, 2001, there were over 223,000 Army civilians who
    support military functions and are funded through congressional
    appropriations. This number includes foreign nationals. There were just
    over 24,000 civilians serving the Army in reimbursable civil works
    functions and nearly 29,000 serving in positions covered by non-
    appropriated funding.
        Today, nearly 41,000 civilians serve in locations outside the
    continental United States. In addition to supporting soldiers and their
    families at overseas posts around the world, Army civilians provide
    direct support to operations such as Haiti, and the Balkans. During the
    12-year period ending September 2001, the Army reduced its civilian
    strength from 434,000 to just over 222,000, or more than 45 percent. We
    achieved the civilian drawdown through reduced civilian hiring,
    unreplaced employee losses, and mandatory placements to minimize the
    adverse impact of reductions on our civilian employees.
        Because of our drawdown posture over the several years, the number
    of civilians who are eligible to retire has grown significantly. In
    2003, 30 percent of our current professional workforce will be eligible
    to retire. Using our workforce analysis and forecasting tools, we
    predict a steady increase in civilian retirements between 2003 and 2008
    as our ``baby boomers'' become retirement eligible.
        Recently, the Office of Personnel Management (OPM) reported that
    the number of retirements from the Federal workforce in 2001 was not
    keeping pace with projections. During 2001, the Army's experience was
    not typical of the experience reported by OPM. We projected that about
    3.2 percent of our workforce would retire in 2001; 3.1 percent actually
    retired. In addition, retirement trends in the Army reflect that
    civilians are spending less time in retirement eligibility status. In
    the mid-1980s, the average time employees remained ``retirement
    eligible'' was just over 8 years. Today, they're in this status about 6
    years, on average.
        The drawdown has also led to skill imbalances. The lack of
    replacements for losses over the last decade has disrupted the pipeline
    of civilian employees who are adequately prepared to assume leadership
    roles as most experienced employees retire. The ability to fill entry,
    mid, and senior-level civilian positions quickly is essential to Army's
    workforce planning efforts. We also must have the means to manage our
    leaders strategically--what we are calling our Strategic Army
    Workforce. The Army is moving toward central management of a cadre of
    supervisors and managers to ensure that our key workforce will be
    quickly accessible, trained, and ready to meet our transformation
    goals.
        To achieve Army transformation goals, we need to replace our
    civilian workforce at a pace that matches their departure rates. In
    addition, our future workforce must be multi-skilled and capable of
    adapting quickly to meet our transformation goals. As the Army becomes
    more strategically responsive, our laws to hire and compensate our
    civilians must also change.
        We must have flexibility to develop and implement accession
    programs that meet the current critical need for the swift hiring of
    highly qualified candidates. We ask this committee to support necessary
    changes to simplify or eliminate outmoded civil service rules and
    produce a modern, streamlined personnel system, one that is responsive
    to our needs. We need the capability to hire at least 3,100 civilians
    expeditiously into critical hard-to-fill positions, be able to pay for
    performance using a flexible pay-banding system, and to provide funds
    to advance the development of bold and innovative civilian leaders. Our
    civilians are the best. We must have the support to replenish the best
    and compete in tomorrow's labor market.
                        army review boards agency (arba)
        The Army Review Boards Agency (ARBA) continues to make progress
    toward providing all of our applicants fair and timely consideration of
    their cases, as well as a clear explanation of our decisions.
        The Army Board for Correction of Military Records (ABCMR) processed
    over 12,000 cases in fiscal year 2001 and has made significant progress
    in improving service to soldiers and veterans. A case backlog of nearly
    5,000 a year ago has been reduced to a sustaining caseload of less than
    3,200. Average case-processing time has been reduced from 22 months in
    1998 to less than 6 months today. Ninety-eight percent of the cases
    submitted to the Board for review during fiscal year 2001 were
    completed within 10 months or less, exceeding a congressional mandate
    to complete 50 percent of boarded cases within 10 months and all cases
    within 18 months. This accomplishment meets fiscal year 2010
    congressional requirements today.
        The Army Discharge Review Board (ADRB) eliminated the 1996 backlog
    of over 5,000 cases. Today, when an application arrives with its
    records, we can review and decide an application within a week. Average
    processing time is less than 90 days. We continue traveling around the
    country to provide applicants desiring personal appearances, but who
    cannot travel to Washington, an opportunity to present their case.
        Our success has not been without cost. We spent over $3 million on
    information technology, including a web page to accelerate and simplify
    the application process. To ensure fair and timely consideration of
    cases, we shielded the boards from personnel cuts, as directed, through
    fiscal year 2001.
        In sum, what we have achieved is testimony to what leadership,
    management, and accountability, coupled with people, money, and time,
    can accomplish. We appreciate your continued support, and we will
    continue to improve our service to our soldiers, past and present.
                                   well-being
        A significant part of Army transformation is Army well-being. Army
    well-being is the driving force for a successful transformation because
    it directly impacts the human dimension of the force. Army well-being
    is the personal--physical, material, mental, and spiritual--state of
    soldiers, retirees, veterans, Army civilians, and their families that
    contribute to their preparedness to perform and support the Army's
    mission. Army well-being encompasses and expands upon quality of life
    successes by providing a standardized, integrated holistic approach to
    programs at the soldier, community/installation and senior-leadership
    level. Well-being provides a clear linkage between quality of life and
    Army institutional outcomes such as performance, readiness, retention,
    and recruiting--outcomes that are strategically critical to sustaining
    a healthy Army into the future.
        The motivating force of Army well-being is ensuring we consistently
    and adequately provide for the people of the Army while improving
    readiness. Helping individuals connect to the Army, feel part of the
    team and derive a sense of belonging is inextricably linked to
    readiness. Well-being pursues an adequate standard of living for
    soldiers and Army civilians and their families. Well-being connects
    soldiers, civilians, retirees, veterans, and families to the Army by
    fostering an intense pride and sense of belonging. Well-being
    encourages members to grow by providing meaningful and supportive
    personal enrichment programs.
        Well-being seeks to enhance morale, recruiting, and retention by
    incorporating all well-being related programs such as command programs,
    pay and compensation, health care, housing and workplace environment,
    education, family programs, and recreational services into an
    integrated approach that succinctly communicates to soldiers,
    civilians, retirees, family members, veterans and leaders the various
    programs and resources provided by the military. It gives members of
    the Army a holistic view that the Army is pursuing fair, balanced, and
    equitable compensation benefits; consistently providing safe,
    affordable, excellent housing; ensuring quality health care; enhancing
    community programs; and expanding on educational and retirement
    benefits by developing universal standards and metrics to evaluate and
    deliver these programs.
        Well-being will continue to be linked to the capabilities,
    readiness, and preparedness of the Army as we transform to the
    Objective Force. Well-being means predictability in the lives of
    soldiers and their families, access to excellent schools and medical
    facilities, educational opportunities, housing, and recreation. Well-
    being means soldiers and civilians will not be put in the position of
    choosing between the profession they love and the families they
    cherish.
                       military compensation and benefits
        The purpose of the military compensation system is to attract,
    retain, and motivate people. In order to man the Army with quality
    volunteers, we must compete directly with the private sector, and in
    today's environment, compensation is a key to competitiveness. An
    effective military compensation system must be flexible and competitive
    in order to attract young men and women to military service and to
    retain them throughout a demanding career. This year's budget contains
    a 4.1 percent pay raise, which is 0.5 percent above the Employment Cost
    Index. Providing pay raises at 0.5 percent above the Employment Cost
    Index this year and through fiscal year 2006 will greatly enhance the
    well-being of our soldiers and improve the competitiveness of the
    military compensation package.
        We appreciate your commitment in this regard.
        We strongly support the plan to eliminate out-of-pocket housing
    costs by the year 2005. This initiative will improve the well-being of
    our soldiers and their families, and contribute to a ready force by
    enhancing morale and retention. The fiscal year 2003 President's budget
    continues this initiative, which will reduce out-of-pocket costs from
    11.3 percent today to 7.5 percent in 2003--putting us on track to
    eliminate the out-of-pocket housing cost for the men and women in
    uniform by 2005. We will continue to endorse fair and equitable
    compensation and benefits for our soldiers and their families and thank
    you for continued support for the men and women of the Army.
                               military retirees
        Army retirees have served our Nation honorably and selflessly,
    affording American citizens a way of life that is unknown in many other
    countries. This Nation is eternally indebted to these gallant men and
    women. Even though they have taken off the uniform, many continue to
    serve in various ways in their civilian and military communities. For
    many, ``U.S. Army Retired--Still Serving'' is not a slogan; it's a way
    of life.
        We greatly appreciate your commitment to provide our military
    retirees with health care that addressed one of their major concerns--
    access. The TRICARE for Life medical coverage provides military
    retirees with the most comprehensive medical coverage and access that
    includes a robust pharmacy benefit with very little out of pocket cost.
    This benefit enhancement maintains the promise, demonstrates our
    Nation's thanks for their service, and improves our ability to recruit
    and retain professional soldiers.
        Prior to this change, retirees and family members perceive the
    limited access to health care as a breach of contract--one that reduced
    their standard of living. The generous modifications by Congress with
    TRICARE for Life, robust pharmacy benefits, and elimination of co-
    payments for active duty military members and their families were
    pieces of legislation that addressed these retiree concerns. We thank
    you for such robust support and ask for continued sufficient funding to
    provide the health care promise to retirees.
                                    closing
        We know the Army offers tremendous opportunities to America's
    youth. Our soldiers return to America's communities better educated,
    more mature and with the skills and resources to prepare them for a
    productive and prosperous life. They make valuable contributions to
    their communities.
        Our recruiting mission continues to be a challenge. The success of
    our retention program continues to rest on the shoulders of unit
    commanders, leaders and our retention professionals throughout the
    Army. Our concerns for the remainder of fiscal year 2002 and beyond
    center around the momentum that was initiated by the administration and
    Congress last year to improve the lives of our soldiers through
    improved pay initiatives.
        I am hopeful that your support and assistance will continue as we
    demonstrate our collective commitment to fulfilling the manpower and
    welfare needs of the Army, Active, Reserve, civilian, and retired.
        Again, thank you for the opportunity to appear before you today.

        Senator Hutchinson. Thank you, Mr. Brown.
        Mr. Navas.

    STATEMENT OF HON. WILLIAM A. NAVAS, JR., ASSISTANT SECRETARY OF
               THE NAVY FOR MANPOWER AND RESERVE AFFAIRS

        Mr. Navas. Mr. Chairman, members of the subcommittee, I
    thank you for this opportunity again to be able to come before
    you and thank you for the support you have given historically
    throughout the years and, in particular, in the last couple of
    years to the people in the Navy and Marine Corps to maintain
    the trends and to sustain those trends that we have attained.
        The Navy Department and the Navy leadership are committed
    to people. Secretary England has been known to say that you
    could build a carrier with $7 billion and have it in the dock,
    but until you put quality people on it the value to the Nation
    is minimal. So we are committed to quality people, quality of
    life, and quality of service.
        Again, our successes have been driven in part by the
    support you have given us, and our priorities for this budget
    in fiscal year 2003 remain. You will see that our budget
    continues on that glide path towards recruiting, retention, and
    quality of life. A big portion of our concerns this year is in
    the support of the mobilized Reserves. They have answered the
    call again as they have over the years, in the aftermath of
    September 11, and today we have Naval reservists and Marine
    Corps reservists serving all over the globe.
        There remain a couple of issues we have to address,
    although we have made great progress. These issues are in part
    the issue of health care for reservists. A lot of progress has
    been made in that, but there still remain some pockets of
    issues that we must address.
        The other issue is of a lesser degree, but not less
    important for those involved--the issue of income difference.
    Some of our reservists, when they are called to serve their
    country, have financial losses because of their service to the
    Nation. Philosophically that is something we need to address,
    and we should be looking at those issues.
        I want to thank you again and keep my remarks brief. I look
    forward to your questions.
        [The prepared statement of Mr. Navas follows:]
                Prepared Statement by Hon. William A. Navas, Jr.
        Mr. Chairman and distinguished members of the subcommittee, it is a
    pleasure to appear before you today to testify on behalf of the
    outstanding men and women of our Navy and Marine Corps--Active duty,
    Reserve, and civilian--who truly embody the ``One Team, One Fight''
    concept in this challenging new time. At the outset, let me thank the
    members of this committee and the entire Congress for the outstanding
    support you have shown for our Nation's military. Building on prior
    successes, you have continued your strong commitment to our people,
    quality of service, and readiness. That commitment is deeply
    appreciated and is having a positive impact; however, we must remain
    dedicated to our ``Quality of Service'' concept by continuing to build
    on our investment in our sailors and marines. This is all the more
    critical during this time when we ask so much of our personnel in the
    defense of our Nation and as we sustain the global war on terrorism.
              continuing our investment in our sailors and marines
        The demands of today's security environment, both at home and
    abroad, mean that the Department of the Navy requires the best trained,
    equipped, and prepared Navy and Marine Corps personnel.
        The fiscal year 2003 budget will allow us the opportunity to build
    on successes of last year, which included meeting annual end strength
    and recruiting requirements. For our Marine Corps, fiscal year 2001
    marked the sixth straight year of mission achievement and our Navy has
    met with recruiting success for 3 consecutive years. Coupled with
    improved retention in both services, this has enabled us to strengthen
    the manpower posture of each service allowing for improved battle group
    manning.
        We have also worked to demonstrate our resolve and commitment to
    improve the quality of service for our personnel by creating an
    environment conducive to professional growth, advanced training, and
    upward mobility, in addition to better pay, health care, and housing.
    In order to sustain this momentum, the budget submitted for fiscal year
    2003 reinforces our commitment to people, their quality of service, and
    overall Navy and Marine Corps personnel readiness. Our budget reflects
    an expression we often use--``Mission First, People Always.'' Included
    is a $4.1 billion increase in the department's military personnel
    accounts. This includes needed funding for pay increases, Basic
    Allowance for Housing (BAH), Career Sea Pay, additional end strength
    funding for the 4th Marine Expeditionary Brigade (4th MEB), and health
    care initiatives, all of which places us on a solid path toward
    transformation.
                              pay and compensation
        The Department of the Navy has made tremendous strides in the last
    year to improve the compensation and benefits systems. I would
    especially like to thank you for your commitment to the well being of
    our sailors, marines, and their families by supporting them with the
    recent pay raise and for your continued support of innovative,
    flexible, and cost effective compensation programs.
                       basic allowance for housing (bah)
        Basic Allowance for Housing (BAH) out-of-pocket expense for
    calendar year 2002 was at 11.3 percent, down from 15.0 percent in the
    previous year. The fiscal year 2003 budget will further reduce housing
    (BAH) out-of-pocket expenses to approximately 7.5 percent and bring us
    closer to the goal of zero percent on average out-of-pocket by calendar
    year 2005. Our end state is for sailors and marines to receive military
    compensation which is competitive with the private sector, provide
    equitable treatment to all sailors and marines and afford flexibility
    in shaping and addressing service-specific manpower management
    challenges.
                           special and incentive pays
        Special pays, in conjunction with concerned leadership, are key
    elements in retaining sailors and marines with critical skills and
    experience. Our special and incentive pays remain an essential part of
    our overall compensation package. While remaining keenly aware of both
    the unique manpower requirements and cultural ethos differences between
    the Navy and the Marine Corps, we walk a fine line in developing and
    implementing special and incentive pays which meet the needs of each
    service but maintain equity between the two. I believe we have found
    great success in accomplishing this feat.
        Career incentive pays for both Surface Warfare Officers and Special
    Warfare Officers as well as major enhancements to Aviation Continuation
    Pay have had an overall positive effect on these critical warfighting
    communities, as have the enhancement of the Enlistment Bonus (EB) and
    Selective Reenlistment Bonus (SRB) programs for the enlisted force. We
    thank you for your past support, and seek your continued assistance as
    we explore further improvements which will enhance Service Secretary
    flexibility in adjusting and targeting cost-effective special and
    incentive pays to react quickly to the ever-changing recruiting and
    retention picture.
                                   recruiting
        The Department of the Navy is committed to recruiting the Nation's
    finest young people to serve in the Navy and Marine Corps. Although the
    events of September 11 did increase expressions of patriotism among
    Americans and early indicators showed increased interest levels, there
    is no evidence that recruiting is easier or that enlistments have
    increased as a result of the terrorist attacks. Despite competition and
    other challenges of the marketplace, both the Navy and Marine Corps
    achieved their recruiting requirements in fiscal year 2001. While the
    Marine Corps is poised to continue their 6-year streak, the Navy is not
    yet postured for long-term success.
        Of concern is the growing number of high school graduates, our
    traditional target market, proceeding directly to college. This makes
    finding operators and technicians for technologically advanced systems
    challenging. The Navy's objective is to improve recruit quality by
    targeting certain skills and increasing the number of recruits with
    college credits, while increasing high school graduates from 90 to 92
    percent of accessions.
                              retention/attrition
        Retaining the best and the brightest sailors and marines, enlisted
    and officer, continues to be a high priority within the Department of
    the Navy. To that end we must offer a quality of life and service that
    is directly tied to combat readiness. Creating an environment conducive
    to professional growth and supporting an attractive quality of service,
    adequate pay, health care and housing will all aid in our retention
    efforts. In addition to the fiscal year 2001 and fiscal year 2002 pay
    raises, increased allowance for housing and special pays like the
    Selected Reenlistment Bonuses (SRB) and targeted officer continuation
    incentives will all positively impact career decisions by our sailors
    and marines.
                 managing time away from home (personnel tempo)
        Navy and Marine Corps personnel have been fully and productively
    involved in Operations Enduring Freedom and Noble Eagle, demonstrating
    the highest levels of professionalism while protecting America and the
    world from the terrorist threat. The services have worked hard to
    balance increased operational requirements while maintaining a
    sustainable personnel tempo. Despite their best efforts, some units
    have had to deploy longer or earlier than planned. We greatly value the
    operational flexibility and reduced administrative burden obtained by
    using Personnel Tempo suspension authority that was provided by
    Congress in Personnel Tempo legislation.
        In addition, by significantly increasing Career Sea Pay and
    extending it to more paygrades, the Department has tried to compensate
    those service members who fill the most arduous duty assignments at
    sea. No matter when the war on terrorism ends, a career in either the
    Navy or Marine Corps will still require at least several long
    deployments. We are committed, over the long term, to reach the right
    balance between burdensome deployments, compensation, and quality of
    life.
        As required by Personnel Tempo legislation, the services are
    preparing a report that will be presented to Congress in March 2002.
    The report will continue the beneficial dialog that exists between the
    services and with Congress on this important topic.
                                   stop loss
        Both the Navy and Marine Corps have implemented stop loss plans to
    hold on active duty those individuals with critical or unique skills in
    support of current operational requirements (e.g. special warfare,
    infantry, linguists, medical, chemical/biological experts). Stop loss
    policies are under continual review. Any changes in stop loss measures
    will be based on emerging requirements driven by the evolving global
    war on terrorism.
                  manpower for anti-terrorism/force protection
        The terrorist actions of September 11 have thrust new requirements
    on the Armed Forces in general, and the Navy and Marine Corps in
    particular. While Anti-terrorism and Force Protection (AT/FP)
    requirements were being addressed within the prior budget submissions,
    the Navy has identified additional requirements in this area in order
    to adequately pursue the ongoing war on terrorism and to safeguard the
    public, our sailors and marines, and associated assets. The fiscal year
    2003 budget includes funds for the recently re-activated Marine Corps'
    4th Marine Expeditionary Brigade (MEB) as an Anti-Terrorism unit. 4th
    MEB (AT) provides a dedicated, sustainable, rapidly deployable
    capability to detect, deter, defend, and conduct initial incident
    response against acts of terrorism.
                                  health care
        Force Health Protection in support of our warfighters remains our
    medical department's primary mission. This mission is furthered through
    Readiness, Optimization and Integration. There is an absolute
    expectation that our sailors and marines, around the world and in
    whatever circumstances we place them, will have quality care by
    dedicated military medical professionals. That expectation includes the
    assurance that they will deploy healthy and with the most advanced
    medical science available to ensure their protection. Their confidence
    in this standard, and their confidence in the care of their families
    through TRICARE, whether the member is home or away, is a key enabler
    for the Navy. Navy Medicine is linked to the transformation that will
    keep the Navy agile, versatile and responsive in the 21st century. This
    will occur through recapitalization of the legacy medical force,
    leveraging current day technology to build the interim medical force,
    and pursuit of advances in medical research, science and technology to
    develop the medical force of the future. We are also coordinating with
    our sister services, the Veteran's Administration, Federal agencies,
    and civilian healthcare provides through TRICARE contracts, to combine
    our efforts into a force multiplier that yields increased efficiencies.
    During these uncertain times, full integration is important to ensure
    optimal healthcare delivery to all of our beneficiaries.
                                reserve affairs
        On September 11, 2001, our Navy and Marine Corps Reserves showed up
    at Reserve centers and military installations all around the country.
    They were not even called. But they knew something had to be done and
    that they would be called upon to do it. The defense of our Nation has
    historically been based on the concept of the civilian who prepares for
    active service during peacetime and becomes the ``citizen-soldier'' in
    times of national emergencies. This is the militia tradition of our
    great country and today's reservists are the modern day minutemen,
    tracing their lineage back to these citizen soldiers, the militia with
    their muskets in Lexington and Concord. On September 11th, the
    tradition continued, only now with reservists wielding F/A-18 Hornet
    strike fighters instead of muskets.
        The mobilization alone does not reflect the whole story of success
    in the past year. The Reserve components are an integral part of day-
    to-day operations. There are approximately 75,000 Navy Selected
    reservists and 40,000 Marine Selected reservists. In addition, another
    140,000 Navy and Marine Corps personnel are members of the Individual
    Ready Reserve and subject to involuntary recall in support of the
    current national emergency. Long before the events of 9/11, our
    reservists were, and continue to be, on difficult assignments in some
    of the most hazardous areas of the world. In response to three
    concurrent presidential reserve call-ups and to other crisis response
    operations, they were in flash-point regions such as the Balkans and
    the Arabian Gulf. They have provided essential port security
    capabilities in the Middle East to US Central Command since the attack
    on the U.S.S. Cole and participated extensively in counter drug
    operations. From real world contingencies to exercises to routine
    operations, Navy and Marine Corps reservists provided more than 2.5
    million man-days in support of the active force in 2001.
                                  mobilization
        Reserve component members were both victims and heroes in the
    attacks at the Pentagon and World Trade Center, and within minutes of
    the attacks, reservists responded to the call to duty. There were
    chaplains on duty in Washington administering to the needs of Pentagon
    personnel and their families and there were reservists manning the Navy
    Command Center. Naval Reserve F/A-18s were flying combat air patrol
    missions in Texas. A Reserve helicopter squadron training in northern
    Virginia provided Medevac support at the Pentagon. Reservists also
    provided Naval Emergency Preparedness Liaison Officers to New York and
    Washington, DC. Marine Corps reservists from the New York area
    volunteered to help with the immediate response and aftermath cleanup.
    Marines were also mobilized to augment staffing levels in most Marine
    Corps commands, Joint and Department of Defense staffs and to augment
    individual bases and stations for force protection.
        In response to operational requirements, mobilization of Navy and
    Marine Corps reservists for the war on terrorism is ongoing, with
    approximately 12,500 Naval and Marine reservists activated in support
    of Operations Noble Eagle and Enduring Freedom, providing critical
    force protection, intelligence support, and staff augmentation.
        Most of our recalled Naval reservists have specific skills as
    individuals, primarily in law enforcement and security. Because of the
    requirement for large numbers of auxiliary security force personnel,
    many personnel were trained enroute to their duty station. Other skills
    in the mobilization include medical, supply, intelligence, construction
    and logistics. Most of the Navy units recalled were Mobile Inshore
    Undersea Warfare units, Inshore Boat units, Harbor Defense units,
    Construction Augment, Personnel Mobilization Teams, and Naval Criminal
    Investigative Service units.
        The majority of activated marines are providing planning, force
    protection, intelligence, civil affairs, communications support, and
    backfill. The Marine Corps also mobilized a company to relieve the
    Fleet Anti-terrorist Security Team at Guantanamo Bay, Cuba. This freed
    up that highly skilled unit to be used in other areas for force
    protection. Two battalions have been mobilized to provide force
    protection and backfill units now assigned to the Marine Anti-terrorism
    brigade, and Reserve aviator units are augmenting the active force.
        Both the Navy and Marine Corps expect to involuntarily extend some
    reservists with high demand skills beyond 365 days. The requirement to
    extend individual reservists beyond 365 days will be based on
    operational requirements, which continue to evolve. Our intent is to
    minimize the impact on individuals beyond an initial 365-day
    commitment. Most Reserve personnel currently filling requirements for
    Operations Noble Eagle and Enduring Freedom will be demobilized at the
    end of 1 year, and active duty personnel or other reservists will fill
    those requirements that remain valid.
        This mobilization has required a great deal of flexibility and
    responsiveness from individual reservists, gaining commands, and
    headquarters elements. To minimize personal hardships, the Secretary of
    the Navy directed that, consistent with operational requirements, all
    Selected reservists will be provided a minimum of 72 hours notification
    prior to required reporting. Non-drilling reservists are given a
    minimum of 14 days notice. Additionally, at various levels of the chain
    of command, authority is granted to delay individual reporting dates to
    allow reasonable time for the reservist to meet his or her obligations
    or to determine if an exemption from mobilization is warranted. Each of
    the services has carefully adjudicated delays and exemptions requests,
    taking into account the needs of the military, the needs of the
    individual reservist and the needs of the employer.
        The mobilization has not been flawless. Once activated, some Navy
    and Marine Corps reservists have experienced problems with pay and
    billeting, although nearly all obstacles have been overcome. Some of
    the problems were the result of different active and Reserve pay and
    personnel systems. The Defense Integrated Military Human Resources
    System (DIMHRS) that is currently being developed will incorporate both
    active duty and Reserve personnel into one system and simplify the
    management of mobilization data, but we need to review the overall
    compensation and benefits package provided for involuntarily activated
    reservists.
                   reserve compensation and benefit concerns
        Mobilization can be financially devastating for Reserve families
    when active duty pay is substantially less than civilian pay. This was
    a very real problem during Operation Desert Shield/Desert Storm,
    prompting an `income protection' initiative by DOD during the 1990s.
    The concept and requirements were valid, but implementation was a
    failure and the program was terminated. The current mobilization again
    highlights the issue as one of significant importance. Both officers
    and enlisted, and in particular, self-employed personnel, can suffer a
    substantial decrease in income that result in family and financial
    hardships upon mobilization. This remains a problem that must be
    addressed.
        Continuity of health care for families of reservists is another
    significant concern. Reservists on active duty are eligible for the
    same healthcare and dental benefits as other active duty service
    members. For service members activated for 30 days or more, their
    family members are also eligible for TRICARE. The recently introduced
    TRICARE Reserve Family Demonstration Project provides special
    protections to Reserve component families in order to preserve
    continuity of care with their existing healthcare providers. This
    demonstration waives deductibles (to avoid Reserve component families
    paying both private health insurance and TRICARE deductibles);
    authorizes TRICARE to pay up to 15 percent above the TRICARE allowable
    rates for care provided by non-participating providers; and waives the
    requirement for families to use nearby military treatment facilities
    for inpatient care.
        Still, health care issues are perhaps the number one obstacle to
    seamless integration of Reserve personnel into the active force. As
    medical costs rise, health insurance and health care benefits take on
    greater importance. We are greatly pleased that Congress authorized
    Federal employing agencies to pay both employee and government
    contributions to the Federal Employee Health Benefit Program (for up to
    18 months for Federal employees who are members of a Reserve component
    called to active duty for more than 30 days in support of a contingency
    operation). Given the frequency and length of recent deployments of
    Reserve personnel, this in-again, out-again health care coverage may
    result in lost or reduced health benefits at a time when most families
    can least afford it. This is a readiness, recruiting, and retention
    issue.
                        reserve recruiting and retention
        The effective integration of Reserve and Active components is
    indispensable as demands on military forces increase while active force
    size has stabilized. The authorities provided by a supportive Congress,
    coupled with the manning strategies the Department has executed, have
    provided America with a very effective force that serves as a source of
    pride and confidence. Our recruiting and retention programs are the
    cornerstones of that capability.
        Paradoxically, as a result of success enjoyed by the active force
    in its efforts to improve retention, the recruiting mission for the
    Naval Reserve becomes even more challenging. Despite that, the Naval
    Reserve came within two percent of its authorized end strength and made
    recruiting goals in fiscal year 2001. Additional enlisted and officer
    Reserve recruiters in fiscal year 2002 will help to ensure future
    recruiting goals will also be met. A restricted line special designator
    has been developed for Naval Reserve recruiting officers allowing for a
    more professional, better managed community.
        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, availability of additional ``A'' school seats, 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 addition to working with the active force to determine
    requirements, over the last 2 years the Naval Reserve Recruiting
    Command (NRRC) has been working more closely with the fleet and active
    Navy Recruiting Command (NRC) to fill those requirements. All sailors
    leaving active duty are contacted prior to separation, a NRRC liaison
    officer has been detailed to NRC, and the NRRC Call Center has been co-
    located with NRC. Further, in fiscal year 2001 the majority of Navy
    Achievement Medals presented to individuals for successful referrals to
    the Naval Reserve were presented to Regular Navy recruiters.
        Recruiting results indicate that increased expressions of interest
    by young people following the attack upon our homeland did not
    translate to hikes in enlistment contracts. The major change Naval
    Reserve recruiting has experienced since September 11, 2001 is the
    decrease in Navy Veteran (NAVET) accessions. Historically, about 80
    percent of SELRES accessions have been Navy veterans. However, the pool
    of eligible Navy veterans is shrinking due to the desire of many
    sailors to remain on active duty serving their country. In fiscal year
    2002, NAVET accessions are running around 55 percent and the NRRC fell
    7 percent below its enlisted accession goal in the first quarter.
    (Naval Reserve recruiting is currently well ahead on officer
    recruiting.) In order to offset this decline, the Reserve Force
    increased recruiting reservations to include greater numbers of non-
    prior service (NPS) accessions. Naval Reserve recruiting also received
    authorization to recruit in the 21 to 25 year old age group, which
    should help both NAVET and NPS recruiting efforts. The Marine Corps
    Reserve has traditionally relied on non-prior service recruits and
    continues to achieve recruiting goals.
        The Reserve Forces have adequate funding in place to retain officer
    and enlisted personnel with critical skills, and the reduction of
    attrition rates has received significant command attention. However,
    attrition rates in fiscal year 2002 are in line with last year's
    percentages and it is too early to know what impact the ongoing
    mobilization will have on Reserve attrition. The long-term impact will
    be tied first to the job satisfaction experienced by mobilized
    reservists. The second critical factor will be the impact of
    demobilization and assimilation back into local communities. Those
    members who experience difficulty in family or personal life, civilian
    careers, or personal finances may be expected to have a decreased
    interest in continued Reserve participation. If the Reserve Forces are
    to assume a new role of regular periods of involuntary active duty, new
    policies, additional schools and training pipelines, and new
    legislation concerning sustainment of the force will be required.
                   ensuring equal opportunity in the military
        We have succeeded in recruiting our sailors and marines from every
    part of society so that they truly represent the people they serve.
    Through careful training and development, we have bonded these diverse
    Americans into the world's pre-eminent naval force. There is no place
    in the Department of the Navy for discrimination that denies us access
    to capable and talented individuals from any background, or that
    impairs the bonds of trust and respect so necessary for cohesion and
    victory.
        Looking to the future, we are keenly aware that military leaders
    cannot be hired from outside but must be cultivated from within each
    service. Our priority is to retain and develop the best talent
    available and so ensure that our future leadership reflects the quality
    and diversity of the people we serve.
                            quality of life programs
        Out of necessity, given the nature of the military profession, we
    ask our people to sacrifice a great deal. In the aftermath of the
    events of September 11, sailors, marines, and their families are facing
    new, unprecedented challenges and are being asked to sacrifice more
    than ever before. However, we cannot expect this sacrifice to continue
    unbounded. There must be a corresponding recognition by military and
    civilian leaders that we need to do what is necessary to ease the
    burdens of the individual and collective sacrifices that our sailors,
    marines, and their families make for the good of our Nation. As a
    result, it is more important than ever that we provide adequate,
    reasonable and consistent quality of life programs and services for our
    people. This support is critical to military readiness and stands as a
    mute testament of our commitment to the well-being of service members
    and their families.
        The Department of the Navy's Child Development, Fleet and Family
    Support, Voluntary Education, Morale, Welfare, and Recreation, retail
    exchange programs and our other wide-ranging Quality of Life programs
    continue to provide a broad combination of support services for our
    service members and their families.
                     morale, welfare, and recreation (mwr)
        The focus of the Department of Navy's Morale, Welfare, and
    Recreation program continues to be in providing high-quality,
    consistent services and activities throughout the Department of the
    Navy. The cornerstone of our MWR programs is physical readiness, with a
    goal to provide ``total fitness'' to all service members, whether
    stationed ashore or afloat. Sailors and marines greatly depend on our
    fitness centers ashore and fitness equipment onboard ships to maintain
    their readiness for combat. Each MWR activity is now responsible for
    having professional fitness staff, equipment, and activities to support
    the Navy and Marine Corps' goal of developing a fitness-based lifestyle
    that includes a well-rounded fitness program. We also encourage family
    members of our military personnel to take advantage of these programs
    ashore. In support of this emphasis on physical readiness, the
    Department's fiscal year 2003 budget provides $67 million for physical
    readiness programs across fiscal year 2003 and the Future Years Defense
    Plan to augment current staffing levels, replace cardiovascular and
    strength training equipment, and implement an aggressive training and
    certification program for fitness and sports staff members.
        During the last 5 months, our MWR programs have also focused on
    supporting service members and their families during Operation Enduring
    Freedom. Among the initiatives undertaken have been the following:

             To give personnel assigned to remote and isolated
            sites a welcomed leisure outlet, Navy MWR developed a self-
            contained ``Theater in a Box,'' which provides 288 videotapes
            along with a videotape player, projector, screen, sound system
            and all connectors needed to set up an indoor or outdoor
            theater. Three of these packages were shipped to the Naval
            Support Unit in Bahrain prior to the year-end holidays.
             As part of a ``Let Freedom Ring'' sponsorship
            agreement with AT&T, every shipboard sailor and marine on
            December 23 and 24 had the opportunity to place a 15-minute
            long distance call to family and loved ones for only 15 cents.
             Country music superstar Garth Brooks performed aboard
            the U.S.S. Enterprise on Thanksgiving Eve for service members
            and their families in Norfolk, Virginia. The concert, aired
            live on network television, was held in honor of military
            families as part of the annual Military Family Week
            celebration.

        Deployed sailors and marines have also taken full advantage of MWR
    services and activities designed specifically for them as part of our
    Single Sailor and Single Marine programs. Single Sailor Centers provide
    recreational opportunities and places to relax for young sailors and
    marines who live onboard ships or in bachelor quarters. These centers
    feature large-screen televisions for viewing sports and movies, video
    games, computers with free Internet and e-mail access for keeping in
    close touch with family members and loved ones, billiards, and much
    more. The Single Sailor/Marine programs support the retention effort of
    an important segment of our military members--our first-term sailors
    and marines.
                    civilians in the department of the navy
        The Department of the Navy employs about 182,000 civilian workers
    in a wide variety of professional, administrative, technical, clerical,
    and blue-collar occupations. In addition, we employ nearly 3,500
    foreign national employees at our bases overseas. These hard working
    and dedicated civilian employees can be found in every major command,
    working alongside our sailors and marines, performing the vital work of
    the Department. The civilian workforce forms an integral part of our
    Total Force team. It is a diverse workforce, which in large measure
    reflects the diversity of our Nation.
        The civilian workforce of the Department of the Navy is 45 percent
    smaller today than it was in 1989, which marked the beginning of a
    decade of steady downsizing. This reduction of more than 149,000
    employees was accomplished in an extraordinarily smooth manner.
    Department of the Navy commanders and civilian leaders made maximum use
    of authorities for separation incentives and early retirement. Whenever
    possible, civilian employees were retrained to prepare for
    transitioning to other work, and existing DOD and Government-wide
    placement authorities were utilized to effectively assist employees in
    finding continuing work. When our employees reached a decision to
    retire or to leave by other means, we provided every available resource
    in helping them through the transition.
        Now the Department of the Navy faces an employment challenge shared
    across the Federal Government: shaping the workforce to ensure that we
    have the right people, with the right skills, in the right jobs to help
    us meet the challenges of the future. We have adjusted our focus to
    concentrate on targeting recruitment and hiring versus downsizing, and
    workforce shaping versus workforce reductions. A Recruiters' Consortium
    was established, bringing together experienced recruiters from our
    commands to share best practices and seek innovative ways to attract
    highly qualified individuals to the Department of the Navy. In keeping
    with our goal to improve the diversity of the workforce, special
    efforts are being made to attract candidates from populations currently
    under-represented in our workforce, with particular emphasis on
    Hispanics and the disabled.
        Throughout the downsizing and concurrent budget reductions, we have
    continuously sought ways to improve the management and operations of
    the civilian personnel and equal employment opportunity functions in
    the Department of the Navy, with a strong emphasis on performance and
    results. Today and in the future, our civilian workforce remains
    focused on its role as a crucial part of the total force supporting the
    military mission of the Department of the Navy.
                                   conclusion
        On behalf of our sailors and marines, civilians, retirees, and
    their families, I want to thank you again for your outstanding support.
    The initiatives and programs approved in last year's National Defense
    Authorization Act have been a significant investment in our sailors and
    marines and toward ensuring the Quality of Service these dedicated men
    and women deserve. I am confident that, with your continued support of
    our efforts to maintain the course of improvement, our Fleet and Marine
    Forces will be the versatile force required to combat the threats and
    capitalize on the opportunities of the 21st century.

        Senator Hutchinson. Thank you, Mr. Navas.
        Mr. Dominguez.

    STATEMENT OF HON. MICHAEL L. DOMINGUEZ, ASSISTANT SECRETARY OF
             THE AIR FORCE FOR MANPOWER AND RESERVE AFFAIRS

        Mr. Dominguez. Thank you. Good morning, Mr. Chairman and
    members of the subcommittee. Thanks for the opportunity to
    testify today, and I also want to thank you and the members of
    this subcommittee for your long continuing support for the men
    and women of the Armed Forces, Active, Guard, and civilian.
        I want to make three key points in my opening comments.
    First is that the men and women of the United States Air Force
    performed magnificently and continue to do so today in
    responding to the challenges in the war against terrorism.
    Within moments of the attacks of September 11, the Air Force
    had moved its forces to high states of readiness and alert.
        Citizen airmen from the Guard and Reserves poured in as
    volunteers to pick up the load of that increased mission
    requirement, and over the intervening months we have mobilized
    many more of those citizen airmen. We have imposed stop loss
    across the entire force, and the airmen out there continue to
    respond without complaint. Every day, they show us the meaning
    of selfless service, and it is an inspiring thing to be a
    witness to, and to me drives home the rightness of the total
    force concept.
        The second point I want to make is that while our
    technology frequently grabs the headlines, it is the quality of
    the men and women who guarantee success, the men and women
    behind that technology, and the quality of the people in the
    Air Force today is a direct result of the constant, continuous
    nurturing over many years that the members of this subcommittee
    and the full Senate Armed Services Committee have given to the
    people issues in the Air Force.
        So you deserve much of the credit for the quality of this
    achievement and the people in the Air Force, and I am eager to
    work with you to extend that success into the future to
    continue to make the Air Force an attractive option for the
    best and brightest young people in America, and to retain the
    people who have joined our team, and that is going to be our
    biggest challenge as we move into the future, because the war
    has increased the stress on the force.
        The tempo of operations (OPTEMPO) is higher, and the high
    demand, low density skills are particularly stressed in Air
    Force, and so retention, already difficult, will become a
    bigger challenge for us, and we have to succeed, because
    retaining those highly educated technically skilled
    operationally proficient combat-tested airmen is the key to Air
    Force readiness today and transformation tomorrow.
        The final point that I would like to make is again also
    sharing with my colleagues recognition of the important
    contribution that civilian airmen make to the output of the
    total force. We know that the viability of that workforce, our
    civilian workforce, is threatened, and we have to respond. If
    we do not, there will be an effect on the combat capabilities
    of the Air Force, and for that reason I commend that particular
    issue to this committee's attention, and we will be soliciting
    your support as we work with the other committees in Congress
    that have more direct jurisdiction over Civil Service matters.
        Thank you, and I look forward to your questions.
        [The prepared statement of Mr. Dominguez follows:]
                Prepared Statement by Hon. Michael L. Dominguez
        Mr. Chairman and members of the subcommittee, thank you for the
    opportunity to testify today. This is a great opportunity to meet with
    you, to thank you for your continuing interest and support of the men
    and women who serve our country so well.
        In a recent speech at the National Defense University in
    Washington, DC, Secretary Rumsfeld eloquently made the case that our
    national security strategy, the wars that we fight, the way that we
    fight wars, and the weapons that we use have changed forever, and we
    must transform to a new approach of deterrence and defense. He
    specifically stated that as we allocate defense dollars and prepare for
    nearer-term threats, we must not cheat the future--or the people who
    risk their lives to secure it for us. We embrace his vision, not only
    because it is his vision for the Department, but also because he is
    right. People are the key ingredient to readiness and to successful
    transformation. We must invest in human capital as ardently as we do
    weapon systems and we must have the freedom to manage that investment.
    The men and women of the Air Force, active duty, Guard and Reserve, and
    civilian employees, are dedicated and patriotic individuals who have
    responded with fervor and talent to the attacks of September 11. We
    must respond with equal determination to ensure that they are the best-
    trained and equipped force possible. We must also ensure that our
    personnel and force management policies are continually transforming to
    meet the ever-changing challenges of the 21st century. This was brought
    home to us painfully on September 11 and the weeks to follow as the
    President declared the war on terrorism.
    Where We Are
        Stop Loss
        The war on terrorism affects an already stressed force. Because of
    the increased operational requirements stemming from war on terrorism,
    the AF implemented stop loss in September. Stop loss has been a
    coordinated Total Force effort, encompassing the Air Reserve Component
    (ARC) as well as the active force. We also put in place a process to
    waive the stop loss order for those individuals with truly extenuating
    circumstances. As the war on terrorism evolved, we worked hard to
    define our current and future total mission requirements. In January,
    we were able to begin releasing airmen from individual career fields--
    specific Air Force Specialty Classifications (AFSCs). The initial
    release from stop loss covered 24 officer AFSCs and 40 enlisted AFSCs,
    which comprise 14 percent of the officer and 24 percent of enlisted
    members of the Total Force. People released from stop loss will be
    allowed to begin separating as of March 1, 2002. However, the Air Force
    won't force anyone out the door with only 30-days notice. Even people
    released from stop loss that must separate due to high year of tenure
    or mandatory retirement dates will be allowed to take up to 5 months to
    transition. We continue to review wartime requirements, and will
    announce further stop loss adjustments at the end of March. I would
    like to point out that the dedication and professionalism with which
    the men and women of the Total Force have handled the additional
    frustration associated with stop loss has been absolutely incredible,
    and is totally in keeping with our Air Force history of proud service
    to the Nation.
        Mobilization
        Our Total Force approach to stop loss is just an extension of the
    way we view ourselves as a single service. Well before September 11,
    the Air Force was truly a Total Force, succeeding through major
    contributions from active duty, civilians, Air National Guard (ANG),
    Air Force Reserve (AFR), and support contractors. This Total Force
    philosophy is paying huge dividends during the national emergency as
    each component performs its role superbly. To date, we mobilized just
    over 26,000 ANG and AFR assets, with an additional 9,000 ANG/AFR
    volunteers serving daily. Let me tell you how proud I am of our
    guardsmen and reservists who have volunteered to serve our Nation. We
    have had tremendous contributions from Air Reserve Component (ARC)
    members that guard the Nation's skies here at home, pursue terrorists
    abroad, and provide support to deployed forces. As we continue to
    support the Expeditionary Air Force (EAF) construct with our Total
    Force policy, the mobilization of the ARC will remain a critical part
    of our capabilities, and the ARC will continue to stress volunteerism
    in meeting current Air Force requirements.
        Total Force End-strength
        Implementation of the EAF structure throughout the Air Force has
    enabled us to better measure and assess Operations Tempo (OPTEMPO)-
    related manpower requirements over time. In the pre-September 11
    environment, we identified a historical, enduring demand for 2+ AEFs
    with acute impact on manpower requirements supporting High Demand/Low
    Density (HD/LD) assets. The events of September 11 exacerbated both our
    overall and HD/LD OPTEMPO, resulting in a higher steady state manpower
    requirement. New homeland security requirements have resulted in an
    ongoing reassessment of Air Force total manpower requirements. Our
    initial projections show increased demands in stressed specialties in
    warfighting skills such as security forces, intelligence, and
    communications, which will have to be offset by reductions in other
    less stressed skill areas.
        While we have been able to meet our end strength requirements
    short-term through the partial mobilization of the Reserve components
    and stop-loss actions, these tools may affect Total Force retention
    down the road. We must plan to exit from stop loss, while also allowing
    our dedicated Air National Guard and Air Force Reserve personnel to
    return to their normal, citizen-airman roles in the future. In
    achieving that end, Secretary Rumsfeld has challenged us to pursue more
    innovative solutions to offset the need for end strength growth. We see
    this as one more dimension of our transformation effort, and are
    investigating a variety of options for shifting resources from ``tail''
    to ``tooth''. We are also looking at cross-leveling within our force to
    lessen impact on stressed AFSCs. These ``fixes'' will take time to
    develop and implement, however, while the stress on our force is very
    much here and now.
    The Way Ahead
        Retention
        Recruiting and retention are often mentioned in the same breath,
    but retention is more than just half the equation for achieving end
    strength. Experience is key to Air Force readiness. The retention
    challenge is a composite problem affected by every other decision made
    in the AF from operational concepts to award policies. We have found
    that we recruit individuals into the Air Force, but the decision to
    either stay or separate is ultimately made around the family dinner
    table. Air Force members that stay with us do so because of their pride
    in serving our Nation, and due to the bonds they develop with the
    greater Air Force family. Our ability to maintain an Air Force culture
    that offers challenge and growth opportunities for our members,
    adequate pay and benefits, and a quality of life acceptable for their
    families dictates our ultimate retention rates. We set high retention
    goals for ourselves because of the substantial cost of recruiting and
    training replacements when people choose to leave. Aided by the badly
    needed pay and compensation gains Congress worked hard to bring about,
    we have exceeded one of three reenlistment goals for the first time in
    3 years--first term enlistment. However, we still fell short of our
    second- and third-term retention goals. Increases in Initial Enlistment
    Bonuses, Selective Reenlistment Bonuses (SRBs), and the expansion of
    the SRB program into new skill areas contributed to this improvement.
    With approximately 80 percent of our enlisted force eligible to make a
    reenlistment decision in the next 5 years, and recent decreases in
    officer retention in some of our most critical career fields such as
    scientists, engineers, and acquisition managers, retention will
    continue to be one of the Air Force's greatest challenge.
        Recruiting
        Our renewed emphasis on recruiting is paying dividends, as we are
    exceptionally well postured to exceed our current recruiting goals. We
    now have 1,634 enlisted recruiters on the job and we are well on the
    way to meeting our goal of 1,650. We have enhanced enlistment bonuses
    and reemphasized the recruitment of candidates that have some prior
    service experience. We started offering contracts to freshman ROTC
    cadets rather than waiting until their sophomore year, added a 1-year
    commissioning program to attract both undergraduate and graduate
    students, and increased the maximum age for entry into senior ROTC.
    Supported by an increased advertising budget that grew from $16 million
    in fiscal year 1998 to $90 million in fiscal year 2002, we have already
    accessed 107 percent of our fiscal year 2002 year-to-date goal without
    lowering quality standards. However, it would be a critical mistake to
    become complacent. The recruiting challenges that lay ahead are even
    greater than those we have overcome if we are going to achieve the
    force structure we will need for the future. We need to recruit the
    right mix of skills in the right numbers. In the enlisted force we fell
    short in the general skills area that includes one of our most stressed
    skills--Security Forces. We also failed to meet our goals in recruiting
    scientists and engineers, who are vital to our transformation efforts.
    An increase in the numbers of Air Force people devoted to meeting
    mission requirements in homeland security, anti-terrorism, and force
    protection, combined with the increased demand for transitional skills
    in areas such as science and engineering, intelligence, and
    communications, will demand creative new approaches to recruiting.
        Investment in Human Capital
        Human capital provides the foundation for achievement of every one
    of our goals, from meeting the challenge of the war against terrorism,
    to transforming the Air Force to meet future, unimagined threats. To
    that end, Secretary Roche has initiated a comprehensive overhaul of how
    we think about developing aerospace leaders, and our programs for
    educating and training that workforce. One component of this focus on
    human capital is providing world class educational experiences tied to
    the unique demands of the military services. To that end, Secretary
    Roche and Navy Secretary England have begun a cooperative effort
    between the Air Force Institute of Technology (AFIT) and the Naval Post
    Graduate Schools (NPGS) to strengthen each institution as an
    independent Center of Excellence. The individual programs will
    compliment each other, and together they will offer all services top-
    tier educational opportunities. Ultimately, our ability to transform
    will rest on the investment we make in intellectual capital today.
        Compensation
        As we transform we need to attract and retain the highest caliber,
    high-quality, high-tech talent. With an all-volunteer force,
    compensation programs must keep pace with the private sector or our
    transformation plans will not be achieved. The President's budget
    includes an additional pay raise for our military members. These raises
    will assist with retention, and make service in the Armed Forces more
    competitive with the private sector. Congress has long recognized the
    cost effectiveness of offering financial incentives in areas of
    critical military skills. A robust and targeted bonus program is still
    our most effective long-term retention tool to manage the force. We
    must extend authorities for accession and retention bonuses for both
    the active duty and the Reserves. For the foreseeable future, we will
    need help in areas such as Aviation Career Pay, Selective Reenlistment
    Bonuses, Critical Skills Retention Bonuses, and Nurse and Dental
    Bonuses. New legislative authorities for Critical Skills Retention
    Bonuses (CSRB) and Officer Accessions Bonuses (OAB) are valuable tools
    in recruiting and retaining the high quality people we need. Recent
    cuts in CSRB will have a direct and lasting negative effect on those
    very skill sets we have identified as critical to our success. Funding
    of CSRB, as well as enlistment/reenlistment, aviation, and medical
    bonuses is a vital component in our effort to build an experienced
    force.
        Force Shaping
        We can no longer rely on inflexible personnel and management
    systems to produce the workforce needed to do the job in the 21st
    century. We must transform, utilize modern business techniques and
    explore creative means to access, develop, and retain a multi-talented
    and skilled workforce. That is particularly critical in the civilian
    component of the force. Traditionally, the Air Force civilian workforce
    has provided continuity and comprises a significant percentage of
    personnel in the scientist, engineer, contracting, financial
    management, logistics, and maintenance career fields. In the
    Expeditionary Air Force, the role of continuity extends to providing
    the ``reachback'' expertise necessary to support deployed troops, where
    previously that support was provided through forward-deployed bases.
    Civilians are an integral part of the complex system that keeps the
    fighters, bombers, tankers and rockets flying. They also play a
    critical role in the DOD's homeland security mission. The roles Air
    Force civilian employees play in accomplishing the Air Force mission
    are, in and of themselves, compelling reasons to invest in the Air
    Force's civilian workforce. However, there are other major issues that
    make investment in the civilian workforce critical.
        A decade of downsizing has produced a civilian workforce that needs
    new blood and new skills. Since 1989, the Air Force eliminated 100,000
    civilian positions. Hiring has been seriously constrained as we
    attempted to minimize the downsizing's effect on existing employees.
    Consequently, there has been limited opportunity to refresh the force
    with new hires. Professional occupations have been the hardest hit. In
    1989, a quarter of all professional employees were within the first 10
    years of service; now less than 10 percent are. As a result, by 2005,
    based on the current assigned force, over 42 percent of the Air Force
    civilian population will be eligible for either early or optional
    retirement. Historical trends indicate that approximately one third of
    white-collar employees will retire the year they become eligible,
    approximately half retire within 2 years of eligibility and by the
    fifth year that number reaches 80 percent. For blue-collar employees,
    the numbers are even higher. We must have workforce-shaping
    flexibilities to ensure we have a sustainable force that can meet
    tomorrow's readiness challenge. There are three distinct civilian
    force-shaping initiatives that we believe to be crucial and that are
    consistent with the President's Management Agenda.
        First, we need to institute pay broad banding to simplify position
    classification and reward top performers. We need the authority to
    develop and implement a DOD broad banded classification and pay system.
    It would streamline the personnel management process, provide
    flexibility, be responsive to ever changing requirements, encourage
    empowerment, and enhance productivity.
        Second, we support the administration's initiative for expedited
    hiring that provides for category ranking of applicants but we also
    need the ability to do on-the-spot hiring for critical skills or where
    there is a demonstrated shortage of candidates. We need the increased
    recruitment flexibility to allow positions to be announced in a limited
    geographic area. Expedited hiring practices can increase efficiency
    without undermining merit principles or veterans' preference.
        Third, we need the ability to shape our workforce to support our
    transformation efforts as the Air Force evolves and adapts to the
    changing security environment of this 21st century. Early retirement
    and separation incentives will allow us to create vacancies, which can
    be used to renew the force now, and arrest the aging of our workforce.
    An aging workforce costs more than it would if normal accessions had
    occurred. Separation authority would be used judiciously to ensure
    institutional knowledge is not lost in the process.
        Air Force leaders also need the flexibility to encourage critical
    skill civilian employees to relocate to meet Air Force mission
    requirements. Currently, we may pay for a last move home for SES
    members when they relocate in the interest of the government. We need
    the same flexibility, at the discretion of the Service Secretary for
    certain other employees when asked to move within a few years of
    retirement.
        Likewise, we need flexible authorities to respond to forecasted and
    unforeseen changes in military requirements. Previous military force-
    shaping programs and transition benefits expired on 31 December 2001.
    These included an early retirement authority, VSI/SSB programs, TIG/CST
    retirement waivers, SERBs, and special retirement and pay authorities
    for the Reserve--relaxation of certain ``active'' and ``consecutive''
    service timelines in the retirement eligibility/pay equation.
    Transition benefits that expired (applicable to involuntary separations
    only) included 2 years of continued commissary/exchange privileges,
    extended use of military housing up to 180 days, delay of travel/
    transportation/storage benefits up to 1 year, extension of expiration
    on Reserve MGIB benefits, educational leave for post-military
    community/public service, continued enrollment of family members up to
    1 year in DOD schools and preference when applying to the Guard or
    Reserve. While other initiatives such as cross-leveling will be
    utilized to shape our force assets to requirements, they are not the
    single answer to successful force management. Hence, as with our
    civilian force, we must have the flexibility to discriminately
    incentivize separations and retirements to support current requirements
    and future planning. The availability of these authorities is critical
    to maintaining a stabilized military end strength and skill mix, and is
    consistent with our transformational strategy for personnel and force
    management policies.
    Sustaining Quality of Life
        Every dollar that we invest in quality of life (QOL) affects the
    readiness of the United States Air Force. We have identified a few key
    quality of life readiness drivers affecting both the member and his or
    her family. High OPTEMPO, excessive work hours, and extensive, extended
    deployments, all mean less time with family. The resulting stress and
    strain will have a direct impact on readiness. Therefore, our highest
    QOL priority is ensuring we have the manpower needed to perform our
    mission. Through our AEF construct, we can provide a properly sized
    force a high degree of stability and predictability in deployment and
    home station scheduling. In the past workplace environments have
    suffered because total Air Force requirements simply exceeded available
    resources. Fortunately, with the support of the President, Congress,
    and the American people, the Air Force budget is now large enough to
    begin reversing that trend. Congress has increased pay, selected
    bonuses, and benefits for our service members and we support your
    continuing efforts to minimize out-of-pocket expenses and to ensure
    fair and competitive pay and benefits.
        Programs and services that support and enhance a sense of community
    are critical, especially in times of deployment and war. In particular,
    quality health care and safe and affordable housing are key to
    providing military members and their families a strong sense of
    security. On-base MWR and family programs are part of the vital non-pay
    benefit system as are the commissary and exchanges. Programs like child
    development, youth programs, fitness centers, libraries, skills
    development, and family support centers contribute to the economic
    viability, morale, and readiness of our total force.
        Our young enlisted members are finding it increasingly difficult to
    make ends meet. With the vast array of credit available to our members
    it is especially important for them to understand the consequences of
    assuming debt that can lead to long-term financial hardship. A study by
    the RAND Corporation indicates that 27 percent of junior enlisted
    members have problems paying their bills compared to 19 percent of
    comparable civilians. We conducted an internal survey of E-3 through E-
    5s and found that 24 percent had no savings and 29 percent had less
    than $1,000 in savings. We are helping our junior members before they
    fall into the spiral of long-term debt, which in many cases leads to
    disciplinary action or separation from the service. We are implementing
    preventative measures to assist our members and their families with
    Personal Financial Management Programs. We've added 2 to 4 hours of
    financial training in our basic and technical training curriculum along
    with 4 to 6 additional hours of training at the member's first duty
    station. We are exploring additional training opportunities at our
    professional Military Education Academies along with developing a Web-
    based training program in our world class Internet site, the Air Force
    ``Crossroads.'' As you continue to support closing the pay gap for our
    military members, we want to do all we can to support financial
    literacy so our members can make smart, informed financial decisions.
                                    summary
        Secretary Rumsfeld and Secretary Roche share a very clear vision
    for the future of the Air Force. That transformational strategy invests
    in human capital as ardently as it does weapon systems, and
    aggressively employs sound business principles and modern management
    techniques to empower the workforce, speeding the agility of our
    response to emerging threats, and shifting resources from bureaucracies
    to the battlefield. Our Total Force is meeting the challenges of the
    new war on terrorism head-on. They endure a high OPTEMPO, stop loss,
    and mobilization without complaint to ensure we achieve our Nation's
    goals. As leaders, we must use these and the other tools at our
    disposal judiciously to sustain the force that so selflessly serves our
    Nation's interests today. With the added mission requirements of a war
    against terrorism, we have stressed particular career fields and will
    need to increase the numbers of people in those fields. The recruiting
    and retention of the high-tech work force necessary to achieve the
    Secretary's transformation goals demands pay and compensation
    competitive with the similarly educated work force in the private
    sector. The time to invest in that precious commodity--human capital--
    is today. A much greater emphasis on advanced academic degrees from
    world-class institutions in mission-related fields is fundamental to
    our success, as are key retention tools like the MGIB and the Student
    Loan Deferment Program that allow us to recruit from the population of
    candidates that have college experience. There is no more critical need
    for us than the need for flexible management tools to shape our
    workforce--both military and civilian. Authorities like broad pay
    banding, streamlined hiring, and voluntary separation incentives will
    allow us to mold today's workforce into a workforce with the skills for
    tomorrow. The way we fight our Nation's wars has changed forever. I
    look forward to working with each of you as we transform the Air Force
    into an organization perfectly suited for our new challenge.

        Senator Hutchinson. Thank you very much.
        Dr. Chu, I am sorry I was not here to hear your testimony,
    but we thank the whole panel. We have five successive votes,
    and so we are hoping that by voting alternately, that we will
    be able to keep the hearing moving along. Thank you again for
    your patience.
        Dr. Chu, let me bring up a subject that I always bring up,
    and that is the vaccine program for the military. This is
    something we have talked about, and I know that you have been
    very dedicated to this. It is my understanding that Bioport has
    now received approval from the Food and Drug Administration
    (FDA) that they are back in production on the anthrax vaccine,
    and that is good news. I am very pleased about that.
        But I am not pleased that we ever got into the situation
    where we were wholly dependent on one commercial company for
    the production of the vaccine. The experience was not good and
    should never be repeated. The military has very specific
    vaccine needs that the commercial sector has been either
    unwilling or unable to meet. I am talking about the so-called
    orphan vaccines that commercial firms do not produce but are
    critical in order to protect our troops.
        At a hearing last week, I asked General Myers about the
    need for the Department of Defense to have some kind of organic
    vaccine production capability, so I raised that issue with the
    Secretary as well. General Myers agreed that this kind of
    facility was a valid requirement, I believe were the words.
    Secretary Rumsfeld indicated that a decision on whether to go
    forward with the Government-owned, contractor-operated (GOCO)
    facility was not yet made but was forthcoming.
        I want to get your thoughts on that, maybe an update on how
    the Bioport production is going, where the vaccination program
    on anthrax, where that stands as far as our troops, and a
    status on the whole GOCO proposal.
        Dr. Chu. Thank you, sir. Your concern for this, of course,
    is quite prescient in character and, as you know better than I,
    has taken on even greater importance since September 11.
        We have, as a result of that widened interest, formed a
    partnership with the Department of Health and Human Services
    (HHS), because as you appreciate, this is really now a national
    problem, not just a military problem. Secretary Rumsfeld
    indicated it will be in that context that Defense makes
    decisions about specific alternatives in terms of how we best
    meet national and military needs, not only for anthrax but for
    a whole variety of problems, as you so well appreciate.
        On anthrax specifically, with the licensure of Bioport, the
    vaccine produced in the course of that licensure process over
    the last couple of years becomes available to us, about 500,000
    doses.
        My understanding from my colleagues in acquisition, who
    monitor the actual facility and its business operations on a
    close basis, is that they seem pleased with what is occurring.
        Going forward, we would obviously come to a review of our
    anthrax inoculation program. That is ongoing. The decisions
    about exactly how we are going to proceed have not yet been
    made, but I expect them fairly shortly. Until licensure was
    completed we had a limited stock of vaccine that we could use
    as a licensed product. We had limited inoculation of anthrax to
    the highest risk category, those being special forces and
    people actually handling anthrax material, etcetera.
        Senator Hutchinson. At what point will the DOD actually
    acquire the 500,000 doses?
        Dr. Chu. They are available to us now, sir.
        Senator Hutchinson. Have we ramped up the actual
    inoculation program?
        Dr. Chu. We are in the midst of deciding how we are going
    to do that. That decision is not yet made. What I should
    emphasize is, even with Bioport at its current production
    capacity for the next 2 or 3 years, it really is not viable to
    return to the older policy of inoculating everybody, Active and
    Reserve, regardless of the level of risk that they face. It is
    just a matter of putting the volume of vaccine you have against
    the number of inoculations you have to give.
        It is intricately entwined with the decision on the results
    that we hope to have in the next 18 months to 2 years, as to
    whether a shorter course of inoculations and a different
    inoculation site would be a preferred route to go. Those tests
    are being run for the Centers for Disease Control (CDC) in the
    Department of Health and Human Services.
        Senator Hutchinson. Is that the same generation of vaccine?
        Dr. Chu. That is the same vaccine, but there are really two
    issues. One is, as I understand it, the microbiology experts
    believe that a shorter number of vaccinations, three
    specifically, would give you protection, versus the six that
    are required now, as the drug is presently licensed. The CDC is
    conducting a series of tests to determine if that is, indeed,
    the case.
        Second, it is believed that if the drug were given in a
    different way, that is to say, intramuscular instead of
    subcutaneous, that you would have fewer swelling reactions,
    which is the normal reaction to this inoculation.
        Senator Hutchinson. In regards to the impending decision--
    and I realize that is not your decision to make--but to my
    knowledge there have been at least two DOD reports recommending
    a GOCO. I know that the Surgeon General of the United States
    has weighed in in favor of believing that such a GOCO is in the
    national interest, so I am a little perplexed as to why it has
    taken so long to reach a decision point on that question. Do
    you have a personal opinion? Have you reached your own personal
    conclusion as to the wisdom of a GOCO to meet these vaccine
    production needs?
        Dr. Chu. I think, sir, that is going to be an issue of
    empirics, of the facts of the case, of weighing that option
    against the other options available to the United States in
    this regard.
        I should also emphasize that, given the breadth of
    challenge we face, this is not just anthrax. It is a whole
    variety of possibilities here, ranging from one arena where HHS
    has already contracted with private sector producers, that is
    smallpox. Also, as you point out, there are the orphan vaccines
    that are not of significant commercial interest. It may in the
    end be a mix of ingredients that is the best choice for the
    United States, but we have reached no conclusion. I certainly
    have reached no conclusion on what the right answer is, and as
    you emphasize, sir, ultimately my end of the process is what we
    need, and not so much how we produce it. That is the
    acquisition community's call.
        Senator Hutchinson. You are intimately familiar with the
    entire issue, and you know the pros and cons and the various
    factors involved. The needs that our uniformed men and women
    will have as we continue this war on terrorism. Iraq has
    weapons of mass destruction in chemical and biological weapons,
    and that was listed by our Commander in Chief as part of the
    axis of evil.
        Given what you know, what would be your recommendation to
    those who are going to be making that imminent decision?
        Dr. Chu. I think what I would recommend in that process is
    that we will need a vigorous national effort to produce
    adequate amounts of vaccines against these possibilities, both
    now and in the future. I think the key ingredient of whatever
    solution we arrive at in terms of the instrumentality employed
    is to link up with the best scientific minds in the United
    States to keep those vaccines at the cutting edge of what our
    science knows how to do.
        Senator Hutchinson. So you are not going to tell me, are
    you? I do not need to go any further on that, do I? [Laughter.]
        Let me switch subjects to an easier issue. I would like an
    update and a status report on the issue of high school access
    to military recruiters. Congress has enacted legislation hoping
    to improve that situation on our military recruiters having
    full access to high school students across this country--and it
    is my understanding that between 2,000 and 3,000 schools have
    been identified by the Department as problem schools that are
    likely to deny access to military recruiters--with the
    implementation date, I think, of July of this year. Can you
    give me a report on how that is faring, what has been done as
    far as informing schools of their responsibilities under the
    law?
        Dr. Chu. First of all, I should emphasize, sir, that we are
    very grateful for the legislation that you helped Congress
    enact. It has called attention to this problem in what I think
    is a very constructive way. In fact, one of the interesting
    things we are discovering is local communities, including local
    media, are calling us for the names of high schools that are
    not open to recruiting. In their own leadership role in their
    communities, they are starting to raise questions about why
    this is so, and why particularly since September 11 there is
    not a more cooperative approach here.
        As you note, sir, we have identified over 2,000 schools
    that we think are not open to us under the provisions that the
    law identifies. We are beginning to organize those visits.
        One small, technical change that we would appreciate in the
    underlying legislation is the right to send a field grade
    officer as opposed to an O-6 or higher. I do think, and I have
    been in discussion with our team about this, in some cases we
    may actually send flag officers, but given the volume of visits
    I regret to say we are going to need to make, it would be
    helpful if we could use field grade officers for that purpose.
    We appreciate your support of that small change. We are going
    to act very vigorously in the spirit of the law.
        Also, it calls attention to the need to think hard about
    the recruiters in the United States, to make sure we are making
    a vigorous effort in all areas of the States, even areas that
    historically have not done well by us.
        Senator Hutchinson. Thank you, Dr. Chu.
        I am going to need to go vote. We will have a brief recess
    until Senator Cleland returns. [Recess.]
        Senator Cleland. The subcommittee will come to order. Thank
    you all for understanding here we have to do our day job. Thank
    you.
        Dr. Chu, I am a very strong advocate of the Montgomery GI
    Bill, and have worked for the last several years to authorize
    service members in certain circumstances to transfer their
    earned but unused GI benefits to family members as a retention
    tool. In response to concerns raised by the Department, I
    actually modified my original proposal that would have
    authorized all service members to transfer all unused benefits
    to family members.
        Last year, we succeeded in enacting a provision that
    authorized service secretaries to permit service members with
    critical skills to transfer up to half of their benefit to
    family members in return for a service commitment. This
    proposal gives the Department and the services significant
    flexibility in how it is implemented. What can you tell us
    about the Department's plans to implement the authorization for
    transferring GI bill benefits to family members?
        Dr. Chu. The Department appreciates the flexibility you
    have created, sir. The services have been reviewing how best to
    proceed both with this option and the savings bond option.
    Their intent, as I understand it, and I really would defer to
    my colleagues here about the specifics, would be to proceed in
    the near term by focusing quite specifically on individual
    skill areas of great interest and great need. But let me defer
    to my colleagues in each of the military departments on the
    specifics.
        Mr. Navas. Yes, sir. The Navy is planning to start a 2-year
    program by targeting certain high risk areas or skills where we
    are having some of our retention challenges, and we will try to
    do that following the law as enacted, of those high risk, for
    basically those who have served for 6 years and reenlist for 4
    more, and we would be coming out with our plan to do that in
    the near future. It is being worked.
        Senator Cleland. We would appreciate it if you would share
    that plan with the committee.
        Mr. Navas. Yes, sir.
        Mr. Brown. We are looking at instituting a pilot program.
    One area to pay attention to is the funding for it, which we
    see as a potential problem. The program could cost us a lot of
    money. We have not yet identified funding.
        Senator Cleland. If you would share those plans with the
    committee, we would appreciate it.
        Mr. Brown. Yes, Mr. Chairman.
        Mr. Dominguez. Yes, Mr. Chairman, thank you. I want to
    share my colleagues' gratitude to the committee and to you and
    to Senator Hutchinson for the arrows in the quiver. More tools,
    more flexibility are great assets for us, because in the Air
    Force we are a retention-based force, and the more tools I have
    to be able to map and match the individual needs of service
    members, the better off we are, and so I really appreciate
    these assets. We, like the others, are in the early stages now
    trying to figure out how best to apply it, and we will be very
    happy, when we get that, to share it with you, sir.
        Senator Cleland. Thank you for being willing to share with
    us your plans.
        Senator Hutchinson.
        Senator Hutchinson. The only follow-up, Dr. Chu and Mr.
    Dominguez, you alluded to the parallel measures of the
    Montgomery GI Bill transferability along with the savings bond.
    Is there any different answer on implementation of the savings
    bond authorization, the flexibility given, or are you in the
    planning stages?
        Dr. Chu. It is all in the planning stages, sir. As Mr.
    Dominguez mentioned, these are two somewhat different but
    parallel opportunities for the Department. We are looking hard
    at how best to utilize them. We have not reached any
    conclusions yet.
        Senator Hutchinson. Thank you.
        Senator Cleland. Thank you very much for understanding the
    back-and-forth here on the five recorded votes. Normally we
    have 15 minutes between the votes. It is down to 10 minutes,
    and we have been running back and forth. Thank you very much,
    and the first panel is adjourned.
        I will call the second panel of senior enlisted members. I
    apologize for not giving the staff time to catch up. We will
    press on here. I would like to extend a hearty welcome to our
    panelists, consisting of the senior enlisted members of the
    services. This is the first time since I have been on this
    subcommittee that we have had you here to testify. I know that
    more than anyone else you are out there talking to our young
    soldiers and sailors, airmen and marines about their concerns.
    No one has an ear closer to the troops than you do, and so we
    are very anxious to hear from you.
        Again, I know that each of you has a prepared statement.
    Without objection, those statements will be included in the
    record. I assure you, your statements will be fully considered.
    Please take a few minutes to talk to us about the matters that
    are of greatest concern to our troops.
        Sergeant Major Tilley, we will start with you, and then
    Sergeant Major McMichael, Master Chief Herdt, and Chief Master
    Sergeant Finch. Thank you.
        Sergeant Major Tilley.

               STATEMENT OF SGT. MAJ. JACK L. TILLEY, USA

        Sergeant Tilley. Good morning, Mr. Chairman and
    distinguished subcommittee members. I would like to begin by
    telling you what an honor and a privilege it is for me to be
    here today to represent the families and the soldiers of the
    United States Army. I would like to introduce Sergeant Major
    Lackey, from the senior noncommissioned officers from the
    United States Army Reserve and Command Sergeant Major Leonard,
    who is the senior noncommissioned officer here representing the
    National Guard. I point them out to you because we work as a
    very close team of the United States Army Guard, Reserve and
    Active duty.
        Senator Cleland. Thank you for that recognition. We thank
    you for your service.
        Sergeant Tilley. When I first appeared on Capitol Hill a
    year ago, I told your colleagues that our Nation had the best
    Army in the world. That opinion has been validated since the
    tragic events of September 11. I hope all Americans are proud
    of their military and the performance thus far on the war on
    terrorism. It goes without saying that today the Army is now
    stretched really as thin as it has ever been.
        My written statement contains in-depth numbers, but right
    now, America's Army has about 124,000 soldiers permanently
    based overseas. Beyond that, due to training and real-world
    missions, there are about another 55,000 soldiers that are
    currently away from their homes in duty stations today.
        A year ago, we averaged about 27,000 soldiers away from
    their homes on any given day. This fiscal year, the number is
    about 42,000 soldiers. When considering the current Army
    operational tempo, an easy number to overlook involves force
    protection. That is, how many soldiers are needed daily to
    secure installations that are not available for training on
    normal days. An example of that, in January our Forces Command
    was using about 4,000 soldiers a day to secure about 11 major
    stateside posts. That number will fluctuate based upon the
    threat. It could go up as high as 11,000 a day within that
    command.
        In giving you a snapshot of the Army's personnel picture, I
    would be remiss if I did not simply thank you on behalf of all
    the soldiers and their families for all the good things that
    are going around the Army right today. A year ago, my
    colleagues and I laid out before your House colleagues a number
    of concerns in a number of areas. Today, those areas are good.
    This year, they raised the largest pay raise we received in the
    Army in the last 20 years. It sent a strong signal to the
    force. I wish you could be with me when I go out and talk to
    soldiers and their families and hear their gratitude about the
    pay raise. It is right on target. We still have a long way to
    go, but I think we are getting it about right, and I hope we
    continue to focus on pay for the Army.
        Today, at bases across the Army, there is street after
    street of housing and barracks renovation and construction. The
    word is getting out that this is Army-wide. Soldiers and
    families sense that commitment. Our residential community
    initiative (RCI) is already having an impact on the program. I
    wish you could go out with me to Forts Carson, Lewis, Meade,
    and Hood. There are 5,000 sets of quarters at Fort Hood. I went
    out to Fort Carson, and the last set of quarters that I lived
    in as a sergeant major was 950 square feet. Today, with RCI,
    they are between 1,400 and 1,500 square feet, and so again,
    that sends a clear signal to our families.
        About half of our families live off-post, and they are
    getting positive feedback by the increases in BAH, and
    hopefully we can close that gap by 2005.
        If there is a concern with the housing and facilities
    arena, it would be in the infrastructure. This year, our
    sustainment, restoration, and modernization needs were funded
    at about 94 percent. Deterioration is still a problem. We have
    an $8 billion backlog. It makes no sense to renovate and build
    facilities and then let them deteriorate due to lack of
    funding.
        When you talk about TRICARE and medical care, it is vitally
    important to families, and it is mostly a good-news story.
    Noting the satisfaction, there is a lot of satisfaction across
    the Army, better quality and reduction of out-of-pocket
    expenses, but improvements are really attributed to money. This
    year we had an increase, I believe it was $3.2 billion, in our
    medical care, but again it is a good-news story for families.
        A year ago, before September 11, I testified the Army could
    not get the job done without the Guard and Reserve. They
    deserve our thanks, as do their families, and certainly their
    employers. Their support has certainly been outstanding. I
    would ask for your help if we ask to adjust entitlements and
    benefits given to our Reserve and component troops.
        Another group I must mention in the Nation is our veterans
    and retirees. They have sacrificed so much for America, and I
    would ask you, and I do, to thank them every chance you get and
    consider issues and requests before such a committee as
    yourself.
        Again, thank you and your colleagues. It is not yet perfect
    in all areas. We still have a long way to go, but you can
    visually see the improvements as you travel around the Army. We
    are making our recruiting and retention goals, and I would
    simply ask to keep up the momentum. You are making a difference
    in the morale of welfare and readiness of our soldiers.
        The Army focus on war is at hand, and we are ready to do
    any mission given us. I am proud of our country, and I am
    certainly proud of our Army. We know who we are fighting
    against, and we know who we are fighting for. I thank you, and
    I really look forward to answering your questions.
        [The prepared statement of Sergeant Major Tilley follows:]
              Prepared Statement by Sgt. Maj. Jack L. Tilley, USA
        Good morning, Mr. Chairman and distinguished subcommittee members.
    It is an honor for me to appear before you on behalf of the magnificent
    men and women who wear the uniform of America's Army. This is my first
    opportunity to address the Senate since being sworn in as the 12th
    Sergeant Major of the Army 21 months ago. When I took the position, my
    boss--Army Chief of Staff General Eric Shinseki--gave me a fairly
    simple set of marching orders. In short, he instructed me to get out
    among our soldiers and their families, to understand their needs and
    issues and to act as their biggest advocate and supporter as I
    represent them to him, the Secretary of the Army, and other senior
    leaders throughout our Government.
        Since then, I have logged hundreds of thousands of miles of travel,
    visited and addressed tens of thousands of soldiers and families on
    repeated trips around the United States and to more than a dozen
    foreign countries.
        I am proud of our Army, and on previous occasions testifying to
    your House colleagues I assured them that America quite simply has the
    world's best Army. That pride and my opinion have both been validated
    time and again in the hours and days following the tragic events of
    September 11.
        We are at war, and I'm sure you would agree that thus far, in what
    will doubtless be a very long struggle, the performance of our
    soldiers--as well as our sailors, airmen, marines, and Coast
    Guardsmen--has been outstanding.
        I'd like to point out that not one service member had to deploy nor
    did bombs need to begin falling in Afghanistan for me to be justified
    in the pride I feel for our Armed Forces. I was in Washington on 9/11
    and was quick in arriving on-scene after the plane hit the Pentagon.
        Rather than go into detail now about what I saw that day, let me
    share how I expressed it during an October ceremony held to decorate
    and honor some of the heroes who emerged that day at the Pentagon: ``I
    saw Americans coming to the aid of their fallen comrades with little
    regard for their own safety. If I were to ask each of you about your
    contributions, I'm sure you'd tell me that they were no big deal--but I
    would tell you that they were a big deal. Not only did you serve your
    comrades well that day, you provided all of us with examples of honor
    and courage that will inspire us in the coming years and in the battles
    that await us in our war on terrorism. The things you showed us that
    day are what is good and right about our country, our Army, and the
    things we all stand for.''
        What I saw that morning made me proud--a pride I know all of you
    share. Later, as I traveled across the Army answering soldiers'
    questions about September 11, and trying to provide some context and
    perspective for the way ahead, I found myself talking often about what
    I saw that day.
        I believe the soldiers I've spoken with have taken heart from what
    I have been able to share with them. Just as the heroic actions of
    countless fire fighters, policemen, and other first responders inspired
    a Nation, our men and women in uniform have been encouraged by the
    reactions that day of their fellow soldiers. Even though they worked at
    the Pentagon and weren't armed at the time, they proved worthy of the
    legacy of quiet, calm, and steady courage passed down to them by
    generations of their predecessors.
        As a result of September 11 and its aftermath, our Army is today
    stretched as thin now as it has ever been. I'd like to point out that I
    used pretty much those same words a year ago in testimony before the
    House to describe the Army's operational tempo. It was certainly true
    at the time, but I can assure you today's numbers dwarf those of just
    11 months ago.
        In January, our Army has about 124,000 soldiers permanently
    stationed abroad in Germany, Korea, Japan, Italy, and other overseas
    locations where we have traditionally kept soldiers. This number has
    stayed consistent over the past couple of years, and I would also like
    to point out that this number includes more than 8,800 Army reservists.
        A year ago, the Army had slightly more than 30,000 soldiers
    deployed away from their homes and families on major exercises and
    operations around the globe. Today, that number is nearly 50,000
    soldiers in some 55 locations, and it includes more than 11,000
    National Guardsmen and another 8,520 Army reservists.
        Aside from places such as the Balkans, the Sinai, Kuwait, the
    Philippines and a number of other countries in Southwest and Central
    Asia, the Army in recent days has had soldiers operating in Turkey,
    Tunisia, East Timor, Cambodia, Vietnam, El Salvador, and Columbia.
        Closer to home, the Army--to date--has more than 12,000 Army
    reservists and National Guardsmen mobilized in support of the homeland
    security mission. Nearly half of them are securing key infrastructure
    facilities around the country, and more than 2,000 others have been
    tasked to help with the force protection mission at our bases in
    Europe.
        I need to point out that all of these deployment and forward basing
    numbers do not reflect the number of active duty soldiers in every
    corner of the Army who are unavailable for their normal duties because
    they are helping with force protection on their installations. Although
    the numbers fluctuate constantly based on threat assessments and other
    factors, I would--to give you a feel for the size of this task--tell
    you that in January, our Forces Command was using 4,000 soldiers daily
    to secure its 11 major stateside installations.
        That number, I would add, doesn't include the military and Defense
    Protective Service who are in charge of the job. If increased measures
    were called for due to future threats or incidents, that number would
    grow to more than 11,000. The impact of numbers like that on the Army's
    readiness and training is obvious to everyone in this room.
        As I thought about the main points I wanted to make today, the top
    item on my list was simply to thank you--on behalf our soldiers and
    their families--for the positive strides in improving their quality of
    life in the past 12 months.
        This list is long.
        A year ago, my colleagues and I each brought before a House
    committee lists of remarkably similar issues that we had compiled based
    on our own observations and the feedback we receive while traveling
    extensively among our troops. They were concerned about how much they
    were paid, where they live and work, the kind of medical care they and
    their families receive, and what they can look forward to in retirement
    as they decide whether to spend 20-plus years in the military.
        I can tell you it is apparent that our Nation's leaders have been
    listening and that they have responded to a level we had hardly allowed
    ourselves to imagine.
        Right now--today--in units, formations, barracks, and households
    across the military, I assure you that soldiers and their families need
    look no further than in their wallets and out of their windows to see
    that life is getting better.
        They received an unprecedented pay raise last month, and the amount
    of construction and renovation that is visible in practically every
    corner of the Army sends a tremendous signal to them.
        I wish you and other lawmakers could have stood with me among our
    soldiers in recent months and heard the responses I received as I put
    to them this very simple question--``did you hear about your pay
    raise?'' I trust you'll believe me when I say it brings the house down.
    Often I say that our soldiers and families know what's real and what's
    Memorex, and I assure you this pay raise sends a very real message
    about how much their Nation needs and appreciates them.
        Another decidedly good news story concerns our housing. There is
    consensus within the Army that DOD's approach to fixing our housing by
    raising Basic Allowance for Housing (BAH) payments, building new
    housing, and renovating existing housing is working.
        A year ago, I painted a rather bleak picture of seeing street after
    street of run-down family housing units at practically every
    installation I'd visited. Far too many of those houses are still
    there--I see them and so do soldiers and their families, many of whom
    live in them. But--as I noted earlier--we are also seeing vast amounts
    of new construction and renovation at the bulk of these installations.
        Knowing that new houses are being built on another street or
    another post doesn't--directly--do much for the morale of families
    living in cramped, decades-old quarters. But, they do see the amount of
    construction and renovation going on around them, and they do realize
    there is light at the end of the tunnel. They do read and hear about
    the amount and quality of housing going up at other posts. They also
    see first-hand the results of fixing and maintaining existing housing
    and other facilities.
        As I've noted, the amount of new, Army-funded construction both in
    the States and overseas has done much for morale, but at several posts,
    a lot of the work being done in family housing areas is thanks to the
    Residential Communities Initiative (RCI).
        To update you, Forts Carson, Hood, Lewis, and Meade have seen or
    will soon see their family housing operations turned over to private
    contractors, and a number of other installations will be well into that
    process by the end of this year. We envision the process gathering
    steam, and by 2007, nearly 69,000 homes will be managed by the private
    sector on 27 different installations. That would be about 80 percent of
    the Army family housing in the continental United States.
        For those of you who haven't had the opportunity, I'd ask you to
    visit a post like Fort Carson before you render judgment on the RCI
    program. I've been there, I've looked at houses--both new ones and
    older units being managed by the private sector--and I have talked to
    soldiers and families living in the quarters. I came away a believer.
        The new houses are easily the best, largest and most thoughtfully
    designed I've seen in my more than 30 years of service. I would--as a
    sergeant major--be happy to live in any of them.
        I was also pleased with what I saw in the post's older quarters.
    While it's true that there is only so much that can be done with older
    houses, Fort Carson's project has spruced up existing units and
    dramatically increased the homes' appeal to newly arrived families.
        Just as importantly, RCI is having an equally big impact on the
    repair and upkeep of existing homes.
        A major complaint heard in recent years dealt with the age of our
    facilities and the time needed for post engineers to make routine
    repairs. At the privatized Fort Carson project, the number of
    maintenance workers has increased from 17 to nearly 40, and they were
    averaging a 30-minute turnaround time on emergency work orders. That
    might not seem like much to a great many people, but to frustrated
    families accustomed to waiting days for repairs, it borders on the
    miraculous.
        Another much-appreciated initiative has been the goal of
    eliminating by 2005 any out-of-pocket expenses for soldiers and
    families receiving BAH to live off-post. Currently, a little less than
    half of our married soldiers live on the civilian economy, along with a
    number of bachelor NCOs and officers. Today, slightly more than one in
    every $10 they spend on off-post housing comes from their own pockets.
        All of these things--new construction, better maintenance of
    existing facilities, the RCI and BAH increases--will hopefully combine
    to get the Army's family housing situation to where we think it needs
    to be. For the work that all of you did in making that happen, I thank
    you. As I stated earlier, it is being noticed, and I believe it is
    making a difference in quality of life, morale, and retention.
        The news is mostly good for our single soldiers and the barracks
    they live in. Everywhere I've gone in the past year, the amount of
    barracks construction and renovation I've seen has rivaled that in the
    family housing areas.
        I have visited hundreds of soldiers both in the United States and
    overseas who couldn't say enough good things about their quarters. But,
    as is often the case with family housing and other facilities, it's
    either feast or famine--you either live in buildings 30 or more years
    old and poorly maintained, or you're among the fortunate who have moved
    into new or newly renovated buildings. As it was with families and
    their housing, our soldiers see and hear of barracks construction and
    renovation and believe their leaders understand the problem and are
    working to correct it.
        I would tell you that our goal of having all of our soldiers in
    larger rooms with semi-private bathrooms, new furniture, adequate
    parking, and recreational amenities is our top construction priority.
    Our goal is to make it happen virtually everywhere in the Army by 2009.
    With the passage of the fiscal year 2003 budget, about 77 percent of
    the money we need to reach that goal will be in place.
        However, one specific area of concern would be our barracks in
    Korea. While there has been notable progress in all theaters, I still
    feel it will be too many years before soldiers in too many parts of
    Korea see the kind of housing improvements that are becoming common
    elsewhere. The differences I see there between today and when I served
    there as a first sergeant 14 years ago are remarkable, but the area
    still needs your attention to help ensure soldiers enjoy a reasonable
    quality of life while there.
        Many areas of Korea are isolated, and we ask a lot of our soldiers
    assigned there. I assure you that funding for quality housing, dining
    facilities, gyms, and things like Internet cafes and Internet access
    can go a long way toward maintaining morale.
        I also need to again ask Congress for continued help in funding for
    our sustainment, restoration, and modernization efforts--an area that
    has been historically underfunded and results in a lot of the
    deterioration I've been talking about. This year, for instance, the
    Army was funded at 94 percent of its requirement. During the last
    fiscal year, it was estimated our restoration and modernization backlog
    was nearly $18 billion. While some of our motor pools and work areas
    are first rate, too many older facilities are decaying and badly in
    need of repair and renovation.
        The buildings, motor pools, and recreation facilities where
    soldiers work, train, eat, and relax are nearly as important as the
    rooms and housing units they live in. As is the case with pay, housing
    and infrastructure impact our soldiers' morale and re-enlistment
    decisions in a great many ways.
        Medical care is another area that is often a top concern for
    soldiers and families. For the most part the health care system has
    significantly improved. As I travel, I am happy to share that I am
    hearing fewer and fewer complaints about medical care in general and
    TRICARE in particular.
        When I passed this along to our medical command, I learned that
    much of the credit for the improvements belongs in these corridors for
    recent funding increases. The money has allowed more services to be
    provided and reduced some out-of-pocket expenses once associated with
    TRICARE.
        Before closing, I'd like to spend a moment on the importance of the
    Reserve component to our Army and to our Nation. When I became Sergeant
    Major of the Army in the summer of 2000, I began telling pretty much
    every group I addressed that--quite simply--we could not get the job
    done without the Guard and Reserve. As I recall, those are pretty much
    the words I used a year ago during my opening remarks to your House
    colleagues.
        I thought we were stretched thin prior to September 11, and I
    assure you that is doubly true today. We are fortunate--as our Nation
    has always been--to be able to go to the bench and call on trained,
    motivated and ready Reserve component formations to help carry the
    load.
        Not since Operation Desert Storm has our Nation asked so much of
    its citizen-soldiers. Given the open-ended nature of the war on
    terrorism--it is not unreasonable to believe this conflict's use of
    Guard and Reserve Forces could, in the end, prove to be larger than it
    was during the Gulf War.
        What I would ask of you and your colleagues is the same thing I'm
    asking of leaders throughout the Army, which is simply to carry back to
    your States, districts, and communities a message of thanks and support
    for our Nation's reservists and guardsmen.
        Sometimes, their hardship is overlooked as many endure significant
    reductions in pay and benefits to serve their Nation, and many leave
    behind friends and families who are unaccustomed to lengthy
    separations.
        Besides praising their contributions and thanking their families, I
    would tell you that their employers also deserve your heartfelt
    gratitude. Doing without a valued employee is never easy, but I am
    often touched by stories of employers who not only allow employees to
    serve as guardsmen and reservists, but who unhesitatingly support them
    when they are activated.
        I was told recently of one Georgia reservist who was on the verge
    of getting an important promotion when he was called. Not only did his
    employer go ahead and promote him, but they continued to pay him--at
    the higher rate--even after he moved out to serve his country. I can't
    tell you what a strong signal that sends to soldiers, families, and
    communities about the importance of our Nation's Reserve Component and
    its soldiers.
        We are learning new things everyday, and I would ask for your help
    if we come to you in the coming months asking for adjustments in the
    benefits and entitlements extended to activated guardsmen and
    reservists. As you look at these requests, I'd ask you to consider
    these Americans' dedication and sacrifice and help us take care of both
    them and their families.
        I would also ask of each of you to not lose sight of another group
    of Americans I feel we can never hope to repay--our veterans and
    retirees. We have a great Army today in no small part because of the
    foundation these men and women laid down for us. Please carefully
    consider the issues and requests they bring to you as you remember the
    sacrifice, risk and hardship they've endured for our country.
        In closing, I would thank you again for everything you have done in
    the past year to make our great Army even better. Our soldiers and
    their families have noticed improvements in their pay and quality of
    life, and we continue to do remarkably well at recruiting and retaining
    the kind of quality soldiers we need, in no small part because of the
    efforts of you and your colleagues. We have the support of leaders like
    you, and soldiers know it.
        I am proud of what our country stands for, I am proud of its Army
    and--as always--I am proud and honored to stand before you today on
    behalf of our great soldiers.

        Senator Cleland. Thank you very much, Sergeant Major, and
    our best to the troops. We appreciate all that they do and all
    that you do for them.
        Sergeant Major McMichael.

            STATEMENT OF SGT. MAJ. ALFORD L. McMICHAEL, USMC

        Sergeant McMichael. Good morning, Mr. Chairman, and to the
    distinguished members of the subcommittee. It is an honor to be
    with you this morning, and to have the opportunity to speak to
    the issues of the personnel status of our marines and our
    Marine families.
        I will say that on behalf of the family of marines, we
    would like to thank you for what you are doing and what you
    have done for us, so that we can continue to be a premier
    expeditionary total force in readiness. We do that with today's
    Marine Corps, that has 172,600 marines in our Active Forces.
    107,000 of them are in our Operational Command. But what is
    even more significant, we have 37,000 marines that are forward-
    deployed, forward-based, forward-stationed, or forward-training
    around the world.
        I am also interested in how we continue to take care of our
    161,900 family members and the 68,800 spouses and, more
    importantly, the 92,800 children that we are responsible for as
    a family of marines. We do that, and get those numbers, with
    the great help of the family of marines that walk the streets
    of America every day known as recruiters. They have been
    successful in recruiting for 6\1/2\ years, consecutively
    recruiting 41,000 into our Marine Corps, and not only are they
    recruiting that 41,000, Mr. Chairman, they are bringing in both
    quality and quantity, and we are very proud of that. But
    equally proud of the recruiting side, we are very proud of our
    retention and how we are going about it. The help of the
    members of this subcommittee has allowed us to retain marines
    even in the high tech areas of jobs that they do in the Marine
    Corps, and that has been through the effort of having bonuses
    and compensation that will help us retain quality marines in
    this area.
        Along with the retention and the recruiting, I am also very
    thrilled about our 2002 Quality of Life survey. Although it is
    the third survey we have conducted in nearly 10 years, what
    makes this one more significant to me is that we are asking the
    right questions about the right things so we can provide the
    right answers and the right support for our family of marines.
    But more importantly, we are not only surveying those that are
    in uniform, but the spouses that are living with our servicemen
    and women every day.
        When we look at what we do for quality of life, we base it
    on our five pillars, which are important to me, because it goes
    with pay, compensation, housing, health care infrastructure,
    which are really the work areas and the spaces and the
    facilities that our marines go to work in every day, but more
    importantly for me, the education piece.
        I would like to say on behalf of the family of marines, the
    Active, the Reserve, the retirees, as well as our family
    members, and the civilians that work alongside of us and serve
    our great Nation, sir, I look forward to answering any
    questions this panel may have when it is time.
        [The prepared statement of Sergeant Major McMichael
    follows:]
           Prepared Statement by Sgt. Maj. Alford L. McMichael, USMC
        Chairman Cleland, Senator Hutchinson, and distinguished members of
    the Senate Armed Services Committee: I am Sergeant Major Alford L.
    McMichael, Sergeant Major of the Marine Corps. Thank you for allowing
    me to appear before you today and comment on the personnel status 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 the
    warfighting capabilities and crisis response of our Nation's Armed
    Forces and improvement to the quality of life of our men and women in
    uniform have been central to the strength of your Marine Corps and are
    deeply appreciated.
        I want to share a few thoughts with you about where, with your
    support, the Marine Corps is headed.
        For the United States to provide its citizens with security and
    prosperity at home it must foster and bolster stability overseas. The
    Navy-Marine Corps team's sea-based power projection capabilities
    provide the means for America to cultivate its overseas relationships
    and are a cornerstone of our military's contribution to prolonged
    security. With this capability, the Marine Corps provides America with
    the capacity to forward deploy, and if required, project decisive and
    sustained, combined-arms combat power from the sea.
        The Navy-Marine Corps team's sea-based capabilities have been
    validated over the past several months. In Afghanistan, the sea-based
    Navy and Marine Corps team has provided the preponderance of air
    sorties and the initial deployment of major ground force presence,
    reaching over 700 miles inland from international waters. Important
    contributions were made through marine integration with Special
    Operations Forces, Army ground forces, and Air Force assets from
    Intelligence, Surveillance, and Reconnaissance capabilities to long
    range strike and close air support capabilities. The Marine Corps has
    demonstrated that America's medium weight, expeditionary force is not
    only responsive and flexible, but a full partner in Joint and Coalition
    operations.
        Inasmuch as the war against terrorism has demonstrated the current
    capabilities of the Navy-Marine Corps team, transformation promises
    even greater possibilities for the Marine Corps. Drawing on our legacy
    of transformation, the Marine Corps is moving forward with innovation
    and experimentation. Our focus is on the creation of new capabilities,
    which provide leap-ahead operational advantages in future conflicts
    through the development of new operational concepts, the introduction
    of advanced technology, and the realignment of organizational
    structure.
    Marine Corps Personnel
        CMC's highest priority has always been his marines, their families
    and our civilian workforce. People and leadership are the real
    foundations of the Marine Corps' capabilities.
        The Marine Corps has the youngest mean age of all the services; two
    of three marines are under the age of 25. Approximately 16 percent of
    marines, 28,000, are teenagers. The Marine Corps is the only service
    with more active duty personnel than family members. Only 43.4 percent
    of marines--approximately 40 percent of enlisted and 70 percent of
    officers--are married, the lowest of the armed services. The average
    age of a married enlisted marine is 28.7 and 40 percent of marine
    spouses are under the age of 25, once more the youngest in the armed
    services. Almost 46 percent of Marine Corps children are under 5 years
    of age; only 20 percent are over 13 years of age.
        It is important to note that the Marine Corps operates as a Total
    Force, including elements of both active and Reserve components. We
    continue to strengthen the exceptional bonds within our Total Force by
    further integrating the Marine Corps Reserve into ongoing operations
    and training. Detachments of both Marine Expeditionary Force
    Augmentation Command Elements, two infantry battalions, two heavy
    helicopter squadrons, two aerial refueler transport detachments, as
    well as other units have been mobilized. With Reserve personnel
    reporting daily on active duty orders, by the end of February we are
    projecting the number of marine reservists activated in support of the
    global war on terror at nearly 5,000. Our Marine Reserves have
    contributed unprecedented support and inclusion into our daily
    operations and exercise schedules, continuing to set the standard for
    interoperability within the Department of Defense. Individuals and
    Units have responded quickly when called to duty, providing seamless
    support from operational tempo relief at Guantanamo Bay to augmentation
    at Camp Pendleton and Lejeune.
        As I speak to you today, there are 172,600 marines authorized for
    active duty. Of that total, over 107,000 are in the operating forces
    and over 37,000 are forward deployed, forward based, forward stationed,
    or deployed for training around the world. These marines have
    approximately 161,900 dependents--68,800 spouses, 92,800 children, and
    300 other family members.
        The youth of our Corps and our unique force structure requires us
    to annually recruit 41,000 men and women into our enlisted ranks. To
    fill this tremendous demand, our recruiters have met our accession
    goals in both quantity and quality for over 6\1/2\ years of dedicated
    effort. Our training establishment is similarly charged with the
    enormous task of training the many skills we need to accomplish our
    missions. Recruiting and training remain among our highest priorities;
    we must continue to provide the necessary resources to attract
    America's finest youth into our Corps and to train them with the most
    cutting age technologies available.
        Retention is as important as recruiting. The Marine Corps continues
    to excel in retaining our best and brightest. Since 1998, we have
    experienced a 23 percent decline in Non-Expiration of Active Service
    (NEAS) attrition. In fiscal year 2001, this means that 981 less marines
    attrited for NEAS reasons than in fiscal year 2000. This equates to
    more than a battalion of marines that we no longer need to train and
    recruit in fiscal year 2002. In the area of career retention, we
    continue to be challenged to retain certain high tech MOSs (Military
    Occupational Specialties) and MOSs that are in high demand in the
    civilian sector. For the past 6 years, we have been successful in
    meeting the goals contained in our First Term Alignment Plan (FTAP). In
    fiscal year 2002, we have initiated the Subsequent Term Alignment Plan
    (STAP) designed to further refine career retention process. The STAP
    will take 40 percent of our Selective Reenlistment Bonus (SRB)
    allocation and target the short and critical MOSs between 6 and 14
    years of service. The SRB program has been an additional, powerful tool
    to meet our retention goals and needs to continue to receive your full
    support. SRB and the targeted pay raise initiative found in last year's
    budget will go a long way in meeting our retention goals and helping to
    take care of our marines and their families. Finally, we have created
    an Enlisted Retention Task Force under the Deputy Commandant for
    Manpower and Reserve Affairs. This task force has been chartered to
    establish a process to systematically reinforce and synchronize actions
    among key organizations in the retention of enlisted marines.
        Taking care of marines and families is instinctive to our Marine
    Corps way of life. We have established five major quality of life (QOL)
    priorities that are vital to the sustainment of our single marines and
    marine families including pay and compensation, health care, bachelor
    and family housing, infrastructure/workplace environment, and community
    services.
        Pay must be competitive with the private sector and offer the
    flexibility for shaping and addressing manpower management challenges.
    Special pay and concerned leadership are key elements in retaining
    marines with critical skills. Coupled with the current BAH buy down
    strategy this will eliminate the extra out-of-pocket expenses that our
    service members now experience.
        The availability of quality, accessible health care is a key QOL
    issue for marines and their families, and is therefore critical to
    recruitment and retention. The Marine Corps is committed to support
    initiatives that improve military health care so marines can be
    confident that their families will receive prompt, hassle-free care,
    whether for routine or emergency services. The goal is for the
    administration of health care to be transparent to the patient, and not
    a source of stress or hardship.
        Providing adequate bachelor and family housing has a significant
    impact on the QOL of our marines, as does the quality of the workspace.
    Safe, comfortable, well-maintained housing and working conditions
    provides an atmosphere that helps us to recruit, develop, and retain
    the quality marines that we need to lead the future Marine Corps. When
    our marines are performing their mission essential tasks in World War
    II vintage buildings with faulty wiring--the mission suffers, as does
    overall QOL.
        Bases and stations are the platforms where the Marine Corps
    develops, trains, and maintains the force needed to win the Nation's
    battles. Bases and stations also support the QOL of marines and
    families through the delivery of essential community services that are
    like those provided in hometowns throughout the Nation. To retain the
    best marines, the Marine Corps must provide them a quality environment
    in which to work and live. The Marine Corps is committed to a long-
    range infrastructure management plan that assures quality base and
    station infrastructure for the future.
        Inasmuch as Congress has provided considerable support to our
    marines and their families, the Marine Corps is also striving to
    enhance their QOL. We have established the Marine Corps Community
    Services aboard our installations to better provide for both our marine
    families as well as our single marines, who constitute nearly 60
    percent of our total active force. The Single Marine Program (SMP)
    provides needed recreational and stress outlets that are both wholesome
    and support development of social skills. Many of our base SMPs are
    involved in community support efforts through Habitat for Humanity,
    Special Olympics, Big Brothers and Big Sisters, food banks, and other
    volunteer organizations that teach the rewards that come from service
    to others. This is a concrete way that the program works to return
    quality citizens to our Nation. Just as important, the SMP stresses the
    responsibility of young single marines to identify solutions to their
    QOL issues and resolve them through working with the chain of command.
        Military life can be demanding, difficult, and hard on families.
    Our Marine Corps Family Building Team (MCFTB) programs help equip our
    families with the knowledge and skills to meet the challenges of the
    military lifestyle. MCFTB offers a wide variety of programs including
    introductory training for new spouses, a communication network managed
    by key volunteers that allows commanders to keep families informed
    during deployments and day-to-day operations, and development
    opportunities for our volunteers.
        Finally, the Marine Corps is sponsoring a comprehensive assessment
    of Marine Corps QOL in 2002. The assessment will document how marines
    and family members feel about their lives as a whole, as well as their
    subjective evaluation of specific aspects of their lives. From the
    information they provide through completion of a survey, conclusions
    may be drawn about some of the situational characteristics that enhance
    life quality and facilitate well being in a military environment. The
    survey was previously administered in 1993 and 1998. With the third
    administration planned for early 2002, we will also be able to
    determine how marines' perceptions of and satisfaction with QOL have
    changed over the last 10 years, particularly in light of increased DOD
    and USMC QOL funding. In the 2002 QOL assessment, spouses of active
    duty marines will be surveyed for the first time. The intent of this
    initiative is to establish a baseline measure of family member QOL and
    to compare relevant findings to those of active duty marines.
        We are also striving to invest in our marines by improving how we
    train and educate them. We believe in the adage, ``you fight the way
    you train.'' All training conducted within the Marine Corps is part of
    a training and education continuum that begins the first day of recruit
    training and continues until the marine's last day in the Corps.
        Recruit training infuses our marines with the core values of honor,
    courage, and commitment, as well as the skills to make them Basic
    Marines. The ``Crucible'' is the defining exercise when our recruits
    earn the title of ``marine.'' All marines attend the School of Infantry
    where we imbue them with the ethos of, ``Every marine is a rifleman.''
    MOS schooling rounds out this initial training phase.
        As marines progress in rank, leadership development becomes more
    prevalent in the education process. In 1999, the Marine Corps
    University completed a thorough evaluation of enlisted professional
    military education (PME). They developed a cradle to grave,
    interconnected, building block approach to enlisted PME concentrating
    on the areas of warfighting and leadership. This program has been
    integrated between our Distance Education Program (DEP) and our
    resident courses.
        To provide a further incentive to pursue PME, the Marine Corps has
    launched a pilot program with the Lifelong Learning Center at MCB
    Quantico that encourages all marines who attend the Staff Academies, or
    complete a DEP, to obtain an Associate degree from a civilian college
    or university. The Service Member's Opportunity Colleges (SOC) is a
    consortium of more than 1,400 colleges and universities who have agreed
    to accept college credit based on a marine's military experience.
        The Commandant has recently directed the establishment of a Marine
    Corps Martial Arts Program. The program is designed to improve the
    warfighting capabilities of individual marines and units, enhance
    marines' self-confidence and esprit de corps, and further instill the
    warrior ethos. This training will continue throughout the career of the
    marine. What is unique is that the marine must display an equal mastery
    of the mental and character disciplines at each level to advance.
        In conclusion, Mr. Chairman, I would like to thank the committee
    for its continued strong support of your marines and improving their
    quality of life has provided and will continue to provide dividends in
    the areas of readiness and retention. There is no question that our
    active duty, Reserve and civilian marines remain our most precious
    warfighting effort. Your Marine Corps is ready, and it's an exciting
    time to be a marine!
        Mr. Chairman, this concludes my statement. I will be pleased to
    answer any questions you may have.

        Senator Cleland. Thank you very much, Sergeant Major. I
    noticed you had all those numbers off the top of your head, so
    I now see why you are a Sergeant Major in the Marine Corps.
        Master Chief Herdt, thank you very much for coming. We
    appreciate your service to our country.

      STATEMENT OF MASTER CHIEF PETTY OFFICER JAMES L. HERDT, USN

        Chief Herdt. Thank you, Mr. Chairman. Good morning, Mr.
    Chairman and distinguished members of the subcommittee. It is a
    high honor to appear here to represent nearly 1/2 million
    sailors and their families. It is really the first opportunity
    we have had, as you mentioned, to do this in the 4 years I have
    been in this job, and I hope as a result of our testimony
    today, that it will be an annual event. It really is a high
    honor to do this.
        In the interest of brevity, sir, I would like to make just
    two points in my opening remarks. The first is how appreciative
    the entire Navy and I are with regard to what this committee
    and the entire Congress have accomplished over the last 4
    years.
        You have done more to improve the lot of sailors in the
    last 4 years of my career than in my estimation the entire 31
    years prior to that of my career. It has resulted in
    unprecedented reenlistment rates in our first term, probably
    the best, certainly the best in my career, maybe the best ever
    in the United States Navy, and it makes a big difference. It
    demonstrates the country's commitment to the extraordinary work
    and the sacrifice of these sailors and their families who
    defend the Constitution and the ideals of our great country.
        Just a very short laundry list. I was looking at this this
    morning prior to coming over here: large and targeted pay
    raises that were mentioned by Sergeant Major Tilley;
    restoration of the retirement benefit with an option for the
    first time ever; supporting our move to zero out-of-pocket
    basic allowance for housing; Thrift Savings Plan to allow
    people to invest in their future, and perhaps more importantly,
    as a teaching tool and learning tool for our most junior
    personnel as they go through their career; expanded career sea
    pay options; family insurance options that we never had before;
    improvements to education benefits that I know that you have
    been involved with, sir, personally; and TRICARE for Life.
        The second point that I want to make is that there remain a
    few areas that we need a little more help in. Although there
    has been considerable work done in these areas, it is my
    estimation that we could use just a little more help. The Navy
    has about 35,000 sailors we would like to move off their ships
    in their home port. Sailors are proud of the way they live and
    work at sea, but when we come back into home port we would like
    to be able to move sailors out of those very austere living
    conditions into more habitable conditions that they deserve
    ashore.
        The second point that we need a little help in, and this is
    one you and I have talked about before, and your work in this
    area is so appreciated, is the transferability of Montgomery GI
    Bill benefits. I am a little concerned, as it is currently
    structured, that we may set up a class system within our ranks
    of those soldiers, sailors, airmen, and marines that are able
    to educate their family members and their children and others
    that will not. I would just ask that consideration be given to
    perhaps moving that benefit out as a benefit for the career
    force that will have the draw to pull people out there, versus
    up-front, and I think it may be more affordable to us and
    result in better retention.
        The third area we could use a little help in is, although
    there has been great work done in restoring or opening the
    eligibility for the Post-Vietnam era service members that had
    an account with the Post-Vietnam Era Veterans Educational
    Assistance Program (VEAP) to roll over into the Montgomery GI
    Bill, we have 40,000 sailors who came into our Navy in the VEAP
    era that have no education benefits. If we could just get the
    rest of them it would be greatly appreciated.
        Again, as I mentioned, it is a high honor to appear before
    you, and I look forward to the opportunity to answer the
    questions that you might have for me, sir.
        [The prepared statement of Master Chief Petty Officer Herdt
    follows:]
      Prepared Statement by Master Chief Petty Officer James L. Herdt, USN
    caring for sailors' needs with personnel priorities--doing what's right
                        to help sailors serve americans
        Chairman Cleland and distinguished members of this subcommittee,
    thank you for the opportunity to appear before you on behalf of the
    outstanding enlisted men and women of the United States Navy and their
    families. I would like to express our appreciation for the steadfast
    support of this subcommittee and for the vast array of vital programs
    you have authorized, which improve our lives and the lives of our
    families. As I complete this my fourth and final year as Master Chief
    Petty Officer of the Navy, I sincerely hope that, in the years ahead,
    the Senior Enlisted Advisors of the uniformed services will continue to
    be afforded this invaluable opportunity to offer their views before
    this subcommittee.
        Our dedicated sailors are continually deployed around the globe in
    Navy's advanced ships, submarines, aircraft squadrons, and ground units
    every day, in peacetime and in war. During my tenure, I have traveled
    extensively throughout the world talking with them and their families,
    and visiting the places in which they work and live. It has become
    increasingly evident that, thanks to the staunch support of the
    administration and Congress, and especially through the efforts of the
    Personnel Subcommittees, our military has evolved into a better place
    for our enlisted personnel to serve. Your persistent focus on quality
    of life enhancements, from significant increases in across the board
    and targeted pay raises, selective reenlistment bonuses and career sea
    pay; to reduction in out-of-pocket housing expenses, Montgomery GI Bill
    improvements, establishment of TRICARE for Life, authorizing Thrift
    Savings Plan participation and expanding retirement plan options, has
    greatly contributed to our quality of service and has dramatically
    improved Navy's personnel readiness, through improved recruiting and
    retention and reduced attrition.
        Sailors are exceptionally pleased with last year's targeted pay
    increases, representing the largest across-the-board pay raise in
    nearly 20 years, and recent steps to reform the pay tables are
    beginning to influence sailors' decisions to stay for a career. The
    Fiscal Year 2002 National Defense Authorization Act provision
    permitting us to increase by one-half percent the number of E-8s
    serving on active duty, while seemingly insignificant, greatly enhances
    our ability to establish the more senior, experienced, and technically
    proficient force needed for today's high-tech platforms, while also
    continuing to increase enlisted advancement opportunities. As the Navy
    continues to evolve, it is a virtual certainty that the ongoing
    transformation will increase the requirement for experienced and
    technical sailors. Our efforts to increase the experience level of the
    force and improve advancement, which directly enhances retention, would
    be facilitated by easing or removing the current percentage limits on
    E-8 and E-9 personnel.
        In the past 3 years, our Navy is well into turning the corner in
    our efforts to acquire and retain quality people. We met overall
    recruiting goals in fiscal years 1999, 2000, and 2001 and this year we
    are well ahead of last year's record setting pace. The most recent
    reenlistment data indicates that we are reenlisting 63 percent of
    eligible sailors who reach the end of their first enlistment, 75
    percent of sailors with 6-10 years of service, and 85 percent of
    sailors with 10-14 years of service. Additionally, our annual attrition
    rate for first-term sailors has fallen from over 14 percent in 1998, to
    10 percent today resulting in thousands of young men and women
    remaining in the Navy who would have been otherwise lost from our
    ranks. These successes have all contributed to recent battle groups
    deploying better manned than ever before. While these are indeed
    welcome developments, we must continue to sustain this momentum.
        We have made great strides toward improving our Navy's quality of
    work and quality of life, which together comprise ``quality of
    service.'' We've come a long way, but there is always room for
    improvement. For example, we need to continue working towards our goal
    of providing every sailor with adequate housing and allowing all
    sailors the opportunity to reside ashore when in homeport. We are
    continuing to review our Individual Personnel Tempo requirements with
    an eye toward identifying the best means of adequately compensating
    sailors for the demands placed upon them and their families by the
    tempo of operations, while considering the unique nature of the Navy as
    a deploying force.
        Navy has mobilized nearly 10,000 reservists, primarily on an
    individual basis, rather than by unit, as was the case during the Iraqi
    War. We are continuing to evaluate future requirements to determine the
    right Active/Reserve mix to meet anti-terrorism/force protection
    manpower requirements in the new security environment. Today, our Navy
    consists of 381,099 active duty personnel and 166,411 ready reservists.
    Five Carrier Battle Groups and Amphibious Readiness Groups deployed
    (some early) in support of Operation Enduring Freedom in the highest
    states of personnel readiness. They operated at wartime tempo--24 hours
    a day, 7 days a week--without requiring additional personnel. It is no
    source of contention for sailors to deploy from their loved ones for 6
    months at a time. Deployments are what we do, but we should never
    underestimate or take for granted the incredible sacrifices that a 6-
    month deployment imposes on our sailors and their families. While
    deployed, sailors consistently live in cramped and often undesirable
    conditions. We certainly owe them our commitment to provide the best
    living conditions possible when their ships are in port. It is
    reasonable for them to expect this, and they deserve it.
    Housing Issues
        Adequate housing continues to be a top priority throughout the
    fleet, and sailors tell us that housing is one of their most important
    quality of life concerns. The quality of our lives and the standard of
    living that sailors are able to enjoy are two very key determinants of
    whether our sailors make the Navy a career or leave for employment that
    will deliver a better standard of living for them and their families.
    The authorization to fully fund our Basic Allowance for Housing (BAH)
    is a major step in the right direction and we have started making
    significant progress in this area. The result of fully funded BAH
    enhances our long-term ability to provide quality housing for all
    service members. While we are making important strides in this area, we
    must sustain our three-pronged approach to improve housing for sailors
    and their families: continued funding increases for BAH to zero out-of-
    pocket expenses (OOP); continued traditional military construction
    housing projects; and continued support of public private venture
    (PPV).
        This year service members' OOP expenses are 11 percent of national
    median housing cost by pay grade and dependency status, an improvement
    compared to last year's 15 percent. We need the continued commitment to
    drive the funding of BAH to 100 percent for sailors, as authorized by
    the 2001 National Defense Authorization Act. The Department of Defense
    is working to buy down the remaining OOP expenses by 2005. Even with
    the lower percentage of OOP expenses this year, families living in high
    cost areas may not feel the full benefit. For example, last year's
    housing costs in Fallon, Nevada, increased an average of 36 percent.
    Sailors don't ask for excessive amounts . . . they just ask for enough
    money to have an average household in their community comparable to
    their peers.
        Military housing is the second piece of our approach to housing the
    fleet. This includes traditional barracks and family housing, as well
    as Public Private Venture (PPV) projects. Traditional and PPV barracks
    projects are particularly important to the Navy as we move closer to
    providing all sailors the choice to live ashore when their ships are in
    port. I cannot emphasize enough how important the authorization for E-4
    and below to live ashore is to junior sailors. Single shipboard sailors
    in pay grades E-4 and below routinely live in the most minimal
    accommodations even when not deployed. While close-quarters living
    conditions at sea are a necessity for now, we're working to improve the
    QOL in port. We currently estimate that we will need approximately
    25,000 additional bed spaces to move sailors ashore in homeports in the
    contiguous United States. We have noticed an early increase in
    retention rates in the areas where we have ongoing projects of moving
    junior single sailors into barracks while in homeport.
        There is still a strong need for continued support for Government-
    owned and leased military family housing. The BAH is based on median
    housing costs and does not provide sufficient compensation for every
    Navy family to obtain housing in the private sector. Owned and leased
    family housing is needed to provide suitable and affordable housing for
    many Navy families. To support this goal, we have and will continue to
    invest in family housing construction projects. The fiscal year 2002
    budget invests over $204 million to replace, construct, or improve over
    3,500 Navy homes, the majority of which are for junior enlisted
    families. We are on track to eliminate approximately 28,000 inadequate
    homes that were on our roles at the beginning of last fiscal year. Navy
    intends to eliminate all inadequate homes by fiscal year 2007,
    consistent with DOD budget priorities. Military family housing is, and
    will continue to be essential for acceptable quality of life for
    sailors.
        Our Public Private Venture (PPV) program for Military Family
    Housing projects continues to develop and create more opportunities for
    military families to reside in quality, affordable housing. We continue
    to increase the number of homes we can construct for the same money
    using leverage savings of PPV. Continuing to pursue these PPV projects,
    where advantageous, is essential to keeping up with the growing need
    for family housing. Today, an overwhelming majority of our career
    enlisted sailors (approximately 80 percent of E-5 to E-9) are married.
    The fact that most Navy activities are located in typically high-cost
    areas adds an even greater dimension to our need.
    Educational Benefits
        Today's sailors are immersed in a culture of learning and they are
    grateful for their educational benefits, especially the recently
    increased Montgomery GI Bill (MGIB) stipend. I fully support continued
    efforts to ensure that the MGIB remains an effective tool for
    attracting young men and women to enter the military services and, more
    importantly, that it adequately recognizes them for their selfless
    commitment to service to our Nation and helps them transition when they
    eventually leave our ranks and bring their wealth of experience,
    training, education, and professionalism back into the civilian
    workforce.
    Individual Personnel Tempo (PERSTEMPO)
        Sailors appreciate the intent of PERSTEMPO legislation with regards
    to reducing/eliminating excessive individual personnel tempo. However,
    we have noted some unintended consequences that occur due to the nature
    of naval service. For the past 20 years, the Navy has been committed to
    managing deployment tempo at the unit level. After 16 months of
    tracking and reporting deployments on an individual basis, we are
    gaining insight how the frequency or duration of deployments adversely
    affects certain specialties or communities. I fully support the intent
    of Congress with respect to managing PERSTEMPO to avoid undue burden on
    our sailors and their families caused by high individual personnel
    tempo. We are committed to identifying the best means for balancing
    PERSTEMPO with mission requirements, while adequately compensating
    sailors and their families for the arduous nature of the duties that
    service in the Navy imposes upon them and the sacrifices they must make
    as a result.
    Conclusion
        The events of the past several years, which saw the bombing of
    American embassies abroad, the attack on the American warship, U.S.S.
    Cole, and the attacks upon the World Trade Center buildings and the
    Pentagon have united us in our resolve to preserve, protect, and defend
    the greatest democracy on the face of the Earth. Every day our
    shipmates are deployed around the world to safeguard our freedom and
    our way of life and they go in harm's way without giving it a moment's
    thought. During fleet visits, I am inspired by the honor, courage, and
    commitment of our sailors. We owe it to these guardians of democracy
    and world peace, to sustain our efforts to improve the quality of
    service. For it is their service and their sacrifice, and that of their
    comrades in arms in the other armed services, which make all else
    possible in our great country. They deserve the continued unwavering
    support from the Nation they serve. It is my honor to represent them
    here today.
        Once again, Mr. Chairman, on behalf of our sailors standing the
    watch around the globe, I thank the subcommittee for its strong and
    unflagging support. Your efforts are making a difference and we are
    eternally grateful.

        Senator Cleland. Thank you very much.
        Chief, I understand you will be retiring in April.
        Chief Herdt. Yes, sir.
        Senator Cleland. We appreciate your years of service. How
    many years do you have in the Navy?
        Chief Herdt. It will be 35, sir.
        Senator Cleland. Thank you very much. My father is 87. He
    served at Pearl Harbor in the Navy after the attack, and after
    September 11 he is ready to go again, so if you have one more
    slot there----[Laughter.]
        Chief Master Sergeant Finch, thank you for your service.

      STATEMENT OF CHIEF MASTER SERGEANT FREDERICK J. FINCH, USAF

        Chief Finch. Thank you, Mr. Chairman, distinguished members
    of the subcommittee. It is an honor to be with you today to
    discuss issues affecting our Air Force professionals and their
    families. Many of our airmen are presently deployed to remote
    locations around the globe defending America's interests.
        I visited members of our total force team, the active duty,
    the Guard, and the Reserve, and I am here to report that they
    continue to work very hard in service to America. Therefore, I
    believe they deserve a standard of living at least equal to the
    Americans they support and defend, and thank you for the
    numerous initiatives you have taken on to help us get there.
        Thanks to you and others, we made great strides toward
    improving quality of life for our people, and they continue.
    The strength of America's Air Force will depend on our ability
    to recruit and, more importantly, to retain high quality
    people. While I have submitted a written statement for the
    record, I would like to take just a couple of moments to
    highlight three topics most often raised to me as I visit
    airmen around the world.
        They are: a mismatch between the task we ask our people to
    accomplish and the people and resources we give them to meet
    those tasks; compensation, especially for midlevel and senior
    noncommissioned officers; and educational benefits for those
    excluded from the Montgomery GI Bill.
        Necessary manpower is a quality of life factor that we have
    focused on lately. The demands to support both ongoing
    continued overseas and our homeland defense caused us to take a
    hard look at our force structure. With the improved recruiting
    and our work on retention we are still short of manpower. The
    bottom line is, we continue to stress our force by asking them
    to accomplish things and not giving them all the things
    necessary to do that.
        Through your efforts and improvements outlined in the
    National Defense Authorization Act for Fiscal Year 2002, our
    airmen received the largest pay raise in two decades, and
    Sergeant Major Tilley mentioned it would be nice if you would
    go around to see those people. They are very appreciative. This
    has been really a shot in the arm. Targeted additional dollars
    for the midlevel and senior NCOs is also a welcome change.
    While I am pleased to make some headway in the retention, there
    are still areas where we struggle to avoid the risk of a pay
    table inversion or a situation where the more junior members
    received actually greater compensation than those who supervise
    them. That can happen in some cases with the issue of bonuses.
        Although current operations make educational pursuits
    difficult, one of our quality of life priorities is enhancing
    educational benefits, and I am encouraged by the numerous
    initiatives included last year. I would be remiss if I did not
    mention the benefit concern to many people, and like the Navy
    we have 49,000 force people without access to the MGIB. This
    year's authority to transfer benefits to family members is
    really seen as a positive move by the force, but for those
    without any benefits, they see that as a driver of a wedge, a
    little bit greater wedge between our members of haves and have-
    nots on our team.
        The Air Force leadership strongly believes quality of life
    is directly related to recruiting and retention. We ask a lot
    of the members of our Armed Forces. We ask them to serve long
    hours in places that are often unsafe and far from home. We ask
    them to commit their soul and to risk their very lives in the
    service of their country, and I have to say the support from
    this committee and Members of Congress have been outstanding in
    the past few years. Thank you very much.
        We truly appreciate your continued help as we strive to
    improve the quality of life for our airmen, and on behalf of
    them and the men and women who serve in America's Armed Forces,
    thank you for your leadership and for allowing us the
    opportunity to discuss these concerns in an open forum.
        I look forward to your questions, sir.
        [The prepared statement of Chief Master Sergeant Finch
    follows:]
      Prepared Statement by Chief Master Sergeant Frederick J. Finch, USAF
                                  introduction
        Good morning Mr. Chairman and subcommittee members. It is an honor
    to be here today to discuss issues affecting the well-being of Air
    Force members and their families.
        This has been a year of tragedies and triumphs. The attacks on
    September 11 had a dramatic impact on the lives of all Americans--
    especially those in uniform. Today, members of our Armed Services are
    deployed to distant lands fighting the war on terrorism. Additionally,
    those left at home have seen a significant increase in their pace of
    operations due to both heightened security requirements at military
    installations and additional tasks in support of the homeland security
    mission.
        These current operations have highlighted the ability of our Armed
    Forces to work together to accomplish the mission. While the accuracy
    of the weapons systems might get media attention, it is the combined
    efforts of the people involved that have made these operations a
    success. Therefore, I am proud to represent a portion of that group--
    the more than 400,000 enlisted members of the United States Air Force
    on active duty, in the Air Force Reserve and in the Air National Guard.
        I have been the Chief Master Sergeant of the Air Force for almost 3
    years. I've traveled around the world visiting bases and speaking with
    people about various issues important to them. Regardless of the
    mission or location I've encountered, troop morale has been very
    positive. People are working hard and are extremely proud of their
    contributions to the mission at hand. Also, they truly appreciate the
    visible signs of patriotism and support from Americans back home.
        Our people don't ask for much. They want the appropriate tools and
    enough trained people to effectively get the job done. They want some
    peace of mind to know their families are being taken care of. They want
    their concerns heard by those who are in a position to take action--not
    just talk about it.
                                   retention
        The continued strength of America's Air Force will depend on our
    ability to recruit and retain high quality people.
        The Air Force is a retention-based force. With such a highly
    technological mission, it costs less for us to retain our people than
    to recruit and retrain new individuals. Our annual retention goals
    identify the percentage of individuals we'd like to retain in the
    various year groups to effectively accomplish the mission. Currently,
    our first term retention rates have stabilized, but we continue to fall
    short on our second term and career airmen retention goals. These
    people represent our experience base--the skilled technicians,
    trainers, and deployers who are vital to meeting mission requirements.
        It is essential that we continue to improve the standard of living
    for our airmen and their families if we want to continue to make
    advances on the retention front. Within the next 5 years, approximately
    234,000 active duty airmen--84 percent of the enlisted force--will make
    a re-enlistment decision. The potential exists that many of these
    people will migrate to the civilian sector for a more stable work and
    family environment.
        A valuable tool in helping stabilize our retention numbers,
    especially, in critical skills is the selective re-enlistment bonus
    program. We increased the number of specialties eligible for an SRB to
    161--which accounts for approximately 82 percent of the enlisted
    skills. The SRB cost has also increased from $74 million in fiscal year
    1999 to $258 million for fiscal year 2002.
                                   recruiting
        This was an outstanding year for Air Force recruiting and first
    quarter figures for fiscal year 2002 paint an optimistic picture for
    the near future. The Air Force finished fiscal year 2001 having
    recruited 35,381 people--102 percent of our 34,600 goal. We finished
    the first quarter of fiscal year 2002 at 107 percent--having recruited
    8,076 against a goal of 7,578.
        To reach these positive numbers, we funded over $71 million in
    fiscal year 2001 for national TV advertising, increased the number of
    recruiter authorizations in the field from 1,209 in fiscal year 2000 to
    1,650 in fiscal year 2001, and provided an enlistment bonus to 85
    skills.
        While our recruiters continue to face a challenging market, we have
    not lowered our standards to meet our goals. Approximately 99 percent
    of our recruits have high school diplomas, and 75 percent scored in the
    top half of test scores on the Armed Forces Qualification Test.
                                quality of life
        The welfare of our people is critical to overall readiness and is
    vital in our efforts for recruiting and retention. Air Force members
    and their families continue to work hard and dedicate themselves in
    service to America. Therefore, we believe those serving on active duty,
    in the Air National Guard, or in the Air Force Reserve Command deserve
    a standard of living at least equal to the Americans they support and
    defend.
        Thus the Air Force continues to pursue improvements in all of our
    core quality of life priorities: necessary manpower; improved workplace
    environments; fair and competitive compensation and benefits; balanced
    tempo; quality healthcare; safe, affordable housing; enriched community
    and family programs; and enhanced educational opportunities.
        Necessary manpower is a quality of life factor that we added to our
    list in recent years. The demands to support both current contingencies
    and homeland defense have required us to take a hard look at our force
    structure. Even with improved recruiting and retention we are still
    short of our actual requirement as outlined by the mission demands. The
    bottom line is that we don't have the people or the resources to
    perform all the missions our Nation asks of us.
        The Air Force is committed to ensuring our people are appropriately
    compensated for their efforts in securing our Nation. It is encouraging
    to see the level of support from Members of Congress through the pay
    and benefit initiatives included in the 2002 National Defense
    Authorization Act (NDAA) have made a tangible impact.
        Through your efforts and support, our airmen received the largest
    pay-raise in two decades. Targeting of additional dollars toward all
    mid-level and senior noncommissioned officers has also been a welcome
    change.
        While I'm pleased we have made some headway in retention, we must
    continue to focus on areas where we struggle, and avoid a ``pay table
    inversion''--a situation where junior members receive greater
    compensation than those who supervise them.
        The continued measures outlined in the Basic Allowance for Housing
    (BAH) program have reduced out-of-pocket costs for maintaining an off-
    base residence to approximately 11 percent based on national median
    housing costs. While this is a vast improvement from the 15 to 19
    percent our members paid just a couple of years ago, we must continue
    to make incremental increases in BAH funding until we eliminate out-of-
    pocket housing expenses.
        Another area of extreme importance regarding pay and benefits are
    commissaries and exchanges. They provide vital non-pay compensation
    benefits upon which active duty, retirees, and Reserve component
    personnel depend. Our commissaries and exchanges provide: value,
    service, and support; significant savings on high quality goods and
    services; and a sense of community for airmen and their families
    wherever they serve.
        A retention initiative authorized in the fiscal year 2001 NDAA is
    the Uniformed Services Thrift Savings Plan. This long-term, savings
    plan to supplement retirement is a way to help our service members
    prepare for the future. Our first open season began in October 2001,
    and we currently have about 10 percent of active duty Air Force members
    enrolled in the program. However as we continue to educate our people
    on the value of this program, I believe the number of enrollees will
    increase.
        Make no mistake, the Air Force is committed to ensuring our members
    and families have a high-quality working and living environment.
        The Air Force Family Housing Master Plan guides our efforts to
    ensure we provide quality on-base living facilities, and we are on
    track to meet the AF goal to revitalize inadequate units by 2010.
        The Air Force Dormitory Master Plan outlines how we will meet the
    Air Force goal of providing single airmen (E-1 to E-4) a private room
    on-base and replace our worst dorms by 2009. With current levels of
    funding, we are on target to meet this goal.
        The quality of the facilities supporting our members and families
    in temporary duty and permanent change of station status are also in
    need of improvement. Not only will better quarters improve our members
    and their families quality of life, but also provides significant
    savings in travel costs, out of pocket expenses, and ensures force
    protection. Our new visiting quarters, or ``VQ'', standard will provide
    a ``one size fits all'' room for all grades of transient personnel,
    while our temporary lodging facilities have significantly increased the
    living space for our families.
        The importance of fitness is directly tied to readiness, and we
    must provide our people with functional facilities. The Fitness Center
    Master Plan prioritizes the requirement for replacing or modernizing
    Air Force fitness centers. The Air Force committed $183 million in
    fiscal year 2000-2005 quality of life funding and has steadily
    increased annual MILCON funding, including $55 million this year.
    However, we still need $382 million to complete the plan.
                                   conclusion
        The Air Force leadership strongly believes that quality of life
    directly impacts recruiting and retention. I thank this committee for
    its support in our efforts to provide a quality standard of living for
    our people.
        Before I conclude, I'd like to share a personal observation. During
    my tenure as the Chief Master Sergeant of the Air Force, I've entered
    into countless conversations with airmen assigned around the world.
    From these conversations I have concluded that many in the field simply
    don't distinguish well between the various leaders or groups within our
    Federal Government. To them, Members of Congress, senior military
    leaders and civilians within the DOD hierarchy are viewed as one and
    the same. Therefore, it is imperative we work together to collectively
    ensure that serving in America's military is a rewarding experience.
        We ask a lot from the members of our Armed Services. We ask them to
    serve long hours in places that are often unsafe and far from home. We
    ask them to commit their heart and soul to their service and country,
    and some pay the ultimate sacrifice. I am happy to say the support from
    this committee and Members of Congress has been outstanding this past
    year. We truly appreciate your continued help as we strive to improve
    the quality of life for our airmen.
        On behalf of the men and women who serve in America's Air Force,
    thank you for your leadership and for allowing us the opportunity to
    discuss issues and concerns in this open forum.

        Senator Cleland. Thank you very much.
        Sergeant Finch, thank you for your service to our country
    and all you do for the Air Force. Let me just ask a little bit
    about some of the points you have raised. One of the reasons
    that I was concerned about the GI bill transferability
    provisions as it passed was that it did not apply to everyone
    in the same way. We give reenlistment bonuses, we give bonuses
    for skill levels, and I have come across this where the 15-year
    sergeant in the Air Force at Aviano wonders why the young 3- to
    4-year veteran in the Air Force, the young tiger sonar
    technician or computer whiz, just received a re-up bonus and he
    did not.
        I am concerned about the perceived inequities growing in
    the military. We did our best, though, to try to get this
    concept of transferability installed, and this was the price we
    had to pay. I wonder if each of you would share with me and
    with the subcommittee what you feel the impact can be, will be,
    or has been on the opportunity to transfer GI bill benefits to
    the spouse and to the kids.
        Why don't we start with you, Sergeant Major Tilley.
        Sergeant Tilley. I am glad you started with me. First of
    all, I have heard about or talked to soldiers about our GI bill
    for the last 20 to 25 years, and a question that has always
    come up is, why can't we transfer that to our family? There are
    a lot of soldiers that stay in the Army for a long time, and
    they never use their GI bill, unfortunately, and so I just say
    from the Army's perspective I think it is a great initiative. I
    think it is the right thing to do, and I think in fact there
    are a lot of people that think that if you do that you will
    slow down your retention within the military. I think the other
    way. I think it will help you with retention within the
    service, so I think it is a wonderful idea.
        Senator Cleland. I am really glad to hear you say that
    because 3 years ago, when, as a result of the Principi
    Commission that looked at the benefit structure in DOD and VA
    and tried to make sense of it, there was a recommendation of
    that independent commission that was put together by Congress
    to report back to Congress as to how it could improve the
    benefit structure of, in effect, active duty veterans and
    military retirees. One of the things that stood out to me was
    the concept of transferability, which as former head of the
    Veterans Administration I had never thought about. Then I
    thought about the evolution of the force since I was in the
    military.
        When I was in the military during the Vietnam War, which
    was the third war in which we had the draft, in effect you had
    draft in and then transfer out, or discharge out. You had a
    disposable force, mostly male, mostly single. With the advent
    of the all-volunteer force, it has evolved into a force that we
    want to retain, since we invest so much time and energy and
    training in that force. It is also a married force, which
    drives so much of the retention decision.
        I was in Osaka, Japan about 2 years ago, and a Navy Admiral
    pointed out to me that the decision to stay in the Navy is made
    around the dinner table, and that said it all.
        I was down at Fort Gordon, and they said, you recruit a
    soldier, you retain a family. We now look at retaining a high
    tech force--and that is the way we go to war now, in case
    anybody has not read the papers lately, precision weapons, high
    tech people, and that saves lives. It is obvious to me that in
    order to retain that force, you have to look at the family
    questions, not just the service member question, and therefore
    the question of transferability of an asset like the GI bill
    came into play.
        Sergeant Tilley, regarding your point--about 3 years ago,
    when we put forward the idea, I heard subtle feedback, gossip,
    and rumors from the Pentagon that they thought if we provided
    this benefit then it would somehow slow down recruitment. It
    seemed to me the other way around, that if you take care of
    people in the military, especially the families, those family
    members are going to want to be part of the military in some
    way.
        They are going to look at that more favorably, and then
    those that know that family are going to say, well, boy, the
    Army, the Marine Corps, the Navy, the Air Force is a good deal,
    I want to sign up. It seems to me the better we take care of
    our people, the more others will want to be part of the force,
    so I was interested in that.
        Sergeant Tilley. You took the words right out of my mouth.
    I did not reenlist in the Army for money. I never thought about
    it as a young solder. I reenlisted because I liked that my
    chain of command was taking care of me, and I could see where I
    was going down the road, but it was never about money, and it
    really wasn't about benefits. But then as you get older,
    younger solders today are asking about their benefits as soon
    as they come into the Army. They want to know what kind of
    college degree can I get, or what can I get out of the service.
        I need to tell you one story, and I will be quick. I go
    around and I see soldiers in the Army with master's degrees and
    doctor's degrees and all sorts of stuff. In fact, I talked to a
    female the other day, 35 years old, down at Goodfellow Air
    Force Base that was going through fire training, and I said,
    hey, look, I just have to ask you, why are you here, why did
    you come in the Army? She said, I came in the Army because I
    just was recently divorced, my mother is taking care of my
    kids, and they are a little bit older, but I want to make a
    life for myself. I want to do something different with my life,
    so I came in the Army because it has a lot of benefits for me.
    I could see my future, and it is going to help me. Those are
    things that people are looking for when they come in the
    service.
        Senator Cleland. Thank you.
        Sergeant Major McMichael.
        Sergeant McMichael. First, Mr. Chairman, I would like to
    say thank you for actually getting this going and rolling,
    because it is a good thing for us, the men and women in
    uniform, to be able to have it transferable, but I am concerned
    that as we do it we do a pilot and do it right, so that we will
    not have to come back 5 years later and have to recreate.
        I am concerned that we focus so much on skills and start
    paying for skills and forget that all men and women who put on
    the uniform are providing a service, that we are paying them
    first, or trying to take care of them for their service as much
    as we are, or even more so, than we are for their skills. As I
    look at the great men and women that serve our United States
    Marine Corps family, they all have great skills, and I would
    hate to put any more value on one than on the other.
        But at the same time, as I said in my opening statement,
    education is very important to me personally, and I champion it
    every day. I do not want anyone to serve in uniform, and
    especially the Marine Corps, if they come in with a GED and do
    not have the opportunity to get a Ph.D. If they cannot get
    there because we do not have a system to allow it, then I am
    not sure that we are fully supporting the men and women that
    serve our corps.
        Senator Cleland. Thank you very much. I appreciate your
    putting it that way. One of the reasons I walked down the road
    here on transferability, and began to be convinced in my own
    mind that this was a road that we ought to all walk down, was
    that about 2 years ago I read a story of a young marine
    sergeant quoted in the New York Times in which he was asked
    about the value of the pay raise. He said, I am glad I got the
    pay raise, and then he quickly said, it will help me pay for an
    education for my 12-year-old daughter. In other words, he
    immediately shifted to what was driving him at this point,
    which was a 12-year-old daughter. It was the family requirement
    and particularly education of a family member, and that that
    was the value of the pay raise to him.
        Obviously, if you are young and single, you know the pay
    raise means other things, but he quickly shifted to what was
    the priority for him at that point. With a military, the
    majority of which is married, it does seem to me that as you
    gain rank and stay in the military a while, that your
    priorities do shift from just being a young tiger out there in
    the first 3 or 4 years, to the 6-year, 8-year mark, 10-year
    mark, you begin to think differently. Your pressures are
    different, and it seems to me that the transferability helps
    with one of those pressures on the servicemen and women.
        Master Chief.
        Chief Herdt. Yes, sir. Thank you for this opportunity. As
    you said, the Admiral said that that decision to stay in the
    Navy is made round the dinner table at night. The follow-on
    piece that he did not relate to you is, and 51 percent of the
    vote is at home. [Laughter.]
        That is the way it works. I am so pleased to have the
    opportunity to talk to this issue, that you are asking for our
    opinion on it, because it is repeatedly the question I get when
    I conduct all-hands calls throughout the fleet. I would be in
    the Northern Arabian Sea talking to sailors on ships. The
    opportunity, or the ability to educate one's children is
    perhaps the single biggest concern in the 36,000 strong Chief
    Petty Officers' mess in the United States Navy. Every one of us
    wants the opportunity to provide a quality education. If we can
    send our kids to the local junior college, then that is fine,
    if that is what we want to do, but for those that want to do
    better, we should have that opportunity.
        I am concerned that perhaps there are real social
    implications when we start deciding who is going to be able to
    educate their children. Dealing with the bonuses and the haves
    and have-nots in the bonuses, that is a little bit different,
    but this is a real social right in our country when we start
    talking about our ability to educate. I am not sure it is going
    to play very well in a team environment when we say, you get to
    educate your children and oh, by the way, you don't, and I am
    locked into this.
        I am also concerned that we started a little bit early. The
    6-to-10-year point, I understand the reasoning that got us
    there, but I think if we move that out a little bit further,
    right now the folks at 15 years and beyond, as you mentioned,
    are sort of looking back at those junior folks and saying, what
    am I, chopped liver? If we structure this right, we could make
    this benefit as powerful a retention tool as the retirement
    system is. I guess if I were doing it, I would move it out,
    maybe another 4 to 5 years, out to about the 14, 15-year point.
    First of all you would obligate for 20, but for every year that
    you stayed in past that initial point, I think, I would up the
    percentage.
        I might start at a lower percentage, and the longer you
    stay in, the more I would give you, and I think we can
    structure this to be an incredibly powerful retention tool.
    Right now, it is structured towards critical skills. We have
    bonuses to take care of those critical skills. This needs to be
    something that is across an entire segment, and affordable. I
    think the further we move it out, the more draw it has when
    young sailors look out and say, look how they are taking care
    of the people who really commit to this institution, and it
    also becomes more affordable for us, sir.
        Senator Cleland. Those are powerfully relevant questions,
    and thank you for really looking down the road and seeing the
    pitfalls here as well as the pluses. We wrote the bill so that
    the Service Secretaries could have the option of applying this
    any way they wanted, and so in effect the Navy has an option to
    do exactly what you suggest. Again, I was aware that you create
    some inequity here, but I had to get the camel's nose in the
    tent first.
        Chief Herdt. We are appreciative of that.
        Senator Cleland. Later, we can work on the whole camel, but
    thank you for helping us understand, and the Navy and the
    services understand how this might be tweaked so that it can
    have all the power of retention that we wanted it to have, and
    yet minimize the sense of inequity that it does have as well.
        Thank you very much. Great suggestions.
        Sergeant Finch.
        Chief Finch. I echo many of the comments the Master Chief
    has made in terms of taking care of our people who have
    committed to the service for a significant length of time. I,
    too, travel around, and do airmen calls hour to hour on bases
    that I visit, and there are a number of issues that come up,
    and educational issues are always something that are raised. If
    you get a large enough group out there they will come up with
    that, and we tried to put those into some category to say, gee,
    what educational issues are really out there, and which are the
    most important, and so there were numerous ones.
        There were the folks that did not have access to
    educational benefits. There was the transferability issue.
    There was the issue of using the GI bill in conjunction with
    tuition assistance, or going to 100 percent, and then there
    were numerous ones that get capsulized. So I went back to the
    senior enlisted leadership and asked, if you could do all of
    those, which would you do, and which would you do first, so I
    could sort out what they thought were the higher priorities.
    The transferability issue was, quite frankly, pretty high. I
    think the folks really appreciate that. Higher yet, though, was
    the ability to get everybody in that window before we started
    to go down that road, and it is a timing issue.
        We certainly appreciate getting the camel's nose inside the
    tent to do that, but it is something we have to go back now and
    make sure that we have opened this up so that we are educating
    the kids in the future.
        Senator Cleland. We have a feedback loop in the bill, too,
    that you come back to us and tell us how you are doing, and
    that we analyze this as we go along and learn from it.
        Senator Hutchinson.
        Senator Hutchinson. Thank you, Mr. Chairman, and we thank
    you for your commitment to the whole issue of transferability
    in education for the families of our servicemen. You have been
    like a bulldog, a great leader, and a great champion on this,
    and tireless in it, and I have been honored to work with you
    and support you in that effort.
        I think, as has been pointed out by our panel, that while
    self-interest, self-education, and self-improvement are very
    valid, and there is nothing wrong with that kind of incentive
    and those kinds of concerns, it reaches a point where your
    greater concern is your children and your family and their
    future. Where you may be willing to make self-sacrifices, you
    are not willing to sacrifice your children. In making those
    determinations to stay in or get out, that becomes fundamental,
    so thank you for what you have done on that issue and your
    continued commitment on it. I look forward to working with you.
        Master Chief Herdt, I want to join the chairman in
    congratulating you and thanking you for your career, for your
    service to our country. You have done an outstanding job and
    exemplary service, and we wish you the best in the future.
        Chief Herdt. Thank you very much, sir.
        Senator Hutchinson. I think we have a vote on final passage
    coming up here very shortly, but I would like to ask the panel
    an issue I asked the previous panel about the vaccine
    production acquisition strategy in the military. You are with
    those who are out fighting the wars. We know in Afghanistan
    that there was evidence of, if not actual biological weapons,
    although I think some of that was found as well, there were
    certainly plans for the use of biological weapons.
        In the future, I believe that we will ultimately have to
    deal with Saddam Hussein in Iraq. We know there are weapons of
    mass destruction there, and we have not had inspectors in in
    years. When we send our young people into these situations, how
    comfortable are you about the kind of protection we are
    providing them in the area of biological weapons? Do you have
    any thoughts or recommendations on what we need to do to
    adequately protect them not only against anthrax or smallpox,
    but other weapons that may be either on the drawing boards or
    being developed by terrorists around the world?
        Let me start on our left and go across the panel.
        Sergeant Tilley. Sir, that is a big question. I have had
    all my six shots. I used to be the U.S. Central Command
    Sergeant Major for about 2\1/2\ years, so I have worked in
    Saudi and Kuwait for about 2\1/2\ years in that area. I got my
    shots a long time ago. The reason I say it is a big question,
    you do not know what you do not know when you talk about
    weapons of mass destruction, anthrax, and things like that.
        I think the one thing about anthrax is, it is there. We do
    not know where it is. We need to make sure that the soldiers
    that are on the ground have the correct protection, that is the
    main thing. We need to make sure that they have it well before
    they go.
        I really support the fact that the Army or all of DOD was
    given those shots before you started giving everybody shots.
    The reason I say that is, if we are alerted to go fight a war,
    and we just do not know what is going to happen, you could be
    gone in 48 hours, or 24 hours, or 72 hours, so I think
    preparation is the most important thing.
        The other thing we need to discuss about weapons of mass
    destruction, I guess if I would think of anything that scares
    me right now, it is just strictly terrorism, because you just
    do not know what is there. You try to do all the things you can
    to protect yourself against force protection, but the one thing
    that I think about is that it is hard to stop one person. It is
    hard to stop one person who is convinced to kill themselves or
    kill us because we are Americans, and as this goes on, because
    it will go on. If it goes on for 6, 10 years, I really worry
    about people getting complacent about thinking it just cannot
    happen. The answer is, they will wait a long time to make sure
    that it does happen.
        I do not know if that answers all your questions. I think
    with what we have right now on the ground, we are doing the
    right kind of things. After being in the Army 33 years, not as
    long as the Master Chief with 35, but I am going to catch up, I
    am pretty pleased about what we are doing for the Army. We are
    transforming the Army. We are changing things. I was also in
    Vietnam in 1967, fighting in the streets of Saigon, so I
    understand the importance of change.
        I guess I would just say that we need to allow our services
    to change, to make sure they change with better equipment,
    better technology, to allow soldiers to survive the next war.
    We just do not know where it is going to be.
        Senator Hutchinson. Thank you. This is not really a right
    or wrong answer. I am just interested in your thoughts. You
    gave me your thoughts, and I appreciate that, Sergeant Major,
    on what you think about what we may face in those battles in
    the future. We certainly had an inadequate approach thus far.
        The goal was to inoculate everyone, to immunize all of
    those who were at least going to be in the rotation. That meant
    a lot to those who were going to be in harm's way and perhaps
    face those kinds of weapons. Because our acquisition strategy
    has failed, we have not been in a position to do that.
        I think one thing the Surgeon General of our country
    emphasized, this is not just the DOD issue any more, this is a
    civilian issue also and a homeland issue, and this is an area
    that we should approach jointly. I am pleased to see we are
    moving in that direction.
        Did you want to add something else?
        Sergeant Tilley. A last comment I would like to make, I
    probably did not say it enough, the importance of changing the
    Army is allowing the Army to transform. When I talked about
    Vietnam, I was on 48s in Vietnam, on a tank, and I took a hit
    with an RPG. I understand the importance of change, and now we
    have had about seven different iterations of tanks in the
    field, and so to me that is change.
        I understand the importance of allowing your Army to change
    and have better equipment, better technology in the future,
    because the worst thing about it, when you go to some of these
    other countries, they are training. They have some of those
    things that we have right now, so we need to continue to grow.
        Senator Hutchinson. The technology, a chance to stay there.
    Sergeant Major.
        Sergeant McMichael. Sir, on the anthrax, it is my opinion
    that we are doing a great service to our men and women by
    making sure the leadership gets all it can to get all of our
    servicemen and women taken care of before they go into harm's
    way. I think we have to put an ESP title on it and be able to
    look at that with what we have to eliminate to make sure that
    we get the vaccine in a timely manner. We then have to
    streamline it so that we can look at the process of getting the
    vaccine to the people that need it, and then prioritize it in a
    fair way, that whoever needs it first, and whoever is going in
    harm's way, or closer to the threat, it can at least be
    available to them.
        When we look at the weapons for the attack, or being able
    to stay safe, we have to be open-minded and willing to step
    outside of the circle, so to speak, and continue to engage in
    experimental methods to stay ready to fight tomorrow's battle
    and not focus on yesterday's conflict. The only way we can do
    that is to continue to be innovative and to use our technology
    to go forward and to continue to educate. None of this will
    make any sense to anyone and will never be embraced by anyone,
    if we do not know how to market it in a positive way and in a
    productive way, with a partnership between the men and women
    that serve in uniform, as well as the great Americans that
    support us in industry and in our technology field.
        Senator Hutchinson. Thank you. Good answer. Master Chief.
        Chief Herdt. Yes, sir. You asked, are we satisfied with our
    preparations. I guess I would answer that by saying, if you are
    aboard a ship at sea, I am relatively satisfied with our
    ability to button up. We have countermeasure watch-down
    systems. We have systems out there that we can pretty much lock
    those kinds of agents out, assuming that we know that they are
    there.
        I am a lot less comfortable, probably, with the homeland
    security defense, plus we have a lot of sailors on the ground
    around the world, because as the Sergeant Major said, you do
    not know what you do not know. You do not know when it is going
    to come. It is going to be there, and just as we found out with
    the attacks here, you do not know it until someone starts
    showing the effects. I agree with both my counterparts here
    with regard to, there is no ``let's get ready for it'' once it
    happens. This is something you clearly have to be prepared for.
    There is not time to begin inoculating people after the attack.
        So we have to have, I would agree: 1) a safe vaccine, and
    2) an abundance so that we inoculate and prepare people as we
    come into service, so that as a group, if our country is
    attacked in this manner, we at least have a cohesive group that
    is able to bring some sense of stability to wherever they might
    be.
        Senator Hutchinson. Thank you. That is very well said. A
    dozen letters or so with a very sophisticated, apparently very
    refined anthrax had a significant impact on our mail system,
    upon our Government, and upon our society, by creating a fear
    element. As my friend Pat Roberts would say, I lay awake at
    night worrying about a ground war, troops in Iraq, and it may
    come to that at some point, and what a widespread dissemination
    of anthrax spores would mean. You are exactly right, this is
    not something you react to.
        We have the Cipro, and we can be ready with antibiotics,
    but that is not really the way we need to send them in. I
    believe we need to send them in protected and prepared to the
    best extent we can.
        Thank you.
        Chief Finch. Sir, I think my colleagues have covered most
    of the key points of this. I would just add that it is
    leadership's responsibility to be sure the men and women who
    are put in harm's way have the ability to come back home, and
    we are doing the best we can to make sure that happens.
        As far as the vaccine, I agree with the Master Chief here,
    we are an expeditionary Air Force. We send people into harm's
    way in a short amount of time, and we have to prepare them,
    whether it is for the risk of anthrax or for the risk of some
    other biological agent or anything that happens to be out
    there. It is our responsibility to try and prepare for those
    things as best we can and provide safe vaccines, to allow our
    folks to go over there and perform their duties.
        Senator Hutchinson. Thank you. I have been called to the
    floor, and I do not know how close we are to the vote, but I
    wanted to ask--Sergeant Major, my understanding is, at least,
    that there is a survey that is being prepared. Are you involved
    in the design of that survey regarding personnel and spouses,
    about the quality of life? Are you familiar with what I am
    talking about?
        Sergeant McMichael. Yes, sir, I am very familiar with the
    2002 quality of life survey that will kick off this month in
    the Marine Corps. As I said in the opening statement, that
    survey is probably designed better than the previous two we
    have had that went out within the last, almost 10 years,
    because for one we will talk to and survey the spouses as well
    as the men and women in uniform. It is structured to get to the
    real questions that will allow us to focus on the things we
    need to work on, or the things that we should provide that has
    not been provided in the past.
        Senator Hutchinson. When do you expect the results of the
    survey?
        Sergeant McMichael. I am not sure of the exact time that it
    will finish being administered, but hopefully in a year. We
    will take it throughout a year's time.
        Senator Hutchinson. Will the results of that be made
    available to the subcommittee?
        Sergeant McMichael. I am quite sure it will, sir.
        Senator Hutchinson. That will be helpful to us. Thank you.
    Thank you, Mr. Chairman.
        Senator Cleland. Thank you, Senator Hutchinson. I thank the
    panelists for your insightful comments today. As we call the
    third panel, we will take a 5-minute break. [Recess.]
        The subcommittee will come to order. Thank you very much
    for your understanding of the Senate version of a 5-minute
    break. Let me just say that all of you have prepared
    statements, and if there are no objections we will enter those
    in the record.
        We have received prepared statements from Brig. Gen. David
    A. Brubaker, Deputy Director, Air National Guard; Lt. Gen.
    Roger C. Schultz, Director, Army National Guard; and Rear Adm.
    R. Dennis Sirois, Director of Reserve and Training, Coast
    Guard. If there are no objections, these statements will be
    included in the record.
        [The prepared statements of Brigadier General Brubaker,
    Lieutenant General Schultz, and Rear Admiral Sirois follow:]
            Prepared Statement by Brig. Gen. David A. Brubaker, ANG
        Mr. Chairman and members of the subcommittee: Thank you for the
    opportunity to present information to this committee--on behalf of the
    108,000 proud men and women of the Air National Guard--and to share
    with you the successes and challenges facing us over the next year and
    beyond.
        It was September 11 that marked time for these and all subsequent
    generations of Americans. The world stood still--but not the Air
    National Guard--nor our brothers and sisters in the Army National Guard
    and the countless thousands of other citizens who immediately responded
    to deter an unseen enemy from further assaults and destruction. With
    years of preparation, training and commitment--all sustained by this
    committee's support--your Air National Guard personnel launched in
    response to our Nation's emergency call for help. These Air Guard men
    and women brought with them the character and core values of
    generations of citizen soldiers and airmen. The volunteer spirit that
    answered the emergency bell to fire the first ``shots heard around the
    world'' on Lexington Commons in April 1775--rapidly responded to the
    ``shock heard round the world'' on September 11 during the brutal
    attacks in New York, Washington DC, and Pennsylvania. While life
    changed forever on that tragic day, our Air National Guard volunteerism
    remains steadfast and reliable--even after nearly 6 months in 24/7
    operations. Today, your Air National Guard remains vigilant in the
    skies above this very room and these important proceedings--ensuring
    the ability of our Nation to continue its critical operations.
        That same undaunting spirit is flying and fighting in distant
    lands; operating in dangerous, deplorable conditions; following the
    enemy deep into their own territory to stop terrorism at its very
    core--guarding America from abroad in Operation Enduring Freedom.
        With growing mobilization authority, the Air National Guard
    currently provides more than 25,000 men and women to Operation Noble
    Eagle, Operation Enduring Freedom, and Aerospace Expeditionary Force
    (AEF). Today those numbers include nearly 6,000 volunteers, 14,000
    mobilized men and women, a sustained 1,300 AEF participants--many under
    partial mobilization and volunteerism--all supported extensively by
    over 21,000 full-time technicians and 11,000 Active Guard Reserve
    (AGRs)--with virtually the same end strength we had in 1984, nearly 20
    years ago. We will continue these contributions for the unforeseen
    future--``Always ready--Always there.''
        At the end of January, our end strength approached nearly 110,500,
    almost 2,500 above our current allocation--a sign of the patriotism and
    dedication of your men and women in today's Air National Guard, as well
    as an indicator of the important role your strong support has given us
    for critical retention programs like control grade relief, Aviation
    Continuation Pay, bonus programs, pay increases, family readiness and
    employer support. We have depended heavily on every one of these
    dedicated citizen warriors--their families and employers.
        To put the Air National Guard's current participation in
    perspective, during Operation Desert Storm we activated nearly 16,000
    proud Air Guard men and women. In Bosnia, our contribution was close to
    8,000 and Kosovo--4,000. We have--in 5 short months--already doubled
    our Operation Desert Storm peak and tripled or better the other
    remaining major conflicts or wars of the last decade alone. The nature
    and timing of this war puts the Air National Guard in a very unique and
    positive leadership position demonstrating to the world the value of
    the citizen airmen in a nation's ability to prosecute a war far from
    its shores while protecting our country at home--but we need your help
    in critical areas to sustain this level of involvement over the long
    haul.
        Today, our Nation contemplates fundamental changes or shifts in the
    way we continue to ``ensure domestic tranquility'' and ``provide for
    the common defense.'' The hand we've been dealt for our future security
    environment cries out for greater involvement of our Air National Guard
    units in war, contingencies, transnational threats, terrorism, and
    humanitarian operations. We know we have the resident skills, maturity,
    and experience to make the difference in this new world. With your
    help, we've insured a relevant and accessible Air National Guard over
    the last decade. Since 1990, the Air National Guard contributions to
    sustained Total Force 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. Air National Guard support to all U.S. Air Force
    operations over the last decade has increased from 24 to 34 percent of
    the Total Force aircraft employed. Contingency support has dramatically
    increased from 8 percent in 1993 to nearly 22 percent--all prior to
    September 11. In February 2002, the Air National Guard supported nearly
    75 percent of all Operation Noble Eagle (ONE) combat air patrols,
    including 24 percent of AEF fighters and a classified level of
    Operation Enduring Freedom (OEF) fighters. Air National Guard tankers
    contributed 60 percent of ONE refueling taskings; 47 percent of OEF Air
    Force requirements; while still sustaining over 37 percent of all AEF
    refueling. Our C-130 fleet conducts 55 percent of ONE tactical lift
    requirements, while contributing 42 percent to OEF taskings, as well 78
    percent of all Air Force AEF taskings. Prior to September 11, the
    average number of active duty days per ANG member (above the 39-day
    obligation) had already increased by 12 days--a full third more--all
    based on the volunteerism of our dedicated citizen airmen. Today, that
    number grows steadily as our men and women clamor to respond to our
    Nation's call to the war on terrorism.
        In Cycle One and Two of the AEF, the Air National Guard deployed
    25,000 of its people--nearly 24 percent--almost 2,500 per AEF. We
    contributed over 20 percent of the Total Force aviation package and
    nearly 10 percent of the Expeditionary Combat Support or ECS
    requirements. Air National Guard contributions to the Total Force have
    been even more robust in AEF Cycle 2--especially with the advent of the
    war on terrorism. The events of September 11 have, for the short term,
    adjusted the AEF rotations and the ANG contributions in both numbers
    and duration. We expect to return to the AEF construct during AEF
    rotations 3 or 4 this year.
        The Air National Guard is busy. Our people are volunteering above
    Operation Desert Storm peak levels with nearly 85 percent of our total
    workdays supporting CINC and service requirements around the world. Our
    men and women are proud of their contributions.
        By the second week of February 2002, Air National Guard fighters on
    all three fronts logged nearly 28,300 flying hours in almost 7,800
    sorties, with a daily average of 90 hours a day. Our tankers flew over
    10,800 hours in almost 2,200 sorties, for an average of 75 hours a day.
    Over 4,200 of our 5,300 Security Forces were mobilized with an
    additional 800 on MPA days. All four Air National Guard intelligence
    squadrons were mobilized early along with ground tactical air control
    systems and air operations groups.
        In practical terms, this has proven that the Air National Guard is
    an essential element of the Total Force charged with protecting and
    defending America at home, in addition to their primary role in forward
    deployed combat and combat support operations. We must take proactive
    steps to insure we remain viable by taking care of our people, their
    families and employers. We must insure a continued and steady
    recruiting capability to meet these sustained requirements.
        During fiscal year 2001, the Air National Guard was faced with many
    of the same recruiting challenges that have confronted all the other
    service components over the last few years--a robust economy and a low
    unemployment rate. Through highly effective recruiting and retention
    programs, the Air National Guard exceeded its programmed fiscal year
    2001 end strength by 400 members. As of 22 January 2002, the Air
    National Guard has attained 110,451 assigned members, far exceeding
    fiscal year 2002 programmed strength at this point.
        We've been successful because you have given us the necessary
    resources to place recruiting and retention emphasis on Air Force
    Specialties where shortages exist, such as aircraft maintenance career
    fields, by offering enlistment and reenlistment bonuses, Student Loan
    Repayment Program, and the Montgomery GI Bill Kicker Program. As a
    result, in many of our critical maintenance positions, we have seen
    real growth from 2-6 percent over the last 2 fiscal years. These
    incentives have contributed greatly toward enticing and retaining the
    right talent for the right job. We thank you for this help.
        During the past year the Air National Guard continued to see an
    increase in Aviation Continuation Pay (ACP) take rates. Currently 450
    out of 483 eligible Active Guard Reserve pilots have signed up for the
    bonus. That equates to a 93 percent take rate. ACP has accomplished its
    goal by retaining qualified instructor pilots to train and sustain our
    combat force--a critical force enabler in today's crisis environment.
    Our greatest challenge will be pursuing legislation to eliminate the 1/
    30th rule as it applies to Aviation Career Incentive Pay (ACIP) and
    Career Enlisted Flight Incentive Pay (CEFIP). This initiative, which
    affects over 13,343 officers and enlisted crew members in the Air
    National Guard and Air Force Reserve, is aimed at providing an
    incentive to our traditional aviators who do not qualify for the ACP
    for Active Guard Reserves and the special salary rate for Technicians.
    They have participated at historically high levels even before, but
    especially since, September 11. Additionally a priority for the Air
    National Guard is to increase our traditional pilot force, which has
    maintained a steady state of 90 percent. We are also implementing
    recruiting procedures to expediently identify eligible prior-service
    military pilots that may be interested in a career with the Air
    National Guard.
        The Air National Guard has placed priority on several quality of
    life imperatives. Each of these initiatives represents a significant
    accomplishment in making Air National Guard membership more attractive,
    one of our biggest priorities. We thank you for the support for another
    priority--the recent increase in the maximum coverage under the
    Servicemen's Group Life Insurance (SGLI) program to $250,000. On the
    heels of that improvement, SGLI was expanded to include families. The
    SGLI and Family SGLI programs provide our members a single
    comprehensive source of affordable life insurance.
        The recent creation of the Uniformed Services Thrift Savings Plan
    (UNISERV TSP) is another equally impressive example of far reaching
    quality of life initiatives. Under this program, all members of the
    Uniformed Services, to include Air National Guard members, are now
    eligible to supplement their retirement by participating in this
    program using pre-tax dollars, providing yet another incentive to
    continue to serve.
        We care about TRICARE and the TRICARE For Life legislation is an
    important enhancement that encourages our members to serve to
    retirement. By doing so, retired members who become eligible for
    Medicare at 65 are also eligible to have TRICARE as a supplement to
    Medicare, saving them significant amounts of money in their retired
    years. Recent improvements for TRICARE of mobilized Guard members will
    reduce the burdens on their families.
        Our human resources enhancement programs, in particular our
    diversity effort, has increased mission readiness in the Air National
    Guard by focusing on workforce diversity and assuring fair and
    equitable participation for all. In view of demographic changes in our
    heterogeneous society, we have embraced diversity as a mission
    readiness, bottom-line business issue. Since our traditional sources
    for recruitment will not satisfy our needs for ensuring the diversity
    of thought, numbers of recruits, and a balanced workforce, we are
    recruiting, retaining and promoting men and women from every heritage,
    racial, and ethnic group.
        Leadership's continuous emphasis on diversity issues is necessary
    to maintain momentum and ensure training and program implementation. In
    addition, declines in prior-service accessions require increased
    emphasis on training and mentoring programs for non-prior service
    recruits. The Defense Advisory Committee on Women in the Services
    (DACOWITS) recommended the Air National Guard Diversity Initiative as
    the ``benchmark for all the services and Reserve components.''
        Our future diversity initiatives will focus on areas of career
    development including the implementation of an Air National Guard
    formal mentoring process and the development of automated tools to
    track progress towards increasing opportunities for women and
    minorities. In the area of education and training we plan to develop
    and execute an innovative prejudice paradigm and gender relations
    training modules. Also, as part of our minority recruiting and
    retention efforts, we will sponsor an initiative to evaluate the
    retention rates of women in the Air National Guard to determine factors
    contributing to the attrition rate. The National Guard declared 2002--
    ``The National Guard Year of Diversity.'' We will insure during this
    year we put emphasis on this critical recruiting, retention and career
    progression effort.
        The predictability and stability of AEF rotations has made it
    easier for employers to support Guard and Reserve members' deployments.
    We've ensured dedicated transportation 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 to work high level issues critical to our shared national
    assets, our pilots. We accomplished several goals in our ``Year of the
    Employer 2001'' efforts, including the introduction of phase one of an
    employer database that not only captures vital information on our
    traditional National Guard employers to improve communication, but also
    the added advantage of capturing critical ``civilian'' skills that can
    be leveraged for military experience. These are but a few of the
    initiatives taking hold as we focus on the `silent partner' behind all
    of our men and women.
        Since 1997, the Air National Guard has repeatedly identified the
    importance of family readiness. Since September 11, the Air Guard has
    asked its families to make great sacrifices to sustain contributions in
    support of Operations Noble Eagle and Enduring Freedom--concurrently
    with sustained overseas deployments of much longer durations. Today,
    this means nearly 50,000 Air National Guard member families are in
    immediate need of dedicated full-time family readiness and support
    services--specifically information referral support and improved
    communications and education capabilities. Until this year, Air
    National Guard base family readiness and support was run entirely by
    volunteers on an average annual budget of only $3,000--$4,000. Through
    this committee's great support in the supplemental last year, we
    received $8 million to bring full-time, dedicated contract capability
    to the Air National Guard for the first time ever.
        The Air National Guard has developed and implemented the program
    solution in fiscal year 2001 to fund a full-time contracted family
    readiness program at each of its major installations. While funding for
    fiscal year 2002 has been added in the fiscal year 2002 supplemental
    appropriations, there is still no sustained program funding in the
    Future Years Defense Program. The Air National Guard family readiness
    program significantly enhances mission capabilities by reducing
    pressures on Air National Guard personnel and their families, as well
    as improves their quality of life. Our families deserve no less.
        The Air National Guard has also identified a need for childcare
    alternatives. With increasing demands from Air National Guard
    Commanders and family members, the Air National Guard researched
    innovative childcare options for the National Guard to include drill-
    weekend childcare access. Quality, affordable, and accessible childcare
    for Guard and Reserve members is an important quality of life issue,
    especially for single and dual-working spouses, just as it is for our
    active-duty counterparts. The Air National Guard has proposed a pilot
    program in 14 locations nationwide to provide a low-cost, simple
    approach to providing quality, childcare access to National Guard and
    Reserve members. At completion, an assessment of the pilot program will
    be reviewed and any necessary guidance with projected costs will be
    validated. Our Active-Duty Child Development Centers (CDC) have
    recently opened their doors for National Guard and Reserve childcare
    use on a space available basis at each of their sites. However, with
    only 14 of 88 Air National Guard Wings on an active-duty base where
    many of the daycares are already operating at capacity, this will have
    limited opportunity for many. With increasing demands on Air National
    Guard families and their children, cost-effective and supportive
    solutions must be found.
        The ANG maximizes training capabilities by employing data uplinks
    from our three studios in Knoxville, Tennessee; Panama City, Florida;
    and Andrews AFB, Maryland. As a forerunner in this dynamic medium, the
    satellite-based Air National Guard Warrior Network has (since 1995)
    transported training and information to our members at 203 downlink
    sites at our bases throughout the Nation. In addition to training
    delivery and production, these studios also serve as full communicative
    links to the states and territories in times of national and local
    contingencies. From the Andrews studio, we provided timely updates to
    the field in support of Operation Noble Eagle. From the Training and
    Education Center in Knoxville we transported critical information for
    the F-16 community concerning their new wheel and brake assembly. This
    training saved over $120,000 in costs associated with travel of a
    mobile team. We also continue to enjoy good working relations with the
    Federal Judiciary Training Network, uplinking training to all their
    Federal courts.
        We continue to work with the DOD and all the Federal training
    communities in developing and delivering expedient learning products,
    and the net result of these actions is helping to increase unit and
    member readiness. The challenge is funding for the future. The Air
    National Guard needs to be positioned to compensate learners, to assist
    with computer acquisition (or accessibility), Internet access, and to
    pay for conversion of courses into a deliverable format. Additionally,
    the Air National Guard plans to make increasing use of tuition
    assistance which equates to a more informed, better trained and
    educated National Guard member--one who is ready to meet the challenges
    of the future.
        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 warfighting capability
    and proved invaluable to immediate responses on September 11. The Air
    National Guard pilots who launched over American cities on September 11
    and deployed for overseas shortly thereafter, averaged over 2,000 hours
    flying the F-16 versus 100 hours for their young active-duty
    counterparts. Ninety-seven percent of our Air Guard pilots have more
    than 500 hours experience in their jets compared to 35 percent of their
    active-duty counterparts. Similar comparisons can be made for other
    critical career fields. 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
    National Guard's combat readiness--especially as we assimilate more
    non-prior service individuals as a function of our overall recruiting
    effort.
        We in the Air National Guard are proud to serve this great Nation
    as citizen-airmen. Building the strongest possible Air National Guard
    to meet the needs of the President, Secretary of Defense, CINCs and our
    Air Force partners is our most important objective. Our people,
    readiness modernization programs, and infrastructure supported through
    congressional actions are necessary to achieve this vital objective.
        We count on the support of the citizens of the United States of
    America to continue meeting our mission requirements--especially the
    members of this committee. We are confident that the men and women of
    the Air National Guard will meet the challenges set before us. With
    your sustained support, we will remain an indelible part of American
    military character as an expeditionary force, domestic guardian and
    caring neighbor--protecting the United States of America--at home and
    abroad.
                                     ______

             Prepared Statement by Lt. Gen. Roger C. Schultz, ARNG
        Mr. Chairman, distinguished members of the Senate Armed Services
    Subcommittee on Personnel:
        On behalf of the 350,871 men and women of the Army National Guard
    (ARNG), I want to thank you for this opportunity to address you today
    and for your continued support to the Guard.
        Our Nation relies on the ARNG now more than ever to accomplish an
    increasing number of vital missions. In response to the events of
    September 11, 2001, the ARNG is deployed across the country and around
    the world. No matter where the duty location, our soldiers possess high
    morale, because they are doing what they signed on for: serving their
    country. This high morale can be attributed in large part to the
    unflagging support of our soldiers' family members and their employers.
    We have experienced no adverse effects on our personnel programs, and
    are achieving, even exceeding, our goals in recruiting and retention.
    We are working within the Army to maintain a sustainable personnel
    tempo, by providing the longest possible lead times to our soldiers and
    their employers. We continue to monitor employer support, and I'm
    pleased to inform you, it is high. In order to sustain the high
    employer support we are experiencing, we are developing a recognition
    program to enhance efforts with Employer Support of the Guard and
    Reserve (ESGR) in sustaining support for our soldiers.
        In order to continue this proud tradition of exceptional service to
    our Nation, the Army National Guard needs your continuing support.
    Recognizing that your focus is on personnel, I want to make you aware
    of our program priorities, and provide you with background on what we
    have identified as critical issues for the Army National Guard. The
    continued support of Congress is critical in fulfilling our
    responsibilities and commitment to our Nation.
        One great asset of the Army National Guard is our extremely
    dedicated full-time workforce, that small team of Active Guard and
    Reserve or Military Technicians back home in your communities that look
    after our units on a day-to-day basis. Full-time manning is our most
    critical issue, and our number one priority. I want to thank you for
    your support in increasing the ARNG full-time manning. In addition,
    inadequate full-time support issues can have an adverse impact on
    retention and the quality of life of our soldiers and their families.
    With the Guard's increasing role in worldwide day-to-day operations, it
    is extremely important to have a sufficient number of full-time
    soldiers ready to help their units meet current operational tempo
    readiness needs. National Guard leaders throughout the Nation
    repeatedly cite the lack of full-time support as a significant
    readiness inhibitor. The Army Guard's current full-time manning level
    is 57 percent of Army validated requirements. The additional
    authorizations for AGR soldiers and military technicians you provided
    were sent to the States and Territories to improve readiness in units.
    Those AGR soldiers are on the ground in our armories that facilitate
    every aspect of readiness by providing the day-to-day support necessary
    to allow units to perform their operational missions when mobilized.
    The Army provides funding beginning in fiscal year 2005 to continue the
    momentum you established in reaching our high risk requirement, but
    more work needs to be done. The Army is seeking additional full-time
    support authorizations and associated funding to incrementally increase
    the ARNG full-time support program over the next 11 years.
        Operational demands on the Armed Forces have stressed active
    military forces. Since the end of the Cold War, the Armed Forces
    experienced a reduction of total personnel while our security strategy
    has increased the demands placed on the Reserve Forces. To meet the
    increasing mission requirements on the ARNG, we must not only attract
    but retain our soldiers.
        Enlisted personnel recruiting and retention were continuing success
    stories for the ARNG during fiscal year 2001. Enlisted accessions for
    the year exceeded the program objective of 60,252 by totaling 61,956 or
    102.8 percent of the goal. The overall ARNG loss rate through the end
    of fiscal year 2001 was 19 percent, nearly meeting the overall
    objective of 18 percent.
        The total officer strength at the end of fiscal year 2001 was
    36,579. Officer end strength was 821 short of the programmed objective.
    The ARNG continues to have a higher than expected loss rate among
    officers. Some of this is attributed to resignation from the ARNG due
    to family pressures, Operations Tempo (OPTEMPO) and better income
    opportunities offered in the civilian sector.
        The shortage of company grade officers in the ARNG, particularly at
    the rank of captain, results in a large number of lieutenants and
    warrant officers occupying captain positions. Our company-grade
    shortfall in units creates a decrease in our overall readiness posture,
    unit morale and unit effectiveness.
        The Army National Guard continues to address significant challenges
    in warrant officer accession and personnel management. Of significant
    concern is the critical shortage of technical service warrant officers
    and the impact this has on unit readiness. Currently the assigned
    warrant officer strength is 81 percent fill of the authorized strength.
    Technical warrant officer strength is down to 71 percent, while
    aviation warrant officer strength has fallen slightly below
    requirements to 95 percent.
        The ARNG continues to employ a number of measures to combat the
    critical shortfall in company grade and warrant officers. Measures
    include developing a robust advertising campaign; creating an officer/
    warrant officer recruiting and retention course; capitalizing on
    alternate commissioning sources for increased accessioning into the
    ARNG; and identifying and resourcing programs to assist in the
    acquisition of new officers. These initiatives will contribute to our
    ability to effectively man the force with quality officers and warrant
    officers.
        In order to fully capitalize on recruiting and retention successes
    and improve readiness, an effective and resourced Reserve component
    compatible schools system must be employed. Duty Military Occupation
    Specialty Qualification (DMOSQ) of individual soldiers is a critical
    element of Personnel Readiness. The Total Army School System and
    Distance Learning capability are the Army answers to this challenge.
    Support for training days for Guard soldiers, distance learning
    courseware and other training support needs are critical to raising the
    personnel readiness of ARNG units.
        The Army's Personnel Transformation effort will merge personnel and
    payroll programs and databases across all components and provide
    greater accuracy and integration. The ARNG supports the Personnel
    Transformation effort and would encourage support for the program.
        Today, the Army National Guard is on duty in 57 countries.
    Operations in fiscal year 2002 are dramatically illustrating the
    increasing role of the Army National Guard in supporting theater
    commanders in chief (CINCs) in Stability and Support Operations. To
    date this fiscal year, the ARNG has provided approximately 31,770
    soldiers to the CINCs, representing an increase of 23,829 soldiers from
    fiscal year 2001. This includes support to the Olympics, Overseas
    Deployment Support, Temporary Tours of Active Duty, Presidential
    Reserve Call-Ups, and Partial-Mobilization.
        To meet the needs of the future, the ARNG must provide our soldiers
    with the resources they need to remain trained and ready. The Army
    National Guard must anticipate the requirements of today's world while
    we plan for tomorrow's challenges. In addition, the ARNG will have a
    major role in supporting domestic civil support missions, including
    such diverse tasks as managing the consequences of weapons of mass
    destruction, national missile defense systems, and other threats to our
    Nation.
        The Army National Guard is clearly an essential force in America's
    military. We must, however, continue to strive forward in order
    progress and sustain both national and civil support initiatives. The
    future will demand an ever-increasing OPTEMPO. Your continued support
    ensures that we maintain our momentum and meet those demands. Your help
    in supporting these issues is greatly appreciated by the National Guard
    as a whole and in particularly by those soldiers in your home
    districts.
                                     ______

       Prepared Statement by Rear Adm. R. Dennis Sirois, U.S. Coast Guard
        Good afternoon, Mr. Chairman and distinguished members of the
    subcommittee. I am Rear Admiral Dennis Sirois, the Coast Guard's
    Director of Reserve and Training. It is a pleasure to appear before you
    today.
        Protecting America from terrorist threats requires constant
    vigilance across every mode of transportation: air, land, and sea. The
    agencies within the Department of Transportation, including the Coast
    Guard, touch all modes of transportation. Ensuring port and waterway
    security is a national priority and an intermodal challenge with
    impacts on America's heartland communities just as directly as the U.S.
    seaport cities where cargo and passenger vessels arrive and depart
    daily. The U.S. has more than 25,000 miles of inland and coastal
    waterways serving 361 ports, containing more than 3,700 cargo and
    passenger terminals. The vast majority of cargo handled on our
    waterways is immediately loaded onto, or has just been unloaded from
    railcars and trucks, making the U.S. seaport network particularly
    vulnerable, with its direct linkage to our Nation's rail and highway
    systems.
        First, let me say we in the Coast Guard are proud members of the
    Department of Transportation team. As such, I want to thank Secretary
    Norman Mineta for his unwavering support of the Coast Guard and Coast
    Guard Reserve, particularly during the recent national emergency. On
    the afternoon of September 11, Secretary Mineta exercised his special
    recall authority under 14 U.S.C. 712, making the Coast Guard Reserve
    the first Reserve component to be mobilized. Within hours, our members
    were on duty working shoulder to shoulder with their active duty
    counterparts. By week's end, we were engaged in the service's largest
    mobilization since World War II and had substantially enhanced the
    security of the Nation's seaports and waterways. Over the next several
    days, nearly 2,800 reservists, over one third of our Selected Reserve
    Force, were recalled to active duty.
        I wish to thank the members of the subcommittee for their
    longstanding support of the Coast Guard Reserve, which is having a
    direct and positive effect on our ability to contribute daily to our
    national homeland security mission. Additionally, I wish to express my
    personal gratitude to all our Coast Guard reservists, who were called
    away from their families, employers, businesses and professions to
    serve their country. Every day, wherever the Coast Guard is found, at
    small boat stations and marine safety offices, aboard cutters, and
    deployed overseas in support of our maritime security and naval force
    protection missions, our reservists stand the watch with
    professionalism and exceptional dedication. Simply put, we could not
    have done it without our Reserve workforce!
        As the current recall continues, our recalled reservists face the
    same challenges as those of the other Reserve components. Over the past
    several years, the National Defense Authorization Act has supported a
    myriad of new benefits and benefit enhancements which has had a
    positive impact on the Coast Guard Reserve component. As new
    legislation is proposed, we seek your support for maintaining Coast
    Guard parity with our DOD services. We must continue to ensure our
    recalled reservists receive the support they need to sustain themselves
    and their families over the long haul.
        The task of ensuring America's maritime homeland security is
    daunting. We foresee a need for a larger Coast Guard to carry out this
    important mission. We also project a need for a larger Reserve
    component to support our Active-Duty Force. As a result of September 11
    and the subsequent recall, we are re-evaluating our force requirements
    and foresee a need to grow the end strength of our Reserve Force beyond
    the current 8,000. Last year, we initiated a Reserve Requirements Study
    to determine future force size based on validated national security
    contingency requirements. The results of that study will be based on
    post-September 11 threat assessments and our subsequent partial
    mobilization experience. We anticipate the need for significant,
    incremental growth of the Selected Reserve over the next several years.
    In order to meet ongoing and emerging contingency needs. To manage this
    growth within the service capabilities to recruit, train, and assign
    new personnel, we are seeking for fiscal year 2003 an increase in the
    Selected Reserve end strength authorization to 9,000. We hope you will
    support the President's Budget request for fiscal year 2003, which
    provides the resources to fully train, support, and sustain a Selected
    Reserve Force of 9,000 members, as well as the additional full time
    support personnel to train and administer our Reserve Force.
        I wish to express my appreciation to you, Mr. Chairman, and the
    distinguished members of the subcommittee for your understanding of the
    challenges facing the Coast Guard and its Reserve component. I will be
    pleased to answer any questions you may have.

        Senator Cleland. I would like to welcome all of you. We
    fully recognize that you are an integral part of the total
    force. We ask our Reserve components to do more than anyone
    would have predicted just a few years ago. Our Armed Services
    depend on members of the Reserve components for virtually every
    mission they are assigned. We need to keep our Reserve
    components fully manned and ready to respond to the Nation's
    needs. As with the previous panels, I will include your
    prepared statements in the record and ask you to take a few
    minutes to highlight the issues you believe are the most
    important. We will start with Mr. Duehring, Principal Deputy
    Assistant Secretary of Defense for Reserve Affairs. Following
    Mr. Duehring will be General Davis, Chief of the National Guard
    Bureau, followed by General Bambrough, representing the Army
    Reserve, then Admiral Totushek of the Naval Reserve, General
    Sherrard of the Air Force Reserve, and General McCarthy of the
    Marine Forces Reserve.

      STATEMENT OF CRAIG W. DUEHRING, PRINCIPAL DEPUTY ASSISTANT
                SECRETARY OF DEFENSE FOR RESERVE AFFAIRS

        Mr. Duehring. Mr. Chairman, in years past they were simply
    called the Reserves. Webster defines them as forces not in the
    field but available, or the military force of a country not
    part of the regular services. Simply put, an inanimate object
    more clearly defined by explaining what it is not, rather than
    by what it is, but September 11 changed that definition
    forever.
        In the first moments after the terrorists struck, members
    of the National Guard and the Reserve components of this great
    country raced to the scenes of destruction in their roles as
    policemen, firemen, and medics, blending military and civilian
    skills as they rushed to save lives, giving no thought to
    preserving their own, while overhead, racing on clean silver
    wings above the towering columns of smoke and ash were fighters
    and tankers of the Air National Guard, the Air Force Reserve,
    and the Marine Air Reserve.
        By the end of the day, an estimated 6,000 members of the
    National Guard and Reserves, including 700 alone from the Coast
    Guard Reserve, had voluntarily reported for duty. Within 3
    days, President Bush had issued a recall for, as he put it
    during his subsequent visit to the Pentagon, no other single
    act more clearly demonstrates the national resolve than to
    mobilize the National Guard and Reserve Forces of the United
    States.
        It is no longer a force not in the field but available. Our
    Reserve Forces were the first to confront the enemy in the
    skies over our homeland, and the mere act of mobilizing those
    forces proved our resolve to the entire world, that we were
    committed to bringing our enemies to justice, or justice to our
    enemies. This profound change in the National Guard and Reserve
    may have come as the epiphany to some, but not to our men and
    women in uniform, nor should it have been for those Members of
    Congress who have steadily supported our Reserve programs
    through funding initiatives, pay increases, equipment
    purchases, and common sense laws that enhance and encourage
    participation in our programs.
        On behalf of the 1.3 million members of the National Guard
    and Reserve, thank you for providing us with the means to
    respond now that our Nation, our families, and our way of life
    are threatened. Thank you for allowing us to train and equip
    ourselves so that we can defeat a dangerous enemy, and thank
    you for considering the concerns of our employers and of our
    families, without whose support this war would be even more
    difficult to endure.
        My colleagues and I are delighted to be here today. We are
    eager to tell you about new programs we have undertaken such as
    the QDR-directed comprehensive force review, which we hope with
    your assistance will make the National Guard and Reserve Forces
    of the United States even better prepared to defend our Nation
    in years to come.
        Thank you for your invitation. May God bless America.
        [The prepared statement of Mr. Duehring follows:]
                    Prepared Statement by Craig W. Duehring
                                  introduction
        Good morning Mr. Chairman and members of the subcommittee. Thank
    you for the invitation to testify before you today. I represent the men
    and women of our military Reserve components as the Principal Deputy
    Assistant Secretary of Defense for Reserve Affairs. Today, I will
    articulate their concerns and provide you with information to assist
    you in making the critical and difficult decisions you face over the
    next several months. This committee has been very supportive of our
    National Guard and Reserve members and on their behalf, I want to
    publicly thank you for all your help in strengthening our Reserve
    components. The Secretary and I appreciate it, and our military
    personnel are grateful. Thank you.
                                 asd/ra mission
        The mission of the Assistant Secretary of Defense for Reserve
    Affairs (ASD/RA), as stated in Title 10, U.S.C., is the overall
    supervision of all Reserve components affairs in the Department of
    Defense. I take this responsibility very seriously because our Guard
    and Reserve perform vital national security functions and are closely
    interlocked with the states, cities, towns, and every community in
    America. During my short time in this position, I have made it my
    business to get out in the field--to see and listen to the men and
    women in our Guard and Reserve. I have spent time with them here at
    home station, in Antarctica, and around the world as they perform their
    duties. I have listened carefully to their comments and concerns. The
    events last September put great strain on the men and women who serve
    in our Reserve components. We are closely monitoring the impact of that
    increased use on our Guard and Reserve members, their families, and
    their employers.
            reserve components are full partners in the total force
        Because the Reserve components now comprise almost 50 percent of
    the Total Force, they are a key part of America's Total Force defense
    and an essential partner in military operations ranging from Homeland
    Defense, peacekeeping, humanitarian relief, and small-scale
    contingencies to major theater war. The new defense strategy proposed
    in the recent Quadrennial Defense Review (QDR), calls for a portfolio
    of military capabilities. This capabilities-based approach will
    continue to find the Reserve components supporting the Active Forces
    across the full spectrum of military missions.
        The fiscal year 2003 Defense budget recognizes the essential role
    of the Reserve components in meeting the requirements of the National
    Military Strategy. The fiscal year 2003 budget provides over $30.8
    billion for Reserve component personnel, operations, equipment
    procurement, and facilities accounts, more than 12 percent above the
    fiscal year 2002 appropriated level. Included are funding increases to
    support full-time and part-time personnel, as well as additional
    resources to strengthen employer support for mobilized Guard and
    Reserve members. It continues last year's effort toward RC equipment
    modernization and interoperability in support of the Total Force
    policy. These funds support more than 864,000 Selected Reserve
    personnel. The Selected Reserve consists of the following: Army
    National Guard 350,000; Army Reserve 205,000; Naval Reserve 87,800;
    Marine Corps Reserve 39,558; Air National Guard 106,600; and Air Force
    Reserve 75,600. Our total Ready Reserve, which also includes the Coast
    Guard Reserve, Individual Ready Reserve, and Inactive National Guard is
    1,240,008 personnel.
        Maintaining the integrated capabilities of the Total Force is key
    to successfully achieving the Defense policy goals of assuring allies,
    dissuading military competition, deterring threats against U.S.
    interests, and decisively defeating adversaries. Only a well-balanced,
    seamlessly integrated military force is capable of dominating opponents
    across the full range of military operations. Using the concepts and
    principles of the National Defense Strategy and the Total Force policy,
    DOD will continue to optimize the effectiveness of its Reserve Forces
    by adapting existing capabilities to new circumstances and threats and
    developing new capabilities needed to meet new challenges to our
    national security.
                 comprehensive review of the reserve components
        The Quadrennial Defense Review (QDR) calls for a ``Paradigm Shift
    in Force Planning'' and states, ``To support this strategy, DOD will
    continue to rely on Reserve component forces. To ensure the appropriate
    use of the Reserve components, DOD will undertake a comprehensive
    review of Active and Reserve mix, organization, priority missions, and
    associated resources. This review will build on recent assessments of
    Reserve components issues that highlight emerging roles for the Reserve
    components in the defense of the United States, in smaller-scale
    contingencies, and in major combat operations.'' In November, the
    Deputy Secretary of Defense tasked the Under Secretary of Defense for
    Personnel and Readiness to conduct this review, with participation from
    the other Under Secretaries of Defense and the Joint Staff. My office
    is working diligently on this effort and we expect to provide an
    interim report to the Deputy Secretary in early March, and to complete
    our review in May 2002. Our review focuses on the principles of the
    Total Force in the 21st century, options to enhance Reserve component
    roles in major mission areas, how the Guard and Reserve can support the
    Department's transformation efforts, and what business practice
    improvements, management changes, and resourcing improvements are
    needed to enable Reserve components to be effective in supporting the
    National Military Strategy. Finally, the QDR calls for a thorough
    reexamination of DOD methods and procedures for determining and
    reporting readiness. My organization is working very closely with the
    Deputy Undersecretary of Defense for Readiness to ensure this system
    will fully integrate Reserve components into the entire picture of
    military readiness.
                     reserve components in a changing world
        The Guard and Reserve continue to maintain their presence in
    ongoing contingencies worldwide. In October 2001, the 29th Infantry
    Division, Virginia Army National Guard, became the second National
    Guard Division to assume command of the U.S.'s mission in Bosnia with
    2,500 soldiers from all Army components--Active, Reserve, and National
    Guard. The Air Force Reserve and Air National Guard continue to provide
    planes, crews and support personnel to Operations Northern Watch and
    Southern Watch over Iraq. The Army National Guard continues to provide
    soldiers in a force protection mission to Patriot Missile Batteries in
    Kuwait and Saudi Arabia. Naval and Coast Guard reservists continue to
    provide essential port security capabilities in the Middle East to U.S.
    Central Command as well as supporting increased requirements at home.
    The Army Reserve continues to provide the majority of the logistics
    support to U.S. and Allied forces in Kosovo. In January of this year,
    the 39th Separate Infantry Brigade, Arkansas Army National Guard,
    assumed the Multinational Force Observers' Sinai mission and will be
    followed by the 41st Separate Infantry Brigade, Oregon Army National
    Guard.
        Some 91,000 reservists have been called to active duty for three
    separate Presidential Reserve Call-Ups (PRCs) in Bosnia, Kosovo and
    Southwest Asia to date include: in Bosnia, over 25,000 reservists have
    been called involuntarily since 1995, with another 22,000 having served
    in a voluntary capacity; for Kosovo, we have called 8,400 involuntarily
    with another 5,700 serving in a voluntary capacity; and for Southwest
    Asia, 4,600 have been called involuntarily and these have been joined
    by 25,000 volunteers. The events of September 11 and the ensuing
    Operations Noble Eagle and Enduring Freedom missions have confirmed
    continued efforts to promote many initiatives that have enhanced
    Reserve component integration in the Total Force. These initiatives
    lower cultural hurdles to integration and increase confidence and
    reliance on Guard and Reserve Forces.
        The national defense strategy is based on the ability to project
    U.S. forces globally and sustain operational tempo in a theater upon
    deployment. A significant element of this strategy is an increased
    reliance upon Guard and Reserve Forces. A seamless Total Force is key
    to fielding a fighting force capable of supporting multiple missions,
    whether in the current war in Afghanistan, peacekeeping in the Balkans,
    humanitarian missions around the globe or in protecting America's
    homeland.
            reserve component support to the global war on terrorism
        For the first time since the Gulf War, we are calling reservists to
    active duty under Partial Mobilization Authority as a result of the
    terrorist attacks on the World Trade Center, the Pentagon, and in
    western Pennsylvania. Within minutes of the attacks, the National Guard
    and Reserve responded. New York Guard members were on the streets of
    lower Manhattan assisting New York's emergency services units. Shortly
    thereafter, Maryland, Virginia, and District of Columbia Guard members
    were on duty at the Pentagon, even before receiving the official call.
        By noon on September 12, more than 6,000 Guard and reservists were
    providing medical and technical assistance, patrolling streets, flying
    combat air patrols and providing security at numerous critical sites
    across the country. By the end of week, the Coast Guard was engaged in
    its largest mobilization since World War II.
        On September 14, 3 days after the attacks, when President Bush
    authorized a partial mobilization of up to 50,000 Guard and Reserve
    members, there were already 10,331 National Guard and Reserve filling
    critical positions in a voluntary status. A review of events show that
    reservists were among the first military on the scene in New York,
    Washington, DC, and Pennsylvania, not to mention the large numbers who
    were already serving as civilian police, firefighters or EMTs.
        In addition to flying homeland combat air patrols and providing
    coastal and port security, reservists are manning Commando Solo
    psychological warfare flights over Afghanistan, serving on Navy ships
    in the Indian Ocean, preparing humanitarian supplies in Germany and
    performing numerous other missions around the world. A small group of
    hand-selected reservists are serving in key mission areas with the
    National Infrastructure Protection Center of the FBI. As of February 5,
    the Reserve components have over 65,000 Guard and Reserve members on
    active duty supporting the global war on terrorism, both at home and
    abroad.
    Support to Mobilized Reservists
        With the issuance of the President's Executive Order authorizing
    the mobilization of Reserve components, the Department immediately
    initiated actions to take care of mobilizing members, their families
    and employers.

             Detailed personnel polices are in place, including a
            limit on the duration of initial orders to active duty of no
            more than 12 months to reduce disruption for reservists, their
            families and employers.
             A medical care enhancement package is available, which
            is designed to reduce out of pocket expenses for Reserve family
            members and makes it easier for them to maintain continuity of
            care with existing providers.
             An employer database to help improve communication
            with civilian employers is being expedited.
             A comprehensive mobilization information and resources
            guide and a family toolkit are now available on the Reserve
            Affairs website for access by military members, families and
            employers.
             The Department is also engaged in more in-depth
            studies to strengthen employer support, to review alternatives
            for ensuring continuity of healthcare for the families of
            reservists and to more effectively address Reserve component
            quality of life concerns.
    RC Support to Civil Authorities
        The National Guard will play a prominent role supporting local and
    state authorities in terrorism consequence management. At its core is
    the establishment of 32 Weapons of Mass Destruction Civil Support Teams
    (WMD CSTs) comprised of 22 highly skilled, full-time, well-trained and
    equipped Army and Air National Guard personnel. Congress authorized 10
    WMD CSTs to be fielded in fiscal year 1999 to be stationed within each
    of the ten Federal Emergency Management Agency Regions. An additional
    17 WMD CSTs were authorized in fiscal year 2000 and 5 in fiscal year
    2001 for a total of 32 teams. To date, the Secretary of Defense has
    certified 24 of the 32 teams as being operational.
        The WMD CSTs will deploy, on order of the State Governor, to
    support civil authorities at a domestic chemical, biological,
    radiological, nuclear, or high yield explosives (CBRNE) incident site
    by identifying CBRNE agents/substances, assessing current and projected
    consequences, advising on response measures and assisting with
    appropriate requests for additional state and Federal support. These 32
    strategically placed teams will support our Nation's local first
    responders as a State response in dealing with domestic WMD incidents.
    The Reserve components WMD CST funding for fiscal year 2001 was $75
    million, for fiscal year 2002 it was $123 million and the budget
    request for fiscal year 2003 is $136 million.
        The DOD is leveraging the capabilities of existing specialized
    Reserve component units. During fiscal year 2001, DOD completed the
    training and equipping of 25 chemical decontamination companies and 3
    chemical reconnaissance companies in the Army Reserve to provide
    support to domestic incidents. They were provided with both military
    and commercial off-the-shelf equipment and received enhanced training
    in civilian HAZMAT procedures. This enhanced training and equipment
    will improve the readiness of these units to perform their warfighting
    mission, while allowing them to respond effectively to a domestic
    emergency, if needed. A budget request of $3 million is submitted for
    fiscal year 2003.
    Medical
        From a medical perspective, the recent attacks have reinforced the
    importance of preparedness in the event of future attacks. The Reserve
    components possess nearly 70 percent of DOD's medical assets and are
    postured to play a significant role in the Federal response to a
    consequence management incident. Although not considered first
    responders to civilian emergencies, the Active and Reserve component
    assets can provide a full spectrum of medical support to the civilian
    community up to and including definitive care facilities. A budget
    request of $62.5 million for medical training and logistics has been
    submitted.
    Airport Security
        In response to the September 11 terrorist attacks, the President
    directed the Governors to assign National Guard personnel to U.S.
    airports to provide additional security and to restore public
    confidence in aviation transportation. The first States began assigning
    personnel on September 28. Currently, there are approximately 7,200
    National Guard personnel providing security at 434 airports across the
    U.S.
    Border Security
        The Department of Justice and the Immigration and Naturalization
    Service (INS) have increased the security level at the U.S. land ports-
    of-entry. The DOD has put plans in place to federally mobilize 824
    National Guard personnel to support the INS Border Patrol at land
    ports-of-entry in nine States along the northern and southern borders
    of the U.S. The purpose of the DOD's support to the INS is to assist
    civil authorities in monitoring and securing those borders for
    approximately 6 months, or until sufficient additional INS agents are
    hired, trained, and operational. Many Guard personnel are on State
    active duty in at least three States today.
                             manpower and personnel
    Recruiting and Retention
        It is too early into this mobilization to determine the long-term
    impacts on National Guard and Reserve recruiting from increased
    operational deployments to support homeland security while continuing
    to support existing commitments in Bosnia, Kosovo, and Southwest Asia.
    One immediate factor will be how well the mobilization and
    demobilization is managed. Predictability is important, which means
    ensuring reservists receive advance notification of mobilization so
    they can notify their employers well in advance. Also, communication
    with families and employers is key to ensuring their cooperation and
    support and in making them feel like ``part of the team.''
        The Reserve components have cumulatively achieved better than 99
    percent of their authorized end strength for the sixth consecutive
    year. During the years immediately following the Operation Desert Storm
    involuntary call-up, when nearly 266,000 personnel were activated,
    Reserve component end strength only declined to 97 percent of
    authorized. When viewed as a composite for all seven Reserve
    components, attrition has decreased to its lowest level in 16 years
    (excluding fiscal year 1991 when stop loss was invoked for Operation
    Desert Storm). However, this macro view of overall Reserve component
    attrition may mask problems in high demand units so we must continue to
    focus on attrition in units that have been used frequently to support
    contingency operations.
        Historically, the recruiting market for Reserve components has been
    a mix of prior service personnel who recently separated from Active-
    duty and individuals with no previous military experience. Both market
    segments now present significant recruiting challenges. A smaller
    Active force (36 percent smaller than in 1989) means a smaller number
    of prior service military members available for the Reserve Force--a
    force that is only 26 percent smaller than in 1989. Compounding these
    difficulties, all services and their Reserve components are trying to
    recruit from essentially the same non-prior service market--the same
    population from which civilian employers also recruit.
        Last year, even in the face of the challenges mentioned above, the
    Reserve components--in the aggregate--achieved their end strength
    objective. This success was due to exceptional efforts by our Guard and
    Reserve recruiters during a very challenging period and excellent
    retention rates by all components. Moreover, all components achieved or
    exceeded the DOD benchmark for upper mental group accessions and all
    components were at, above or just slightly below the high school
    diploma graduate DOD benchmark of 90 percent.
        In achieving this level of success, the components used a
    combination of tools that included: an increase in the recruiter force,
    expanded bonus programs, enhanced advertising campaigns, increased
    focus on retention resources, and increased use of the MGIB-SR kicker
    benefit.
        For 2002, all Reserve components are continuing to focus their
    efforts on managing departures in addition to maintaining aggressive
    enlistment programs by targeting both enlistment and re-enlistment
    incentives in critical skill areas. Although limited stop loss is
    slowing down departures, Reserve components continue to optimize
    retention incentives while expanding their recruiting efforts,
    particularly in the prior service market. Well-established programs in
    the Reserve components should yield equal or better results in fiscal
    year 2003.
    Health Care Enhancements
        Dependents of Reserve component members who are ordered to active
    duty for more than 30 days are eligible for TRICARE--and for TRICARE
    Prime if the member is ordered to active duty for more than 179 days.
    Recognizing that changing healthcare systems can be disruptive, the
    Department developed and the Secretary approved a new TRICARE
    Demonstration Program specifically to assist mobilized reservists with
    the transition to TRICARE. The Demonstration Project is designed to
    reduce out of pocket expenses for Reserve family members and makes it
    easier for them to maintain continuity of care with existing providers.
        The Demonstration Project provides for three important enhancements
    for mobilized Reserve members. First, it waives the annual deductible
    (up to $300 per family) for those members who do not or cannot enroll
    in TRICARE Prime. Second, the requirement to obtain a non-availability
    statement to receive inpatient care outside a military treatment
    facility is waived so Reserve family members can maintain continuity
    with their existing local providers, if they wish. Finally, the
    Department will pay up to 15 percent above TRICARE maximum allowable
    charges for family members receiving care from providers not
    participating in TRICARE, who bill in excess of TRICARE maximum
    allowable charges.
        The TRICARE Dental Program, implemented last February, offers
    reservists and their families a comprehensive and affordable dental
    program. The normal minimum 12-month service commitment to enroll in
    this program is waived for Reserve members ordered to Active-duty in
    support of a contingency operation, such as Operations Nobel Eagle and
    Enduring Freedom.
    Pay Issues for Mobilized reservists
        Reserve service under mobilization is often characterized by
    economic strains placed on the member and families. Preliminary results
    from a recent survey of Reserve component members indicate that one
    third of our Reserve members experience reduced income when mobilized
    or deployed. The potential for economic loss has been an issue since
    1990 when the Department called Guard and Reserve members to active
    duty for the Persian Gulf War. Nearly two thirds of those mobilized
    reported economic loss as a result of military pay being less than
    civilian income, additional expenses incurred by the member and his
    family as a result of activation, and continuing losses after release
    from active duty due to erosion of the business or practice.
        The Department has explored and tried ways to address this from the
    approach of supplementing income, with little success. Therefore the
    Department would like to study, as an alternative, the potential for
    better debt management. More effective debt restructuring or deferment
    of principal and interest payments on preexisting debts may prove to be
    a more efficient means of addressing the specific income problems of
    Reserve component members ordered involuntarily to active duty for
    extended periods of time. We are prepared to work closely with Congress
    and those industries that might be affected to consider possible
    options to resolve this important issue.
    Family Readiness
        One of the lessons learned from the Persian Gulf War was the need
    to improve family readiness within the Guard and Reserve. Our first
    initiative was the 1994 publication of a DOD Instruction that provided
    the framework for improving Reserve component family readiness. The
    next major milestone was publication of the first-ever Guard and
    Reserve Family Readiness Strategic Plan 2000-2005, which was developed
    through the collective efforts of the OSD staff, the military services,
    the Reserve components and family readiness program managers. It
    provides a blueprint for offering greater support to National Guard and
    Reserve families and assisting them in coping with the stresses of
    separations and long deployments. The plan set out specific goals and
    milestones and we have already accomplished a number of these. Also, it
    established a link between family readiness and unit mission readiness.
        The foundation for support of family members lies in the
    preparation and education of professionals and family members alike
    well before a reservist is called to active duty or actually deployed.
    The ability of Reserve component members to focus on their assigned
    military duties, rather than worrying about family matters, is directly
    affected by the confidence a member has that his family can readily
    access family support services.
        We published a Guide to Reserve Family Member Benefits, designed to
    inform family members about military benefits and entitlements,
    including medical and dental care, commissary and exchange privileges,
    military pay and allowances, and reemployment rights. A Family
    Readiness Event Schedule was developed to make training events and
    opportunities more accessible for family support volunteers and
    professionals. It also serves to foster cross-service and cross-
    component family support, which supports the desired end-state of any
    service member or family member being able to go to a family support
    organization of any service or component and receive assistance or
    information.
        From our previous survey of spouses of deployed Reserve component
    members, we know that information and communication are essential to
    Reserve families. In addition to information concerning their deployed
    spouse, family members request information on available benefits,
    services, and programs, to include locations of commissaries,
    exchanges, healthcare and other facilities. Communication through an
    establish unit or organizational point of contact is also key.
        To support better communications, we recently published a family
    readiness tool kit. It is a comprehensive guide on pre-deployment and
    mobilization information for commanders, service members, family
    members and family program managers. It contains checklists, pamphlets,
    and other information, such as benefits and services available that
    inform family members how to prepare for deployment. The tool kit is
    based on ``best practices'' from the field as identified by the Reserve
    components. As with other informational products, the family readiness
    tool kit can be accessed on the Reserve Affairs website at http://
    www.defenselink.mil/ra.
    Employer Support
        Since most Reserve component members have a full-time civilian job
    in addition to their military duties, civilian employer support is a
    major quality of life factor for personnel. The DOD recognizes the
    positive impact employer support has on Reserve component readiness,
    recruiting and retention, and completion of the Department's missions.
    The National Committee for Employer Support of the Guard and Reserve
    (ESGR) coordinates the efforts of a community based national network of
    54 committees consisting of 3,500 volunteers in every state, the
    District of Columbia, Guam, Puerto Rico, and the Virgin Islands. ESGR's
    mission is to obtain employer and community support that ensures
    availability and readiness of National Guard and Reserve Forces.
        Strengthening employer support is a major focus of current
    Department planning guidance. It requires the existence of a strong
    network, comprising both military and civilian-employer leaders, and
    capable of providing for communication, education and exchange of
    information. To build this support, we are increasing our efforts to
    improve communications between the Department and employers, identify
    future actions that will provide some relief for employers when we call
    upon their reservist-employees, and strengthen the relationship between
    the Department and employers that will enable us to continue to use our
    shared employees.
        To support the community-based efforts of ESGR and its nationwide
    network of volunteers, the Department expedited its development of a
    web-enabled database that we hope will eventually provide a ready
    listing of civilian employers of National Guard and Reserve personnel.
    The database could then be used to improve communications and outreach
    programs and to target information to those employers most affected by
    mobilization.
        Additional funding is programmed to increase interaction between
    Selected Reserve units and employers, support a marketing campaign to
    inform senior business leaders about the Guard and Reserve, and survey
    employers to determine their overall attitudes toward participation of
    employees in the Guard and Reserve. An important new study is ongoing
    to consider options for providing some relief for employers whose
    reservist-employees are called to active duty.
        The fiscal year 2003 budget request adds $5.5 million to improve
    relationships and strengthen employer support of the Guard and Reserve
    in the following ways:

             To develop an employer database management system that
            will collect information on civilian-acquired skills and joint
            operations experience of RC members.
             To enhance the ESGR website to provide information
            exchange between DOD and civilian employer leadership.
             To support an employer marketing campaign to inform
            business leaders and professionals about the National Guard and
            Reserve to foster stronger business community support of the
            military.
             To perform periodic surveys of Guard and Reserve
            members to assess the impact of actions and incentives that
            encourage increased employer support and participation.
             To create a call center for management of telephone
            calls initiated from users of the ESGR website.

        Despite the increased utilization of our Reserve Forces since the
    events of September 11, and the obvious impact that the call up of more
    than 71,000 reservists has had on our Nation's employers, our Nation's
    employers have responded in overwhelmingly positive fashion. Many
    employers have extended benefits for their reservists mobilized to
    support Operations Enduring Freedom and Noble Eagle, provided pay
    differential while they serve, continued their civilian health
    programs, and given both financial and moral support to their families,
    wives and children. Our Nation's employers have overwhelmingly
    supported our reservists in this war on terrorism, and we are extremely
    appreciative of their support to the Nation and to our men and women of
    the Reserve components who are supporting this effort.
                                    training
        The Armed Forces of this Nation have long enjoyed a well-deserved
    reputation as the best equipped, best-trained and best-led military
    throughout the world. U.S. leadership similarly recognizes that
    training, based on tough, demanding and relevant performance standards
    is the cornerstone of readiness and dominance in today's evolving
    world. Training will continue to be a critical contributor to military
    preparedness.
        While referring to current operations in our war on terror, the
    Secretary stated: ``The lesson of this war is that effectiveness in
    combat will depend heavily on jointness, how well the different
    branches of the military can communicate and coordinate their efforts
    on the battlefield, and achieving jointness in wartime requires
    building that jointness in peacetime. We need to train like we fight
    and fight like we train and, too often, we don't.'' Our Armed Forces
    must transform training and ensure total operational integration in
    order to successfully counter emerging asymmetric warfare threats of
    the 21st century.
        Joint warfighting experiments, modeling, and simulations
    (coordinated in live, virtual and constructive environments) are tools
    that will define the capabilities required to dominate combat
    operations in this new millennium. It is essential that we identify and
    deploy new training technologies and delivery media, while
    simultaneously developing individual, unit, and leader training
    requirements that ultimately produce coherent, integrated training
    systems for our Total Force. Working in partnership with other DOD
    organizations, we must continue to ensure that Reserve components are
    fully considered, funded and integrated into emerging training
    initiatives.
        Training for dominance in future conflicts will depend on
    dedicating resources that exploit technology and provide both
    traditional school-house and distributed performance-enhancing
    training. Scenarios must be realistic and delivered at the time, place,
    and by the most appropriate means to support desired outcomes. This
    focus demands a significant emphasis on distributed learning strategies
    and employing more robust communications tools to deliver training. An
    increased availability of training for our reservists at their local
    Reserve Center, Armory, training site, or home is a significant
    advantage in improving readiness. This advantage is enhanced by the
    provision of identical training opportunities for reservists and their
    Active duty counterparts.
        Increased emphasis and participation by Reserve Forces in joint
    training and operations requires that we develop this training.
    Reservists have participated extensively in support of joint exercises
    and are currently involved in support of Operations Noble Eagle, Joint
    Endeavor, and Intrinsic Freedom. All training must focus on the ability
    of our forces to operate effectively and efficiently with other
    services, other governmental agencies and in all likelihood, within a
    multinational framework. This is the reality of today and the way we
    will fight in the future--this is how we must train our Armed Forces.
    Peacetime training for the Reserve Forces that provides a realistic,
    joint, multi-national scenario is critical. The support of asynchronous
    distributed learning provided by the Fiscal Year 2002 NDAA is making a
    difference in our overall training transformation success. We thank you
    for your support in this area.
                            civil military programs
        In January, the President highlighted his support for Federal,
    State, and local programs that promote Americans improving their
    communities through volunteerism and community service. In support of
    the President's call for Americans to serve, the Department continues
    to fund two youth outreach programs, ChalleNGe and STARBASE. Both
    programs help improve the lives of children by surrounding them with
    positive military role models and helping them not just dream big
    dreams, but achieve them. The ChalleNGe program, operating in 25
    States, has successfully given young high school dropouts the life
    skills, tools, and guidance they need to be productive citizens. The
    budget request for fiscal year 2003 is $63.6 million for ChalleNGe and
    $13.4 million for STARBASE.
        On November 1, the National Mentoring Partnership awarded the
    Excellence in Mentoring Award for Program Leadership to the ChalleNGe
    program. This award acknowledges the program's accomplishments in
    mentoring more than 32,000 young people. The STARBASE program,
    operating at 39 military facilities located in 26 States, has enhanced
    military-civilian community relations and reached over 200,000 young
    children. Active, Guard and Reserve members volunteer their time to the
    STARBASE program in order to provide a military environment/setting in
    which local community youth, especially the disadvantaged, are provided
    training and hands-on opportunities to learn and apply mathematics,
    science, teamwork, technology, and life skills. These two successful
    DOD outreach programs are another way in which this administration
    works with State and local governments to provide opportunities for
    Americans to become more involved with serving their communities.
        The third Civil Military program is the Innovative Readiness
    Training (IRT) program. IRT is similar to the overseas deployment
    exercise program in that it provides valuable military training;
    however, IRT projects help address serious community needs within the
    50 States, U.S. territories and possessions. The program is a
    partnership effort between local communities and Active, Guard, and
    Reserve units. Individuals and units involved are primarily from
    medical, dental, and engineering career fields.
        All IRT projects are compatible with mission essential training
    requirements. IRT projects must be conducted without a significant
    increase in the cost of normal training and are designed to enhance
    training in a real world scenario without deploying overseas. Program
    history proves that these projects have a very positive impact on
    recruiting and retention by providing military personnel an opportunity
    to train in support of the communities where they live. Of interest are
    several ongoing annual projects for Native American and Alaskan Indians
    in Alaska, North and South Dakota, Montana, and New Mexico. These
    projects specifically address underserved populations through medical
    and dental health services, as well as road and house construction on
    reservations. Examples include: Operation Alaskan Road on Southeast
    Annette Island constructing 14 miles of road to a new ferry landing;
    and Operation Walking Shield constructing new homes, roads and bridges,
    providing well drilling and medical and dental assistance. In 2001, 122
    projects were completed in 34 states, the District of Columbia and the
    Virgin Islands. Program expenditures for fiscal year 2001 were $29.764
    million. The budget request for fiscal year 2003 is $20.0 million.
                        equipment and facility readiness
    Equipment
        There is an increased awareness of Reserve component equipment
    issues. The fiscal year 2003 budget includes $2.34 billion in equipment
    procurement funding for the Reserve components, representing an
    increase of $680 million above the fiscal year 2002 President's budget.
    The fiscal year 2003 budget demonstrates a concerted effort by the
    Department to apply more resources to the Reserve components' equipment
    needs and to buy down deferred repairs of aging equipment currently in
    the inventory. It also reflects a conscious effort to improve
    interoperability of the Reserve components with Active Forces. I am
    convinced the continued modernization of our Reserve Forces is a
    cornerstone for the Total Force integration and that properly equipping
    the Reserve components with compatible, up-to-date equipment is an
    important piece of this strategy.
        Key equipment to be procured for Reserve components with fiscal
    year 2003 appropriations includes:

             Army National Guard: UH-60 Helicopters, Multiple
            Launch Rocket Systems, Javelin Systems, Small Arms Weapons M-
            16/M-240, Family of Heavy Tactical Vehicles, Family of Medium
            Tactical Vehicles, Trucks, M915/M916 Tractors, Training
            Devices, SINGARS Radios, and Communications and Electronics
            Equipment.
             Army Reserve: UH-60 Helicopters, Family of Medium
            Tactical Vehicles, Reserve component Automation System,
            Hydraulic Excavators, All Terrain Lifting Army Systems, and
            other support equipment.
             Air National Guard: C-130J Aircraft, Vehicular
            Equipment, Electronics and Telecommunications Equipment,
            Modifications for A-10, H-60, C-5, C-21, C-130, KC-135, F-16,
            and F-15 Aircraft, and Aircraft Support Equipment and
            Facilities.
             Air Force Reserve: C-130J Aircraft, Vehicular
            Equipment, Electronics and Telecommunications Equipment,
            Modifications for A-10, H-60, C-5, C-130, KC-135, and F-16
            Aircraft, and Aircraft Ground and Base Support Equipment.
             Naval Reserve: Modifications for C-130, F/A-18, and
            CH-46 Aircraft, Cargo/Transport equipment, Aviation Support
            Equipment, Fire Fighting Equipment, and Mobile Sensor Platform.
             Marine Corps Reserve: Amphibious Assault Vehicles,
            Improved Recovery Vehicles, Material Handling Equipment,
            Training Devices, Construction Equipment, and Communications
            and Electronics equipment.
    Facilities
        The fiscal year 2003 Reserve component military construction
    (MILCON) President's budget request is $297 million. The President's
    budget will provide new Armed Forces Reserve Centers, vehicle
    maintenance facilities, organizational maintenance shops, training and
    administrative facilities for Reserve components. These new facilities
    begin to address Reserve component infrastructure issues neglected in
    the past. The fiscal year 2003 budget provides a good start to directly
    affect the quality of life for the Guard and Reserve by improving where
    they work and train. This also applies to Reserve component facilities
    sustainment, restoration, and modernization (SRM) request of $821.2
    million in the fiscal year 2003 President's budget. In fiscal year
    2002, the Department made a conscious decision to increase resources
    aimed at reducing a significant backlog of facilities maintenance and
    repair. The fiscal year 2003 budget reflects a concerted effort by the
    Department to reduce a $1.165 billion backlog and improve the Guard and
    Reserve facilities readiness and quality of life.
        The installation environmental programs managed by each Reserve
    component continue to be a good news story of professionalism and
    outstanding efforts to protect, preserve, and enhance the properties
    entrusted to our Reserve Forces. The RC environmental programs are
    budgeted at $315.9 million, which includes $193.7 million for
    environmental compliance requirements, providing 91 percent of the
    overall validated RC environmental requirements for fiscal year 2003.
        An initiative of the Reserve components is construction of joint-
    use facilities. Congressional support for joint construction projects
    is included in Title 10, with new emphasis for inclusion of Active
    components in this initiative beginning in fiscal year 2003. The
    Department is looking at incentives and alternatives to capitalize on
    joint use opportunities, to include Active, Guard, and Reserve
    component requirements. Joint construction has yielded approximately 20
    percent cost avoidance when compared to unilateral construction.
                                   conclusion
        This administration views a mission-ready National Guard and
    Reserve as a critical element of our National Security Strategy. As a
    result, the National Guard and Reserve will continue to play an
    expanded role in all facets of the Total Force. While we ask our people
    to do more, we must never lose sight of the need to balance their
    commitment to country with their commitment to family, and to their
    civilian employer.
        I commit that I will do all in my power to ensure the readiness of
    the Reserve components and support the quality of life initiatives I've
    outlined for our service men and women and their families. I also
    pledge to work hard to ensure the National Guard and Reserve are a
    well-trained, fully integrated, mission-ready, and accessible force.
        Thank you very much again for this opportunity to testify on behalf
    of the greatest Guard and Reserve Force in the world.

        Senator Cleland. Thank you, Mr. Duehring.
        General Davis.

     STATEMENT OF LT. GEN. RUSSELL C. DAVIS, ANG, CHIEF, NATIONAL
                              GUARD BUREAU

        General Davis. Chairman Cleland, distinguished members of
    the subcommittee, I would like to first off thank you for the
    opportunity to appear before your subcommittee, and thank you
    for the tremendous support you provided to the Army and the Air
    National Guard over the years. National Guardsmen are busy as
    part of the homeland security mission today, as they have been
    for the last 365 years, to help protect life and property in
    the individual States, as well as in their communities, while
    at the same time maintaining readiness for their wartime
    mission.
        Today, over 50,000 Army and Air Guardsmen have been called
    into Federal duty as well as in-State duty to respond to the
    events of 11 September. This is in addition to the thousands of
    guardsmen who are already serving overseas and performing
    missions in Bosnia, Kosovo, Iceland, Operation Northern Watch,
    and Operation Southern Watch.
        When this terrorist act occurred, the number 1 priority for
    the National Guard was people. Full-time manning is a very key
    component of that. We thank you for your help and assistance in
    providing additional full-time manning, because that is what
    helps relieve the stress points. As part of our force, the
    intensity of today's operations highlight this need even more.
    This full-time manning is what allows us to handle the training
    and administration of our part-time force. Your support has and
    continues to be well-appreciated by all of us.
        In both the Army Guard and Air National Guard, I am happy
    to report to you good news, sir. We are making our recruiting
    and retention goals. Recruiting goals--we look at and were able
    to achieve those as a result of the funding you have provided
    us for incentives and bonuses. That has made a significant
    difference in our force and has allowed us to meet those goals.
    Last year, while not meeting the recruiting goal, we did not
    adjust the goal, but we exceeded our end strength, and so in
    effect we had the people on board we needed--quality, trained
    people.
        Our ability to retain people in the Guard and in the other
    services and components has very positive trends. This year, we
    have increased the number of OPTEMPO hours that are required
    for our people and days that are required, but right now we
    have not been able to determine if that has had a negative
    impact. We will obviously continue to watch that and monitor it
    very closely.
        The benefits that are provided to the Active component,
    most of which have been shared with the National Guard and the
    Reserve, are certainly all appreciated by us. This, as I said,
    has been a major factor in our retaining as well as our
    recruiting programs. National Guardsmen and women are motivated
    to serve, as are other members of our U.S. military service.
        Thousands serve in partial mobilization and involuntary
    service, but we have a significant number who still volunteer
    to serve long tours of duty, 180 days or so. As to the other
    components, transformation is another key issue. As part of our
    personnel efforts, our focus on people is very important to us,
    while at the same time we need to understand that one of the
    components of that is the quality of life for these people,
    these soldiers and these airmen. As we focus on that, we look
    at things like modernization of equipment and those kinds of
    things, which have a major impact on our people as well as
    their retention.
        The infrastructure, the areas in which they work, their
    workplace for the Army and the Air Guardsmen, we think, is a
    key factor as a quality of life issue, along with health care
    and many of the other issues that the other earlier panels have
    talked to.
        The inclusion of family in the Servicemember's Group Life
    Insurance (SGLI), as well as TRICARE, are other initiatives
    which have been applied to the National Guard and Reserve, and
    for this we are thankful to your subcommittee. These are our
    top personnel issues.
        Our family and our employer support are things that we deal
    with every day. The earlier panels have talked about the
    families, and we want to remain focused on them as well as the
    employers.
        The last issue I would like to talk to you about just
    briefly is diversity. We are a very diverse force, becoming
    more diverse. We are celebrating 2002 as the year of diversity,
    acknowledging the differences in our people while knowing full
    well that their ability to come together as a team, a finely
    tuned machine, will be one of the major issues and challenges
    as we move into the 21st century.
        I thank you and the subcommittee for the opportunity to
    come before you and make some remarks. I stand ready and
    willing to answer any of your questions.
        [The prepared statement of Lieutenant General Davis
    follows:]
              Prepared Statement by Lt. Gen. Russell C. Davis, ANG
        Mr. Chairman and distinguished members of the subcommittee, I am
    grateful for the opportunity to appear before you today to address some
    of the personnel-related issues of concern to both components of the
    National Guard--the Army National Guard and the Air National Guard.
        Like their counterparts in the other Reserve components represented
    here today, the men and women of both the Army and the Air National
    Guard have also been heavily called upon to step away from their
    families, their homes, and their jobs since September 11. In addition
    to answering the call of the Nation, however, National Guardsmen have
    also been answering the call of their States. This is as it should be.
    The National Guard has a dual mission. Members of the National Guard
    take oaths to serve both the Nation and their individual home States.
        When the security of our homeland is threatened, we answer the call
    to service from the President and we answer the call to service from
    the Governor. This dual-mission flexibility provides the American
    people and their leaders with a tremendous scope of capabilities for
    responding to a crisis in a highly cost-effective manner. It also
    raises some unique issues affecting the people who serve in the
    National Guard. I am very pleased to have the chance to address some of
    those with you today.
                                    overview
        There are about 460,000 men and women in the Army and Air National
    Guard. As we speak, over 50,000 of them are serving on either Federal
    or State duty as a result of the September 11 attacks. The breakdown of
    that number tells a lot about where our people are and how they have
    answered the call to service since September 11.
        Over 10,000 members of the Army National Guard and over 23,000
    members of the Air National Guard have joined their Army and Air Force
    Reserve counterparts in being called to active Federal service as part
    of Operations Enduring Freedom and Noble Eagle. For the Army National
    Guard this means providing security at key facilities here in the
    United States and in Europe. For the Air National Guard this has meant
    flying Combat Air Patrols over American cities, performing in-flight
    refueling, flying cargo and countless other missions. It is
    particularly important to note, both Army and Air National Guardsmen
    are also participating in diverse operational aspects of the war on
    terrorism in other theaters.
        In addition to that, however, many thousands more have been called
    to duty under the command and control of their governors. There are
    over 7,000 members of the National Guard involved in providing airport
    security. This mission was created and authorized by the President but
    it is being carried out under Title 32 by State governors. In addition,
    over 4,000 members of the National Guard from several States are
    bolstering security at the Winter Olympics in Salt Lake City. Over
    2,000 members of the National Guard are on duty providing security at
    National Guard armories and other key facilities. Finally, an
    additional 2,000 are on State duty, on orders and pay from State
    governors to help meet the security or other requirements of the
    States.
        All of this full-time duty for our Guardsmen has come on top of the
    existing missions we were performing in support of our Active component
    services prior to 11 September. In all of the attention to the war on
    terrorism, some may forget that we also have had over 1,700 National
    Guardsmen on duty in Bosnia through this same period. About 1,000 more
    are supporting operations from Germany and elsewhere in Europe.
    Hundreds more are helping to enforce the no-fly zones over Northern and
    Southern Iraq. In fact, National Guardsmen were helping meet the
    ongoing requirements of the CINCs in each of the Unified Commands all
    over the world at the time the first plane struck the World Trade
    Center on September 11. As busy as we were, that incident made us a
    whole lot busier.
                  immediate responses to the terrorist attacks
        Among the very first military responders to the terrorist attacks
    were Massachusetts Air National Guardsmen flying F-15s scrambled out of
    Otis Air National Guard Base. We find this fact to be entirely
    appropriate because the roots of the National Guard and indeed the
    citizen-soldier tradition of this Nation go back to the first militias
    of the Massachusetts Bay Colony. Then as now, citizens stood ready to
    take up arms in defense of their homeland and that is precisely what
    happened on September 11.
        Immediately, the New York National Guard began a tremendous
    operation to support recovery efforts at the World Trade Center site as
    well as missions to bolster security throughout New York City. From the
    beginning, the citizen-soldiers and airmen performing these missions
    did so in State Active Duty--that is on the orders and payroll of the
    Governor of New York. By all accounts, they did a superb job. The long
    hours and days they had previously spent training wartime skills like
    guard duty, use of weapons and vehicles, leadership, planning,
    logistics and so forth provided many of the skills needed to support
    civil authorities in New York. In short, the people of the National
    Guard provided exactly the dual-mission leverage they are supposed to
    provide.
        Likewise, Military Police soldiers of the Maryland Army National
    Guard were immediately called for duty to help provide security at the
    Pentagon. They were on-site the very next day.
        On the ground and in the skies, the men and women of the National
    Guard responded immediately and have sustained that response in the
    subsequent weeks and months. They have served in every possible duty
    status--State Active Duty, Title 32, and Title 10--and they have done
    so under stressful and sometimes hazardous conditions. They deserve the
    very best we can give them.
                              army national guard
        Our Nation relies on the ARNG now more than ever to accomplish an
    increasing number of vital missions. In response to the events of
    September 11, 2001, the ARNG is deployed across the country and around
    the world. No matter where the duty location, our soldiers possess high
    morale, because they are doing what they signed on for: serving their
    country. This high morale can be attributed in large part to the
    unflagging support of our soldiers' family members and their employers.
    We have experienced no adverse effects on our personnel programs, and
    are achieving, even exceeding, our goals in recruiting and retention.
    We are working within the Army to maintain a sustainable personnel
    tempo, by providing the longest possible lead times to our soldiers and
    their employers. We continue to monitor employer support, and I'm
    pleased to inform you, it is high. In order to sustain the high
    employer support we are experiencing, we are developing a recognition
    program to enhance efforts with ESGR in sustaining support for our
    soldiers.
        In order to continue this proud tradition of exceptional service to
    our Nation, the Army National Guard needs your continuing support.
    Recognizing that your focus is on personnel, I want to make you aware
    of our program priorities, and provide you with background on what we
    have identified as critical issues for the Army National Guard. The
    continued support of Congress is critical in fulfilling our
    responsibilities and commitment to our Nation.
        One great asset of the Army National Guard is our extremely
    dedicated full-time workforce, that small team of Active Guard and
    Reserve or Military Technicians back home in your communities that look
    after our units on a day-to-day basis. Full-time manning is our most
    critical issue, and our number one priority. I want to thank you for
    your support in increasing the ARNG Full Time manning. Inadequate full-
    time support has an adverse impact on retention and the quality of life
    of our soldiers and their families. With the Guard's increasing role in
    worldwide day-to-day operations, it is extremely important to have a
    sufficient number of full-time soldiers ready to help their units meet
    current operational tempo readiness needs. National Guard leaders
    throughout the Nation repeatedly cite the lack of full-time support as
    a significant readiness inhibitor. The Army Guard's current full-time
    manning level is 57 percent of Army validated requirements. The
    additional authorizations for AGR soldiers and military technicians you
    provided were sent to the States and Territories to improve readiness
    in units. Those AGR soldiers are on the ground in our armories that
    facilitate every aspect of readiness by providing the day-to-day
    support necessary to allow units to perform their operational missions
    when mobilized. The Army provides funding beginning in fiscal year 2005
    to continue the momentum you established in reaching our high risk
    requirement, but more work needs to be done. The Army is seeking
    additional full-time support authorizations and associated funding to
    incrementally increase the ARNG full-time support program over the next
    11 years.
        Operational demands on the Armed Forces have stressed active
    military forces. Since the end of the Cold War, the Armed Forces
    experienced a reduction of total personnel while our security strategy
    has increased the demands placed on the Reserve Forces. To meet the
    increasing mission requirements on the ARNG, we must not only attract
    but retain our soldiers.
        Enlisted personnel recruiting and retention were continuing success
    stories for the ARNG during fiscal year 2001. Enlisted accessions for
    the year exceeded the program objective of 60,252 by totaling 61,956 or
    102.8 percent of the goal. The overall ARNG loss rate through the end
    of fiscal year 2001 was 19 percent, nearly meeting the overall
    objective of 18 percent.
        The total officer strength at the end of fiscal year 2001 was
    36,579. Officer end strength was 821 short of the programmed objective.
    The ARNG continues to have a higher than expected loss rate among
    officers. Some of this is attributed to resignation from the ARNG due
    to family pressures, Operations Tempo (OPTEMPO) and better income
    opportunities offered in the civilian sector.
        The shortage of company grade officers in the ARNG, particularly at
    the rank of captain, results in a large number of lieutenants and
    warrant officers occupying captain positions. Our company-grade
    shortfall in units creates a decrease in our overall readiness posture,
    unit morale, and unit effectiveness.
        The Army National Guard continues to address significant challenges
    in warrant officer accession and personnel management. Of significant
    concern is the critical shortage of technical service warrant officers
    and the impact this has on unit readiness. Currently the assigned
    warrant officer strength is 81 percent fill of the authorized strength.
    Technical warrant officer strength is at 71 percent, while aviation
    warrant officer strength has fallen to 95 percent.
        The ARNG continues to employ a number of measures to combat the
    critical shortfall in company grade and warrant officers. Measures
    include developing a robust advertising campaign; creating an officer/
    warrant officer recruiting and retention course; capitalizing on
    alternate commissioning sources for increased accessioning into the
    ARNG; and identifying and resourcing programs to assist in the
    acquisition of new officers. These initiatives will contribute to our
    ability to effectively man the force with quality officers and warrant
    officers.
        In order to fully capitalize on recruiting and retention successes
    and improve readiness, an effective and resourced Reserve component
    compatible schools system must be employed. Duty Military Occupation
    Specialty Qualification (DMOSQ) of individual soldiers is a critical
    element of Personnel Readiness. The Total Army School System and
    Distance Learning capability are the Army answers to this challenge.
    Support for training days for Guard soldiers, distance learning
    courseware and other training support needs are critical to raising the
    personnel readiness of ARNG units.
        The Army's Personnel Transformation effort will merge personnel and
    payroll programs and databases across all components and provide
    greater accuracy and integration. The ARNG supports the Personnel
    Transformation effort and would encourage support for the program.
        The Army National Guard has been on duty in 57 countries during the
    last year. Operations in fiscal year 2002 are dramatically illustrating
    the increasing role of the Army National Guard in supporting theater
    commanders in chief (CINCs) in Stability and Support Operations. To
    date this fiscal year, the ARNG has provided approximately 31,770
    soldiers to the CINCs, representing an increase of 23,829 soldiers from
    fiscal year 2001. This includes support to the Olympics, Overseas
    Deployment Support, Temporary Tours of Active Duty, Presidential
    Reserve Call-Ups, and Partial-Mobilization.
        To meet the needs of the future, the ARNG must provide our soldiers
    with the resources they need to remain trained and ready. The Army
    National Guard must anticipate the requirements of today's world while
    we plan for tomorrow's challenges. In addition, the ARNG will have a
    major role in supporting domestic civil support missions, including
    such diverse tasks as managing the consequences of weapons of mass
    destruction, national missile defense systems, and other threats to our
    Nation.
        The Army National Guard is clearly an essential force in America's
    military. We must, however, continue to strive forward in order
    progress and sustain both national and civil support initiatives. The
    future will demand an ever-increasing OPTEMPO. Your continued support
    ensures that we maintain our momentum and meet those demands. Your help
    in supporting these issues is greatly appreciated by the National Guard
    as a whole and in particular by those soldiers in your home districts.
                               air national guard
        With growing mobilization authority, the Air National Guard
    currently provides more than 25,000 men and women to Operations Noble
    Eagle, Enduring Freedom, and the 10 U.S. Air Force's Air Expedition
    Force. Today those numbers include nearly 6,000 volunteers, 14,000
    mobilized men and women, a sustained 1,300 AEF participants--many under
    partial mobilization and volunteerism--all supported extensively by
    over 21,000 fulltime technicians and 11,000 AGRs--all with meager 1984
    end strength numbers. We will continue these contributions for the
    unforeseen future--``Always ready--Always there.''
        At the end of January, our end strength approached nearly 110,500,
    almost 2,500 above our current allocation--a sign of the patriotism and
    dedication of your men and women in today's Air National Guard, as well
    as an indicator of the important role your strong support has given us
    for critical retention programs like control grade relief, Aviator
    Continuation Pay, bonus programs, pay increases, family readiness and
    employer support. We have depended heavily on every one of these
    dedicated citizen warriors--their families and employers.
        In Cycle One and Two of the AEF, the Air National Guard deployed
    25,000 of its people--nearly 24 percent--almost 2,500 per AEF. We
    contributed over 20 percent of the Total Force aviation package and
    nearly 10 percent of the Expeditionary Combat Support or ECS
    requirements. Air National Guard contributions to the Total Force have
    been even more robust in EAF Cycle 2--especially with the advent of the
    war on terrorism. The events of 11 September have, for the short term,
    adjusted the AEF rotations and the ANG contributions in both numbers
    and duration. We expect to return to the AEF construct as part of the
    U.S. Air Force during AEF rotations 3 or 4 this year.
        We've been successful because you have given us the necessary
    resources to place recruiting and retention emphasis on Air Force
    specialties where shortages exist, such as aircraft maintenance career
    fields, by offering enlistment and reenlistment bonuses, Student Loan
    Repayment Program, and the Montgomery GI Bill Kicker Program. As a
    result, in many of our critical maintenance AFSCs, we have seen real
    growth from 2-6 percent over the last 2 fiscal years. These incentives
    have contributed greatly toward enticing and retaining the right talent
    for the right job. We thank you for this help.
        During the past year the Air National Guard continued to see an
    increase in Aviator Continuation Pay (ACP) take rates. Currently 450
    out of 483 eligible Active Guard Reserve pilots have signed up for the
    bonus. That equates to a 93 percent take rate. ACP has accomplished
    it's goal by retaining qualified instructor pilots to train and sustain
    our combat force--a critical force enabler in today's environment.
    Additionally, our priority is to increase our traditional pilot force,
    which has maintained a steady state of 90 percent. We are also
    implementing recruiting procedures to expediently identify eligible
    prior-service military pilots that may be interested in a career with
    the Air National Guard.
        Thanks to the efforts of Congress, the Air National Guard has been
    able to place priority on several quality of life imperatives. Each of
    these initiatives represents a significant accomplishment in making Air
    National Guard membership more attractive, one of our biggest
    priorities. Our first priority is the recent increase in the maximum
    coverage under the Servicemen's Group Life Insurance (SGLI) program to
    $250,000. On the heels of that improvement, SGLI was expanded to
    include families. The SGLI and Family SGLI programs provide our members
    a single comprehensive source of affordable life insurance.
        The recent creation of the Uniformed Services Thrift Savings Plan
    (UNISERV TSP), is another equally impressive example of far reaching
    quality of life initiatives. Under this program, all members of the
    Uniformed Services, to include Air National Guard members, are now
    eligible to supplement their retirement by participating in this
    program using pre-tax dollars, providing yet another incentive to
    continue to serve.
        We believe TRICARE and the TRICARE For Life legislation is an
    important enhancement that encourages our members to serve to
    retirement. By doing so, retired members who become eligible for
    Medicare at 65 are also eligible to have TRICARE as a supplement to
    Medicare, saving them significant amounts of money in their retired
    years. Recent improvements for TRICARE of mobilized Guard members will
    reduce the burdens on their families.
        Our Human Resources Enhancement programs, in particular our
    diversity effort has increased mission readiness in the Air National
    Guard by focusing on workforce diversity and assuring fair and
    equitable participation for all. In view of demographic changes in our
    heterogeneous society, we have embraced diversity as a mission
    readiness, bottom-line business issue. Since our traditional sources
    for recruitment will not satisfy our needs for ensuring the diversity
    of thought, numbers of recruits, and a balanced workforce, we are
    recruiting, retaining and promoting men and women from every heritage,
    racial, and ethnic group.
        Leadership's continuous emphasis on diversity ideals and issues is
    necessary to maintain momentum and ensure training and program
    implementation. In addition, declines in prior service accessions
    require increased emphasis on training and mentoring programs. The
    Defense Advisory Committee on Women in the Services (DACOWITS)
    recommended the Air National Guard Diversity Initiative as the
    ``Benchmark for all the services and Reserve components.''
        In the future, our diversity initiatives will focus on areas of
    career development including the implementation of an Air National
    Guard formal mentoring process and the development of automated tools
    to track progress towards increasing opportunities for women and
    minorities. In the area of education and training we plan to develop
    and execute an innovative Prejudice Paradigm and Gender Relations
    training modules. Also, as part of our minority recruiting and
    retention efforts, we will sponsor an initiative to evaluate the
    retention rates of women in the Air National Guard to determine factors
    contributing to the attrition rate.
        We've made participation for today's employers easier by our
    Aerospace Expeditionary Force (AEF) predictability and stability. We
    implemented a dedicated rotator to get our men and women to and from an
    AEF location. We've identified employer support in our Strategic Plan.
    The ANG has taken the lead to establish a Reserve Component Airline
    Symposium where we meet with the Nation's airline industry's chief
    pilots--as we did shortly after the September 11 attacks. We
    accomplished several goals in our ``Year of the Employer 2001''
    efforts--including the introduction of phase one of an employer
    database that not only captures vital information on our traditional
    National Guard employers to improve communication, but also the added
    advantage of capturing critical ``civilian'' skills that can be
    leveraged for military experience. These are but a few of the
    initiatives taking hold as we focus on the ``silent partner'' behind
    all of our men and women.
        Since 1997, the Air National Guard has repeatedly identified the
    importance of family readiness. Since 11 September, the Air National
    Guard has asked its families to make great sacrifices to sustain
    contributions in support of Operations Noble Eagle and Enduring
    Freedom--concurrently with sustained AEF rotations of much longer
    durations. This means today, nearly 50,000 Air National Guard member
    families are in immediate need of dedicated full time family readiness
    and support services--specifically information referral support and
    improved communications and education capabilities. Until this year,
    Air National Guard Wing/CRTC family readiness and support was run
    entirely by volunteers on a mere average annual budget of $3,000-
    $4,000. Through this committee's great support in the supplemental last
    year, we received $8 million to bring ``fulltime-dedicated'' contract
    capability to the Air National Guard for the first time ever to enhance
    our support to the ANG families of Air Guardsman who are deployed or
    otherwise on duty.
        The Air National Guard has developed and implemented the program
    solution in fiscal year 2001 to fund a full-time contracted family
    readiness program at each Wing and CRTC. While funding for fiscal year
    2002 has been added in the fiscal year 2002 supplemental
    appropriations, there is still no sustained program funding in the
    FYDP. Properly funded and resourced, the Air National Guard family
    readiness program will significantly enhance mission capabilities by
    reducing pressures on Air National Guard personnel and their families
    as well as improve their quality of life.
        The Air National Guard has also identified a need for childcare
    alternatives. With increasing demands from Air National Guard
    Commanders and family members, the Air National Guard formed a
    Childcare Integrated Process Team (IPT) to study innovative childcare
    options for the National Guard to include drill-weekend childcare
    access. Quality, affordable, and accessible childcare for Guard and
    Reserve members is an important quality of life issue, especially for
    single and dual-working spouses, just as it is for our active duty
    counterparts. The Air National Guard has proposed a pilot program in 14
    locations nationwide to provide a low-cost, simple approach to
    providing quality, childcare access to National Guard and Reserve
    members. At completion, an assessment of the pilot program will be
    reviewed and any necessary guidance with projected costs will be
    validated. Our Active Duty Child Development Centers (CDC) have
    recently opened their doors for National Guard and Reserve childcare
    use on a space available basis at each of their sites. However, with
    only 14 of 88 Air National Guard Wings on an Active Duty Base where
    many of the CDCs are already operating at capacity, this will probably
    have limited opportunity for many. With increasing demands on Air
    National Guard families and their children, cost-effective and
    supportive solutions must be found. We currently have no funding for
    this test program. This is an opportunity to assess the viability of
    those options in highly effective ways.
        The ANG uplinks training from our three studios in Knoxville,
    Tennessee; Panama City, Florida; and Andrews AFB, Maryland. As a
    forerunner in this dynamic medium, the satellite-based Air National
    Guard Warrior Network has (since 1995) transported training and
    information to our members at the 203 downlink sites at our bases
    throughout the Nation. In addition to training delivery and production,
    these studios also serve as full communicative links to the states and
    territories in times of national and local contingencies. From the
    Andrews studio, we provided timely updates to the field in support of
    Operation Noble Eagle. From the Training and Education Center in
    Knoxville, TN, we transported critical information for the F-16
    community concerning their new wheel and brake assembly. This training
    saved over $120,000 in costs associated with travel of a mobile team.
    We also continue to enjoy good working relations with the Federal
    Judiciary Training Network, uplinking training to all their Federal
    courts.
        We continue to work with the DOD and all the Federal training
    communities in developing and delivering expedient learning pieces, and
    the net result of these actions are helping to increase unit and member
    readiness. The challenge is funding for the future. The Air National
    Guard needs to be positioned to compensate learners, to assist with
    computer acquisition (or accessibility), Internet access, and to pay
    for conversion of courses into a deliverable format.
        In the last year, the Air National Guard filled more than just
    ``positions.'' We brought skills, experience and training to the
    theater that increased Air Force AEF warfighting capability and proved
    invaluable to immediate responses on September 11. The Air National
    Guard pilots who launched over American cities on September 11 and
    deployed for Operation Enduring Freedom and AEF shortly there after,
    averaged over 2,000 hours flying the F-16 versus 100 for their young
    active duty counterparts. Ninety-seven percent of our Air Guard pilots
    have more than 500 hours experience in their jets compared to 35
    percent of their Active Duty counterparts. Similar comparisons can be
    made for other critical career fields. 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 National Guard's combat readiness--especially as we
    assimilate more non-prior service individuals as a function of our
    overall recruiting effort.
        We in the Air National Guard are proud to serve this great Nation
    as citizen-airmen. Building the strongest possible Air National Guard
    to meet the needs of the President, Secretary of Defense, CINCs, and
    our Air Force partners is our most important objective. Our people,
    readiness modernization programs and infrastructure supported through
    congressional actions are necessary to achieve this vital objective.
        We count on the support of the citizens of the United States of
    America to continue meeting our mission requirements--especially the
    members of this subcommittee. We are confident that the men and women
    of the Air National Guard will meet the challenges set before us. With
    your sustained support, we will remain an indelible part of American
    military character as an expeditionary force, domestic guardian and
    caring neighbor--protecting the United States of America--at home and
    abroad.
      year of diversity--a celebration in both the army and air national
                                     guard
        I would like to mention that all National Guardsmen--in blue
    uniforms and green--will celebrate this calendar year 2002 as our Year
    of Diversity.
        The National Guard is a diverse organization made up of men and
    women, civilians and military, of every religion, ethnic group, and
    race. It serves and is drawn from the people of an even more diverse
    American Nation. With current demographic trends, it is clear that
    America will become even more diverse in the years ahead. This
    diversity is a source of strength for the National Guard just as it is
    for America. Indeed, if the National Guard is to be successful over the
    long term, it must strive to become more representative of America's
    diversity. This year both the Army and the Air National Guard will be
    developing and launching initiatives to celebrate the diversity we have
    now and to lay the groundwork for expanding that diversity for the
    future.

        Senator Cleland. Thank you very much, General Davis.
        General Bambrough.

    STATEMENT OF MAJ. GEN. CRAIG BAMBROUGH, USAR, DEPUTY COMMANDING
                   GENERAL, U.S. ARMY RESERVE COMMAND

        General Bambrough. Mr. Chairman, members of the
    subcommittee, thank you for the opportunity to testify on
    behalf of the nearly 360,000 men and women serving in the Army
    Reserve units and as individual mobilization assets, all
    soldiers of the Army. I extend my appreciation to the
    subcommittee for its sustained assistance and strong support of
    our citizen soldiers, and by asking me to discuss the
    challenges we face, you clearly demonstrate your concern for
    our Reserve soldiers and their families, and how we can best
    assist them to accomplish the missions they have been assigned.
        The opportunity to testify before the subcommittee comes at
    a time when the challenges we faced before September 11 had
    increased both in number and complexity. Not only must we wage
    and win this war, but we must concurrently transform our Army
    while we prosecute the war. What was important for an Army
    Reserve in peacetime is also important for an Army Reserve at
    war.
        Thus, our priorities remain consistent to sustain and
    improve our already high levels of readiness, to obtain more
    full-time support, which is essential for readiness, to improve
    our infrastructure so that our outstanding soldiers work and
    train in the modern facilities that they deserve, to acquire
    modern equipment so that they cannot only support our Army
    transformation, but also the Army warfighter, and build on
    successes in recruiting and retention to be sure we have the
    force necessary to do our job and what our Nation requires of
    us.
        Of these priorities, the ones most pressing for the
    attention of this subcommittee deal with readiness, recruiting,
    and retention. Additional authorization and funding increases
    for our full-time support is essential to improve Army Reserve
    readiness in order for us to continue to meet our operational
    requirements. The funding for medical and dental readiness
    continues to be at less than 30 percent of requirements. Given
    the increased operational tempo, achieving full readiness and
    the attendant ability to mobilize literally at a moment's
    notice will not be achieved.
        We have been successful in meeting our recruiting missions
    for the last 2 years, and we are well underway to making
    mission again in fiscal year 2002. However, we continue to
    experience difficulty in attracting and retaining qualified
    individuals in certain critical wartime specialties,
    particularly within the medical department. Your continued
    support on behalf of recruiting and retention initiatives,
    expanding the 90-day rotation policy to cover all but full
    mobilization, and allowing for innovative readiness training
    and the funding of continuing educational opportunities will
    help us make this success story complete. We must be able to
    provide a variety of incentives for both officer and enlisted
    personnel to attract and retain quality soldiers. The funding
    of our critical advertising needs is also imperative, so we can
    reach the young people of today, progressively advertising
    through mass media.
        Sir, I thank you for the opportunity to appear before you
    and the subcommittee, and I look forward to answering any
    concerns you may have.
        [The prepared statement of Lieutenant General Plewes,
    presented by General Bambrough, follows:]
                Prepared Statement by LTG Thomas J. Plewes, USAR
                                  introduction
        Mr. Chairman, members of this subcommittee, thank you for the
    opportunity to testify on behalf of the nearly 360,000 men and women
    serving in Army Reserve units and as individual mobilization assets--
    all soldiers of the Army.
        As I appear before you today, there are Army Reserve citizen-
    soldiers on duty, on all fronts of the global war against terrorism--
    defending our homeland and our fellow citizens, supporting the battle
    against the terrorists wherever they may hide, and bringing assistance
    to those who have long suffered from their oppression. We have been in
    this war since it was brought upon our Nation. We will be there when we
    finish it--an indispensable and strategically responsive force, an
    essential component of the Army.
        Before I continue, I wish to convey my sincere appreciation to this
    subcommittee for its sustained, consistent, and strong support of
    citizen-soldiers. By asking me to discuss the challenges we face, you
    clearly demonstrate your concern for our Reserve Forces and how well
    they can fulfill the missions assigned to them.
        The opportunity to testify before this subcommittee comes at a time
    when the challenges we faced before September 11 have increased in
    number and complexity. Not only must we wage and win this war but we
    must concurrently transform our Army while we wage war. Yes, the
    challenges that the Army faces are great. Do we shy from them? Never.
    To back away is not something done by American soldiers. The men and
    women of the Army Reserve exemplify this spirit, the spirit of Hometown
    U.S.A. While flames and smoke still rose from the Pentagon and the
    World Trade Center, thousands began to come forward. They had not been
    called up yet. They just knew their country needed them; they did not
    wait to be asked to serve. That unstoppable spirit can be found
    throughout the Army Reserve today.
        When last I addressed this subcommittee, I discussed with you how
    the Army Reserve, the Army National Guard and the Active Army were full
    and equal partners in the fully focused American Force that is the most
    responsive ground combat force in the world. I told you that wherever
    the Army has gone, so, too, has gone the Army Reserve, and that
    wherever the Army is today, so are we. I also told you that the U.S.
    Army today cannot perform its missions or meet its mission goals
    without the Army Reserve, that we were being utilized more frequently
    than ever before as an indispensable Army partner--one increasingly
    committed to our national defense in several important ways.
        The events of September 11, a little over 5 months ago, have
    dramatically proved all that I said last July.
        As unimaginable horror came to our country, Americans rose to the
    occasion. Among the great heroes of that day were many Army reservists.
    They displayed the highest qualities of courage and selflessness,
    whether that meant rushing into the World Trade Center, helping injured
    comrades out of the burning Pentagon or organizing rescue and recovery
    activities regardless of personal safety concerns. Some lost their
    lives in the performance of their duty.
        Yes, Army reservists have been on the frontlines of this war since
    it began and even as the flames continued to be fought, more of the
    Army Reserve went into action all across America.
        Among the first units to respond to the World Trade Center disaster
    was our 77th Regional Support Command, headquartered in Flushing, NY.
    Hundreds of support items were identified and delivered promptly to
    assist in the disaster recovery effort. Other support was also provided
    to aid the heroic rescue workers at Ground Zero.
        Equally quick to respond and critical to the rescue and recovery
    operation were the Army Reserve Emergency Preparedness Liaison Officers
    (EPLOs) in the New York City area. They arrived on scene immediately to
    facilitate support requests from civilian agencies as quickly and
    effectively as possible.
        Crisis action teams were in full operation in every major Army
    Reserve command headquarters within hours. Military Police units took
    up station at key facilities.
        The Army Reserve response continued to grow. Thousands of trained
    and ready Army Reserve men and women came forward, first as volunteers
    and then in response to the partial mobilization ordered by President
    Bush on September 14, just 3 days after the attacks.
        The President's rapid decision to order partial mobilization
    underscored how serious the threat was to America. During the Gulf War,
    we had a Presidential Selected Reserve Call-up less than 3 weeks after
    Iraq invaded Kuwait in August 1990, but a partial mobilization did not
    occur until January 1991.
        The first call-ups under the September 14 partial mobilization
    began on September 22, 2001. Just as in 1990, however, the Army Reserve
    was already engaged before the orders were issued. By the time the
    first units were called up, the Army Reserve already had seven units,
    one installation, six facilities and approximately 2,300 personnel
    involved in support of operations. Most units and personnel were in a
    training status.
        They responded quickly, more quickly than ever before, conducting
    hasty mobilizations or mobilizing on the go. Arriving at their places
    of duty, they immediately started their missions: force protection and
    security at installations and facilities, intelligence and
    investigation support, training and training validation, headquarters
    augmentation and historical documentation, logistics and transportation
    operations. Whatever our leaders and the Nation needed the Army Reserve
    to do, we did it--quickly, efficiently, and professionally.
        Let me relate one example that demonstrates how quickly our
    soldiers and units went into action. Immediately after the Pentagon was
    attacked, it became clear that the active Army's only mortuary affairs
    company could not handle, by itself, the highly sensitive mission of
    recovering the remains from the Pentagon with the efficiency, dignity
    and honor required. It needed immediate additional help. That help was
    available in the Army Reserve's 311th Quartermaster Company (Mortuary
    Affairs) from Aguadilla, Puerto Rico.
        The call went out on September 13 to the 65th Regional Support
    Command in Puerto Rico. The next day, volunteers were called for from
    the 311th. Eighty-five soldiers raised their hands and moved out that
    same day. They flew to Dover Air Force Base, DE, and then moved down to
    Fort Myer, VA, arriving early on Saturday, September 15. By daybreak of
    Monday, September 17, they were working in the Pentagon's north parking
    lot, conducting 24 hour-a-day operations alongside the FBI, searching
    through tons of debris for both evidence and human remains. This unit
    was called up, deployed overseas and operational within 72 hours.
        The rest of the company, another 105 men and women, joined the
    first 85 soldiers on September 26. By this time, they were all under
    partial mobilization orders. The orders had caught up with a unit that
    had already been ``at war'' for more than a week.
        For some of the 311th's newest soldiers, their first drill with the
    company since their graduation from Advanced Individual Training was
    the one on September 14. Other 311th soldiers were veterans of the
    company's Gulf War service in Southwest Asia, who were now the senior
    noncommissioned officer leaders of the company.
        Quality soldiers and solid, proven leadership are the bedrock of
    all Army Reserve units. The example of the 311th was repeated again and
    again as dozens and then hundreds of units were called up and moved
    out, conducting hasty mobilizations or mobilizing after they deployed.
        Now, some 5 months and 2 days after the attacks, there are more
    than 400 Army Reserve units and some 14,000 Army Reserve soldiers on
    duty, doing what needs to be done. They are accomplishing our core
    competency missions, as well as other assignments. They are part of the
    more than 72,000 members of the Nation's combined Reserve components on
    duty today, critically engaged in defending the homeland. All of them
    put aside their own lives and concerns for the good of the Nation. No
    acts of terror could ever deter patriots like these. As Winston
    Churchill said of reservists, they truly are ``twice the citizen,''
    prepared to serve and defend at personal sacrifice for themselves,
    their families, their employers and their communities for the good of
    the Nation. Their spirit and resolve remain undaunted.
        The bulk of those called up are in support of Operation Noble
    Eagle, helping with the recovery from the attacks or engaged in the
    defense of our homeland. The missions being performed include: force
    protection and security at installations and facilities, intelligence
    and investigation support, training and training validation,
    headquarters augmentation, garrison support and legal support,
    communications, postal and personnel support, engineer support,
    historical documentation, logistics and transportation operations.
        The Army Reserve also has units and soldiers in support of
    Operation Enduring Freedom, the operation taking the war to the
    terrorists and bringing assistance to the long-oppressed people of
    Afghanistan. These mobilized forces include public affairs, military
    intelligence, civil affairs, medical, and other combat support and
    combat service support specialties. We also continue to fill
    headquarters and agency-level requests for Individual Ready Reserve and
    Individual Mobilization Augmentee soldiers to support current
    operations.
        The men and women on duty today and those who may be called forward
    tomorrow understand the task that lies before them, how difficult it is
    and how long the struggle ahead may be.
        Along with their own abilities and dedication, the citizen-soldiers
    of the Army Reserve went into this fight from a position of strength.
    Recurring deployments since the Gulf War have given our units a great
    deal of experience in being able to mobilize quickly and effectively. A
    decade earlier, we learned the importance of family support and
    employer support programs. These programs were in place when this new
    conflict began and have been an absolutely essential part of our
    activities today. Because of our integral involvement in Army
    transformation, we have become accustomed to innovative thinking and
    this has facilitated our finding solutions to ever-changing situations.
        It has been often said that everything changed on September 11, but
    much remains the same. What was important for an Army Reserve in
    transformation is also important for an Army Reserve in transformation
    while at war. The transformation we were undergoing before September 11
    was to prepare for the sort of uncertainty and evolving world that we
    now have.
        Our priorities before the attacks remain our priorities today:
    sustaining and improving our already high level of readiness; obtaining
    more full-time support, which is essential for readiness; improving our
    infrastructure so that our outstanding soldiers work and train in the
    modern facilities they deserve; acquiring modern equipment so that we
    cannot only support Army transformation but also support the Army
    warfight; and building on successes in recruiting and retention to
    ensure we have the force necessary to do what our Nation requires of
    us.
        I like to use the five R's when I discuss our priorities:
    Recruiting, Retention, Readiness, Relevance, and Resources. Because of
    all that the men and women of the Army Reserve have accomplished in the
    last decade and certainly as of result of all we have done for the Army
    and the Nation since September 11, I believe there is now a sixth R:
    Respect. Today's Army Reserve and today's Army reservists have gained
    the respect of both those they serve alongside and those they serve.
    Respect is hard to earn and can be easy to lose. The citizen-soldiers
    of the Army Reserve have no intention of losing what they worked on so
    long and so well to earn.
                            recruiting and retention
        Recruiting and retention is an area of highest importance to the
    Army Reserve. 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
    subcommittee 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.
    We met our mission before the end of fiscal year 2001, before September
    11. We are going to make mission again in fiscal year 2002.
        Although successful in overall mission numbers, we continue to
    experience difficulty in attracting and retaining qualified individuals
    in certain critical wartime specialties, particularly within the Army
    Medical Department. Your continued support on behalf of recruiting and
    retention incentives, expanding the 90 day rotation policy to cover all
    but full mobilization, allowing for innovative readiness training and
    the funding of continuing educational opportunities will help make this
    success story complete.
        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 taking the following measures:

            --  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. Career counselors
            talk to Army reservists about joining the Active Guard Reserve
            (AGR) program, training to become warrant or commissioned
            officers, and sharing other opportunities available in our
            troop units.
            --  Our retention program seeks to reduce attrition, thereby
            improving readiness and reducing recruiting missions.
            --  We are jointly working with the Recruiting Command to
            ensure AGR personnel assigned to that command are given
            leadership and professional growth opportunities.

        We recently initiated the first of these activities by transferring
    responsibility for the prior service mission from the Recruiting
    Command to the Army Reserve. This transition is a three-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 lifecycle 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 Army 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, ensure prior service
    soldiers are provided opportunities in our units, and assist our
    commanders in delivering recruiting promises. Phase II, which began
    October 1, 2001, increased the total Army Reserve Retention and
    Transition Division (RTD) mission to 10,000 prior service transfers. We
    continue extensive collaboration with USAREC to ensure a smooth
    transition of these responsibilities.
        To support these efforts, the Army Reserve uses 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.
        The Army Reserve developed the Commander's Retention Program to
    correct this shortcoming. 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 Troop Program Unit attrition by nearly
    nine percentage points. The enlisted attrition rate in fiscal year 2001
    was 28.8 percent.
        The Army Reserve is also experiencing a 4,200 company grade officer
    shortfall. The active Army has a shortfall of these junior leaders,
    too. 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.
        The Army Reserve will successfully accomplish its 41,700 recruiting
    mission for fiscal year 2002 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 commanders,
    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 affect 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 competitive 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
        Our readiness on September 10, 2001--the highest measured readiness
    in Army Reserve history--enabled us to respond in the decisive and
    rapid manner that we did on September 11 and in the days, weeks, and
    months that followed.
        The Army Reserve's readiness posture continues to improve. As of
    January 2002, 74 percent of our units meet deployment standards, a 6
    percent increase over the previous 2 years. It is imperative that we
    preserve our readiness, personnel and equipment to continue to meet our
    operational requirements.
        Our Force Support Package (FSP) units, those which scheduled for
    early mobilization, average 85 percent deployable readiness. With your
    assistance, 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. Limited resources require the Army Reserve to manage
    risks in an attempt to achieve the proper balance between current and
    future readiness. In the past, the Army worked to protect near-term
    readiness at the cost of modernization and infrastructure. During the
    past couple of years, Army transformation sought to leverage the
    benefits obtained through science and technology, recapitalization, and
    similar investment opportunities.
        In regards to medical and dental readiness, the picture for the
    Army Reserve continues to improve. The Federal Strategic Health
    Alliance (FEDS-HEAL) program is filling in the gaps and allowing
    commanders to provide mandated medical and dental readiness services.
    The provider network continues to grow. A robust dental network of more
    than 15,000 was recently added to the provider panel and a further
    expansion with academic dental clinics (dental schools, hygienist
    schools) is pending. During calendar year 2001, more than 18,100
    requests for services were submitted, most during the last quarter.
    Most were for physical examinations and other services (dental and
    immunizations). More than 1,100 were for dental screening and
    treatment. In January 2002, over 4,000 requests were submitted.
        The 2001 Quadrennial Defense Review supports maintaining force
    structure while balancing competing requirements such as modernization,
    recapitalization, and operations and maintenance. Equipment readiness
    demands the right kinds of equipment, fully operational, properly
    maintained, mission capable, in the hands of the forces that will
    employ them. Commensurate with equipment readiness considerations is
    the Army Reserve's personnel readiness goal of improving 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 Education (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.
                                   relevance
        The relevance of the Army Reserve is unquestioned today. The
    capabilities that we possess are in great demand.
        For example, we have about 120 Military Police units of various
    sizes and types, from Criminal Investigation Division detachments to
    Internment and Resettlement Brigades. We have now called up about half
    of these units. They are on duty now: serving in the Balkans, engaged
    in homeland defense missions, and conducting operations in other parts
    of the world. There are more than 200 Army Reserve Military Police
    soldiers on duty at Camp X-Ray in Cuba or otherwise participating in
    the detainee operation. Those MP units not yet employed are leaning
    forward. Those units know how critical their capabilities are and
    expect they, too, will be called up.
        Our other commitments did not cease when the war on terrorism
    began. We have nearly 800 Reserve soldiers supporting contingency
    operations in Operations Joint Forge and Joint Guardian (Bosnia and
    Kosovo) in the European theater. Since 1995, more than 17,000 Army
    reservists have participated in our operations in Bosnia and Kosovo or
    in support operations in neighboring countries.
        In the last 5 years, we have had more than 27,400 Army reservists
    supporting operations worldwide. Overall, in fiscal year 2001, the Army
    Reserve deployed more than 100,000 soldiers to 64 countries
    operationally and for exercises. We provided a total of 3.7 million man
    days in the United States and abroad. Our deployments abroad ranged
    from Central America and Southwest Asia to places like East Timor and
    now Afghanistan and Cuba.
        Furthermore, the Army Reserve did this at the same time that it
    achieved its highest readiness status in history. 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.
        Worldwide deployments are nothing new for the soldiers of the Army
    Reserve. 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 that wherever the Army deploys,
    so, too will the Army Reserve.
        When not working alongside their active Army, Army National Guard
    and sister services, Army Reserve soldiers honed their always-in-demand
    skills on exercises.
        Two examples of these were the annual Translots exercise in June
    2001 and Roving Sands 2001. In the first exercise, more than 2,200
    soldiers from 27 units used landing craft to unload equipment and truck
    supplies to the ``front lines.'' More than half of the units for
    Translots came from the Army Reserve, to include the executive agent
    for the exercise, the 143rd Transportation Command from Orlando,
    Florida. More than 2,600 Army reservists from 51 units were
    significantly involved in the joint theater air and missile defense
    exercise, Roving Sands.
        The Army Reserve provides contributory support to the Army on a
    daily basis. 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, IL, 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,
    WI, 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) or a functional course by taking an
    interactive, distance-learning course, developed and taught by ARRTC.
        The ARRTC has successfully piloted one distance-learning or DL
    course last summer which was broadcast to 12 locations, qualifying Army
    Reserve and Army National Guard soldiers in their MOS. I envision that
    in an age of evolving technology, we will soon have connectivity to all
    of our locations, thus enhancing the interoperability between active
    and Reserve component units worldwide by reinforcing the premise that
    as we train together, we fight together, all as part of one Army team.
        Your continued interest and support of the Army National Guard
    Distributed Learning project and its expansion to include the Army
    Reserve will greatly enhance the individual and collective training
    readiness of the Army.
        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, many of whom are corporate and community
    leaders, 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.
        The Strategic Storage Site (SSS) is such an initiative to better
    facilitate deployment response times. The program is designed to place
    select Army Reserve combat support/combat service support equipment
    into strategically located controlled humidity storage facilities
    within the continental United States and outside the continental United
    States. This program improves responsiveness and materiel readiness,
    and extends the life of the legacy equipment at reduced cost. About 37
    percent of a typical Army Reserve unit's equipment that is not required
    for peacetime training can be positioned in strategic storage to be
    available for contingencies. The initial Strategic Storage Site is a
    150,000 square foot facility at Gulfport, MS, which was resourced in
    the fiscal year 2002 appropriations bill. The Army Reserve is
    appreciative of this congressional support and is examining another six
    locations strategically located to support the Reserve units. Sites
    inside the continental United States will be established near large
    metropolitan areas with consideration to location and types of
    equipment, such as engineer, medical, signal and transportation, needed
    to support homeland defense and disaster relief.
    Consequence Management
        Our presence throughout America and our commitment to America,
    combined with the civilian-acquired skills of our soldiers and the
    capabilities of our units, are all key factors that enhance our
    abilities to manage the consequences of a domestic terrorist event. We
    have been preparing and training ourselves, our Army National Guard
    partners and other Federal, State, and local agencies to effectively
    respond to this mission long before September 11.
        For example, 4 months before the terrorist attacks on America, Army
    Reserve units were key participants in two major back-to-back weapons
    of mass destruction (WMD) response training exercises, Operation
    Dangerous Wind 2001 and Operation Consequence Island 2001. The first
    exercise was held May 7-17 at the Regional Training Site--Medical at
    Fort Gordon, GA. Following immediately was Operation Consequence Island
    2001, held May 18-26 at the Euripedes Rubio Army Reserve Center in San
    Juan, Puerto Rico.
        These exercises allowed Federal, State, and local agencies to hone
    the coordination and other skills necessary to respond to a WMD-related
    emergency. Although the Army Reserve is not a ``first responder'' in
    the case of a WMD incident or natural disaster, we know that our Combat
    Support (CS) and Combat Service Support (CSS) capabilities are the very
    capabilities that are much in demand by both civil authorities and by
    the Army. A listing of the units that participated in these two
    exercises gives an indication of some--but not all--of the capabilities
    we have to provide: 883rd Medical Company (Combat Stress), Roslindale,
    MA; 1982nd Medical Detachment (Surgical), Niagara Falls, NY; 1883rd
    Medical Team (Infectious Disease), Chamblee, GA; 427th Medical
    Logistics Battalion, Forest Park, GA; 369th Combat Support Hospital,
    Puerto Nuevo, PR; 407th Medical Company (Ground Ambulance), Fort
    Buchanan, PR; 597th Quartermaster Company (Field Services), Bayamon,
    PR; 346th Transportation Battalion, Ceiba, PR; and 311th Quartermaster
    Company (Mortuary Affairs), Aquadilla, PR.
        The 311th Quartermaster Company that trained for a domestic
    terrorist event during Exercise Consequence Island 2001 in May was the
    same company that I discussed earlier, the one that deployed to the
    Pentagon as part of Operation Noble Eagle in September.
        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 9 of the 15 reconnaissance platoons called
    for in Defense Reform Initiative Directive 25. One of the Army's two
    Biological Integrated Detection System (BIDS) companies is in the Army
    Reserve. That unit, the 310th BIDS Company, has already been activated
    for participation in Operation Enduring Freedom. The requirement for
    increased biological detection capabilities has resulted in the
    proposal to create additional Army Reserve BIDS companies, which will
    stand up over the next several years. One of these, the 375th BIDS
    Company, is a high demand/low density unit that requires state-of-the-
    art BIDS equipment. This unit, which officially activates in Sep 2003,
    will be in strong demand for both defending the homeland and protecting
    U.S. forces against biological attacks in combat theaters.
        Residing within the Army Reserve are 68 percent of the Army's
    medical assets. 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. The Army
    Reserve contains 50 percent of resourced Mortuary Affairs 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 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. 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
        Information Operations (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. We use IO to defend
    our own information and information systems while disrupting those of
    the enemy.
        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 IO.
        The Army Reserve is also 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
    fourth 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 out its niche in this
    evolving area of cyber warfare by creating the Reserve Information
    Operations Structure. This organization was activated on October 16 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 located 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
        The Army Reserve greatly appreciates your support in providing
    resources to enhance our readiness and relevance; however, we still
    face several challenges. At the outset, I would like to emphasize that
    many of our resourcing challenges are a consequence of our being
    victims of our own achievement. Successfully executed operations lead
    to additional operations, thus increasing operating tempo and personnel
    tempo costs. This places stress on personnel, equipment and facilities
    with bills that ultimately must be paid. Both people and equipment wear
    out faster under frequent use. For example, units deployed in Somalia
    took 10 months to restore their equipment to predeployment levels.
    Multiple, concurrent, and sequential commitments erode warfighting
    readiness.
    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 2002
    transformation of the Army's go to war structure included eliminating
    approximately 251 Title XI Active Army authorizations from Army Reserve
    units. As a coordinated ``Army'' decision, the Army Reserve AGR end
    strength was increased by 182 in fiscal year 2003 to accommodate the
    loss of Title XI soldiers. The revised ramp end strength is 16,263. 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 2002 congressional increase in AGRs and
    MILTECHs. This increase reduced the Army Reserve FTS shortfall by
    almost a thousand (650 MILTECHs and 300 AGRs). The Army Reserve
    utilized the 300 AGRs in fiscal year 2002 to restore Title XI soldiers
    that remained unfunded.
    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 the
    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 years 2001 and 2002, 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.
                                    summary
        As we approach the 6-month mark since September 11, the men and
    women of the Army Reserve are serving proudly and performing their
    duties in the manner expected, professionally and skillfully. They are
    fully backed by their families, by their employers, by their comrades
    at home and by a united Nation. They have leaders who understand their
    needs and who are working to meet those needs and to prepare for the
    future.
        The citizen-soldiers of the Army Reserve, confronted with attacks
    to Americans on American soil for the first time in our lives, have
    answered the Nation's call and are adding a new chapter to our nearly
    94-year history of service. It is a great chapter but it is not yet
    completed. It may take a long time to finish but we know the part we
    have in it.
        Our part was clearly stated by the commander in chief when he
    signed the proclamation for National Employer Support of the Guard and
    Reserve Week 2001 on November 9:

            ``We're fighting a war on many fronts. It's a diplomatic war,
            it's a financial war. The military is performing brilliantly in
            Afghanistan. We could not win the war without the help of the
            Guard and the reservists.''

        The citizen-soldiers of the Army Reserve are proud of their country
    and of the role they play in its defense and in winning the war forced
    upon us. As our citizen-soldiers have always done, they have come
    forward, without hesitation, at a moment of crisis and danger to our
    country. Although today's Army reservist is more ready, better trained,
    more adaptable, and more relevant than ever before, we readily admit
    that we cannot surpass the love of country and willingness to sacrifice
    of all those who have served before us. Those great American citizen-
    soldiers passed to those who serve today a tremendous responsibility--
    to uphold their legacy of defending this Nation, its citizens and its
    freedoms, no matter what it costs. We proudly and confidently accept
    that responsibility.
        We are grateful to Congress and the Nation for supporting the Army
    Reserve and our most valuable resource, our soldiers--the sons and
    daughters of America. United we stand--united we will win.
        Thank you.

        Senator Cleland. Thank you, General Bambrough.
        Admiral Totushek.

    STATEMENT OF VICE ADM. JOHN B. TOTUSHEK, USNR, COMMANDER, NAVAL
                             RESERVE FORCE

        Admiral Totushek. Thank you, Mr. Chairman. Thank you for
    the opportunity not only to come before you today to talk about
    the United States Naval Reserve, but to thank you sincerely,
    and the committee, for all the work that you have done for all
    the military over the years. Your efforts in particular have
    made a great impact on the naval service and all of the
    military services, and I would like to thank you on behalf of
    the 88,000 people in the U.S. Naval Reserve.
        I am going to, in the interest of brevity, summarize my
    brief remarks so that we can move on with questions and
    answers. I would like to talk about a couple of things that
    have already been broached. The first is that on September 11,
    before the mobilization, over 200 naval reservists volunteered
    in a variety of ways within hours of the attacks.
        Chaplains were on duty in Washington administering to the
    needs of Pentagon personnel and their families; Naval Reserve
    F-18s were flying air combat missions; a Reserve helicopter
    squadron was operating on a training mission in Northern
    Virginia, and came in a medevac role to the Pentagon. Our naval
    emergency preparedness liaison officers began working with
    civilian authorities in rescue and relief efforts both here and
    in New York City.
        Reservists, from our intelligence specialists to law
    enforcement and security personnel, began showing up to provide
    their support before anybody called them up. Our phone lines
    lit up in New York and in Washington with people volunteering
    that had already been retired to come back to active duty to
    support the effort.
        The second aspect I would like to touch upon is the
    mobilization itself. While the numbers are changing daily, the
    Naval Reserve has recalled approximately 10,000 people at this
    time, and they are serving the Nation all over the globe in
    roles that range primarily physical security and law
    enforcement to the intelligence specialists that I talked
    about.
        These people are doing a wonderful job for us, and it is
    interesting to note that in many cases we are calling people
    because of their civilian skills as much as we are for the
    military skills. While none of us knows how long we are going
    to need to tap their talents, I am confident that we are going
    to continue to have reservists volunteering and stepping up to
    answer the call.
        The mobilization has gone much smoother this time than it
    did during Operation Desert Storm, largely due to some of the
    things we put into effect during the 1990s, but also due to the
    really hard work of some of my people, and that of our active
    service. Because of the differences and the nuances instituted
    this time, Naval Reservists in addition to the mobilization
    have already provided over 15,000 man-days of direct support
    this year.
        Our frigates continue to make 6-month deployments, the same
    length of time as our active duty counterparts, to support
    exercises such as BALTOPS and UNITAS. Our coastal warfare
    Reserve units have served in Vieques, they have served all
    around the globe, and continue to be one of the highest demand
    and lowest density organizations we have out there. In fiscal
    year 2001, our logistics aircraft flew more than 4,400
    missions, transporting 172,000 naval personnel and over 14
    million pounds of cargo in direct support of the Navy and
    Marine Corps team.
        In order to continue to provide this kind of support, I
    need to continue to receive the support of Congress to have an
    immediate reconstitution of our aging equipment. We have needs
    in the transport area such as new C-40s to replace the aging C-
    9s. Our coastal warfare equipment, our P-3 Charlie and our F-18
    upgrades are things we desperately need to keep consistent and
    continue to provide the wonderful support that we do to the
    Navy and Marine Corps.
        Finally, I will echo a couple of things that my colleagues
    have already underlined in the manpower area. We have
    challenges in recruiting, mainly from the veterans that
    ordinarily answer the call of the Naval Reserve. Traditionally,
    we have been a highly veteran force. Up to 80 percent of our
    members had previous service in the active service. Now,
    however, in our last few months we have been only recruiting
    about 55 percent veterans. I think that is a reflection on the
    fact that those who want to stay on active duty are staying
    there to answer the Nation's call, and those that have made the
    decision to leave active service actually do not want to get
    recalled.
        The Naval Reserve Force's adequate funding does continue to
    retain people. In fact, that is how we are making end strength
    these days, by concentrating on driving attrition out of our
    ranks, and we are making wonderful progress. We hit all-time
    historical lows last year, and so I would like to just talk
    about two additional things, if I could.
        I know that Secretary Navas mentioned the income-protection
    problem that we have with reservists that have spent some time
    on the outside and have been fairly successful, and then come
    back to answer their country's call, only to have to take money
    out of their pocket to make their house payment. We did not do
    a very good job the last time around when we did income
    insurance. Mobilization insurance, we called it. The
    implementation was wrong. The idea was right, and we still do
    need something to protect our reservists that have become
    successful and continue to serve the Navy.
        The second is continuity of health care. When people are
    mobilized from places in the middle of the country, where there
    are not a lot of TRICARE providers, it is a big issue for them
    and something that needs to be addressed.
        In closing, I would like to say that I am very fortunate to
    have the good men and women that I do in my force today. We are
    truly fighting the good fight and meeting the threats posed to
    us as we must. We are called to serve, and we are out there
    serving. I look forward to answering your questions.
        [The prepared statement of Vice Admiral Totushek follows:]
             Prepared Statement by Vice Adm. John B. Totushek, USNR
        Mr. Chairman, I appreciate the opportunity to appear today to
    discuss the Naval Reserve and our role in Operations Enduring Freedom
    and Noble Eagle. There are really two distinct aspects of Naval Reserve
    support of the war effort: the first deals with the immediate aftermath
    of the attacks. Even before the mobilization, more than 230 Naval
    reservists began immediately assisting in any way they could:
        Within hours following the attacks on the Pentagon and on New York,
    Naval reservists responded:

             Chaplains were on duty in Washington administering to
            the needs of Pentagon personnel and their families;
             Naval Reserve F/A-18s were flying combat air patrol
            missions in Texas;
             A Reserve helicopter squadron training in Northern
            Virginia was providing Medevac support at the Pentagon;
             Naval Emergency Preparedness Liaison Officers began
            working with civilian authorities in rescue and relief efforts;
             A Naval Reserve augment unit began round-the-clock
            support for the New York City Port Authority;
             Reservists--from intelligence specialists to law
            enforcement and physical security personnel and more--began
            showing up to provide support to their gaining commands in
            Washington; and
             Phone lines lit up in New Orleans and Washington with
            reservists volunteering for recall to active duty.

        The second aspect is the mobilization itself. The numbers change
    daily, but we've recalled approximately 10,000 personnel. The majority
    of these Naval reservists have been recalled individually based on
    specific skills; primarily law enforcement, security and as cohesive
    units of the Naval Coastal Warfare command. Other skills reflected in
    the mobilization include medical, supply, intelligence, and other
    specialties. There is a Naval Reserve C-130 based in Bahrain that last
    month moved approximately one million pounds of mission critical
    equipment. We are providing an additional logistics aircraft to support
    personnel and equipment movement throughout the fleet, and our newest
    Naval Reserve C-40A logistics aircraft are ferrying men and equipment
    to the Gulf with great reliability.
        I found it interesting that one of the frequent comments heard in
    the immediate aftermath of the September 11 attacks on our country was
    that the Navy and the Naval Reserve--and the Armed Forces in general--
    would have to change the way we do business.
        The attacks left the impression in some circles that our military
    was not prepared for what had happened, that we were not equipped to
    deal with new realities and that a fundamental rethinking of our
    training and our mission was in order.
        I believed then, as I do now, they were wrong. Our response since
    the moment of the attack has been proving them wrong. The fact is that
    our sailors--and the marines, airmen, and soldiers in our sister
    services--are well trained to respond to a terrorist crisis at home, to
    track down enemies of freedom abroad--and well suited to carry out
    their roles in homeland defense.
        While none of us knows how long we will need to tap into this
    reservoir of talent, it is heartening that--once again, as in Operation
    Desert Storm--many Naval reservists stepped up and volunteered for
    recall in the early days of the crisis.
        As a Nation, before September 11, we already knew that we lived in
    a troubled world. Now we know how dangerous the enemy in that world can
    be. We know how vulnerable an open society such as ours can be to those
    who seek to do us harm.
                              the price of liberty
        The patriot John Philpot Curran said in 1790, ``The condition upon
    which God hath given liberty to man is eternal vigilance.'' This
    passage provides as much relevant guidance for us today as it did then.
        The question is this: what can the Naval Reserve do in support of
    eternal vigilance?
        Two things are certain: we are ready--ready to live in freedom,
    ready to pay the price for freedom; and we are capable.
        Every day, the Naval Reserve maintains facilities in every state.
    Every day, we support operations and exercises on a global basis. As
    you read this statement, Naval reservists are deployed in support of
    operations in the Arabian Gulf, in Bosnia/Kosovo, in the Caribbean and
    South America, in Korea, throughout Europe, and afloat on every ocean.
        Today's Naval Reserve Force consists of 34 air squadrons, including
    a carrier air wing, a maritime patrol wing, a helicopter wing and a
    fleet logistics support wing. We operate 26 ships, including 9
    frigates, 10 mine hunter coastal patrol ships, 5 mine countermeasures
    ships, 1 mine control ship, and a tank landing ship. Further strength
    lies in additional fleet support units. Among the most notable of these
    are 2 Naval Coastal Warfare Group staffs, 22 Mobile Inshore Undersea
    Warfare units, 14 Inshore Boat units, and 9 Harbor Defense Command
    units; 12 construction battalions, 12 cargo handling battalions, 4
    fleet hospitals, and many other units.
        The force that we deploy is highly educated. Nearly 11 percent of
    our enlisted members have college degrees, and more than 97 percent
    have a high school diploma. Within the Reserve Force officer ranks,
    nearly 35 percent have master's degrees, and more than 9 percent have a
    doctorate.
        The state of the Naval Reserve is strong, and our fundamentals
    remain unchanged. Let's take a look from three perspectives:

             Alignment of the Chief of Naval Operations' (CNO) top
            priorities and the Commander, Naval Reserve Force's (CNRF) top
            priorities.
             Our progress and achievements over the past year, and
            how our ships, aircraft and people are being employed.
             Our goals for the future, some of which are unfunded
            priorities. Congressional support of these initiatives and
            upgrades will keep our Naval Reserve Force strong and
            integrated into the Active Force.
                                     goals
        Our first--and most immediate--goal is to assist the CNO in his
    providing a capable and effective Naval force and to help in
    prosecuting and winning the war on terrorism. Our supporting goals
    complement this primary one and align with the CNO's following
    priorities:
             Manpower and personnel. Just as the active Navy
            competes for people, the Naval Reserve makes every effort to
            attract and retain the best, and to reduce first-term
            attrition. The Reserve Force focuses on retaining our best
            people, recruiting to fill future needs, and sustaining end
            strength. Through a combination of leadership training,
            financial and educational incentives, and career decision
            surveys, we watch closely and encourage the career paths of our
            talented reservists. We continue to innovate and support new
            concepts such as income protection insurance and health care
            protection for mobilized reservists and families. Similarly,
            our recruiting efforts have been strengthened this year with
            the addition of new recruiters, a new advertising campaign, new
            incentives to recruit the best candidates, and by the ability
            to recruit in the 21-25 year old non-prior service market. Our
            main recruiting concern at this time is that the sense of
            renewed patriotism following the attack upon our homeland did
            not translate into hikes in enlistment contracts. The major
            change Naval Reserve recruiting has experienced since September
            11, 2001 is the decrease in Navy Veteran (NAVET) recruiting
            from about 80 percent of SELRES accessions having been Navy
            veterans to around 55 percent. We believe that this is due to
            the desire of many sailors to remain on active duty to support
            our Nation's war on terrorism. Reserve recruiting is closely
            monitoring this trend. Coupled with the efforts outlined above
            and the renewed thrust into the non-prior service market,
            Reserve recruiting is combating the downward trend in NAVET
            affiliations. Naval Reserve recruiting is currently well ahead
            on officer recruiting.
             Current Readiness. The Active force has benefited from
            additional funding for training and maintenance and continually
            reviews the balance between requirements and resources. On the
            reserve side, we're using Just-In-Time Training to support
            homeland defense requirements. Specifically, the Naval Reserve
            has established the Law Enforcement Specialist Course in
            response to force protection mobilization requirements.
            Personnel who have been mobilized are being sent to the 2-week
            course in Willow Grove, Pennsylvania, and Ft. Worth, Texas.
            Graduates will receive a certificate and Joint Qualifications
            Booklet to bring back to their gaining command. When the
            booklet is completed, they will earn the Navy Enlisted
            Qualification for Enlisted Law Enforcement Specialist. Training
            is also taking place through the new Navy Learning Network, as
            well as in non-traditional settings such as the Senior Enlisted
            Academy and Navy Apprentice Schools.
             Future Readiness. The Navy makes continuous
            investments for the near-mid-and-long term. These include
            investments in training, technology, and new equipment. The
            Naval Reserve strives to upgrade its equipment, with
            acquisitions such as the new C-40A aircraft, F/A-18 and P-3
            upgrades, and building a new Information Technology structure.
             Alignment and Fleet Support. The CNO has set as a
            priority the unification of systems, processes and
            organizations, which increases support to the fleet. The role
            of the Naval Reserve is fleet support, and we are aligning our
            systems, processes and organizations to serve our primary
            customer: the active force.
                               2001 achievements
        Our current mobilization has gone much smoother than in Operation
    Desert Storm, due to changes put into effect in the 1990s, and the
    extremely hard work put in by our Reserve and active duty personnel.
    With that said, the mobilization alone doesn't reflect the whole story
    of success in the past year.

             Naval reservists supported fleet operations and
            exercises throughout the year. Naval Surface reservists
            provided over 15,000 man-days of direct support to fleet
            exercises in Bahrain, Germany, Korea, Iceland, Italy, Norway,
            Istanbul, Thailand, and Puerto Rico.
             Naval Reserve Force frigates continued to make the
            same 6-month length deployments as the their active Navy
            counterparts, focusing on counter-narcotics interdiction and
            exercises such as Unitas, Baltops, and Carat. Naval Reserve
            Force Frigates were on station in either the Caribbean or
            Eastern Pacific supporting drug interdiction operations for 356
            days during calendar year 2001. The U.S.S. Stephen W. Groves
            proved to be one of the Navy's most productive counterdrug
            units. During her deployment, Groves interdicted three go-fast
            boats, interrupted one significant smuggling event, detained 10
            suspects, and recovered 3,600 pounds of cocaine.
             VAQ-209 continued to support tactical electronic
            warfare deploying to Saudi Arabia for 6 weeks as part of
            Operation Southern Watch.
             Naval Reserve P-3 and E-2 squadrons provided year-
            round patrols supporting counter-drug detection and monitoring
            operations in the Caribbean and Eastern Pacific.
             Naval Coastal Warfare Reserve (NCW) Units were in high
            demand during 2001. Before 9/11 units deployed to the Arabian
            Gulf and Vieques, PR in vital AT/FP missions. Units also
            participated in exercises Bright Star, Northern Edge, Natural
            Fire, and CARAT. Subsequent to the homeland attacks, 17 full
            units within the NCW organization mobilized and deployed both
            at home and overseas. The demand for this robust capability by
            warfighting CINCs is so great. NCW will expand to include units
            both in the Active and Reserve component. The Reserve NCW
            organization will provide valuable training and operational
            expertise as the Active and Reserve component emerge as an
            important segment of homeland security.
             Naval Reserve Strike Fighter and Adversary squadrons
            provided 100 percent of fleet adversary training (more than
            9,000 hours in 2001).
             More than 30 Naval Reserve divers participated in an
            historic expedition to raise the Civil War Ironclad Monitor
            from 240 feet off the coast of Cape Hatteras, NC.
             Reserve Carrier Air Wing 20 (CAG-20) embarked three
            squadrons and staff on U.S.S. Nimitz for a 54-day
            circumnavigation of South America during a coast-to-coast
            homeport change.
             In fiscal year 2001, our logistics aircraft flew more
            than 4,450 missions, transporting 172,220 personnel and 14
            million pounds of cargo in direct support of Navy fleet
            operations worldwide. Presently, there is a Naval Reserve C-130
            transport flying out of Bahrain supporting the war effort in
            Afghanistan, as well as several C-9, C-20, and C-40 flights per
            week in direct support of deployed forces in theatre.
             We took delivery of our first four C-40A Clippers: the
            last two were named ``Spirit of New York City'' and ``Spirit of
            the Pentagon.''
             We began to roll out the long-anticipated Navy-Marine
            Corps Intranet, which over a 5-year period will equip the Navy
            with access, interoperability and security for the Navy's
            information and communications by providing voice, video and
            data services to Navy and Marine Corps personnel. The Navy's
            first site was our own Naval Air Facility Washington.
                                   the future
        With a mobilization underway--and mindful of President Bush's
    caution that the war on terrorism could last for years--the near-term
    future of the Naval Reserve will be focused on continuing to sustain
    the Navy's warfighting capabilities. Given the uncertainty of how the
    war might develop, the challenge for the Naval Reserve will be to
    remain flexible in adapting existing capabilities--both function and
    structure--to meet evolving and previously unanticipated requirements.
        Yet, the Navy's requirements for reservists to support the war are
    in addition to its need for reservists to conduct `normal' peacetime
    operations, including exercises, training, watch standing, and
    administrative duties.
        While the Navy's demand for Naval Reserve longer-term capabilities
    is not clear, there are some implied and important Reserve roles.
    Homeland security will create demand for capabilities to guard the
    Nation's borders, and the Reserve components are being considered for
    this major role. Further, a recently published Quadrennial Defense
    Review indicated that future forces would be shaped to meet an expanded
    list of threats, and that the Department of Defense would transform
    itself simultaneously. These have the potential of adding to Navy's
    challenges at a time when it is fighting the war and otherwise
    maintaining a forward presence worldwide. The Naval Reserve will
    undoubtedly play a part.
        In addition, to continue supporting the fleet, our long-range plans
    include upgrading our aircraft, implementing information technology
    improvements, and maintaining our real estate holdings.

             Aircraft upgrades. The introduction of the C-40A
            Clipper into the Naval Reserve is maintaining our worldwide
            intra-theater logistics lift support for the fleet. Without
            these aircraft, the Reserve could not conduct its essential
            airlift operations in foreign airspace. The C-40As are slowly
            replacing the fleet of aged C-9s. Four C-40As have been
            delivered to the Naval Reserve and two additional C-40As will
            be delivered by the end of this year. The C-40A delivery begins
            the process of increasing safety, improving compatibility and
            meeting environmental requirements. Our goal is to replace all
            27 of our aged Navy C-9 aircraft and 2 Marine Corps Reserve C-9
            aircraft at a rate of three per year.
              My aging, but well maintained, P-3 aircraft assets are in
            need of modernization upgrades in the form of Block
            Modification Upgrade Program (BMUP) and Aircraft Improvement
            Program (AIP) kits. These kits provide new mission computers
            and acoustic sensors to achieve a common P-3C configuration
            with our fleet counterparts.
              In addition, two of our four 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 12 additional ECP-560 kits to outfit our third F/A-18
            squadron.
             Navy and Marine Corps Intranet. The NMCI is an
            opportunity for the Reserve Force to show the way in
            integrating the best in Information Technology. We are
            replacing disparate 20-year old systems with a unified system
            accessible by fleet commanders and Reserve units alike.
             Real estate maintenance and management. With the Naval
            Reserve as a landlord for 1,224 structures (average age of 33
            years) on 6,800 acres in all 50 States and Puerto Rico,
            maintenance and efficient management are issues of continued
            concern.
                                    summary
        Our primary mission--before and after September 11--has been to
    support the Navy/Marine Corps team throughout the full range of
    operations, from peace to war. At this time, it is war. Fortunately, we
    are a well-trained force dedicated to enduring freedoms. In the words
    of Edmund Burke, ``The only thing necessary for the triumph of evil is
    for good men to do nothing.'' I am very fortunate to have good men--and
    women--in my force, and we are truly fighting the good fight and
    meeting the threats posed to us, as we must. As the war on terrorism
    unveils we will all be called to serve. The Naval Reserve is ready to
    answer the call.

        Senator Cleland. Thank you very much, Admiral.
        General Sherrard.

     STATEMENT OF LT. GEN. JAMES E. SHERRARD III, USAF, CHIEF, AIR
                             FORCE RESERVE

        General Sherrard. Mr. Chairman, it is indeed our pleasure
    on behalf of the men and women of the Air Force Reserve Command
    to have the opportunity to speak to you today and echo the
    words that our colleagues have already expressed on panels I,
    II, and now III, the great service that this committee and you
    in particular have stepped forward to do, the things that in
    fact enhance our ability to ensure that the welfare of the men
    and women of our commands are in fact taken care of.
        To summarize very quickly, fiscal year 2001 started out as
    a very good year, and continued for us in terms of recruiting,
    where we were able to achieve 105 percent of our recruiting
    accession goal, as well as exceed our end strength authority by
    achieving 106 percent of our authorized end strength at the end
    of the year. Retention was at an all-time high, 89.3 percent
    for the force.
        Unfortunately, the tragic events of September 11 made all
    that joy that we all were so looking forward to expressing go
    away, because immediately the men and women of our commands
    stepped forward and started volunteering, as Mr. Duehring has
    mentioned. They started leaving without being called. They were
    just showing up immediately to serve in any fashion that they
    could, based upon the needs of our command and the needs of our
    great Nation at that point in time. In fact, they continue
    today. We have over 3,000 volunteers a day that are performing
    duty around the world in support of the needs of the Air Force.
        To date, we have mobilized more than 11,600 people with
    more than 2,200 of those members deployed overseas. It should
    be interesting to note that while we have mobilized about one-
    half of the numbers we did in Operation Desert Shield and
    Operation Desert Storm, we in fact have increased by more than
    36 percent the number of individual mobilization augmentees
    that are performing duty under mobilized status. This is
    particularly important because of the key roles they are
    performing in very critical areas such as intelligence and
    security forces.
        In addition, I would tell you that the men and women that
    are out there are very proud of doing what they are doing, and
    I echo the same things that Admiral Totushek said. The phones
    were ringing from the retired members. They continued to ring,
    and the authority that your committee has given us and that we
    were given in legislation in the recent past to in fact bring
    retired members back into the Reserve Forces to serve serves us
    all very well, and it is a great opportunity for us to utilize
    that legislation to get those members back into our fold and
    let them bring those high experience levels we all need in
    order to do our business.
        The concerns and challenges we face are very
    straightforward; retaining the highly skilled force that we
    have to the maximum years' service possible certainly is
    important so we can again maximize that return on investment
    that the American public has made in each one of us through the
    valuable training we received. We are very concerned in
    watching very carefully any recruiting impact that stop loss,
    as was mentioned earlier, may have on our ability to recruit
    prior service members, because again, more than 80 percent of
    our members being prior service, it is critical for us to be
    able to do the missions we are being asked to do.
        Likewise, the impact of mobilization, what will that do on
    future retention, are certainly areas of key concern to us. The
    most critical point I want to make is sustaining the current
    high levels of support we are receiving from employers and
    families. They are part of this process. They are critical
    elements of the way we do business today, and remembering those
    members and ensuring that their protections and their needs in
    fact are met are critical for us in the military side of the
    business to do our duties.
        I want to thank you and your subcommittee, sir, for your
    continuing support, and look forward to the opportunity to
    answer any questions you might have.
        [The prepared statement of Lieutenant General Sherrard
    follows:]
           Prepared Statement by Lt. Gen. James E. Sherrard III, USAF
        Mr. Chairman, Senator Hutchinson, and distinguished members of the
    subcommittee, I appreciate the opportunity to appear before you today.
    Thank you 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.
        The Air Force has enjoyed over 30 years of unparalleled Total Force
    integration success. Today, Air Force Reserve Command (AFRC) members
    are performing in almost every mission area within our Air Force
    including the war on terrorism, and we plan to seek involvement in all
    future mission areas, as they evolve. Key to our successes, to date, is
    the fact that AFRC is a very dynamic organization in a rapidly changing
    environment, and we are finding new and advanced ways to seamlessly
    link all our forces in both peace and war.
        In the Air Force Reserve, our priorities are people, readiness, and
    modernization, and it is toward these three key areas that our
    attention is focused to assure that our members are provided the full
    spectrum of training opportunities which ensure they achieve and
    enhance their warfighting skills and capabilities. We put people first,
    emphasize readiness, and continue to seek balanced, time-phased
    modernization and infrastructure programs.
        People are our most important asset. In an effort to retain our
    best and brightest, we must continue 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 should 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.
        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 of our Air Force Reserve programs.
                               highlights of 2001
        Until September 11, this year had been shaping up to be one of our
    most productive ever. Our key goals had been to achieve our authorized
    manning levels, continue to improve retention of our talented members,
    meet the extensive Reserve commitments to the Aerospace Expeditionary
    Force (AEF) and execute our Flying Hour Program as authorized in the
    fiscal year 2001 defense budget. The hard work of the men and women of
    the Air Force Reserve assured we attained our goals and, even more, met
    the many additional challenges presented following the September
    attacks.
        We exceeded our fiscal year 2001 end strength authorization;
    achieving a final manning percentage of 100.6 percent of our authorized
    end strength. This was possible only through outstanding efforts of our
    recruiters, who accessed 105 percent of our recruiting goal, and with
    the superb assistance of our assigned personnel who help tell our story
    of the true value of service to country. Likewise, we exceeded our
    command retention goals for officers, first-term airmen, second-term
    airmen, and career airmen by achieving retention rates of 92.1 percent,
    81.7 percent, 79.6 percent, and 91.4 percent respectively. The overall
    command retention rate of 89.3 percent is the result of great teamwork
    by members, first sergeants, supervisors, and commanders who led us to
    this exceptional achievement.
        We are also very proud of our Air Expeditionary Force contributions
    in 2001. We have met virtually 100 percent of both aviation and combat
    support commitments, deploying 14,000+ personnel in volunteer status in
    the current 15-month AEF cycle (1 Dec 2000-28 Feb 2002). The challenge
    for 2002 will be to meet ongoing AEF commitments with volunteers from a
    Reserve Force which has had much of its operations and combat support
    mobilized for homeland defense and the war on terrorism.
        Through the dedicated efforts of our operators and maintainers,
    along with assistance from our support personnel, AFRC flew 99.5
    percent of the Operation and Maintenance (O&M) funded portion of our
    flying hour program. Due to the lack of available cargo and passengers,
    we, like our fellow active duty and ANG partners, were unable to fly
    the full Transportation Working Capital Fund (TWCF) commitment.
    However, overall, this was our best year of flying hour execution
    within the past 5 years.
        Air Force Reserve Command personnel participated in several key
    operational exercises in which combat training events were accomplished
    by our members, while critical command and control processes were
    tested and evaluated to determine overall readiness of our military
    forces. Pacific Warrior was a medical exercise conducted in Hawaii in
    which AFRC was the lead Air Force agent. Deployment and redeployment
    consisted of 72 missions, 1,030 passengers, and 445 short tons of
    equipment and supplies. Ground and aeromedical patient care and
    evacuation was conducted utilizing all deployable specialties assigned
    within the Air Force Medical Service. More than 1,000 patients were
    treated and 533 patients were evacuated by aeromedical missions. Over
    400 patients were moved via C-130 aircraft in the tactical phase and
    130 patients were moved in the strategic phase. Additionally, units
    performed a pre-F3 (form, fit, and function) on proposed new manpower
    packages to validate proposed innovations in aeromedical support.
        Exercise Consequence Island was a large Veterans Administration and
    Federal Emergency Management Agency-sponsored exercise in Puerto Rico
    to evaluate United States response capabilities to a weapons of mass
    destruction attack. A big emphasis was on post attack health care
    delivery and aeromedical evacuation. AFRC provided the majority of
    airlift and aeromedical evacuation capabilities. The long hours and
    changing dynamics of the exercise proved to be very realistic, and the
    hard work, dedication, and problem solving abilities demonstrated by
    our Reserve Forces made the exercise a big success.
        Another operation with heavy AFRC involvement this past year was
    Operation Palmetto Ghost, which is the resupply mission for Army
    counter-drug operations in the Caribbean. Each quarter, this
    requirement calls for a significant number of strategic and tactical
    airlift sorties, as well as a Tactical Airlift Control Element (TALCE)
    for command and control on the ground. Though this mission is not
    assigned specifically to the Air Force Reserve, we stepped up to
    provide the majority of the airlift support with C-5s, C-17s, C-141s,
    and C-130s, and provided 100 percent of the TALCE support.
        The past year saw the Reserve enhance their continued role in
    training pilots for all Air Force components. As the Air Force
    determined a requirement to increase the production of fighter pilots,
    it became evident that our training capability needed to increase as
    well. To meet that demand, the Chief of Staff of the Air Force directed
    the Air Force Reserve to convert a combat flying unit to a training
    flying unit. The 944th Fighter Wing at Luke AFB, Arizona now trains
    active duty, Air National Guard, and Air Force Reserve Command pilots
    in all phases of the F-16 formal training program. This program
    utilizes its unit-equipped aircraft and instructor pilots assigned to
    the 302d Fighter Squadron and the instructor pilots assigned to the
    301st Fighter Squadron, the Air Forces' only associate F-16 training
    organization. This associate squadron is an integral part of the
    overall Air Force training capability. Through its use of highly
    experienced instructor pilots, it is truly the benchmark upon which all
    future operational training needs will be measured.
        The Air Force Reserve Associate SUPT (Specialized Undergraduate
    Pilot Training) Instructor Pilot Program is managed by the 340th Flying
    Training Group at Randolph AFB, Texas. They provide administrative
    control for Reserve flying training squadrons at six Air Force bases:
    Laughlin, Randolph, and Sheppard in Texas; Columbus AFB, Mississippi;
    Moody AFB, Georgia; and Vance AFB, Oklahoma. The units are associate in
    nature and belong to the host active duty flying training wing for
    operational control. They provide programmed flying training support
    for all phases of SUPT. Overall, the AETC/AFRC Associate Instructor
    Pilot Program provides 16 percent of all Air Force SUPT training
    capability.
        September 11, 2001 changed life in the United States forever, and
    its impact on Air Force Reserve operations will also be felt for a long
    time to come. Perhaps more so than any other potential scenario for
    military operations, it highlighted the huge importance and unique
    missions of the Air Force Reserve.
        Air Force Reserve aeromedical evacuation (AE) aircrews were among
    the first to respond and provided almost half of the immediate AE
    response that was provided. Tragically, we found there was little need
    for their service. The larger need was in mortuary affairs support, of
    which the Air Force Reserve provides more than 75 percent of our Air
    Force's capability. One hundred eighty-six trained reservists
    immediately stepped forward, in volunteer status, for this demanding
    mission. Reserve airlift crews were among the first to bring in
    critical supplies, equipment and personnel, including emergency
    response teams from the Federal Emergency Management Agency (FEMA),
    fire trucks, search dogs, and earth moving equipment. F-16s fighters
    and KC-135 air refueling tankers immediately began pulling airborne and
    ground alert to provide combat air patrol support over major U.S.
    cities. They were quickly joined by our AWACS aircrews and our C-130
    aircrews under the direction of NORAD in support of Operation Noble
    Eagle.
        The response of our reservists in this time of crisis has been
    simply overwhelming. Over 11,000 Air Force reservists have been
    mobilized, and thousands more continue to provide daily support as
    volunteers. Three thousand of those mobilized are Individual
    Mobilization Augmentees (IMAs), providing critical support to the
    Unified Commands, MAJCOMs, and various defense agencies supporting
    homeland security efforts. Required support functions span the entire
    breadth of Reserve capabilities . . . security forces, civil
    engineering, rescue, special operations, strategic and tactical
    airlift, air refueling, fighters, bombers, AWACs, command and control,
    communications, satellite operations, logistics, intelligence, aerial
    port, services, and medical. Never have I been so proud to be part of
    the outstanding group of patriots who make up the Air Force Reserve
    Command.
        Equally important to the Air Force Reserve Command's ability to
    meet the requirements being levied on us is family and employer
    support. Their sacrifices and support make it possible for our members
    to carry out their duties in such a spectacular manner.
                            recruiting and retention
        While significant progress has been made in Air Force Reserve
    recruiting and retention, my principal concern today remains attracting
    and retaining high quality people.
    Recruiting
        In fiscal year 2001, the AFRC exceeded its recruiting goal for the
    first time in 5 years. Also, we surpassed our fiscal year 2001 end
    strength by achieving a final manning percentage of 100.6 percent of
    our authorized end strength. This was possible only through outstanding
    efforts of our recruiters, who accessed 105 percent of our recruiting
    goal, and with the superb assistance of our assigned personnel who help
    tell our story of the true value of service to country. Several
    initiatives contributed to Reserve recruiting success. In fiscal year
    2001, Air Force Reserve Command (AFRC) with great congressional support
    increased recruiter authorizations by 50, instituted a new call center,
    redesigned the web site, launched a ``Prior Service Other'' advertising
    campaign, and re-energized the ``Get One Program'' in which current Air
    Force Reserve members give recruiters referrals. Air Force Reserve
    recruiting leads all other services in monthly accessions with 3.55 per
    recruiter.
        While fiscal year 2001 was an outstanding year for Reserve
    recruiting, fiscal year 2002 is shaping up to be a very demanding year.
    After September 11, ``Stop Loss'' was initiated for all service
    members. Historically, Reserve recruiting directly accesses 25 percent
    of eligible members (i.e. no break in service) separating from active
    duty which accounts for a total of 30 percent of annual AFRC
    accessions. Recruiting will have to make up that part of the goal, more
    than 3,000, from other sources including ``non-prior'' and ``prior
    service other'' (i.e. Air Force separatees with a break in service or
    accessions from other services) applicants until stop loss is lifted.
    Once lifted, we expect there will be challenges in filling many vacated
    positions.
        One of the biggest challenges for recruiters this year is Basic
    Military Training (BMT) quotas. With recruiting services increased
    emphasis on enlisting non-prior service applicants, BMT allocations
    have not kept pace. This problem is forecasted to worsen this year as a
    result of stop-loss since more non-prior applicants will have to be
    accessed to offset the decrease in members separating from active duty.
    We are working diligently to increase our number of BMT allocations and
    explore solutions to address BMT shortfalls.
        A new recruiting initiative we are currently implementing focuses
    on bringing back retired military members. We are actively encouraging
    retired members to continue serving their country by returning to
    active service in the Air Force Reserve. By accessing retired military
    members, the Air Force Reserve and Total Force benefit by gaining
    personnel with proven experience, training, and leadership talents.
    Moreover, we save valuable training dollars and benefit from the
    specialty skills, experience and knowledge these individuals already
    possess. Once returned, members earn additional pay, retirement points,
    years of service, and promotion opportunity by returning to active
    Reserve duty. Accessed members may continue serving as long as eligible
    under High-Year Tenure (HYT) guidelines, Mandatory Separation Date
    (MSD), or until age 60. This scenario presents a ``win-win'' situation
    for the member and the Air Force and allows valued service members the
    ability to continue serving while providing a vast amount of technical
    and mentoring experience to our USAFR. We are processing our first
    applicants and have discovered a couple of obstacles to effective
    implementation along the way.
    Retention
        The Air Force Reserve exceeded Command retention goals for first
    term airmen, second term airmen, and career airmen during fiscal year
    2001. Again, it was the team effort of the members, first sergeants,
    supervisors, and commanders that led us to this exceptional
    achievement.
        At the end of calendar year 2001, the USAFR was paying enlistment/
    reenlistment bonuses in 67 percent of its traditional Reserve enlisted
    specialty codes and 50 percent of the enlisted individual mobilization
    augmentee specialty codes.
        The Air Force Reserve is currently exploring the possibility of
    expanding bonus authorities for air Reserve technicians and certain
    career fields for active Guard and Reserve members. These initiatives
    are designed to enhance both recruiting and retention of key Reserve
    component assets. Additionally, special duty pay initiatives are also
    being studied for later implementation for senior enlisted positions
    such as command chief master sergeants and unit first sergeants.
        We are continuing to pursue substantial enhancements to the
    Aviation Career Incentive Pay (ACIP) and Career Enlisted Flyer
    Incentive Pay (CEFIP) to increase retention in the aviation community,
    as well as attract/retain individuals to aviation. These initiatives,
    which effect over 13,343 officers and enlisted crew members in the
    Guard and Reserve, are aimed at providing an incentive to our
    traditional aviators who do not qualify for the Aviation Continuation
    Pay for AGRs and the Special Salary Rate for Technicians.
    Quality of Life Initiatives
        To provide increased financial benefit to its members, the USAFR
    began enrollment of its members in the congressionally authorized
    Uniformed Services Thrift Savings Plan in October 2001. This program
    allows members to augment their retirement income through ``401(k)''
    type investment accounts.
        To better provide insurance benefits for members, we began
    implementation of the family coverage Service Member's Group Life
    Insurance (SGLI) program. This program allows the spouse and children
    of a service member to be covered for specified SGLI insurance coverage
    amounts. The enhanced coverage program allows service members and their
    families to take advantage of a comprehensive insurance package that
    might not be otherwise available to them.
        In sum, the matter of recruiting and retention is an issue of major
    concern to me, and we are taking positive steps to address ongoing
    recruiting and retention challenges as I lead the Air Force Reserve in
    this new millenium
                          readiness and modernization
    Readiness
        As full participants in the Total Air Force, our readiness remains
    fair overall. At present, the Air Force as a whole is in the process of
    addressing a significant decline in readiness level due to sustained
    OPTEMPO, cumulative effect of chronic underfunding, declining skill-
    level manning and aging equipment. It will take several years of
    significant investment to restore readiness through substantial and
    sustained recapitalization of people, equipment, infrastructure, and
    ``info''-structure. Operations Noble Eagle and Enduring Freedom will
    also require a reconstitution period to regain pre-attack readiness
    levels. Reserve units have comparable equipment in quantities
    proportional to their active duty counterparts and participate in day-
    to-day operations, exercises, and training. Reserve units train to
    active duty standards and receive regular inspections from their
    gaining major commands.
        Our 70 assigned F-16s, using the information being provided through
    the LITENING II targeting pod combined with Global Positioning System
    (GPS) software enhancements, provide a remarkable precision munitions
    delivery capability. This outstanding capability, combined with the
    information being provided through the Situational Awareness Data Link
    (SADL), give our pilots a capability that is acknowledged as one of the
    weapon systems of choice for combat missions. We have seen in
    operations in Southwest Asia, both in Iraq and most recently in
    Afghanistan, how this capability in the hands of our experienced pilots
    provides combatant commanders the ability to conduct attacks against
    ``time-critical targets'' in conjunction with the Predator. The F-16
    pilot can put a laser mark on the target for confirmation by the
    Predator controller. So now, the Predator and its controller are
    operating as a Forward Air Controller from a remote location.
        Our B-52 aircrews were among the first to deploy in support of
    Operation Enduring Freedom. Their efforts have been superb and clearly
    demonstrated that value of this weapon system in today's arsenal of
    capabilities. While the B-52 was first built 50 years ago, it shows, on
    a daily basis, it has a ``mean bite'' and remains the enemy's ``worst
    nightmare.''
    Modernization
        As AFRC continues to work within the Active component structure,
    modernization is key to our ability to provide like capability for
    deployed operations and homeland defense. This is true across our
    airlift/special mission areas, as well as with our bomber, fighter, and
    aerial refueling aircraft.
        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, autopilot replacements, and night vision
    compatible aircraft lighting systems. Specifically for the HC-130, we
    have equipped nine HC-130s with the APN-241 navigation ground map radar
    to improve aircrew survivability and weapon system reliability. Also in
    the combat search and rescue area we are beginning the upgrade of the
    forward-looking infrared for the HH-60G helicopter fleet.
        AFRC equipment is compatible to support all applicable Air Force
    missions. One exceptional highlight is the 10 WC-130H aircraft at
    Keesler Air Force Base, MS soon to be replaced by 10 WC-130J models.
    These aircraft and crews are specially trained and equipped to
    penetrate severe storms while collecting and transmitting data to a
    special ground station. The extensive meteorological data necessary to
    track and forecast the movement of these severe storms requires a
    dedicated aircraft with special equipment and crew. Conversion to the
    WC-130J should be completed in 2002.
        There are 52 O/A-10 aircraft assigned to the Air Force Reserve
    inventory. Plans call for upgrading all A-10 aircraft with the revamped
    precision engagement program that will incorporate Situational
    Awareness Data Link, targeting pods, and smart weapons capability. This
    precision engagement modification, with its major upgrade in
    communications, is a key stepping stone that will be key to keeping the
    current ground attack fighters (F-16, F-15E and A-10) compatible with
    the next generation of information intensive ground attack system, the
    Joint Strike Fighter.
        AFRC's 70 KC-135E/R aircraft provide about 13 percent of the Air
    Force's KC-135 aerial refueling capability. In an effort to increase
    reliability and sustainability, the Air Force began a KC-135 engine
    retrofit in 1996. There are 16 AFRC KC-135E aircraft requiring upgrades
    to the KC-135R configuration.
        In addition, modernization of the avionics and navigation systems
    on all Air Force KC-135 continues, including those in the AFRC
    inventory. Called Pacer CRAG (compass, radar, and global positioning
    system), the project provides for a major overhaul of the KC-135
    cockpit to improve the reliability and maintainability of the
    aircraft's compass and radar systems.
        The project also meets the congressionally-mandated requirement to
    install the GPS in all Defense Department aircraft. As an added safety
    measure for formation flying, a traffic collision avoidance system
    (TCAS) will be installed. TCAS will give pilots the ability to actively
    monitor other aircraft and will provide advance warning of possible
    mid-air collisions.
        In 2002 we will continue to work closely with Air Mobility Command
    to finalize the Air Staff led Mobility Tiger Team beddown plan for the
    C-17 aircraft and establish viable, long-term replacement missions for
    our C-141 locations. Currently our C-141s are scheduled to leave the
    inventory starting in fiscal year 2004. AMC is working hard to ensure
    Reserve mobility experience is preserved and follow-on missions for
    these units is a top priority. A great deal of work remains to be done
    and senior leaders at Air Force Reserve Command are engaged at every
    level. Already funding has been secured to ensure our C-141 manpower is
    retained; operation and maintenance dollars will follow once
    replacement missions are finalized in the 2004 program.
                                  new missions
        In the 21st century, the U.S. Air Force anticipates deriving its
    strength from the flexibility and diversity of its integrated active
    duty, Air Force Reserve, and Air National Guard more than ever before.
    Optimum use of Air Force component resources is critical in providing
    the complete potential of American aerospace power. Future campaigns
    will include new ways to optimize the Active, Reserve, and Guard
    components to make the best use of our resources and people and to
    build on a foundation of high standards and strong cooperation among
    the components.
        September 11 attacks have brought homeland security to the
    forefront with the publication of Executive Order 13228 establishing
    the Office of Homeland Security. Total Force components are being
    called upon to counter a new class of foreign and domestic terrorist
    threats with both defensive and offensive actions. Air Force Reserve
    Command has begun the process of identifying and coordinating the
    extent of its role and participation in homeland defense. Among
    foreseeable needs relating to this vital mission are augmentation of
    existing security forces, firefighters, and home station operational
    support personnel, both full-time and traditional Reserve.
        Both AFRC and Air Force Space Command (AFSPC) see space as a
    growing mission area in which AFRC can help support Department of
    Defense and national requirements. To that end we will maintain our
    work with AFSPC in the determination of long-range plans in space
    operations and support. We currently provide over 8 percent of total
    Air Force Space Capability and have the capacity to contribute even
    more with this growing mission.
        Our 310th Space Group at Schriever AFB, Colorado provides direct
    warfighter support to 14th Air Force at Vandenberg AFB, California. In
    addition, many AFRC squadrons and units have been established within
    AFSPC to provide full mission support, including satellite operators
    that provide support for Global Positioning System and Defense Support
    Program surge requirements.
        The 6th Satellite Operations Squadron, the only unit-equipped space
    squadron in AFRC, operates the Defense Meteorological Satellite Program
    in support of both the Commerce Department and the National Oceanic and
    Atmospheric Administration.
        Full- and part-time operational augmentation to the Space-Based
    Infrared Radar System at Buckley AFB, Colorado, the Satellite
    Operations Center at Vandenberg AFB, California, and the 17th Test
    Squadron at the Space Warfare Center at Schriever AFB, Colorado, round
    out our current involvement in the space mission area. As we develop
    our synergistic relationship with AFSPC, we continue to look at
    additional mission area projects for potential implementation.
        AFRC has one existing Air Operations Center (AOC) supporting
    organization--the 701st Combat Operations Squadron, March AFB,
    California. This unit represents approximately 33 percent of the
    current AOC units, with Active component units in Korea and Germany,
    and Air National Guard units in Missouri and New York. Plans for at
    least three additional AOC units are projected for fiscal year 2002 and
    beyond, with one additional tasking for an AFRC organization. All
    command and control units will provide equipment and/or manning support
    for an eventual 19 AOC units for aerospace command and control
    operations worldwide. Eventual crew and equipment standardization will
    promote effective aerospace command and control in the United States
    and abroad.
    Final Thoughts
        The Air Force Reserve supports the Air Force mission to defend the
    United States through control and exploitation of air and space by
    providing global reach and global power. As we have repeatedly
    witnessed, the Air Force Reserve Command plays an integral role in the
    day-to-day Air Force mission and is not a force held in Reserve for
    possible war or contingency operations.
        The events of September 11 clearly changed our normal manner of
    business as we continue to fulfill the needs of our Nation, maintain
    our increased vigilance, and prepare for the unexpected. As we are
    presented with new and challenging missions, I remain confident in the
    tremendous capabilities of reservists to measure up to the task.
        While this new mission activity continues, we need to keep our
    focus--assess the impact of stop loss on our operations, provide
    adequate funding for continuing activations, and keep an eye on
    sustaining our recruiting efforts. The challenge will be to retain our
    experience base and keep our prior service levels high.
        Based on the actions of reservists over the past year and
    especially since September 11, I'm sure the challenge will be met by
    the outstanding men and women assigned to Air Force Reserve Command. It
    is these hardworking, professional, and patriotic individuals who are
    the heart and soul of the command. Our accomplishments during this past
    year are the accomplishments of everyday Americans who are proud to
    serve.
        In summary, Air Force Reserve Command is committed to meeting our
    people, readiness and modernization challenges, to 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 subcommittee once again for your
    assistance in making us part of the world's best air force, the USAF. I
    appreciate the opportunity to meet with the subcommittee today to share
    my views with you, and I look forward to answering any questions you
    might have for me.

        Senator Cleland. Thank you very much, General.
        General McCarthy.

      STATEMENT OF LT. GEN. DENNIS M. McCARTHY, USMCR, COMMANDER,
                         MARINE FORCES RESERVE

        General McCarthy. Mr. Chairman, thank you. I join my
    colleagues in saying thanks for the opportunity to appear this
    morning, and even more importantly, for the consistent support
    that your committee has provided.
        Like everyone else, I am enormously proud of the people
    with whom I serve. The marines and sailors and Marine Forces
    Reserve have really stepped up to the plate during this
    emergency, but they have not done anything that they really
    were not doing very well before this really critical period
    began.
        I am also proud of the way our Commandant and our Corps
    have used the Marine Forces Reserve--in my judgment, exactly
    right. We are a combat unit force, and he has resisted some
    pretty heavy pressure to start breaking that force up and
    piecemealing its employment. The fact is, it remains a force in
    readiness for whatever the future role will bring.
        There are two issues that I wanted to highlight from my
    prepared remarks, and the first has to do with medical care.
    The committee made great progress last year, I believe, in
    working a provision to help Reserves who were leaving active
    duty to transition back to their private health care, and that
    is an important step forward, but as I think the committee has
    recognized since Operation Desert Shield and Operation Desert
    Storm, the Reserve components of all of the services have been
    used in a dramatically different way.
        We have more and more Reserve members, Guard members who
    are flowing back and forth between Active and Reserve service,
    repeatedly changing their status for relatively brief periods
    of time. The model of our health care system simply does not
    support that. We need some kind of a portable system that will
    ensure that a marine and his or her family are protected as
    they move back and forth and transition from Active status to
    Reserve and back again.
        I would also echo the point that Admiral Totushek made
    about TRICARE for our service members, and in our case
    primarily Active component members who support the Reserve
    around the country and depend on the TRICARE remote system.
    Every place I go, I talked to people about that. That remains a
    real constant source of concern for marines and sailors who are
    assigned around the country.
        The other point I would like to make dovetails to your
    discussion with earlier panels on the Montgomery GI Bill. The
    Montgomery GI Bill is and can be a powerful tool for retention.
    I have suggested several times, and I do so in my prepared
    testimony, that you to consider expanding the way that is
    applied to the Reserve.
        Right now, you have to enlist in the Reserve for 6 years of
    Active service in order to be entitled to the Montgomery GI
    Bill provisions. We would ask that you expand that so that a
    young man or woman who enlists in the Reserve for 4 years of
    Active service followed by 4 years in the Individual Ready
    Reserve (IRR) could also qualify for the Montgomery GI Bill.
        It would be revenue-neutral. It does not cost any money. We
    would simply spread the available benefit to a wider group of
    marines, and I think that would have tremendous benefit for us
    as we go through the process of retaining and recruiting men
    and women for this force. Those two points are important. There
    are obviously others, but I stand by to try to respond to any
    questions you may have.
        [The prepared statement of Lieutenant General McCarthy
    follows:]
            Prepared Statement by Lt. Gen. Dennis M. McCarthy, USMCR
        Chairman Cleland, Senator Hutchinson, and distinguished members of
    the subcommittee, it is my privilege to report on the status and the
    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 subcommittee for its continued support. Your efforts reveal not
    only a commitment for ensuring the common defense, but also a genuine
    concern for the welfare of our marines and their families.
                                 current status
        The Marine Corps Reserve continues to make an extraordinary
    contribution at home and abroad, most evident now during this time of
    crisis. With Reserve personnel reporting daily on active duty orders,
    by the end of February we are projecting the number of Marine
    reservists activated in support of the global war on terrorism at
    nearly 5,000. From provisional security platoons manning the fence line
    at the U.S. Naval Base, Guantanamo Bay, to a reaction force ready to
    respond to terrorist attacks on American soil, the men and women of
    your Marine Corps Reserve are ready, willing, and able to answer the
    call to duty.
        The terrorist attack on the World Trade Center had a direct and
    personal impact on the Marine Corps Reserve. Two heroic marines,
    Gunnery Sergeant Matthew Garvey and Corporal Sean Tallon, both members
    of FDNY, made the ultimate sacrifice when the buildings collapsed
    during their desperate efforts to save others. The Secretary of the
    Navy awarded both marines the Navy and Marine Corp Medal, posthumously,
    for their extraordinary heroism.
        Today we have 172,600 marines in the Active component and another
    39,558 in the Selected Marine Corps Reserve (SMCR). This force can be
    expanded by drawing from the 60,000 marines who serve in the Individual
    Ready Reserve (IRR). As an integral part of our Total Force, Reserve
    Marines augment and reinforce the Active component by performing a
    variety of missions in wartime and in peacetime. The missions assigned
    to our Reserves in the global war on terrorism are a clear reflection
    that Marine Forces Reserve (MARFORRES) possesses capabilities across
    the full spectrum of military operations.
            - Two provisional security platoons have relieved two Fleet
            Anti-terrorism Support Team (FAST) platoons of the security
            mission at U.S. Naval Base, Guantanamo Bay.
            - Marine Heavy Helicopter Squadron (HMH) 772 will be deploying
            its CH-53s and personnel with the 24th Marine Expeditionary
            Unit.
            - 2nd Battalion, 23rd Marines and 2nd Battalion, 25th Marines
            will act as ready reaction forces in support of homeland
            security.
            - Civil affairs and intelligence detachments are augmenting I
            and II Marine Expeditionary Force (MEF) staffs, along with
            detachments from our MEF Augmentation Command Elements.
            - 25th Marines regimental headquarters, HMH-769, and
            detachments from Marine Aerial Transport Squadrons 234 and 452
            are providing much needed operational tempo relief for our
            Active Component Forces. The mobilization of our Reserves for
            the global war on terrorism has been a very deliberate and
            prudent process. The Commandant of the Marine Corps, General
            Jones, has stressed the need to scrutinize and validate every
            request for Reserve support. The priority mission for the
            Reserve is to augment and reinforce the operating forces;
            therefore, the Marine Corps must be judicious in committing its
            Reserves to ``other'' missions.

        The partial mobilization authorized by President Bush gave the
    Marine Corps full access to the IRR. This pool of trained and
    experienced Reserves has always been particularly important to the
    Marine Corps to fill critical individual augmentation requirements. We
    have attempted to activate marines most ready and willing to serve in
    order to avoid, as much as possible, disrupting the lives of our IRR
    members and their families. Our Reserve Career Management Team added a
    database link to their well-established website for individual Reserves
    to identify themselves and their skills and their availability for
    activation. The database has been used to assess individuals with
    specific skills and fill validated requirements.
        Our close partnership with the U.S. Navy has been evident in the
    mobilization process. When two platoons from Company B, 1st Battalion,
    23rd Marines were mobilized in early November, their Navy Reserve
    Program Nine corpsmen were mobilized on the same timeline and deployed
    with the marines to Guantanamo Bay. This success from one of our first
    unit activations has carried over to subsequent activations and is
    directly attributable to the close coordination of our marines and
    their Navy counterparts. Also, for the first time we have activated the
    Medical Augmentation Program, which provides active duty Navy personnel
    to support certain SMCR units.
        The ability of the Reserve to rapidly mobilize and integrate into
    the Active component in response to the Marine Corps' operational
    requirements is a tribute to the dedication, professionalism, and
    warrior spirit of every member of Marine Forces Reserve. Our future
    success relies firmly on the Marine Corps' most valuable asset--our
    marines and their families.
        One of our top concerns is the provision of an affordable health
    care benefit for Reserve Marines as they transition to and from periods
    of active duty, which we believe is necessary to support the increased
    use of the Reserve. Switching into and out of TRICARE clearly adds to
    the burdens the families bear when the Reserve member is called away.
        We need your continued support to attract and retain quality men
    and women in the Marine Corps Reserve. While we experienced a surge in
    prior service recruiting after September 11, the recruiting challenge
    remains. This year our prior service recruiters were integrated with
    Marine Corps Recruiting Command, which has always had our non-prior
    service recruiting mission, to provide more synergy in our overall
    recruiting effort. Our mission is to find those potential marines who
    choose to manage a commitment to their family, their communities, their
    civilian careers, and the Corps. While such dedication requires self-
    discipline and personal sacrifices that cannot be justified by a drill
    paycheck alone, adequate compensation and retirement benefits are
    tangible incentives for attracting and retaining quality personnel.
        During the past fiscal year we achieved 102 percent of our
    recruiting goals for both prior service and non-prior service marines.
    It was not easy! Our retention rates for Reserve enlisted marines who
    stay beyond their initial obligation are also improving. We do,
    however, still have some work to do in keeping non-prior service
    Reserve Marines in a satisfactory participation status for the full
    length of their obligated drilling commitment. The incentives provided
    by Congress, such as the Montgomery GI Bill (MGIB) and the MGIB Kicker
    (Kicker) educational benefits, enlistment bonuses, medical and dental
    benefits, and commissary and PX privileges, have helped us to attract
    and to retain capable, motivated, and dedicated marines, which has
    contributed to the stability of our force.
        The MGIB and the Kicker, which provide up to $600.00 per month for
    college, are our most popular incentives. But, they compete with more
    lucrative educational enticements offered by the National Guard. I
    appreciate the additional MGIB funding Congress provided in fiscal year
    2001. It expanded our ability to offer the Kicker to more marines in
    critical billets and it helped to level the field of competition
    between the Guard and the Reserve component.
        Many of our Reserve marines serve initially in the Active
    component, and we staff transitional recruiting stations at Marine
    Corps bases and stations to begin the prior service recruiting process
    before marines leave active duty. Congressional support for increased
    educational benefits and reenlistment and affiliation bonuses in fiscal
    year 2001 helped us attract these marines to join and to stay in our
    units. During that year, not only did we exceed our enlisted accession
    goal, but unit attrition decreased by 2 percentage points to 27.1
    percent, well within our target range.
        The Marine Corps Reserve today is a daily use force, not just
    dedicated solely to supporting a Major Theater of War effort. Our
    contribution to Total Force requirements, measured in terms of work-
    days, has doubled from an average of 150,000 work-days per year, to
    well over 300,000 in recent years. This fiscal year, the Marine Corps
    Reserve is assuming the marine portion of the United American States
    (UNITAS) deployment around South America, a major OPTEMPO relief
    effort. The goal is to assign the UNITAS deployment to the Reserve
    every other year. We are using the Reserve for manpower augmentation to
    Active and Reserve staffs, units, and exercise forces by providing
    short-term and full-time 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 OPTEMPO relief operations, Joint and Combined Exercises,
    and essential combat, combat support, and combat service support
    training. To meet Total Force training and support requirements
    sufficient funding in Special Training and ADSW-AC is critical.
        Maintaining overall SMCR end strength at 39,558 (including 2,261
    Active Reserves) will ensure 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. The
    current Marine Forces Reserve Force structure also reflects a small
    tooth-to-tail ratio with a minimal number of active duty personnel in
    support of a majority of deployable warfighters.
                           future roles and missions
        As directed by QDR-01, we are participating in the comprehensive
    review of Reserve Forces. In the process we will look at possible new
    missions and organizations for our Reserve Force to better integrate
    with the Active component in support of our new National Military
    Strategy. We conducted a similar internal review in 2001 at the
    direction of our Commandant. Regardless of what changes may result, we
    know that certain challenges will remain.
        Our future commitments depend on our marines to be ready, willing,
    and able to respond quickly to contingencies worldwide, as they have
    thus far in the war on terrorism. The value of the Marine Corps Reserve
    has always been measured in our ability to effectively augment and
    reinforce the Active component. Accordingly, all operational units of
    the SMCR have been assigned to a unified combatant commander and
    apportioned to each commander in chief (CINC) for 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 marry up with Maritime Prepositioned Shipping
    equipment. These facts clearly demonstrate how important the Marine
    Corps Reserve is to the total Marine Corps planning effort.
        The demands of the global war on terrorism will increase
    operational challenges and amplify the need to effectively resource the
    Marine Corps Reserve. Congressional support for increased use of the
    Reserve has been a key element in providing OPTEMPO relief to the
    Active Forces, and we seek your continued support. 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.
        Our Commandant has made it clear that combat readiness and personal
    and family readiness are inseparable. We are aggressively working to
    strengthen the readiness of our marines and families by enhancing their
    quality of life (QOL). Our many Marine Forces Reserve Marine Corps
    Community Services (MCCS) programs and services are designed and being
    developed to reach all marines and their families regardless of
    geographic location; a significant and challenging undertaking
    considering the geographic dispersion of our marines and their families
    throughout the U.S. and Puerto Rico. One area I'm particularly proud of
    is our Marine Corps Family Team Building program. During the past 3
    years we have made a considerable commitment and investment in
    building, training, and supporting family readiness teams--comprised of
    marines and volunteers--at sites and units across the force. In short,
    these teams are vital to our family readiness efforts prior to, during,
    and after a deployment or mobilization. Our other MCCS programs include
    chaplain delivered retreats; physical fitness and healthy lifestyle
    programs; children, youth, and teen support; and continuing education
    programs just to name a few. Much work remains to extend MCCS programs
    and services to our unique force, but even today MCCS is positively
    impacting our mobilization readiness.
        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 5,750 funerals in 2001 and we
    project to support approximately 7,000 funerals this year. The
    authorization and funding to bring Reserve marines on active duty to
    perform funeral honors has particularly assisted us at sites like
    Bridgeton, MO, where we perform several funerals each week. We
    appreciate Congress exempting these marines from counting against
    active duty end strength. Furthermore, as a result of the increase in
    funeral honors, we have realized increased operations and maintenance
    costs associated with vehicle maintenance and fuel for transportation
    of funeral honors duties and for the cleaning and maintenance of dress
    uniforms. Continued support for military funeral honors funding, in our
    Military Personnel and Operation and Maintenance accounts, is critical
    to ensuring mission success in this most worthwhile endeavor.
        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 who remain affiliated. The
    CMT staff provides record reviews and counseling, offers career
    guidance, and communicates 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 ADSW opportunities using the Reserve Duty
    On-Line (RDOL) database. RDOL replaces the Reserve Career Management
    Support System and allows units to advertise billet vacancies and ADSW
    opportunities and provides units with online visibility of marines who
    are actively seeking Reserve career options. RDOL will also be the
    linchpin in our effort to leverage the civilian job skills of our
    marines. We want to stratify the IRR to tap into skills not associated
    with traditional Marine Corps military occupational specialties but
    needed for special assignments. The RDOL will include the capability to
    capture and maintain data on civilian job skills, as well as allowing
    Reserve marines to identify their periods of availability.
        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.'' The Marine For Life program has entered the formal
    acquisition process and initial opertional capability with at least 50
    hometown links across America will be achieved by summer 2002.
        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 Reserve Order Writing System (ROWS),
    fielded just last month, which integrates our orders request and
    writing systems and facilitates reconciliation of funding obligations,
    thereby expediting orders and travel processing for our Reserves coming
    on Active duty. We actively participate in development of the Total
    Force Administration initiatives, a Marine Corps program to update and
    further automate our Manpower Management System.
        The U.S. Navy continues to directly support MARFORRES personnel
    readiness by providing over 2,700 medical, dental, religious, and naval
    gunfire support staff. I enthusiastically support the Navy plan to fund
    a full 15-day annual training for these sailors in fiscal year 2002 and
    out. Our joint training is essential to the successful accomplishment
    of our training and operational mission.
                                    summary
        The Marine Corps Reserve is ready, willing and able to answer our
    Nation's call to duty in the global war on terrorism, as has been so
    well demonstrated by the mobilization and integration of Reserves into
    the Active component. Our greatest asset is our outstanding young men
    and women in uniform. Your consistent and steadfast support of our
    marines and their families has directly contributed to our success. The
    Marine Corps appreciates your continued support and collaboration in
    making the Marine Corps and its Reserve the Department of Defense model
    for Total Force integration and expeditionary capability.

        Senator Cleland. Thank you all very much for your
    testimony.
        Mr. Duehring, obviously we have had some challenges here.
    When we call up reservists to do active duty around the world,
    Lord knows, in today's unstable environment one can go anywhere
    at any time. Is the Department of Defense working on a Reserve
    benefits package, and if so, what are the benefits you are
    considering? We have heard challenges about health care and
    portability.
        Mr. Duehring. We have done quite a bit since this began.
    Some of the programs were started prior to September 11. The
    TRICARE guidance that we gave out was that you can qualify for
    TRICARE if you are on active duty for 30 days or more, TRICARE
    Prime if it is over 179 days, and so we gave guidance to our
    people that when you call people up, when you mobilize them, we
    recommended a year. That gives us some options, some time to
    work at least. It made those people and their families eligible
    to use the TRICARE system.
        We also waived the annual deduction of $300 for those who
    were in TRICARE Prime. We waived the nonavailability statement
    for in-patient care outside of military treatment facilities
    and authorized up to a 15 percent payment greater than what
    TRICARE normally would authorize if you were using a doctor or
    facility that did not normally take TRICARE. We were trying to
    encourage these other facilities to accept our people.
        We put together a mobilization guide that is now available
    on the Internet, so we do not have to worry about distributing
    it through normal means. In fact, I saw it printed out, and it
    was about this thick. It was just about the size of these
    testimony papers here, which our folks can access and use in
    preparation for mobilizing.
        We have a family tool kit that is again about this same
    size, that answers a lot of the questions that the spouses may
    have about their family members, about where they go for help.
    We have a wonderful family support center program that is
    working very well, I think. They are coming to our offices in
    the Pentagon, and we are recognizing the work they have done to
    help our folks out.
        I cannot go very far without talking about ESGR, Employer
    Support for the Guard and Reserve. We have about 35 people in
    this office working as hard as they can, with so many of the
    employers around the country, and helping them. We have a team
    of about 3,600 volunteers, 250 of whom are trained ombudsmen
    who will actually go out into the workplace and work some of
    the problems whenever they are identified to us. They can call
    a 1-800 number, they can e-mail, any way they wish, and we will
    actually get involved in the individual cases as a result.
        I did a survey yesterday because I knew we would be here
    today talking about this. I said, what are you hearing about
    complaints, what are the phone calls telling you? They said, we
    are not getting any, and I said, come on, you have to be. After
    6 months in this program, you have to be getting complaints.
    They said, not really. We are not getting many complaints at
    all.
        I said, if you have to pick one area where you were still
    having some problems, what would it be? They said, well, we get
    most of our calls actually from Federal Government agencies
    that are losing their people and needing help and asking how we
    make this transition.
        So the program has been very effective. We have about 94
    companies we have identified that are giving differential pay
    incentives. We have a study ongoing talking about the medical
    program, how to make that more seamless, how to make that
    transition. We have another study we are doing on how to make
    the transition from the Reserve life into the active duty phase
    more seamless.
        Right now, we think there are 32 different ways to come on
    active duty, and that is just far too complex. These folks have
    been helping us tremendously by identifying the problems, and
    we have quite a number of different programs underway to try
    and resolve them.
        Senator Cleland. Thank you very much for your testimony.
    Thank all of you for coming today. Thank you for waiting, and
    the subcommittee is adjourned.
        [Questions for the record with answers supplied follow:]
                   Questions Submitted by Senator Max Cleland
                                    dacowits
        1. Senator Cleland. Dr. Chu, women serve very important roles in
    all of our Armed Services. Today, they comprise about 14.6 percent of
    our military personnel. Over the years, the Defense Advisory Committee
    on Women in the Services, commonly referred to as DACOWITS, has given
    the Secretary of Defense valuable advice on issues concerning our
    female service members. We have recently received letters from
    constituents expressing concern about the future of DACOWITS, and
    recent press reports indicate that some groups have urged that the
    charter for DACOWITS not be renewed. What is your view on the value of
    the service of our female service members and of DACOWITS' role in
    advising the Secretary of Defense?
        Dr. Chu. Women service members are an integral and valued part of
    our team. We anticipate no changes to long-standing policies that have
    provided women service members with unparalleled opportunities to serve
    and succeed. Our commitment to them remains steadfast.
        For the past 50 years, DACOWITS has functioned as an important
    advisory committee to inform the Secretary of Defense and military
    service leadership on matters affecting women service members. It has
    also been an important forum for surfacing the issues and concerns of
    the women of the Armed Forces. We are committed to ensuring the voices
    of the women of the Armed Forces continue to be heard.

        2. Senator Cleland. Dr. Chu, do you support renewing the charter
    for DACOWITS?
        Dr. Chu. On March 5, 2002, the Department announced a reconstituted
    role for DACOWITS. The committee will be revitalized to make it more
    relevant, efficient, and effective. The new charter will focus the
    activities of the committee to provide recommendations with regard to
    recruiting and retaining highly qualified professional women while
    continuing to consider their treatment, employment, integration, and
    well-being. Under its new charter, the committee's focus will also
    include making recommendations on how to improve conditions for those
    who serve and their families.

                               vaccination policy
        3. Senator Cleland. Dr. Chu, both the House and Senate have had
    great interest in the Department's policy for vaccinating military
    personnel against anthrax. This committee held several full committee
    hearings where commanders testified that this was a force protection
    issue and they strongly encouraged support for the policy that required
    vaccination of all service members. The assessment that the threat of
    the use of anthrax was real was born out by the release of anthrax
    right here in the Senate Hart building. Despite testimony from the FDA
    and Service Surgeons General, some groups objected to the policy,
    claiming that the vaccine produces an unacceptable level of adverse
    effects. The Department was forced to curtail the anthrax vaccination
    immunization program because it was running out of FDA approved
    vaccine. Now that the FDA has approved the license for the manufacture
    of anthrax vaccine, the supply of approved vaccine has greatly
    increased. Is the Department going to reinstate its previous policy
    requiring the vaccination of all service members, or adopt some
    different policy?
        Dr. Chu. The Department of Defense is evaluating policy options to
    determine the most appropriate anthrax vaccine policy in response to
    what we all now know is a very real threat. Once the Secretary has
    determined the anthrax vaccination policy we will notify Members of
    Congress. Our primary concern is the health and safety of our men and
    women in uniform.

                               army end strength
        4. Senator Cleland. Mr. Brown, the Army Reserve and the Army
    National Guard have made it clear that their number one readiness issue
    is full-time manning. The Army developed an 11-year plan for gradually
    increasing the number of military technicians and Army Guard Reserves
    (AGRs) to gradually reach a minimally acceptable level of full-time
    manning. Last year, the administration's legislative proposal didn't
    provide for the first year's increase in these personnel, but we fixed
    that in our authorization bill by authorizing the personnel increases
    to meet the plan's first year full-time manning goals. Does the
    Department's budget proposal for fiscal year 2003 provide for the
    second year of the Army's 11-year plan? If not, why not?
        Mr. Brown. The fiscal year 2003 budget submission does not support
    increasing the Reserve component full-time manning program during
    fiscal year 2003 and fiscal year 2004 due to more pressing funding
    priorities. The Army recognizes and supports the critical issue of
    full-time manning for the Reserve components. We have resourced
    additional full-time manning to support the 11-year plan in fiscal
    years 2005-2007.

        5. Senator Cleland. Dr. Chu, we continue to hear that our Armed
    Forces are stretched to the limit; that we do not have enough military
    personnel. Did any of the services propose increases in their Active
    duty end strengths for fiscal year 2003, and what is your view of the
    need for such increases?
        Dr. Chu. In their fiscal year 2003 budget requests, the services
    all expressed their views that additional military manpower is required
    to fight the war on terrorism and perform associated force protection
    responsibilities. In particular, the Marine Corps requested 2,400
    additional military members to stand up an expeditionary brigade
    focused on providing a proactive anti-terrorism capability. This
    increase was included in our budget request. While we believe that, in
    isolation, many of the services' requests have merit, the Secretary is
    concerned that many, if not all, of these emerging missions can be
    satisfied by redirecting military manpower from lower priority
    requirements.
        To achieve the Secretary's objective, the Department has initiated
    several studies that will evaluate overseas presence, re-examine
    missions and military engagements worldwide, exploit technology, and
    capitalize on our ongoing efforts to streamline headquarters and
    identify workloads that do not require active duty military personnel
    for conversion to civilian or commercial performance. We expect these
    studies to be completed by late summer. We are confident that the
    results of these studies will help posture our military resources to
    the areas that truly require unique military skills, focusing military
    manpower on the most critical missions, while simultaneously reducing
    operations and personnel tempo.

                                 end strength
        6. Senator Cleland. Mr. Dominguez, Mr. Navas, and Mr. Brown, did
    your respective service request an end strength increase, and does your
    service have all the personnel you need to carry out all of your
    missions and not wear out your people?
        Mr. Dominguez. The events of September 11 exacerbated both our
    overall and High Demand/Low Density OPTEMPO, resulting in a higher
    steady state manpower requirement in certain specialties. While we have
    been able to meet our end strength requirements short-term through the
    partial mobilization of the Reserve components and stop-loss actions,
    these tools may affect Total Force retention down the road. We must
    plan to exit from stop loss, while also allowing our dedicated Air
    National Guard and Air Force Reserve personnel to return to their
    normal, citizen-airman roles in the future. In achieving that end,
    Secretary Rumsfeld has challenged us to pursue more innovative
    solutions to offset the need for end strength growth. We see this as
    one more dimension of our transformation effort, and are investigating
    a variety of options for shifting resources from ``tail to tooth.'' We
    are also looking at cross-leveling within our force to lessen impact on
    stressed AFSCs. These ``fixes'' will take time to develop and
    implement, however, while the stress on our force is very much here and
    now.
        Mr. Navas. My response is in two parts to address Navy and Marine
    Corps needs separately.
        Re Navy: New requirements have emerged in force protection as we
    increase our baseline posture across the Navy to the heightened
    condition of Threat Condition Bravo Plus. Nearly 4,400 additional
    personnel are required to adequately safeguard our ships and stations
    against potential terrorist attacks. The Reserve activation has gone a
    long way in helping us fill these requirements in the short-term, but
    our ability to maintain the heightened security posture will gradually
    diminish as Selected Reserves are demobilized.
        The fiscal year 2003 budget request seeks an end strength
    authorization of 375,700, while the additional AT/FP tasking increases
    our total fiscal year 2003 manpower requirement to 380,083. Congress
    has authorized the Secretary of Defense (SECDEF) to permit the services
    to over execute end strength by up to 2 percent. While the difference
    between the budget request and actual manpower requirement could be
    accommodated within SECDEF's 2 percent discretion, the cost of over
    executing end strength to meet requirements is unfunded. We continue to
    examine our manpower requirements against the existing end strength
    flexibility provided by Congress. For example, thanks to increased
    retention and reduced attrition across the board in the Navy, we have
    already been able to reduce the fiscal year 2002 accession missions by
    4,000. As retention improves, the cost of the resultant richer force
    mix will increase beyond current budget authority. When combined with
    mission driven increases in manpower execution, the estimated funding
    necessary to support Navy manning increases to $427 million.
        In keeping with Navy's longstanding deployment practices we are
    well positioned to continue to perform our mission without further
    impact on our sailors. However, while Navy will do what it takes to win
    the war on terrorism it is reasonable to anticipate a decline in the
    current strong retention rate, given the uncertainty of current and
    future extended deployments.
        Re Marine Corps: For the past decade, the Marine Corps has
    aggressively examined its force structure to ensure effective Marine
    and civilian-marine staffing in our operating forces at the level
    required by the tempo and variety of full spectrum capabilities. To
    date, we have made substantial progress in increasing the manning in
    our operating forces by shifting approximately 2,500 marines from the
    supporting establishment. However, the new security environment has
    increased our Nation's need for more Marine Corps operating forces. As
    a direct result of the events of September 11, 2001, the Marine Corps
    created the 4th Marine Expeditionary Brigade (Anti-Terrorism) (4th MEB
    (AT)). This unit was activated from existing Active-Duty Forces and has
    already been deployed to Capitol Hill (Anthrax), Incirlik (Force
    Protection), and Kabul (reactivation of the U.S. Embassy). The 4th MEB
    provides the Unified Commanders a new capability for joint force
    operations. Sustaining that new capability requires the addition of
    2,400 marines to active duty end strength, an increase in the Marine
    Corps fiscal year 2003 active manpower requirement to 175,000.
        Mr. Brown. No, the Army has not requested an increase in end
    strength in its fiscal year 2003 budget submission. Post September 11
    operations have placed increased demands on Army personnel needs. We
    have met those needs by initiating a partial stop loss, and by
    mobilizing Guard and Reserve Forces.
        Additional flexibility is provided by the Fiscal Year 2002 Defense
    Authorization Act which permits the Department of Defense to allow the
    services to exceed their end strength by 2 percent in any fiscal year
    in which there is a war or national emergency. Full allowance of this
    provision would allow the Army to increase its Active component end
    strength to 489,600. To achieve this increase, the Army would move
    forward with a ramp of 4,000 in fiscal year 2003 and 4,000 in fiscal
    year 2004 to address the most immediate needs of the war on terrorism.

                           army review boards agency
        7. Senator Cleland. Mr. Brown, the Army Board for Correction of
    Military Records was created as a fair, practical, feasible, and cost-
    effective substitute for private relief bills as a means of correcting
    errors or removing injustices in an individual's military record.
    Timely processing of applications for relief is essential. The Army has
    just recently reduced an unacceptable backlog of applications and
    reduced the time to process applications from receipt to adjudication.
    Is the Army considering a proposal to reduce the staffing for the Army
    Review Boards Agency, and if so, what measures will be taken to ensure
    that applications will continue to be adjudicated in a timely manner?
        Mr. Brown. I agree the Army Review Boards Agency has done a superb
    job of reducing an unacceptable backlog of applications and reducing
    the time to process applications from receipt to adjudication. The Army
    is considering a reduction in staffing for the Army Review Boards
    Agency (ARBA) subject to the constraint that ARBA continues to meet or
    exceed congressionally-mandated standards for processing applications.
    We are examining alternatives to see if we can continue to meet those
    standards through substitutions of technology or contracted services.
                                     ______

                   Questions Submitted by Senator Ben Nelson
                                  recruitment
        8. Senator Ben Nelson. Dr. Chu, I know that maintaining the
    personnel levels we need to conduct our missions across the world is
    difficult. It is difficult in poor economic times as well as times of
    prosperity. All of the services should be applauded for meeting their
    manpower missions last year. Have the events of September 11 and the
    wave of patriotism eased the difficulties of recruitment?
        Dr. Chu. Not much. Survey results, including our most recent youth
    poll administered in October 2001, indicate that more young people
    considered joining the military after the terrorist attacks of
    September 11, 2001, and showed an increase in propensity levels (the
    percent of young people who report they ``definitely'' or ``probably''
    will serve in a branch of the military or the military in general).
    However, hikes in propensity did not translate directly to enlistment
    contracts. In short, the recently high levels of patriotism have not
    translated to any significant increase in actual enlistments.

        9. Senator Ben Nelson. Dr. Chu, is there concern that if the
    country increases its operational commitments that the ``well will run
    dry'' with an all volunteer force?
        Dr. Chu. None of our recent studies or polls indicate that the war
    on terrorism is having a negative impact on the propensity of young
    people to enlist. We have a number of polls in place to gauge the state
    of the recruiting environment. Although propensity is no longer as high
    as it was immediately following the terrorist attacks, it remains at
    historically ``normal'' levels. Consequently, I do not anticipate that
    the recruiting ``well'' is in danger of running dry.
        We are monitoring all of the factors we measure to ensure a ready
    force, propensity of youth to serve, enlistment numbers, retention
    statistics and surveys of those who are serving, to ensure we can
    predict, and hopefully prevent, any serious downward trends. The
    nobility of military service and the patriotism and enthusiasm for
    service of our young men and women give me confidence in our ability to
    maintain the quality force we have today.

        10. Senator Ben Nelson. Dr. Chu, are the services having difficulty
    recruiting officers due to universities and colleges not allowing
    access to students on campus?
        Dr. Chu. None of the services have reported substantial difficulty
    in recruiting officers as a direct consequence of campus access issues,
    and all services are commissioning a generally adequate number of
    officers. Congress has, in statute, prohibited colleges and
    universities from barring our recruiters access to the campus and the
    students. Doing so would place the university at risk of losing their
    Federal grants and contracts.

        11. Senator Ben Nelson. Mr. Brown, the Army asked for an increase
    in end strength of 40,000 soldiers to meet its current operational
    commitment. If it were authorized, can the Army successfully recruit
    40,000 more quality soldiers?
        Mr. Brown. I am unaware the Army has asked for an increase in end
    strength. However, if it were authorized, the Army could successfully
    recruit more soldiers.

                               perstempo program
        12. Senator Ben Nelson. Mr. Navas, the PERSTEMPO program was
    designed to minimize and/or compensate over-deployed service men and
    women. The accrual of deployed days has been suspended due to September
    11, but even in peacetime more than 22 percent of the Marine Corps is
    forward deployed. How has the PERSTEMPO program affected a service like
    the Marine Corps prior to September 11, and is it a program that needs
    adjustment?
        Mr. Navas. Marine Corps and Navy agree that the PERSTEMPO program
    has created a significant administrative and management burden for
    units and their commanders. Both services believe that the program is
    not compatible with the expeditionary nature of their missions and
    therefore, it would be appropriate to consider legislative
    modifications. The Navy and Marine Corps submitted specific
    modifications to the existing PERSTEMPO for inclusion in the Secretary
    of Defense's March 2002 PERSTEMPO report to Congress.
        There is no apparent impact on the Marine Corps for several
    reasons. First, the Marine Corps did not sacrifice organizational
    stability, cohesion, and mission essential training to avoid the
    PERSTEMPO payments. Instead, the Marine Corps continued to train,
    operate, and deploy as necessary to meet its missions and support
    CINCs' requirements. Second, the Commandant assumed the responsibility
    for paying the PERSTEMPO costs as a necessary cost of our business and
    relieved commanders of this burden.
        Prior to September 11, marines were accruing PERSTEMPO for the
    first time and there was no need to transfer many marines with accrued
    PERSTEMPO to another unit, so it was only beginning to become a
    significant factor. As more marines with PERSTEMPO become eligible for
    normal reassignment, and more marines accrue more deployed days,
    PERSTEMPO will become a larger factor in personnel assignment and
    manpower management decisions.
        The existing PERSTEMPO program needs adjustment. The management and
    penalty thresholds are below our norms and inconsistent with our
    expeditionary, forward-deployed nature. Additionally, we believe that
    the $100 per day payment for members who exceed the penalty threshold
    is excessive.

                                   personnel
        13. Senator Ben Nelson. Sergeant Major Tilley, Sergeant Major
    McMichael, Master Chief Petty Officer Herdt, and Chief Master Sergeant
    Finch, if anyone on these three panels knows what our servicemen and
    women need, it is you. What aspect of the personnel area needs to be
    addressed the most? Is it inadequate or untimely healthcare, base
    housing, pay compensation...what is the feeling of our service members?
        Sergeant Tilley. The areas of concern that I hear from soldiers
    mainly focus on a comparable standard of living with the society that
    we serve. They greatly appreciate the recent increases in pay and
    housing allowances provided by Congress. Those increases are a
    tremendous step in the right direction. However, soldiers, Army
    civilians, and their families remain behind society and need your
    continued support for the plan to reach pay comparability over the next
    few years, particularly through targeted pay raises.
        The elimination by 2005 of median out-of-pocket housing expenses
    for soldiers and families receiving Basic Allowance for Housing (BAH)
    to live off post remains another high priority. The recent increases in
    BAH significantly helped; however, slightly more than one in every $10
    soldiers spend on off-post housing comes from their own pockets.
        Finally, and particularly in light of the crucial role our Reserve
    components shoulder in the war on terrorism, is employer support to the
    Guard and Reserve. We currently fight a war of unknown duration and are
    dependent upon the skills and abilities of the Reserve component
    soldiers, and their families, to win this war. I ask that you continue
    to strengthen the partnership between the employers, the Reserve
    components, and the military. Our success in so many ways depends upon
    the continued, enthusiastic support of the employers of our citizen-
    soldiers.
        Our soldiers and their families truly appreciate the improvements
    in their pay, housing, and overall well-being. We are grateful for the
    overwhelmingly positive support of the Nation. Everything I have listed
    as concerns are already being addressed--I just ask for your continued
    support for the programs already initiated.
        Sergeant McMichael. The Marine Corps continues to discuss our top
    five priorities of: pay and compensation; health care; bachelor and
    family housing; infrastructure/installation management; and community
    services. We do think that these components of QOL are interrelated and
    we cannot fund one program to the detriment of the others. We think a
    balanced approach that addresses all of these areas would be the best.
        Chief Herdt. Considering the tremendous gains that have been made
    recently in these issues, I believe that the most important issues to
    our sailors that need to be addressed are educational benefits and
    quality of work. As I stated during my testimony, educational benefits,
    including MGIB transferability options, are important to our sailors.
    Equally important to educational benefits is the need to continue
    working to improve quality of work. We must put the proper emphasis on
    sustainment, restoration, and maintenance to ensure that our service
    members are able to work in a first-rate environment, no matter where
    they are stationed.
        Chief Finch. Our February 2002 major air command quality of life
    revalidation highlighted TEMPO as the number one issue that concerns
    our people. I believe that TEMPO and necessary manpower are directly
    linked, with one significantly impacting the other. The Air Force's
    eight core quality of life priorities cover a wide spectrum of issues
    because while all are important, each individual Air Force member views
    them from a different perspective and priority. The Air Force's eight
    priorities are: necessary manpower; improved workplace environment;
    fair and competitive compensation and benefits; balanced TEMPO; quality
    health care; safe and affordable housing; enhanced community and family
    programs; and improved educational opportunities.

                             national guard funding
        14. Senator Ben Nelson. General Davis, it appears that the National
    Guard is underfunded in critical areas that directly affect the ability
    to recruit and train traditional citizen-soldiers to attain higher unit
    readiness levels in support of the war on terrorism. For example,
    annual training funds for Nebraska are more than $2 million less for
    fiscal year 2002 than fiscal year 2001. Similarly, funding for
    technical schools is down more than 23 percent from 2 years ago, and
    training days funding has been reduced by 37 percent from 2 years ago.
    In addition, key support programs such as Distributed Training
    Technology Program (DTTP) and the counterdrug program, which enhance
    training and provide a key outreach to high schools have been severely
    cut.
        How does the National Guard Bureau and the Department of Defense
    propose to restore the Army National Guard funding levels to ensure our
    traditional soldiers are fully trained and ready to fight?
        General Davis. The National Guard Bureau has developed a strong
    relationship with the Department of the Army and Department of Defense
    to identify and fund the individual training requirements of the Army
    National Guard. The Chief of Staff of the Army has directed the Army
    National Guard achieve 85 percent Duty Military Occupational Skill
    Qualification (DMOSQ) and Professional Development (PD) of assigned
    personnel by fiscal year 2005. Headquarters Department of the Army has
    resourced the ARNG to reach this goal by providing the required
    training seats, schoolhouse support, and student funding. The ARNG will
    achieve a DMOSQ rate of 75 percent in fiscal year 2002 on the ramp for
    85 percent by fiscal year 2005.

                                                       [Millions]
    ----------------------------------------------------------------------------------------------------------------
                                                                                    Fiscal Year
                                                             -------------------------------------------------------
                                                               2001    2002    2003    2004    2005    2006    2007
    ----------------------------------------------------------------------------------------------------------------
    ARNG Students...........................................   161.7   175.9   206.5   222.9   218.6   196.1   212.7
    ARNG Schoolhouse........................................    14.2    18.5    25.8    29.2    26.9    23.3    30.1
    ----------------------------------------------------------------------------------------------------------------
    Data From: PROBE PB 03--d.

                               military funerals
        15. Senator Ben Nelson. Mr. Duehring, Lieutenant General Davis,
    Major General Bambrough, Vice Admiral Totushek, Lieutenant General
    Sherrard, and Lieutenant General McCarthy, military burials are a
    service that we owe our veterans. It is a service that becomes
    increasingly difficult as National Guardsmen and reservists are called
    to active duty. Many guardsmen and reservists are involved in homeland
    defense and it is a manpower issue you juggle daily. Are we having
    difficulty providing this service and if so what solutions do you
    propose to ensure veterans in Nebraska and all over the country get the
    burial they deserve?
        Mr. Duehring. We share your concern. We inquired with the DOD
    office that has primary responsibility for military funeral honors, and
    were advised that none of the services have reported any difficulty in
    providing military funeral honors. During a time of mobilization, the
    area of responsibility for units not mobilized increases to cover the
    area of responsibility for mobilized units. This is a total force
    mission supported by all Active, Guard, and Reserve components. The
    Department is determined that every request to provide military funeral
    honors for a veteran is fulfilled.
        According to the Veterans Administration where the Department of
    Defense obtains veteran demographic data, approximately 670,000
    veterans and retirees died in calendar year 2001. The Department
    supported military funeral honors for 93,000 veterans whose family
    requested honors. The number of veteran deaths is expected to increase
    each year and peak in 2005 at approximately 687,000. The increase in
    veteran deaths will make providing military funeral honors more
    challenging.
        One of the provisions of Public Law 106-65, the National Defense
    Authorization Act for Fiscal Year 2001, was to provide the services
    with a way to augment the mandatory two uniformed person detail. This
    provision in law indicated that ``The remainder of the detail (two-
    person) may consist of members of the Armed Forces or members of
    veteran organizations or other organizations approved under regulations
    prescribed by the Secretary of Defense.'' To implement this provision,
    in August 2001, the Department of Defense initiated the Authorized
    Provider Partnership Program (AP\3\). The AP\3\ allows military units
    to train volunteers to assist with the rendering of funeral honors and
    the adding of additional elements to the funeral service. Additional
    elements consist of firing party, bugler, color guard, pallbearers, and
    may assist in folding the flag. This program is still very new and
    growing.
        General Davis. Yes, the Army National Guard (ARNG) is having
    difficulty in trying to maintain and sustain the growing mission of
    performing funeral honors. As an example, the ARNG performed 18,770
    honors in calendar year 2001 (35 percent of Total Army). This number is
    an increase of 25 percent over the 14,976 honors rendered in calendar
    year 2000. The ARNG continues to render honors at the same rate of
    demand. In calendar year 2003 and beyond, additional funding has been
    authorized for this program at sufficient levels to cover the estimated
    costs and growth of the program. The use of soldiers in an Active Duty
    for Special Work (ADSW) status would provide a stable workforce with
    benefits and entitlements not provided to those soldiers performing
    military funeral honors for a short duration, inactive duty status. In
    addition, we propose contracting state coordinators to handle the
    increase administrative workload the program has encountered. Federal
    appropriation to match the growing requirements in this area is
    critical.
        General Bambrough. Presently, we are not having problems providing
    military funeral honors anywhere in the country due to your support.
    The Regional Support Commands have performed all funeral honor requests
    tasked to them by the Casualty Area Commands. As long as we have
    adequate funding to bring reservists on Active Duty for Special Work to
    perform funeral honors, we can fully support all funeral honors
    requirements.
        Admiral Totushek. I agree that providing funeral honors is a
    service that our Nation's veterans deserve. The Naval Reserve is not
    having a problem supporting these efforts at this time, and I do not
    see any problem in the near future.
        General Sherrard. At this time, all military funeral commitments
    are being met, although the demands of the mobilization have
    complicated the matter to a degree. The HQ USAF Services Directorate
    (AF/ILVS) continues to work with the Air Force Reserve to utilize non-
    mobilized Reserve members in man-day status to augment military funeral
    teams around the country. The Air Force Reserve also supports the AF/
    ILVS initiative to have major commands create full-time personnel
    authorizations for burial detail teams, which should offer some relief
    from multiple Reserve component funeral taskings.
        General McCarthy. The Marine Corps has not encountered difficulties
    to date in providing funeral honors. Upon mobilization of Marine Corps
    units, a site support section, the Peacetime/Wartime Support team is
    also mobilized, and they assume the duties of the active duty staff at
    the site. They are capable and prepared to provide funeral honors in
    the absence of the Reserve unit.

                fiscal year 2003 budget for active duty benefits
        16. Senator Ben Nelson. Mr. Duehring, Lieutenant General Davis,
    Major General Bambrough, Vice Admiral Totushek, Lieutenant General
    Sherrard, and Lieutenant General McCarthy, does the fiscal year 2003
    budget reflect the activation of our reservists and National Guardsmen
    to receive active duty benefits?
        Mr. Duehring. All members of the Reserve components receive
    ``active duty benefits'' if they are mobilized. The fiscal year 2003
    budget makes no distinction between active duty and reservists called
    to active duty. However, the budget request does not reflect all of the
    costs associated with the current call-up. This is the reason for the
    supplemental currently under consideration within the Department.
        General Davis. The Army and Air Force fiscal year 2003 budgets
    include active duty benefits for those reservists and National
    Guardsmen who are activated for planned deployments during the fiscal
    year. Unforeseen activations would pay for active duty benefits out of
    Emergency Relief Funds, Defense (ERF-D) that would be released to cover
    necessary requirements.
        General Bambrough. The budget request does reflect the pay,
    allowances, and other benefits for activated Army reservists under the
    Military Personnel, Army account. This is not included in the Army
    Reserve portion of the budget, since activated reservists are place on
    active duty under U.S.C. Title 10, Section 12302.
        Admiral Totushek. The services' fiscal year 2003 military personnel
    budget requests do not reflect the activation of our reservists and
    National Guardsmen to receive active duty pay and allowances. However,
    the Defense Emergency Response Fund (DERF) appropriation submission is
    part of the fiscal year 2003 President's budget request to Congress.
    Activated reservists would be funded out of this transfer account.
        General Sherrard. The fiscal year 2003 President's budget
    submission for the active Air Force does not include any funding for
    Reserve and Guard activation. Instead, the Air Force submitted the
    requirement ($4.9 billion) to OSD as part of the fiscal year 2003
    Unfunded Priority List. That request included funding for pay and
    allowances.
        General McCarthy. No.
                                     ______

                 Questions Submitted by Senator Strom Thurmond
                    junior reserved officers training corps
        17. Senator Thurmond. Dr. Chu, Junior Reserved Officers Training
    Corps (JROTC) is an extremely important program to me. JROTC not only
    enhances good citizenship, but has an extremely positive impact on our
    Armed Forces. In fact, in a letter I received from General C.C. Krulak,
    then Commandant of the Marine Corps, he aggressively endorsed the JROTC
    program by stating, ``I can think of nothing that helps instill the
    virtues of honor, courage, and commitment in our young people more than
    this program. As we seek to identify and develop young men and woman of
    character, this program does it all.''
        The Fiscal Year 2002 Defense Authorization Act eliminated the cap
    of 3,500 JROTC units to allow for greater participation throughout the
    Nation's high schools. However, it has come to my attention that many
    schools have been on the waiting list since the mid-1990s and have come
    no closer to realizing the goal of obtaining a JROTC unit. What can be
    done to help these schools so that they too can benefit from the JROTC
    program in the future?
        Dr. Chu. Several years ago when the ceiling on JROTC units was
    first elevated to 3,500, the Department funded an expansion to reach
    that number by 2007. This is the level we have programmed and are
    committed to attaining. Since fiscal year 2000, we have opened 472 new
    units and have almost 700 schools on waiting lists which we now are
    prioritizing in a way that would distribute units across the Nation in
    an equitable way, including geographical equity.

        18. Senator Thurmond. Dr. Chu, it is my understanding that many
    schools on the waiting list are still there due to an ``equal
    geographical distribution'' clause within the current law. I personally
    feel that we should spread this outstanding program to every corner of
    the Nation. Nevertheless, many schools are still waiting years for a
    unit while other schools can obtain a unit within 1 year due to this
    clause calling for geographical distribution. Would you support an
    exception to the ``equal geographical distribution'' rule allowing
    schools that have been on the list for more than 5 years to receive a
    unit?
        Dr. Chu. There are many schools in ``over-represented'' states with
    currently-approved applications which, owing to that over-
    representation, are relatively lower priorities. Placing those with 5
    years on the waiting list at the top of the priority scheme would have
    the effect of pushing those in under-represented states down the list,
    delaying our ability to, as you say, ``spread this outstanding program
    to every corner of the Nation.''

        19. Senator Thurmond. Dr. Chu, if not, would you consider some
    other exception that would provide an opportunity for schools that have
    been on the ``waiting list'' for extended times to receive a JROTC
    unit?
        Dr. Chu. The means to preserve geographical diversity as a
    priority, while reducing wait lists, rests with an increase in the
    number of units. However, I believe the Junior ROTC program is
    prudently funded and properly scoped to recognize Defense interests.

                        reserved officers training corps
        20. Senator Thurmond. Dr. Chu, I find it disheartening that Harvard
    University, a center known for free speech, would prohibit the posting
    of fliers that endorse or even support our Armed Services. An October
    4, 2001, article in the Wall Street Journal detailed many difficulties
    faced by a Harvard ROTC recruiter. Specifically, the article stated,
    ``When he wants to send a flier, he can't visit Harvard and stuff
    mailboxes. Last year, he used $500 from the ROTC budget to mail
    information to about 1,600 freshman--while permitted student groups
    including the Bisexual, Gay, Lesbian, and Transgender Supporters
    Alliance, the Harvard Boxing Club, and the Harvard Global Peace Project
    can all solicit free.'' Many of these schools receive millions of
    dollars in Federal funds each year. I find it troubling that schools
    that benefit from Federal funds can deny our military access to their
    campuses. How can a school prevent our Nation's military recruiters
    from posting fliers on campus or placing fliers in mailboxes while they
    allow other campus organizations to do so?
        Dr. Chu. Although there was a conflict with one of the mail-outs at
    Harvard last year, the specifics were not exactly as represented in
    this article, and the Army reports that the situation was resolved
    without the expenditure of ROTC funds. That solution included a change
    that will prevent such conflicts in the future. Recent actions by the
    leadership of Harvard indicate good support of the ROTC program, and
    the Army reports that it is pleased with its current relationship with
    university leadership.
        More generally, current statute (10 U.S.C. Sec. 983) and policy (32
    CFR 216) provide excellent tools for the Department to deal with
    problems. For example, current policy establishes that the ROTC
    department must be treated on a par with other academic departments and
    may not be singled out for unreasonable actions that would impede
    access to students (and vice versa) or restrict ROTC operations. Any
    professor of Military, Aerospace, or Naval Science who finds that a
    school impedes such access is obligated to notify the school of the
    problem and to request remediation. Should a school fail to meet access
    standards, it would subject itself to the penalties set forth in the
    statute.

        21. Senator Thurmond. Dr. Chu, what action would be appropriate to
    assure recruiters access to campuses in the future?
        Dr. Chu. The application of current law and policy are powerful
    enough to ensure access to college campuses, as evidenced by the fact
    that no schools are presently in violation of the standards. We are
    grateful to Congress for the statutes presently in place, and believe
    we have the tools necessary to sustain appropriate access for military
    recruiters.

                         prohibition of rotc on campus
        22. Senator Thurmond. Dr. Chu, it has come to my attention that
    certain institutions of higher education have prohibited the Reserved
    Officers Training Corps (ROTC) from participating on their campus for
    more than 3 decades. Harvard, Yale, Brown, Columbia, and Stanford are
    among the institutions that restrict ROTC from participating on their
    campuses. According to Title 10 U.S.C. 983, the Secretary of Defense
    can deny certain funds to an institution of higher education that
    denies ``the Secretary of a military department from maintaining,
    establishing, or operating a unit of ROTC at that institution.'' In
    your December 18, 2001, response to my letter of November 19, 2001, to
    Secretary Rumsfeld, you stated that schools such as Yale, Harvard,
    Brown, Stanford, and Columbia are partnered with other universities to
    accommodate its ROTC cadets. According to the statute, the denial of a
    unit's operation or maintenance is a violation of Title 10. Is
    requiring cadets at Yale to drive 75 miles to the University of
    Connecticut at Storrs for class and drill preventing the operation of a
    unit at Yale?
        Dr. Chu. To be in violation of current law (10 U.S.C. Sec. 983), a
    university must ``prohibit or effectively prevent'' its students from
    participating in an ROTC program. The services report that the present
    arrangement is satisfactory, particularly given the alternative--
    drawing additional strength from operating forces to establish
    additional ROTC detachments. But I am pleased to report that Army ROTC
    plans to open a satellite unit (using its University of Connecticut
    ROTC staff) at Sacred Heart University during the forthcoming school
    year. Located near Yale, that satellite unit will serve roughly six
    colleges or junior colleges in Southwest Connecticut, and will be
    intermittently manned as needed to carry out the program using ROTC
    staff from the University of Connecticut. We will continue to monitor
    this issue carefully.

        23. Senator Thurmond. Dr. Chu, according to the Wall Street Journal
    article mentioned previously, Harvard alumni donors pay $150,000 a year
    to Massachusetts Institute of Technology (MIT) for overhead costs for
    training Harvard ROTC cadets. If we cut the funding from a
    participating school, would this be violating Title 10?
        Dr. Chu. We have no present intention of cutting funding for those
    schools.

        24. Senator Thurmond. Dr. Chu, additionally, in Harvard's case, if
    they cut the alumni support and Harvard does not fund the ROTC cadets
    that travel to MIT would Harvard be violating Title 10?
        Dr. Chu. To the extent the situation you describe prevents the
    enrollment of students in ROTC, it probably would represent a violation
    of the statute. But we look at each case individually.

                        survey on policies and practices
        25. Senator Thurmond. Dr. Chu, in your December 18, 2001, response
    to my letter regarding the ROTC program at various universities, you
    mentioned that you have contacted 23 schools notifying them that they
    may be in conflict with the statute. Now that these schools have had
    more than 30 days to respond and define their policies and practices, I
    ask that you provide me your findings and conclusions.
        Dr. Chu. The 23 schools I mentioned were all law schools. Each
    received a letter advising of the potential violation of campus access
    standards. Of those, two requested and received extensions for their
    response. One reply initially appears to rise to the level of a
    violation, and Army is developing the case for review by my office. Of
    the remaining 20 law schools, 8 did not respond and 12 responded in
    ways short of acknowledging that their present policies are not in
    compliance with the law. These 20 schools will receive a second letter
    shortly, which will specify the events or situations which have led to
    their inclusion on this list. Each will be provided an additional 30-
    day period to rebut those specifics, consistent with policy codified at
    32 CFR 16. If a school fails to reply, or if that reply does not
    persuade the affected service of the school's compliance with statutes,
    the cases will be forwarded to the Assistant Secretary of Defense
    (Force Management Policy) for disposition consistent with present law
    and policy. Our due process requires that the affected service document
    their case and the school's position and forward through the Secretary
    of the Military Department to Assistant Secretary for Force Management
    Policy. I will be pleased to keep you abreast of further developments
    as they occur.

                    nomination and promotion review process
        26. Senator Thurmond. Dr. Chu, I have been closely monitoring the
    promotion of Colonel Robert P. Smart to Brigadier General for several
    years. Colonel Smart is a member of the South Carolina National Guard.
    He is respected and supported by his peers in the State as well as
    leadership in the National Guard Bureau. It is my understanding that
    his package has successfully passed through all the necessary channels
    in the Department of the Air Force with the recommendation to proceed.
    It was sent to your office for final approval before forwarding to the
    White House. It appears that your office sent it back to the Department
    of the Air Force due to an unsubstantiated allegation that has been
    thoroughly investigated previously. This is yet another delay in
    Colonel Smart's promotion that I feel is unwarranted due to the
    investigations that have already taken place. Can you assure me that
    Colonel Smart's promotion package will be reviewed in a way that will
    not incur any additional unnecessary delays in the hopes that the
    United States Senate can vote on his, and all other candidates for
    promotion, in an expeditious manner?
        Dr. Chu. We can assure you that the Department's nomination and
    promotion review processes ensure a careful review of all relevant
    matters pertaining to the recommended nomination of a general or flag
    officer. Colonel Smart's nomination package, which includes reported
    substantiated adverse information, is being thoroughly reviewed to
    ensure that decision-makers at all levels within DOD have access to all
    pertinent information so they can make informed recommendations to the
    Secretary of Defense as to the fitness of Colonel Smart for promotion
    to brigadier general.

                               military funerals
        27. Senator Thurmond. Mr. Brown, Mr. Navas, and Mr. Dominguez,
    according to a February 11, 2002 article in the Wall Street Journal,
    roughly three-quarters of all funerals for veterans do not have a
    bugler to play Taps. As stated in the article, these funerals play a
    recording of Taps instead of a live bugler. Accordingly, with nearly
    580,000 veterans expected to pass away this year, only 174,000 will be
    honored with a live bugler. I am confident that you agree with me that
    we should afford the men and women who fought for this Nation the
    dignity of a bugler. After contacting several military bases in South
    Carolina, I discovered that nearly 90 percent of the time the casualty
    affairs office did not have a bugler to play Taps. Do you agree that we
    should do better for our Nation's veterans?
        Mr. Brown. We should do all we can within our means to honor our
    Nation's veterans. Based on congressional guidance, the Army has taken
    the necessary action in our Disposition of Remains program to expand
    the North Korea recovery operations. In fiscal year 2001, the Army
    implemented instructions, established requirements, and funded a
    military burial honors entitlements for all veterans. The burial honors
    program provides for the rendering of the final tribute and
    reorganization to our Nation's veterans in a very important tradition.
    This program has received positive feedback from veteran's families and
    friends. The Army continues to work diligently to ensure that all
    veterans receive the services and entitlements that were promised. The
    Department of the Army is committed to recognizing our Nation's
    veterans.
        Mr. Navas. We can and should always strive to do better for the men
    and women who served this country. Of all the military bugle calls,
    none is so easily recognized or more apt to render emotion than Taps.
        Despite our desire to provide buglers for our fallen sailors, there
    are factors that stand in our way. Navy has only 93 billets for
    buglers, 75 of which are in the continental United States. These are
    assigned primarily to fleet concentration areas such as Norfolk and San
    Diego as well as to Washington, DC. In calendar year 2001, Navy
    provided funeral honors for 17,580 sailors (an average of 48 per day)
    across the United States. The limited availability of buglers in
    relation to the sheer number of funerals and possible locations
    precludes our providing a bugler in response to every request for
    funeral honors.
        Mr. Dominguez. While all veterans are entitled to funeral honors,
    not all veterans request them. For example, out of 627,000 eligible
    veterans and retirees in DOD who passed away in calendar year 2001,
    only 93,000 families requested funeral honors (a 15 percent request
    rate). A live bugler performed Taps at approximately 17,700, or over 19
    percent of the funerals we supported; military buglers from military
    bands supported 13,000 (14 percent of the total) while civilian buglers
    supported 4,700 (4 percent of the total by contract, and 1 percent by
    Veteran Service Organizations, or VSOs). About 74,400 funerals (80
    percent of the total) used a high-quality CD recorded version of Taps.
    For the remaining 1 percent of the funerals, a live bugler was not
    available and the families declined the offer of the recorded version
    of Taps.
        We agree that a quality bugler, especially a military member, is
    better than using a recorded version. However, DOD cannot support more
    funerals with military buglers because we do not have dedicated funeral
    detail buglers. Military buglers do funerals in addition to their
    normal duties in military bands. In calendar year 2002, we expect
    approximately 635,000 veterans and retirees to pass away; within the
    Air Force, though, we have a total of only 86 trumpeters assigned to
    our various bands. To cover the shortfall, we encourage our bases to
    engage with their local veteran service organizations to determine if
    and when they can provide buglers. In addition, some Air Force
    installations are pursuing contract buglers.

        28. Senator Thurmond. Mr. Brown, Mr. Navas, and Mr. Dominguez, what
    steps have you taken to assist base Casualty Affairs Officers in their
    efforts to create local networks with civilian and local schools to
    provide civilian buglers for military funerals?
        Mr. Brown. The Casualty Affairs Officers continue to work with
    organizations, such as Veteran Service Organizations, the Retired
    Officers Association, the Non-Commission Officers Association, and
    other local civilian organizations to ensure that they are kept
    informed of items of interests such as the burial honors programs. The
    Casualty Affairs Office provides monthly updates of all ongoing search
    and recovery missions and other events of interest to the families in
    the local communities. The Casualty Affairs Office continues to work
    with funeral directors to ensure that information is being publicized
    to the families concerning burial entitlements, thereby addressing the
    burial honors. The Casualty Affairs Office contacts the music
    departments at local colleges and universities for musicians to play
    Taps at the veterans' funerals. The Army is in the process of
    establishing a resource pool to provide buglers for veterans' families
    who request a live bugler.
        Mr. Navas. Navy efforts have been directed to strengthening the
    partnership with Veteran Service Organizations (VSOs). Our Regional
    Casualty coordinators have refocused their efforts to strengthen the
    ties and provide training to the VSOs in the prescribed manner of
    conducting funeral honors. While this has helped in finding escorts for
    the services, these efforts have paid limited dividends in providing
    buglers for the funerals.
        We are continuing to evaluate the possibility of partnerships with
    local schools; however, our Regional Coordinators have met with mixed
    responses from the school officials. While all recognize the importance
    of paying tribute to our Nation's veterans, school officials are
    understandably concerned about student time away from school,
    particularly when the vast number of funerals occur during the school
    week during school hours.
        There are also significant concerns about transportation to and
    from the funeral sites and liability associated with such travel.
    Significant complicating factors emerge when funerals occur in
    extremely remote areas where the student may be required to travel
    significant distances, in some cases justifying overnight stays, which
    would entail lodging expenses and the need for parental supervision.
        The services would also lack the ability to ensure quality control
    in terms the students rendering of the tribute, appropriate attire and
    decorum, and timely arrival at funeral sites, again a significant
    challenge in remote areas of the country.
        Mr. Dominguez. The Air Force funeral honors units are working with
    their local Veteran Service Organizations to determine if and when they
    can provide buglers. Many bases have had bad experiences with high
    school and Junior ROTC buglers not being qualified to play a quality
    version of Taps; therefore, they look to college bands, and local city
    bands for the availability of more experienced buglers. We continue to
    encourage the use of good civilian buglers.

        29. Senator Thurmond. Mr. Brown, Mr. Navas, and Mr. Dominguez,
    would you consider creating a small fund to allow Casualty Affairs
    Officers to advertise to create networks or pay transportation costs or
    other unforeseen costs that would increase the likelihood of providing
    a live bugler instead of a recording of Taps at military funerals?
        Mr. Brown. The Army is currently reviewing the resources it would
    take to provide buglers for burial honors. Currently there are only
    approximately 500 buglers in the service, which is insufficient to meet
    all the burial honor requests received. The Army is reviewing options
    to deal with these requests.
        Mr. Navas. If the present rate of mortality of veterans continues,
    the potential cost of such a program might exceed $50 million per year.
        For example, with 580,000 funerals per year, and the services
    providing currently providing buglers for approximately 174,000 of
    them, 406,000 would require contracted or commercial service. Several
    of our Regional Coordinators have started small pilot programs for such
    contracts with preliminary costs for the rendering of Taps and
    associated cost running at nearly $125 per service. Associated costs
    include such things as travel to and from the funeral site, which take
    place throughout the United States, lodging, and in some cases laundry
    services due to inclement weather or the environment in which the
    funeral occurs (410,000 funerals X $125 = $50,750,000/year). If such a
    program were instituted the Regional Coordinators would be responsible
    for the quality and dignity of the service provided.
        Mr. Dominguez. Some Air Force installations are pursuing contract
    buglers now. For example: Patrick and MacDill Air Force Bases share a
    contract where they pay $135 for each detail. This is an unprogrammed
    expense that most bases just cannot afford. The Air Force would
    willingly pursue more civilian buglers if the resources were made
    available.

                               milcon and housing
        30. Senator Thurmond. Sergeant Major Tilley, Sergeant Major
    McMichael, Master Chief Petty Officer Herdt, and Chief Master Sergeant
    Finch, Congress, in particular the Armed Services Committee, has in the
    past years made the adequacy of military housing and the working
    conditions of our military personnel an area of particular interest.
    Due to this interest, we increased funding for military construction
    and family housing. I would like your views on whether or not we are
    getting the desired results. If not, what do you consider the most
    critical shortfall in these areas?
        Sergeant Tilley. The outlook for eliminating inadequate Army family
    housing is extremely bright. The original goal was to eliminate all
    inadequate family housing by fiscal year 2010. However, The Department
    of Defense accelerated that goal to fiscal year 2007. The Army has
    programmed additional funding in fiscal years 2005 to 2007 to meet this
    goal. This acceleration is contingent upon congressional support in the
    fiscal years 2005 to 2007 budget cycles for increased Army Family
    Housing funds. This additional funding, along with the privatization of
    family housing on certain installations and the elimination of excess
    housing will enable the Army to meet this new goal. The results can be
    seen in the increasing number of housing improvement projects which
    will continue to ramp up over the next 5 years.
        The Army is committed to completing its permanent party barracks
    modernization program by fiscal year 2009. The buyout slipped from
    fiscal year 2008 because the Fiscal Year 2002 Defense Appropriations
    Act eliminated the centrally managed Barracks Upgrade Program (BUP),
    and reallocated the requested Operation and Maintenance Army (OMA)
    funds to the Army Major Commands (MACOMs). The Army will try to recover
    in future budgets, but it will be difficult without congressional
    support for a centralized OMA funded BUP program.
        Our military construction budget request will fund our highest
    priority facilities and family housing requirements. In fiscal year
    2002, the Army presented a budget that was a down payment on our goal
    to better support our infrastructure. The fiscal year 2003 Army budget
    provides the required funding to continue our commitment of eliminating
    all inadequate family housing by 2007 and upgrade barracks by 2009.
        Sergeant McMichael. We are seeing the desired results. Marines and
    their families are much more optimistic about their future. Family
    housing, bachelor housing, and operational construction have finally
    become visible on Marine Corps installations. This is primarily due to
    our healthy fiscal years 2001 and 2002 construction programs. Although
    our fiscal year 2003 program is not as large as our 2002 program, it
    does provide urgently needed bachelor quarters, operational and
    readiness necessities, and family housing.
        In the area of family housing, new or replacement construction or
    renovation work is underway through public-private ventures (PPV) or
    traditional military construction at the following locations: Camp
    Lejeune, Cherry Point, Camp Pendleton, Twenty-nine Palms, Yuma, Hawaii,
    Iwakuni, 8th & I, and MCRD San Diego. Demolition of older, excess,
    deteriorated homes is underway now at MCB Quantico and other demolition
    is planned for MCSA Kansas City and Barstow. PPVs will be awarded
    within the next 12 months at Stewart, NY, and Beaufort Parris Island,
    SC, which will not only eliminate all the inadequate housing at both
    locations, but will also provide recreational and community support
    facilities needed to create ``complete communities.'' Our fiscal year
    2003 budget request supports continuation of these critical efforts.
        Top line constraints over most of the last decade forced us to
    defer investment in areas that did not have an immediate impact on
    near-term readiness, such as investment in military construction,
    family housing, and maintenance of our existing facilities. We
    sustained our combat readiness at the expense of construction because
    we had no other option. Our most critical requirement and challenge is
    to maintain the funding levels we have achieved in the past 2 years.
        Chief Herdt. Yes, we are starting to see significant improvements
    in this area. Public private ventures, combined with Military
    Construction enhancements are starting to pay dividends in improved
    housing for our personnel. While we are making tremendous progress,
    there is still a strong need for continued support for government owned
    and leased military family housing. The BAH is based on median housing
    costs and does not provide sufficient compensation for every Navy
    family to obtain housing in the private sector. Owned and leased family
    housing is a necessity to suitably and affordably house many of our
    Navy families because of private sector housing shortfalls in
    surrounding communities. We are on track to eliminate approximately
    28,000 inadequate homes that were on our roles at the beginning of
    fiscal year 2001. Military family housing is, and will continue to be
    essential for acceptable quality of life for sailors.
        Our PPV program for Military Family Housing projects continues to
    develop and create more opportunities for military families to reside
    in quality, affordable housing. We continue to increase the number of
    homes we can improve for the same money using leveraged savings of PPV.
        Chief Finch. The welfare of our people is critical to overall
    readiness and is vital in our efforts for recruiting and retention.
    Congress' efforts in improving family housing and in fixing our
    facilities are a major part of the welfare and we are seeing good
    results. The Air Force continues to pursue improvements in all of our
    core quality of life priorities; necessary manpower; improved workplace
    environments; fair and competitive compensation and benefits; balanced
    tempo; quality healthcare; safe, affordable housing; enriched community
    and family programs; and enhanced educational opportunities.

                            reserve differential pay
        31. Senator Thurmond. Mr. Duehring, as you no doubt recall, Section
    512 of the 1996 Defense Authorization Bill created a Mobilization
    Income Insurance Program. This legislation was designed to address the
    income disparity many of our reservists face when mobilized.
    Unfortunately, the program failed and we still have no system in place
    to address income disparity despite the fact that this problem
    continues to financially harm many reservists. In fact, I recently met
    a Mobilized Marine Corps reservist who is facing potential financial
    problems for a second time due to mobilization. To avoid bankruptcy,
    this reservist is selling his wife's new car and exhausting all of his
    civilian job leave to continue receiving pay to compensate for the pay
    loss. Has the Department considered revisiting the issue of the
    Mobilization Income Insurance Program and if not, what assistance can
    we provide the individual reservist?
        Mr. Duehring. I share your concern about the severe economic impact
    mobilization may have on some Reserve families. We continue to assess
    the impact of involuntary call-ups on reservists and will consider any
    support programs that make sense and are cost-effective. We are
    especially concerned about the impact on reservists who are self-
    employed or small business owners.
        As you may be aware, the Department's previous efforts to establish
    an effective mobilization insurance program to address the income and
    business losses sustained by many Reserve members as a result of their
    mobilization during Operation Desert Storm met with a decided lack of
    success. There were a number of factors that led to the decision to
    terminate the program within a year of its implementation. First and
    foremost, the program was not self-sustaining as originally intended,
    partially because the timing of the implementation coincided with a
    decision to extend support operations in Bosnia. Also, enrollment
    remained low and because of the timing, there was extremely high
    adverse selection. There was insufficient time to effectively market
    the program to the Reserve community and more importantly no time to
    build up a mobilization fund before benefit payouts were due. As a
    consequence, the program experienced a significant loss the first year
    of operation and failed to provide an effective mechanism for
    addressing some reservists' concerns about income disruption. Any
    replacement program, at a minimum, would have to require sufficient
    participation to spread the risk; be designed to minimize adverse
    selection; and have a stable funding base. This would almost mandate a
    compulsory or involuntary program and assured funding beyond the
    premiums collected from participants--conditions that DOD does not feel
    would be acceptable at this time.
        With this experience, the Department would like to consider
    alternative approaches, such as the possibility of some form of debt
    management. This type of approach might feature provisions that would
    allow for debt restructuring or deferment of principal and interest
    payments on preexisting debts. Similar features are included in a bill
    introduced in the Senate, S. 1519, which would amend the Consolidated
    Farm and Rural Development Act to provide farm credit assistance for
    activated reservists, and the policy implemented by the Department of
    Education, which provides relief on Federal loans held by student-
    reservists who are called to active duty in support of the war on
    terrorism. A program that focuses on pre-service debts may prove to be
    a more efficient means of addressing the specific income problems of
    Reserve component members and could overcome some of the major
    shortcomings of the mobilization insurance program--specifically
    providing for means testing and limiting relief to those who experience
    a significant reduction in income. However, this approach would not be
    without some impact on financial institutions in the private sector. We
    are prepared to work closely with Congress on any possible options to
    resolve this important issue of income loss.

                              travel compensation
        32. Senator Thurmond. Mr. Duehring, I am aware that an active duty
    member assigned to a duty station for 180 days or greater automatically
    receives a permanent change of station or PCS move. This PCS move
    entitles an active duty military member to bring his dependents and
    automobile among other things, if applicable and appropriate. I am
    informed, however, that a Reserve military member, on the other hand,
    is not entitled to a PCS move when mobilized for the same period. As
    you are aware, in many cases, reservists are mobilized to backfill
    positions when active duty members are forward deployed. Obviously,
    beyond the emotional strain such a system places on a military
    reservist, this disparity in treatment further financially harms
    Reserve members who must pay transportation costs for their spouses as
    well as rental car costs and other assorted costs. Do you agree that we
    should eliminate this disparity?
        Mr. Duehring. The Joint Federal Travel Regulations, which govern
    both permanent duty travel and temporary duty travel, specify that a
    Reserve component member is entitled to a permanent change of station
    move if the period of service is for 20 weeks (140 days) or more.
    However, to provide the services with flexibility during this
    mobilization and in order to accommodate unique circumstances a
    reservist may face if mobilized, the Department issued the following
    guidance:

              In the case where the reporting location is not within
            commuting distance of the member's home of record, the Service
            Secretary may, IAW Section U7150, paragraph A4 of the JFTR,
            call the member to active duty in a temporary duty status, so
            long as the order states the call to active duty is in a
            temporary duty status.
              In the event orders move individuals or the entire unit to a
            location away from the reporting location, such orders will
            normally indicate temporary duty status. Per diem will be paid
            in accordance with the JFTR.

        While the standard remains to provide a permanent change of station
    move when a Reserve component member is mobilized, the flexibility
    authorized in this policy guidance allows the Service Secretary to
    retain the member in a TDY status--which entitles the member to per
    diem in addition to his or her normal pay and allowances--when it is
    determined that this is in the best interest of the reservist. We are
    not aware of any situations in which the services have been
    inappropriately applying this authority to the disadvantage of the
    reservist.

                               full-time support
        33. Senator Thurmond. General Davis, General Bambrough, General
    Sherrard, and General McCarthy, this committee has shown a great deal
    of interest in full-time support. In the Fiscal Year 2002 National
    Defense Authorization Act, we took a very positive step by authorizing
    increases in both Active Guard Reserve and military technicians. Were
    adequate funds appropriated to support those authorizations? If not,
    what is the unfunded requirement?
        General Davis. The Army National Guard received authorized end
    strength increases in Full-Time Support in the Fiscal Year 2002
    National Defense Authorization Act of 724 Active Guard Reserve and 487
    Military Technicians. The Army National Guard received an increase of
    $24.7 million in the National Guard Personnel, Army appropriation that
    fully supported the authorized increase of 724 Active Guard Reserve
    personnel. The increase in the Operations and Maintenance, Army
    National Guard appropriation was $11.2 million. This increase did not
    fully support the authorized increase of 487 Military Technicians. The
    unfunded requirement to fully support the fiscal year 2002 authorized
    military technician increase is $2.4 million, however, the Army
    National Guard has adjusted hiring plans to execute the increased
    authorization with funds appropriated.
        General Bambrough. The Army Reserve is grateful for the increase in
    full-time support in fiscal year 2002; however, adequate funds to
    resource the hiring of the 250 increased Military Technicians
    authorized were not funded. The executable resources necessary to
    support these authorizations is $8 million in Operations and
    Maintenance, Army Reserve funds.
        Funds were provided for the fiscal year 2002 increase in AGR
    authorizations; however, the sustainment of the previously authorized
    13,106 soldiers had a shortfall of $20 million in Reserve Personnel,
    Army funds coming into the fiscal year. We have been able to reduce the
    shortfall to $15.9 million in Reserve Personnel, Army funds by slowing
    permanent change of station moves and reducing the program's overall
    average strength.
        General Sherrard. The Air Force Reserve was funded for the
    additional AGRs at the appropriate rate for additive personnel (half
    year funding). We thank you for your support.
        General McCarthy. The fiscal year 2002 RPMC appropriation was
    sufficient to support fiscal year 2002 Reserve manpower authorization
    of 39,558, including 2,261 Active Reserve. An unfunded requirement does
    not exist.

                               incentives program
        34. Senator Thurmond. General Davis, General Bambrough, General
    Sherrard, and General McCarthy, incentives are a necessary recruiting
    tool to attract and maintain quality soldiers. Have you been adequately
    resourced in the Incentive Program in fiscal year 2003? If not, why
    not?
        General Davis. Yes, the Army National Guard's (ARNG) Incentive
    Program is fully funded in the fiscal year 2003 President's budget and
    programmed adequately for the out years. Continued congressional
    support for incentives is essential to attracting potential members and
    retaining quality soldiers.
        General Bambrough. No, Senator, the Army Reserve has not been
    adequately resourced for the Incentives Program in fiscal year 2003. As
    a result, the Army Reserve remains $19.0 million short of validated
    requirements in Reserve Personnel, Army funds. There is an overall
    shortfall in resourcing the Army Incentive Program and the Army
    resourced all its components at the same level to share the shortfall.
        General Sherrard Frankly, the Air Force Reserve has historically
    initiated the majority of its incentive offerings initially ``out-of-
    hide'' because the lead time to program and budget for requirements is
    so long. Fiscal year 2003 is a case in point. We would like to offer
    selective reenlistment bonuses to more categories of personnel than we
    are fiscally able to do so. We would also especially like to offer
    retention incentives to personnel past the 16-year point, but recognize
    this will require enabling legislation.
        General McCarthy. During fiscal year 2001 the Marine Corps received
    a congressional enhancement of $3.3 million, provided to attract and
    retain quality marines. Correspondingly, Reserve unit attrition
    declined by 2 percent. The decline in attrition experienced in fiscal
    year 2001 suggests that incentive programs improve retention. The
    fiscal year 2003 funding level for the incentive programs are
    consistent with that in fiscal year 2002.

                               full-time support
        35. Senator Thurmond. General Bambrough, we understand the Army is
    supporting an increase in full-time support, both Active Guard Reserve
    and Military Technicians, to improve Army Reserve unit readiness. What
    is the annual requirement to support the ramp?
        General Bambrough. The fiscal year 2003 ramp for both Military
    Technicians and Active Guard Reserve is currently unfunded. The
    validated annual ramp for the Army Reserve is 300 Active Guard Reserve
    soldiers and 250 Military Technicians. For fiscal year 2003, the
    requirement is $11.4 million in Reserve Personnel, Army funds for the
    active Guard Reserve and $8.0 million in Operations and Maintenance,
    Army Reserve funds for the Military Technicians ramp.

        36. Senator Thurmond. General Bambrough, is the ramp supported in
    the fiscal year 2003 Department of Defense budget?
        General Bambrough. The fiscal year 2003 ramp for both Military
    Technicians and Active Guard Reserve is currently unfunded. The
    validated annual ramp for the Army Reserve is 300 Active Guard Reserve
    soldiers and 250 Military Technicians. For fiscal year 2003, the
    requirement is $11.4 million in Reserve Personnel, Army funds for the
    active Guard Reserve and $8.0 million in Operations and Maintenance,
    Army Reserve funds for the Military Technicians ramp.
                                     ______

                   Questions Submitted by Senator John McCain
                                 end strength
        37. Senator McCain. Dr. Chu, Sergeant Major Tilley, Sergeant Major
    McMichael, Master Chief Petty Officer Herdt, Chief Master Sergeant
    Finch, Major General Bambrough, Vice Admiral Totushek, Lieutenant
    General Sherrard, and Lieutenant General McCarthy, more than a year
    ago, servicemen and women were promised that the frequent number of
    deployments that they became all too familiar with during the Clinton
    administration would ease and the number of worldwide commitments would
    be reduced. I am told that most of the services feel that has not
    happened to the extent promised and may have even worsened because of
    ongoing war operations. While all support the budget recently
    submitted, privately all the services admit they need additional end
    strength to get the job done. In fact, one service has told me that
    they may need as many as an additional 42,000 service members. Do you
    have any comment on the need for additional servicemen and women?
        Dr. Chu. We are examining how to meet these requirements from two
    perspectives: the   near term and longer range. This issue is one of
    the most pressing challenges facing the Department, and is receiving
    our close attention.
        Sergeant Tilley. Post September 11 events have increased demands
    placed on the force. Our Total Army Analysis process will help
    determine the size and composition of the Army within the budget.
        The immediate solution for the war on terrorism was the
    mobilization of our magnificent Army National Guard and Army Reserve
    soldiers and the implementation of ``stop loss'' for selected skill
    sets. The performance of these soldiers has been exemplary, but these
    are temporary measures, not a long-term solution.
        Chief Herdt. With our high reenlistment and recruiting levels over
    the past year, the Navy appears to be in good position to maintaining
    the right force size. While we continue to examine our evolving
    manpower requirements, it appears that we will be able to execute our
    mission within the existing end strength flexibility provided by
    Congress.
        Chief Finch. Necessary manpower is a quality of life factor that we
    added to our list in recent years. The demands to support both current
    contingencies and homeland defense have required us to take a hard look
    at our force structure. Even with improved recruiting and retention we
    are still short of our actual requirement as outlined by the mission
    demands. The bottom line is that we don't have the people or the
    resources to perform all the missions our Nation asks of us.
        General Bambrough. The Army Reserve is an essential provider of
    training and support units and individuals to our Army. We currently
    have 12,609 reservists mobilized to support Noble Eagle and Enduring
    Freedom operations. In addition, we along with the rest of the Army
    have also been supporting smaller scale contingencies. The Army Reserve
    is experiencing pockets of stress, particularly in high demand career
    field such as Civil Affairs and Military Police. With the strategy
    coming out of the Quadrennial Review, the evolving global war on
    terrorism, the emerging requirements for homeland security and the
    Secretary of Defense's Active and Reserve Component Mix study still
    ongoing, it is difficult to know how what end strength is required to
    reduce these pockets of stress.
        Admiral Totushek. Yes, as a result of the events of September 11,
    Navy has increased Naval Reserve end strength in support of new
    requirements for Anti-Terrorism/Force Protection (AT/FP) and Mobile
    Inshore Undersea Warfare (MIUW) units. The Naval Reserve feels
    confident that it will be able to achieve this end strength and sustain
    AT/FP missions in fiscal year 2003 through change of rate programs,
    retraining trained personnel within these functional areas, and
    aggressive recruiting in the 21-25 year old market. Requests for
    supplemental funding to support AT/FP requirements have been identified
    and submitted to DON/OSD.
        General Sherrard. SECDEF has challenged us to pursue more
    innovative solutions to offset our need for additional manpower
    requirements for homeland security, anti-terrorism and force protection
    for the Total Force as a result of Operations Enduring Freedom and
    Noble Eagle. The AF Reserve has documented an additional requirement
    that is part of the Total Force additional requirements post September
    11. Requirements are based on the new increased ``steady state''
    conditions produced by Operations Enduring Freedom/Noble Eagle.
    Increased requirements are in Security Forces, Intelligence, Office of
    Special Investigations, and other specialties. We see this as one more
    dimension of our transformation effort and are investigating a variety
    of options resourcing these requirements.
        General McCarthy and Sergeant McMichael. The Marine Corps is
    requesting an active duty end strength increase of 2,400 marines in the
    fiscal year 2003 budget to support the formation of the 4th Marine
    Expeditionary Brigade (Anti-Terrorist). Currently, the Marine Corps
    Reserve is at an appropriate end strength to fulfill its mission and
    mobilization requirements.

                              reserve deployments
        38. Senator McCain. Dr. Chu, Major General Bambrough, Vice Admiral
    Totushek, Lieutenant General Sherrard, and Lieutenant General McCarthy,
    I understand that there are over 85,000 National Guard and Reserve men
    and women supporting Operations Noble Eagle and Enduring Freedom--
    citizen solders who juggle two careers: civilian and military. Also
    included in the category of ``twice the citizen'' are the employers
    who, for no incentive that I know of, hire reservists and National
    Guardsmen and put up with monthly weekend drills, 2-week annual
    training periods, and recalls to active duty with little information on
    how long they will be away from their job. Today every single one of
    the recalled 85,000 reservists are told that they are on 1 year orders
    and may be continued for 2 years or more. It seems that the same open-
    ended deployments that the Secretary of Defense has been directed to
    end with active duty servicemembers has not been fixed and instead has
    drifted over the Reserve components. What is the plan to bring the
    reservists back home and back to their civilian jobs that they left,
    and who will replace them if we have a force structure that according
    to the services is already stretched thin.
        Dr. Chu. In the days, weeks, and months since September 11, 2002,
    our National Guard and Reserve personnel have responded immediately
    when called upon in support of Operation Enduring Freedom and Operation
    Noble Eagle. Early on, the demands to provide force protection and
    address other security needs were extremely high and significant
    augmentation by our Reserve components was necessary to meet
    operational demands and force protection requirements levied by our
    military commanders. A number of critical skills necessary to both
    force protection and prosecution of the al Qaeda exist only in the
    Reserve components. Under 10 U.S.C. 12302, there the authority is
    granted to the President to mobilize Reserve component personnel for up
    to 2 years. However, it has been the Department's policy to write
    mobilization orders for only 1 year and to direct the services to
    conduct an ongoing evaluation of the needs for continued augmentation.
        We recognize the stress this places on our reservists and National
    Guard and have, in cooperation with the Central Command, developed a
    rotation policy in order to provide a level of predictability for our
    personnel, their families, and their employers. We have sought to
    strike a balance between the needs of our theater commanders, the
    requirements to provide adequate force protection for our military
    installations, and the necessity to minimize stress on our Reserve
    component.
        The Department will continue to evaluate our mobilization policies
    in light of the various requirements and we will be proactive in the
    management of our human resources.
        General Bambrough. We do not have open-ended deployments. We order
    reservists to active duty under United States Code, Title 10, Section
    12302 for support of Operations Noble Eagle and Enduring Freedom. This
    authority allows for mobilization up to 24 consecutive months.
    Currently all Army Reserve orders are for 12 months. If circumstances
    change, it may be necessary to retain some individuals and units for
    the maximum time allowed. Once the mobilization tour has been
    completed, the soldiers will be demobilized and returned to their
    civilian employment. They will be replaced as needed by other Army
    reservists.
        Employer support is critical to the success of the Army Reserve. We
    work closely with the National Committee for Employer Support of the
    Guard and Reserve in this area.
        Our soldiers bring hometown America support for these operations.
    The American public is a vital part of these operations through that
    linkage to our soldiers. Their support connects the Army to the people
    it defends. It reminds us all of the commitment and momentum that is
    critical to successful long-term operations.
        Admiral Totushek. The mobilization of Naval reservists for the war
    on terrorism has resulted in approximately 10,600 Naval reservists
    activated in support of Operations Noble Eagle and Enduring Freedom,
    providing critical force protection, intelligence, logistics,
    meteorology, linguistics, mobilization support, and staff augmentation.
    The Navy expects to involuntarily extend some reservists with high
    demand skills beyond 365 days. The requirement to extend individual
    reservists beyond 365 days will be based on operational requirements,
    which continue to evolve. Our intent is to minimize the impact on
    individuals beyond the initial 365 day commitment. Most Reserve
    personnel currently filling requirements for Operations Noble Eagle and
    Enduring Freedom will be demobilized at the end of the year, and active
    duty personnel or other reservists will fill those requirements that
    remain valid.
        General Sherrard. The mission capability of the Reserve components
    is essential to Air Force operations around the globe and we play a
    significant role in reducing tempo for Active-Duty Forces. We still
    have a lot of work ahead of us in the war on terrorism and also here at
    home. Air Reserve component airmen are filling a sizable portion of our
    Air Expeditionary Force rotations. Subsequently, Air Force must
    continue to ensure the appropriate mix of Active Duty and Reserve
    component forces are available to meet operational requirements.
    Reserve component members will continue to be mobilized until mission
    requirements allow them to be demobilized. In fact, the Secretary of
    the Air Force has already approved some Air Force Reserve
    demobilizations. In the Air Force Reserve, we will continue to backfill
    requirements with volunteers to the maximum extent possible.
        General McCarthy. The Marine Corps was authorized by the Secretary
    of Defense to mobilize up to 7,500 reservists to support Operations
    Noble Eagle and Enduring Freedom. The Marine Corps has been very
    judicious in utilization of this mobilization authority and as of March
    27, 2002, the Marine Corps has a total of 4,455 Marine reservists on
    active duty. Additionally, we have already demobilized 66 reservists
    who are no longer needed on active duty. The Marine Corps is currently
    participating in a DOD sponsored Mid-Year Review of USMC Component
    Activations to determine whether or not further reductions can be made.
    If we need to continue to fill these billets, we will either have to
    find another ``volunteer,'' involuntarily extend the current
    individual, or find an active duty marine to fill the billet. The
    mobilization initially authorized a 1-year call up and, if required, an
    additional year.

        39. Senator McCain. Dr. Chu, Sergeant Major Tilley, Sergeant Major
    McMichael, Master Chief Petty Officer Herdt, Chief Master Sergeant
    Finch, Major General Bambrough, Vice Admiral Totushek, Lieutenant
    General Sherrard, and Lieutenant General McCarthy, is it possible that
    you may need to increase end strength at some point to replace the
    National Guard and Reserve service members who eventually will have to
    come home? If so, what options would you consider to increase our end
    strength?
        Dr. Chu. The Reserve component mobilization issue is a key element
    of our total force end strength review. In our deliberations on
    military end strength we are examining a wide variety of alternatives.
        Sergeant Tilley. Post September 11 events have increased the
    demands placed on the force.
        In 1999 the Army started using the Reserve components in the
    rotational mix in Bosnia and the Sinai to reduce Active component
    operations tempo. These soldiers have performed magnificently in these
    enduring missions. Reserve component soldiers are also supporting
    emerging, immediate missions--both for the global war on terrorism and
    homeland security. These missions, such as airport security, will
    eventually be turned over to civilian authorities. Mobilizing Reserve
    component soldiers to meet these immediate requirements is not a long-
    term solution.
        If we increase end strength, we must ensure the recruiting increase
    is achievable, the training base can meet additional requirements, and
    high standards and quality of life are maintained. All of which are
    achievable, but can't be overlooked as part of the equation.
        Sergeant McMichael. The Marine Corps is requesting an active duty
    end strength increase of 2,400 marines in the fiscal year 2003
    President's budget to establish the 4th Marine Expeditionary Brigade
    (Anti-Terrorist). No Reserve end strength increase is currently
    required.
        Chief Herdt. While determining end strength requirements is outside
    the scope of my normal duties, I do not immediately foresee the need
    for changes to the Navy's end strength. However, we are analyzing our
    long term commitments to see if requirements currently being performed
    by recalled Naval reservists can be effectively absorbed by the Active-
    Duty Force.
        Chief Finch. We've reviewed our new tasking from Operations
    Enduring Freedom and Noble Eagle in detail, and verified additional new
    requirements for Security Forces and other specialties, such as Office
    of Special Investigations and Intelligence. As an immediate fix, we
    partially mobilized a significant number of personnel from the Reserve
    and Guard Forces to help us in this area. Also, we energized the entire
    AF Team from recruiting throughout the rest of the service to enable us
    to increase the help to these stressed career fields in the future.
    Realizing the resource constraints we are facing, we have taken steps
    to help offset our increased requirement in the years ahead through new
    technology, reducing overseas taskings, etc.
        General Bambrough. We are not projecting a requirement to increase
    end strength; however, we do need additional full-time support
    authorizations and appropriations. The Army Reserve participates in
    Total Army Analysis, which is the Army's method for structuring and
    resourcing the requirements of the Combatant Commanders in Chief in
    accordance with the Secretary's Title X responsibilities. Any request
    for an increase in end strength would result from an analysis of risk
    coming from this process. The Army Reserve is a full partner in this
    process and our personnel and force structure requirements are
    incorporated by the Army.
        Admiral Totushek. As previously stated, the Navy has budgeted for
    additional Naval Reserve end strength in the fiscal year 2003 budget
    request to support requirements for Anti-Terrorism/Force Protection. In
    addition, Navy realizes that there are some high demand/low density
    mission areas that are strictly found within the Naval Reserve, that
    because of the recent events, are under review to determine the proper
    Active/Reserve mix to sustain the war effort.
        General Sherrard. SECDEF has challenged us to pursue more
    innovative solutions to offset our need for additional manpower
    requirements for homeland security, anti-terrorism and force protection
    for the Total Force as a result of Operations Enduring Freedom and
    Noble Eagle. The AF Reserve has documented an additional requirement
    that is part of the Total Force additional requirements post September
    11. Requirements are based on the new increased ``steady state''
    conditions produced by Operations Enduring Freedom/Noble Eagle.
    Increased requirements are in Security Forces, Intelligence, Office of
    Special Investigations, and other specialties. We see this as one more
    dimension of our transformation effort and are investigating a variety
    of options resourcing these requirements.
        General McCarthy. The Marine Corps is requesting an active duty end
    strength increase of 2,400 marines in the fiscal year 2003 President's
    budget to establish the 4th Marine Expeditionary Brigade (Anti-
    Terrorist). No Reserve end strength increase is currently required.

                          call to service act of 2001
        40. Senator McCain. Dr. Chu, in your written statement you briefly
    discuss the Call to Service Act of 2001. Unfortunately, you appear to
    have misunderstood the basic essence of the program. Senator Bayh and I
    envision this program not as an exact replica of existing, effective
    career military service programs, but as a complementary, avocational
    program to match Americans' propensity to serve their country with
    national community service opportunities, including military service
    opportunities, that are generally non-career-related and of short-term
    duration. The incentives proposed for such service cannot be compared,
    on an apples-to-apples basis, with those developed to attract and
    retain career military service men and women. To attract top-notch
    National Service Plan candidates to address immediate short-term
    military service needs, for example, our plan would not offer an
    incentive of TRICARE for Life and the full complement of Montgomery GI
    Bill benefits. Instead of accruing this tremendous long-term cost, we
    would propose offering a much more modest severance pay that would
    permit the National Service Plan participant to use that money for
    educational goals or other similar efforts immediately after concluding
    his or her service. Is this an effort that you and your staff would
    commit to working on with Senator Bayh and me this year?
        Dr. Chu. Yes.

        [Whereupon, at 12:35 p.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2003

                                  ----------

                           WEDNESDAY, MARCH 13, 2002

                                   U.S. Senate,
                             Subcommittee on Personnel,
                                   Committee on Armed Services,
                                                        Washington, DC.

                             DEFENSE HEALTH PROGRAM

        The committee met, pursuant to notice, at 9:45 a.m., in
    room SR-232-A, Russell Senate Office Building, Senator Max
    Cleland (chairman of the subcommittee) presiding.
        Committe members present: Senators Cleland and Hutchinson.
        Committee staff member present: Cindy Pearson, assistant
    chief clerk and security manager.
        Majority staff member present: Gerald J. Leeling, counsel.
        Minority staff members present: Patricia L. Lewis,
    professional staff member; and Richard F. Walsh, minority
    counsel.
        Staff assistants present: Dara R. Alpert and Andrew Kent.
        Committee members' assistants present: Andrew
    Vanlandingham, assistant to Senator Cleland; Charles Cogar,
    assistant to Senator Allard; James P. Dohoney, Jr. and Michele
    A. Traficante, assistants to Senator Hutchinson.

           OPENING STATEMENT OF SENATOR MAX CLELAND, CHAIRMAN

        Senator Cleland. The committee will come to order.
        Thank you all very much for joining us today. I would like
    to welcome everyone to the Personnel Subcommittee hearing on
    the Defense Health Program. This is our second hearing of the
    year to discuss the issues that pertain to our military
    personnel and families.
        As you all know, health care is expensive. No matter what
    your age or career, every American is affected by the rising
    costs of health care. We have all heard various estimates of
    the growing cost of Medicare.
        Every year private businesses have increased costs to
    provide health care to employees. The amount these individuals
    pay for health insurance increases every year.
        The Defense Health Program is not immune to these
    increases. It is one of the fastest growing accounts in the
    Defense budget. The administration has invested more than $20
    billion in the military health system for fiscal year 2003.
        Even though health care is expensive, it is necessary. As a
    Nation, we cannot even think of sending our young men and women
    into harm's way unless we are prepared to offer them state-of-
    the-art health care for those injuries they incur while
    performing their duties.
        We have also committed to them that we will provide world-
    class health care to their family members in return for their
    selfless service to the Nation.
        I know this all too well. I personally am here because of
    the health program in place in 1968. I am a living example of
    why it is important to have skilled medical personnel available
    for our troops on the front line. The first person that
    actually came to my aid after a grenade went off April 8, 1968
    and almost mortally wounded me, was a young Marine corporal by
    the name of David Lord.
        Corporal Lord was not a medic. He was a mortar squad
    leader. He jumped out of mortar pit and ran over to assist me.
    He obviously had some good medical training, because he knew
    what he had to do. He cut my pant leg off and used his belt to
    put the tourniquet on what was left of my leg--which reminds
    me, I may even owe him a belt these days. [Laughter.]
        Several Marine corpsmen got to me right after that, and
    they really saved my life.
        I know that our medical program is not perfect, but we have
    been steadily working to improve it. We have responded to
    concerns about health care for our active-duty members by
    enacting provisions that improve the quality of health care and
    access to health care providers.
        We authorized the TRICARE Remote Plan for families of
    active duty personnel assigned to where military medical
    facilities were in need and were not available.
        We eliminated co-pay for active duty personnel and their
    families when they received care under the TRICARE plan option.
    We responded to military retirees, who then called our
    attention to the broken promise of health care for life.
        We started with a series of pilot programs, which included
    access to the Federal Health Benefit Program, a TRICARE senior
    supplement, and Medicare subvention.
        Ultimately, we found an even better answer: TRICARE for
    Life (TFL). Under this program, TRICARE pays for virtually
    everything that Medicare does not pay for. It is the best
    health program for Medicare eligibles in the United States. We
    are really proud of this program.
        Our first panel today will discuss DODs' plans for the next
    generation of contracts for medical care. Last year, the
    Department asked for changes in the law that would give them
    more flexibility in contracting for the health care delivered
    by the managed support contractors.
        It asked for authority to move away from the statutory
    requirement that contractors ``share the risk'' with the
    Government. We were reluctant to give them that though without
    knowing their plan for using it.
        We want to know what they plan to do, so that we can
    fulfill our responsibility to make sure our service personnel
    and their families get the top quality health care they
    deserve. We want to know what problems they have tried to solve
    with the new contracts, and how the changes will affect the
    beneficiaries.
        We are more than willing to work with the Department on
    ways to control the costs of the Defense Health Program. One
    thing we will not do is compromise the quality of health care
    for beneficiaries solely for the sake of saving money.
        For our second panel, we are doing something that has not
    been done since I have served the subcommittee. We have always
    focused our hearings on the TRICARE benefit, on mainly the
    benefit to families and retirees. We have not looked at the
    health care available to our front line troops.
        Today, we have the surgeons from several of our Unified
    Combatant Commands (CINCs) here to tell us about the health
    care we provide the service members serving on one of our many
    contingency operations. We want to hear about the kinds of
    medical care provided on the front lines.
        We also want to make sure that you have the resources you
    need to provide the top quality health care we want to our
    members, especially those in harm's way.
        It is my pleasure now to welcome Senator Hutchinson,
    ranking member of this committee, and I would like to invite
    him to make an opening statement.

                  STATEMENT OF SENATOR TIM HUTCHINSON

        Senator Hutchinson. Thank you, Mr. Chairman. I think you
    have outlined the issues before us today very well. I am
    pleased that the second hearing in our subcommittee in review
    of the Defense authorization request for fiscal year 2003 will
    be to receive testimony on the Defense Health Program.
        This subcommittee has oversight of quality of life programs
    for our military members. Working together, Mr. Chairman, we
    have made, I think, very significant gains over the last
    several years.
        In addition to the significant pay raises that we have
    seen, I am particularly pleased at the accomplishments that we
    have made in respect to the military health care program. Major
    initiatives in improving the TRICARE program, authorizing the
    prescription benefit for our older retirees and, most notably
    as you have observed, meeting the commitment for health care
    for life, by enacting the TRICARE for Life Program. These are
    some of the areas that we have focused on.
        Keeping faith with our military retirees and their families
    is critical. Meeting the commitment of health care for life is
    a top priority.
        The President's budget request provides a significant
    increase in the Defense Health Program. The Department of
    Defense has committed to fully funding the program for fiscal
    year 2003.
        I am very glad about our panels today. The first panel will
    afford us the opportunity to receive an overview of the health
    program, get an update on implementation of TRICARE for Life,
    and receive testimony on how the Department of Defense plans to
    move forward with the next generation of major health care
    support and contracts. That is going to be very important
    information for us to hear. Our second panel provides an
    opportunity to hear, firsthand, about the status of medical
    support for our active-duty deployed troops. Having just
    returned from Afghanistan about two weeks ago, and having had
    the opportunity to stop at the K2 camp in Uzbekistan there, it
    was inspiring, particularly visiting the hospital there at that
    K2 base, all in tents.
        A young Arkansan who was an operating room assistant has
    been there since before Thanksgiving, for Thanksgiving,
    Christmas, and New Year's. She did not have any idea of when
    she would be relieved or rotated, but the morale was incredibly
    high, the sense that they are doing something for America, that
    they are there for a purpose. I did not meet one among of the
    hundreds that we met at K2 who wished they were anywhere else
    in the world. They are glad they are doing something for our
    country.
        I look forward to that testimony. Military medical
    personnel need to be prepared to address disease, environmental
    threats, exposures, battlefield wounds, non-battlefield
    injuries, provide force health surveillance, and respond to
    potential chemical and biological attacks.
        I know our second panel is going to address some of the
    needs concerning a vaccine program, and I look forward to that.
        We ask our medical troops to ensure the health of our
    forces and their families, respond to the needs of our allies,
    and often local populations, as well as administering to our
    enemies we have captured. That is a lot to ask. I think they
    are well prepared and doing a great job. I look forward to the
    testimony of our witnesses today.
        Thank you, Chairman Cleland.
        Senator Cleland. Thank you very much, Senator Hutchinson.
    Thank you for your contributions to this panel. It means an
    awful lot having you here and your contribution.
        We welcome the first panel. We welcome Dr. Winkenwerder,
    the Assistant Secretary of Defense for Health Affairs; and Mr.
    Carrato, the Executive Director of the TRICARE Management
    Activity (TMA).
        I especially would like to acknowledge Dr. Winkenwerder,
    who has served as the Associate Vice President for Health
    Affairs and the Vice President of Emory Health Care in Atlanta.
        We received your joint prepared statement and it will be
    included in the record. We would appreciate your summary. Dr.
    Winkenwerder, I understand you will be making an opening
    statement on behalf of both you and Mr. Carrato. Please include
    a brief description of responsibilities of your positions, so
    that we can understand how you relate to each other
    organizationally. Thank you very much for coming.

        STATEMENT OF HON. WILLIAM WINKENWERDER, JR., ASSISTANT
    SECRETARY OF DEFENSE FOR HEALTH AFFAIRS; ACCOMPANIED BY THOMAS
      F. CARRATO, EXECUTIVE DIRECTOR, TRICARE MANAGEMENT ACTIVITY

        Dr. Winkenwerder. Thank you, Senator.
        Mr. Chairman, Senator Hutchinson, and distinguished members
    of the subcommittee, thank you for the opportunity to appear
    before you today. I am pleased to be here with Mr. Tom Carrato,
    who is the Executive Director of TRICARE Management Activity.
        As you requested, I will provide a brief verbal statement
    on behalf of the Department and submit our written statement
    for the record. Before going into my verbal comments, I will
    answer your question with regard to my responsibilities and Mr.
    Carrato's.
        As the Assistant Secretary of Defense for Health Affairs, I
    have responsibility for the Defense Health Program. That
    includes the peacetime health care system, our medical
    readiness activities and, all the plans, strategies, and
    preparations that we undertake on an ongoing basis to ensure
    that what we do in wartime is of the very best that we can
    offer to protect our men and women who are in harm's way; and
    if they are injured or hurt in some way, to address those
    injuries or wounds and get them back either into their
    positions or back home, and under the best care that we can
    provide.
        There are many activities. We will touch on some of the
    specific responsibilities here today. One of the biggest
    responsibilities under my purview is the TRICARE program. Mr.
    Carrato acts as my chief lieutenant, so to speak, for those
    activities. He is really responsible for the day-to-day
    management of the TRICARE program, which is an insurance
    program that also is involved in a wide range of activities,
    also covering some of the medical readiness components of our
    sphere of work.
        With that, let me move forward. First, I want to take a
    moment to acknowledge the heroic and exemplary contributions of
    our military health professionals and what they are doing
    around the world.
        Our military medics are engaged in a number of diverse and
    challenging activities in support of the war on terrorism, both
    here and abroad. In Afghanistan, our medical professionals are
    providing lifesaving care to our troops and allies in a very
    austere environment.
        I get briefings from the Joint Staff on a daily basis with
    regard to those activities. I have to tell you with the number
    of stories I have heard, lives have been saved and will be
    saved as we go forward because of the preparations that we have
    undertaken to have the right kind of medical support to be
    right on top of injuries when they happen.
        I would also add that we have provided lifesaving treatment
    to some of our allies and to other people like reporters and
    people that are in the theater.
        Senator Cleland. It is the reporters I would question. It
    is a joke.
        Dr. Winkenwerder. No comment. [Laughter]
        In Guantanamo Bay, Cuba, our Navy medics are delivering
    high-quality medical care for a number of the detainees, I
    think that is another important thing to note they are
    providing care in the same way that they would to our own
    people. They are doing an outstanding job. They have held back
    in no way with respect to the level of care, the quality of
    care that those people receive.
        We are operating as if they are people that deserve the
    full level of care, and I can talk further about that if there
    are questions about it.
        In the United States, our health professionals continue to
    work closely with other Federal agencies in the Office of
    Homeland Security in responding to biological and chemical
    warfare threats facing us today.
        Of course, we also continue to provide the finest medical
    care every day, throughout the world to active duty personnel,
    their families, and our retirees.
        Everything we do within the military health system is
    designed to support our warfighters, from preventive medicine
    activities to complex multi-specialty care requirements for the
    most severely ill or injured patients. This support includes
    the design and operation of TRICARE and the management of
    TRICARE contracts.
        TRICARE was intended to better integrate the care we
    provide our beneficiaries in our military hospitals and clinics
    with the $7 billion that we spend on that care every year, that
    we deliver through the private sector.
        In the 7 years since TRICARE was first introduced, it has
    been very successful in this effort. Virtually every indicator
    of success has moved in the right direction. We have increasing
    beneficiary satisfaction, increased perceptions of quality of
    care, increased use of preventive services, and decreased use
    of the emergency room. We have metrics that we can share with
    you on all of those measures.
        Our costs have increased too, but they have remained within
    the overall cost increases seen in the private sector. As we
    have implemented a new set of health care benefits,
    particularly the establishment of TRICARE for Life and a
    prescription drug benefit for Medicare-eligible beneficiaries
    in a timely and effective manner.
        We are proud of these successes, and yet there is still
    room for improvement. The current contracts, and the current
    TRICARE contractors, have provided us with a strong foundation
    upon which to build. We do need to move forward with a new set
    of TRICARE contracts that build upon both its successes and the
    lessons we have learned from the past 7 years.
        Over the years, we have placed a number of new requirements
    on the existing contracts. Very often, our requirements have
    been too prescriptive and not provided the proper incentives
    for contractor innovation.
        Our next generation of TRICARE contracts will be made
    simpler. They will adopt the best practices in the private
    sector, and they will invite greater competition from the
    private health care market place.
        I believe that financial incentives are a powerful tool to
    enhance contractor performance. In the next set of contracts, I
    expect to retain some form of financial risk-sharing that
    rewards outstanding performance. I will be glad to talk further
    about that, should there be questions.
        However, we will also look to fee-based rewards for
    achieving certain performance targets, for example, in
    beneficiary satisfaction or efficiency of claims payments.
        Finally, I will ensure that our new contracts enhance
    quality and continuative care for beneficiaries, and minimize
    any disruption in beneficiary services. In sum, we want to
    improve and make better what we can, and we do not want to
    break what is working well right now. That has been my pledge.
        I strongly believe that these actions will improve the
    health care delivery system for our patients, improve the
    predictability of our health care budgets, and establish the
    military health system as one of the preeminent health systems
    in the country.
        I want to assure the committee that I will continue to
    consult with you regularly as we proceed with our TRICARE
    contracting strategy.
        In the President's budget request for fiscal year 2003, the
    Defense Health Program submission is based on realistic
    estimates of providing health care for DOD eligible
    populations. It includes assumptions for growth rates in both
    pharmacy and private sector health costs to reflect our recent
    experience, which mirrors the rest of the private market place.
        As we strive to raise the performance of our health care
    system, we are also reaching out to other Federal agencies to
    improve collaboration and coordination of services, and in
    particular I want to note our efforts with respect to the
    Department of Veteran Affairs (VA) and the Department of Health
    and Human Services (HHS).
        DOD's collaboration with the VA dates back many years. Our
    efforts for the VA are similar to our experiences with the
    TRICARE contracts. We have accomplished a lot but there is much
    more that we can do. There really, truly are many opportunities
    here.
        We are investigating the means by which we can increase
    collaboration on a number of fronts; for example, VA
    participation in TRICARE contracts, a unified and simplified
    billing system, so that we know what the relative costs of
    services are in both systems, and there is one system of
    billing; increased cooperation on our capital asset and
    construction plans; and improvements that will permit
    appropriate sharing of electronic patient records. Those are
    just a few, and there are many more.
        The focus of these efforts will be to identify those
    opportunities that are congruent with our departmental mission
    and also with the VA's, and that will benefit both the
    beneficiary and the U.S. taxpayer.
        To elevate the performance of our system, we must continue
    to recruit and retain the best qualified medical professionals
    and ensure that they are clinically challenged in their medical
    practice.
        We have initiated several efforts to better understand the
    reasons that military medical professionals stay on or why they
    leave the service and what factors would convince one to remain
    in the military.
        We have proposals that we are now developing to ensure that
    we attract and retain the best people and that we pay them
    appropriately. As the military health system continues to meet
    its many missions and challenges, I am certain that we will
    emerge even stronger.
        Again, I thank you for the chance to speak with you about
    the military health system and the exceptional people who make
    it vibrant and the best that this country has to offer.
        I look forward to answering any questions that you might
    have. Thank you.
        Senator Cleland. Thank you very much, Dr. Winkenwerder and
    Mr. Carrato. Thank you very much for being here.
        [The joint prepared statement of Dr. Winkenwerder and Mr.
    Carrato follows:]
     Joint Prepared Statement by Hon. William Winkenwerder, Jr., MD, MBA,
                             and Thomas F. Carrato
        Chairman Cleland, Senator Hutchinson, and distinguished members of
    the subcommittee, thank you for this opportunity to appear before you
    today to discuss the Military Health System.
        The terrorist attacks of September 11, and the bioterrorist
    incidents that followed in October have awakened us all to a very real
    threat of terrorism. Through that prism we examined the Military Health
    System, refined its responsibilities and mapped a course that we must
    pursue in order to protect the health of our men and women in uniform.
    This course is preeminent in our priorities and is encompassed in our
    vision for military medicine. That vision is to attain world class
    stature as a healthcare system, one that meets all wartime and
    peacetime health and medical needs for the active military, retirees,
    their families, and other entitled beneficiaries.
        Achieving this vision will require more than just the traditional
    focus upon preventive medicine and the delivery of restorative
    healthcare. To meet the health and medical needs of our entire
    beneficiary population while meeting our requirements for the force
    health protection of our active duty personnel, we must continue to
    improve and seek to optimize our integrated system of healthcare. This
    integrated system consists of uniformed, civil service and contract
    medical personnel working together to improve the health of our
    beneficiaries across the country and around the world.
        This system must rapidly identify and mitigate potential health
    threats, and provide preventive measures and education to preserve the
    health and vigor of our population. Should these measures fail, we must
    be prepared to treat disease and restore the sick and injured to health
    through use of the most efficacious treatments that medical science can
    offer. The need for an effective, integrated system also extends beyond
    the period of active service, for those in need of rehabilitation
    following injury or illness, and for the care of our retired
    beneficiaries who have honorably served their country. All the while,
    we must continuously improve the quality of care we provide, the safety
    and satisfaction of our patients and exercise fiscal stewardship in
    managing the system.
        We must use the concepts of evidence-based medicine to ensure that
    patients receive treatments that are effective. We must continue to
    contribute to the body of medical knowledge by participating in
    scientific research, particularly in our knowledge of hazards of the
    battlefield, chemical and biological terrorist threats, and the
    operational environment.
        As we face the threat of terrorism, it is more important than ever
    that we ensure effective coordination and cooperation with other
    Federal agencies and organizations with necessary expertise. These
    include Congress, and especially the Departments of Veterans Affairs
    and Health and Human Services.
        Accomplishing this vision will require that we create and maintain
    high quality information systems, that we attract and retain high
    quality medical professionals, that we provide the necessary tools and
    training for our personnel, and that we maintain our commitment to
    achieving the vision.
                         military health system funding
        In the President's budget request for fiscal year 2003, the Defense
    Health Program (DHP) submission is based on realistic estimates of
    providing healthcare benefits to DOD eligible populations. It includes
    inflation assumptions for pharmacy of 10.5 percent plus anticipated
    program growth for an overall of 15 percent from fiscal year 2002
    program. Private sector health costs have been inflated at 7 percent to
    reflect our recent experience: anticipated program growth brings the
    overall rate of change to 12 percent from fiscal year 2002. We will
    manage the healthcare system to improve performance and contain the
    healthcare costs within budgeted amounts. We will make prudent
    decisions that result in effective performance. We seek your assistance
    in making permanent the contract management flexibility you provided in
    the National Defense Authorization Act for fiscal year 2002 and in
    alleviating the restrictions on moving resources across budget activity
    groups. The Department must have the freedom to move funding in
    response to where healthcare is received, either within the military
    healthcare facilities or through the private sector.
        The President's budget for the DHP consists of the following
    amounts:

                            [In millions of dollars]
    Operation and Maintenance (O&M)............................      $14,360
    Procurement................................................          279
    Research, Development, Testing & Evaluation (RDT&E)........           67
                                                                ------------
      Total....................................................      $14,706
    ------------------------------------------------------------------------
                O&M Funding by Budget Activity Group
                     [In thousands of dollars]
    Direct Care................................................  $ 4,070,811
    Private Sector Care........................................    7,159,674
    Consolidate Health Support.................................      809,548
    Information Management.....................................      666,709
    Management Activities......................................      221,786
    Education and Training.....................................      350,092
    Base Operations/Communications.............................    1,081,651
                                                                ------------
      Total O&M................................................  $14,360,271

        In addition to the DHP budget, the Military Health System is
    supported with $6.0 billion for Military Personnel (MILPERS) and $0.165
    billion for military construction. The fiscal year 2003 total unified
    MHS budget is $20.9 billion.
        The DOD Medicare Eligible Retiree Health Care Fund is projected to
    provide an additional $5.7 billion for the healthcare costs of
    Medicare-eligible beneficiaries, $4.3 billion for private sector care,
    $0.8 billion for direct care (O&M), and $0.6 billion for MILPERS.
        This budget request reflects implementation of accrual financing
    for the healthcare costs of Medicare-eligible beneficiaries, including
    their new TRICARE for Life benefits. This will entail both payments
    into the fund ($8.1 billion) to cover the Government's liability for
    future healthcare costs of current military personnel and receipts from
    the fund (projected $5.7 billion) to pay for care provided to eligible
    beneficiaries. Our budget reflects a decrease to the DHP appropriation
    to account for the payments from the fund and an increase to the
    military services' Military Personnel accounts to cover the
    Department's normal cost contribution. This alignment ensures
    consistency with the accrual funding for the military retirement
    pension costs under Title 10, chapter 74. We ask your help in modifying
    NDAA 2001 and 2002, which currently direct that the Defense Health
    Program make the annual contribution to the accrual fund. It is the
    Military Personnel accounts that should make these payments. They have
    received increases for this purpose in the fiscal year 2003 budget
    request.
                 force health protection and medical readiness
        Even before the events of September 11, Secretary Rumsfeld's
    Quadrennial Defense Review assented that both terrorism and chemical
    and biological weapons would transform the strategic landscape for the
    Department. The terrorist acts of last fall placed us on a war footing
    and escalated the urgency of our need for preparedness. The MHS has
    underway numerous activities to ensure that preparedness, including
    formation of a high-level working group with Department of Health and
    Human Services representatives to improve collaboration on defense
    against biological and chemical terrorism. Deliberations continue on
    the future of the anthrax vaccine immunization program now that we have
    confidence in an assured supply of FDA-approved vaccine. The MHS has
    also placed renewed emphasis on training military healthcare personnel
    in recognizing symptoms of and refreshing treatment plans for exposure
    to chemical and biological agents.
        We are actively developing Investigational New Drug (IND) protocols
    and guidelines for possible use during the war on terrorism, to include
    protocols on smallpox vaccine, pyridostigmine bromide (PB) tablets,
    botulinum toxoid vaccine, and anthrax vaccine post-exposure with
    antibiotics. The MHS is developing and implementing a seamless system
    of electronic healthcare and surveillance data, integrating the entire
    spectrum from fixed facility systems to field hand-held technology. The
    deployment health system is maturing in response to a growing array of
    acute and chronic deployment health concerns, with recent added
    emphasis on environmental and occupational health surveillance.
        We continue to expand and improve both the vaccine healthcare
    center network to support our world class vaccine safety assessment
    program, and the deployment health clinical center network to provide
    multidisciplinary evaluation and treatment of service members with
    deployment related health problems.
                                    tricare
        This military health system (MHS) program benefit provides an
    essential and interdependent link between medical readiness and
    everyday healthcare delivery. Meeting the force health protection
    responsibilities of the MHS depends upon the success of TRICARE in
    providing both quality healthcare and challenging clinical experiences
    for military healthcare providers. Very important to this success is a
    stable financial environment. The President's fiscal year 2003 budget
    request for the DHP provides that stability.
        TRICARE Contracts. TRICARE's success also relies on incorporating
    best business practices into our administration of the program,
    specifically our managed care contracts. Our new generation of TRICARE
    contracts (T-NEX) will encourage best business practices by the
    contractors without over direction by the government. We also are
    working with the Department of Veterans Affairs to make sure T-NEX
    provides appropriate opportunities for VA participation in provider
    networks. We have listened to the advice of industry and our
    beneficiaries on how to structure these contracts and we are confident
    that the design will help us to continue providing high quality care.
    We enter this new generation of contracts with a commitment to our
    beneficiaries to earn their satisfaction and to ensure continuity of
    quality services. We place a great deal of importance on contractor
    customer service performance--to include positive and negative
    financial incentives--to ensure that our beneficiaries are provided the
    kind and type of information and services they seek in a timely and
    accurate manner. Also, we will continue to partner with The Military
    Coalition and National Military and Veterans Alliance, who collectively
    represent the interests of more than four million current and former
    military personnel. This partnership ensures that we really know what
    our beneficiaries feel and think about the TRICARE Program. Their
    feedback helps us to better address the concerns and needs of our
    beneficiaries.
        TRICARE for Life. Implementation of TRICARE for Life has proceeded
    exceptionally well. As in all new program startups, we have experienced
    problems. Nevertheless, we aggressively handle each one until we reach
    a satisfactory resolution. Since the October 1, 2001, start date, we
    have processed over six million claims and the overwhelming majority of
    information we receive is that our beneficiaries are extremely
    satisfied with TRICARE for Life. They speak very highly of the senior
    pharmacy program as well. This program began April 1, 2001, virtually
    problem-free, and through February 15, 2002, 8.6 million prescriptions
    have been processed through the TRICARE retail pharmacy networks and
    the our National Mail Order Pharmacy program, providing over $539
    million in prescription benefits for our age 65 and over beneficiary
    population.
        Examples of the problems we identified and addressed with the
    initial implementation of TRICARE for Life include a group of 185,000
    beneficiaries inadvertently excluded from the initial data match with
    CMS to verify Medicare Part A and B coverage. This problem did not
    involve denial of benefits for these beneficiaries. Rather, Medicare
    could not forward their claims automatically to TRICARE for the first
    60 days. We have corrected this problem.
        Another example involves approximately 4 percent of potentially
    eligible TFL beneficiaries who have not revalidated their military
    benefits eligibility status as required every 4 years. This affected
    only family members, as retirees retain eligibility without periodic
    revalidation. The failure to revalidate eligibility (sometimes referred
    to as obtaining a new ID Card) resulted in claims being denied. We have
    several steps underway to address this issue:

             We determined that the potential for these individuals
            to be eligible is so high that TRICARE began paying claims for
            these beneficiaries February 15, 2002. Concurrently we are
            notifying each beneficiary through personal letters and
            Explanation of Benefits messages that they must revalidate
            their eligibility. We will continue paying claims for these
            individuals through August 1, to allow them ample opportunity
            to update their eligibility.
             The Defense Manpower Data Center developed a letter
            that beneficiaries may sign and return to validate their
            continuing eligibility. This eliminates the need to travel to
            an ID card issuing facility to obtain a new ID card. In the
            mean-time, DOD will track these beneficiaries and use every
            reasonable means to assist them with this process.
             In addition to contacting individual beneficiaries, we
            will renew our efforts through the media, caregivers,
            beneficiary organizations, and other organizations to inform
            all beneficiaries about their TRICARE for Life opportunity.

        TRICARE for Life is secondary payer to all other health insurance
    (OHI). When TRICARE records indicate that a beneficiary has other
    health insurance, an informational Explanation of Benefits is issued
    showing how much TRICARE would have paid had the beneficiary not had
    other health insurance. This provides the beneficiary with helpful
    information to determine if the premium they pay for their OHI is worth
    the benefit. When a beneficiary cancels their OHI, they may simply
    telephone TRICARE with the date their other coverage was canceled and
    TRICARE will reprocess any incorrectly denied claims.
        Sub-acute and Long Term Care. The reform actions implemented
    through NDAA-02 ensure availability of high-quality sub-acute and long-
    term medical care and services for all DOD beneficiaries in the most
    efficient manner. The new authority to provide home healthcare and
    respite care for qualifying active duty family members supports
    readiness through the improved quality of life for special needs
    families. Alignment of the TRICARE benefit and payment system for
    skilled nursing facility and home health care with Medicare will
    greatly improve coordination of benefits for our age 65 and over
    beneficiaries and simplify authorization and provision of medically
    necessary sub-acute and long-term care for all.
        Portability. The TRICARE National Enrollment Database (NED),
    implemented July 2000, provides health coverage portability to all
    TRICARE Prime enrollees. NED provides a standardized beneficiary-
    centered enrollment process and eliminates the procedural and automated
    systems' disconnects that existed throughout the military health
    system, including the contractors' systems, prior to the implementation
    of the NED.
        In our continuing efforts to improve and optimize our military
    health system, the military services are developing plans for the
    fiscal year 2001 and fiscal year 2002 optimization dollars provided by
    Congress. Service health leaders developed the MHS Optimization Plan in
    1999 setting forth an overarching 5-year strategy to guide health
    system improvements to achieve a more efficient, cost-effective, world
    class integrated health system supported by advanced information
    technology and reengineering of our clinical and business processes.
    The foundation of the optimization plan is population health
    improvement and prevention, also the cornerstone of Force Health
    Protection in support of our readiness mission, delivered proactively
    with optimal use of our resources. A Special Assistant for Optimization
    was established at the TRICARE Management Activity to assist in
    integration of these efforts. A MHS Population Health Improvement Plan
    and Guide has been published which provides our clinical staffs with
    guidance for most efficiently managing the health of our beneficiaries.
                 coordination, communication, and collaboration
        The MHS has built many strong relationships among other Federal
    agencies--including Congress--professional organizations, contractors,
    and beneficiary and military service associations. These relationships
    facilitated the MHS's ability to respond in the aftermath of the
    terrorist actions of last fall. The MHS role in the new homeland
    security responsibilities will span an array of Federal, State, and
    local agencies and will demand effective cooperation among all
    involved. Our close working relationship with beneficiary associations
    and our contractors can be credited for the smooth implementation of
    TRICARE for Life.
        DOD's collaboration with the VA dates back many years and much has
    been accomplished. We have eight joint ventures throughout the country
    providing coordinated healthcare to VA and DOD beneficiaries. We have
    over 600 sharing agreements in place covering nearly 7,000 healthcare
    services. However, all of these agreements are not fully utilized.
    Eighty percent of VA facilities partner with us through our TRICARE
    networks. It should be noted, that the level of participation by VA
    within the TRICARE networks varies. Our Reserve components capitalize
    on education and training opportunities with over 300 agreements in
    place. DOD, VA, and the Indian Health Service collaborate in the
    Federal Health Care Information Exchange (formerly known as the
    Government Computerized Patient Record) which will enable DOD to send
    laboratory results, radiology results, outpatient pharmacy, and patient
    demographic information on separated servicemembers to the VA. Before
    fiscal year 2005, we expect not only to have the ability to transmit
    computerized patient medical record data to VA but also to receive this
    information from VA. While we have achieved many successes, it is time
    to reinvigorate these collaborative efforts to maximize sharing of
    health resources, to increase efficiency, and to improve access for the
    beneficiaries of both departments. The focus of our efforts is to move
    the relationship with the VA from one of sharing to a proactive
    partnership that meets the missions of both agencies while benefiting
    the servicemember, veteran, and taxpayer.
        Our vision of DOD/VA coordination is a mutually beneficial
    partnership that optimizes the use of resources and infrastructure to
    improve access to quality health care and increase the cost
    effectiveness of each department's operations while respecting the
    unique missions of the VA and DOD medical departments. Our guiding
    principles include collaboration; providing the best value for the
    taxpayer; establishment of clear policies and guidelines for DOD/VA
    partnering; and fostering innovative, creative arrangements between DOD
    and VA. As DOD and VA move toward a more proactive partnership, we have
    established short-term goals to be accomplished during this fiscal
    year. These include establishing solid business procedures for
    reimbursement of services, improving access to health care through VA
    participation in TRICARE, examining joint opportunities in
    pharmaceuticals, facilitating healthcare information exchange, and
    establishing a long-range joint strategic planning activity between DOD
    and VA. We will accomplish this through the VA-DOD Executive Council,
    where senior healthcare leaders proactively address potential areas for
    further collaboration and resolve obstacles to sharing.
        Concurrent with these ongoing efforts, DOD actively supports the
    President's Task Force to Improve Health Care Delivery to Veterans
    announced by President Bush on Memorial Day 2001. DOD has provided
    office space, administrative support, and functional experts to ensure
    the Task Force accomplishes its mission of developing recommendations
    to improve quality and coordination of healthcare for our Nation's
    veterans. I will continue to work closely with my colleague, Dr. Gail
    Wilensky, to ensure the success of the Task Force in meeting their
    objectives, and we look forward to the Task Force's recommendations.
                           military medical personnel
        The Quadrennial Defense Review directs development of a strategic
    human resource plan to identify the tools necessary to size and shape
    the military force with adequate numbers of high-quality, skilled
    professionals. The MHS depends on clinically competent, highly
    qualified, professionally satisfied military medical personnel. In
    developing the MHS human resource plan, we have begun several
    initiatives to determine retention rates, reasons for staying or
    leaving the service, and what factors would convince one to remain in
    the military.
        At the request of Congress, we commissioned a study by the Center
    for Naval Analyses (CNA) to examine pay gaps, retention projections,
    and the relationship between pay and retention. We acknowledge the
    significance of the findings. The CNA study shows a relationship
    between pay and retention--although it points out that there are
    factors other than pay that affect retention. A typical military
    physician--for example, a general surgeon with 7 years of service--
    receives one half of his or her income in incentive pays. While base
    pay and other components which make up the remaining half of total
    compensation have been increasing recently, the incentive pays have not
    kept up with changes in the civilian community. CNA estimates the pay
    gap for the surgeon is currently $137,000, or 47 percent. The
    challenges of military service can be unique and tremendously rewarding
    personally and professionally. We know that financial compensation is
    not the sole determinant of a medical professional's decision to remain
    in the service or to leave. We can never expect to close the pay gap
    completely. However, we are concerned by the CNA findings and are
    analyzing them now. Incentives to optimize our ability to shape
    military medical staff size and mix with appropriate experience levels
    are critical to meeting our mission requirements.
        We will simplify the health professions' incentives authority to
    place more management authority within the Department. The rapid pace
    of change in the civilian healthcare personnel market, which competes
    directly with our military accession and retention programs, requires
    flexibility in the management of incentives for optimum effectiveness.
        Additionally, we are expanding our use of the Health Professions
    Loan Repayment Program (HPLRP). The President's budget provides funding
    for an increase of 282 scholarships. In addition we are exploring ways
    the Department can maximize use of incentives in the efforts to
    optimize the accession and retention of appropriate personnel to meet
    mission requirements.
                      military health information systems
        We leverage advances in information technology to contribute to the
    delivery of quality care, patient safety, improved system management,
    and ease of patient access to healthcare. An essential element of
    quality remains the assurance of the credentials of the health
    professionals practicing in our health system. We have now in
    operational testing at 10 military medical facilities a single database
    that supports the management of the professional credentials for active
    and Reserve component health personnel across all services. We
    anticipate that this system, the Centralized Credentials Quality
    Assurance System, will begin full deployment to all sites this Spring.
    We plan to explore the potential for integrating this system with the
    Veterans Administration's credentials system, VetPro.
        The Theater Medical Information Program supports the medical
    readiness of deployed combat forces. This system will aggregate medical
    information from all levels of care within the theater thereby
    supporting situational awareness and preventive medicine needs for
    operational forces. Medical data generated at battlefield locations
    will be transmitted to a central theater database, where the command
    surgeon will have a comprehensive view of the theater medical
    battlefield and be in a better position to manage the medical support
    to all forces. This system serves as the medical component of the
    Global Combat Support System and has an integrated suite of
    capabilities that includes the Composite Health Care System II. User
    testing will be conducted this summer during Exercise Millennium
    Challenge and initial operational test and evaluation is scheduled for
    later this year.
        The Military Health System has successfully created an electronic
    computer-based patient record. The Composite Health Care System II
    (CHCS II) generates, maintains and provides secure electronic access to
    a comprehensive and legible health record. CHCS II merges the best
    commercial off-the-shelf applications on the market into a single
    integrated system capable of worldwide deployment both in fixed
    facilities and in the field environment, as part of the Theater Medical
    Information Program. The Composite Health Care System II will undergo
    formal operational test and evaluation this summer. Once completed, a
    worldwide implementation decision will be made in 3Q fiscal year 2002.
        Optimizing the Military Health System continues to be a high
    priority in our efforts to effectively manage and operate the TRICARE
    program. The Executive Information/Decision Support Program assists
    health managers at all levels throughout the MHS. This program provides
    an exceptionally robust database and suite of decision support tools
    for health managers. It supports managed care forecasting and analysis,
    population health tracking, MHS management analysis and reporting,
    Defense medical surveillance, and TRICARE management activity
    reporting. The data repository began operating in fiscal year 2001.
        The Defense Medical Logistics Standard Support Program reflects how
    information technology and business process re-engineering can lead to
    significant return on investment and tremendous user satisfaction. This
    program provides responsive medical logistics support to all military
    services. Electronic catalog sales have grown from $204,000 in April
    1999 to over $23.2 million in fiscal year 2001. The prime vendor
    section of this program has grown to electronic sales of $1.3 billion
    in fiscal year 2001. More importantly, it has reduced procurement lead
    times from up to 45 days to 2 days or less, reduced medical logistics
    inventory by 85 percent and allowed a 95 percent fill rate with
    delivery in less than 24 hours. This program is the first in DOD to
    receive Clinger-Cohen Act certification.
        TRICARE Online uses the Internet to assist our beneficiaries gain
    access to the Military Health System. It is an enterprise-wide secure
    Internet portal for use by all DOD beneficiaries worldwide. It provides
    information on health, medical facilities and providers, and increases
    patient access to healthcare. Beneficiaries may create their own secure
    health journals securely on this site, TRICARE Prime patients may make
    appointments with their primary care providers, and all beneficiaries
    may access 18 million pages of health and wellness information. This
    system is scheduled for worldwide deployment later this year following
    operational testing now underway.
        We believe that our medical technologies can be helpful to the
    Department of Veterans Affairs and together we are exploring joint
    technologies as a means for closer collaboration.
        As the MHS pursues the many initiatives outlined above, it will
    become even stronger. The Military Health System's continued mission-
    oriented focus on its primary responsibilities has further cemented its
    world-renowned stature as a leader in integrated healthcare.
        Again, I thank you for this chance to speak with you about the
    Military Health System and the exceptional people who make it the
    vibrant, innovative, comprehensive system that it is.

        Senator Cleland. Dr. Winkenwerder, I know that you and Mr.
    Carrato have been working on plans to change TRICARE,
    implementing greater flexibility in contracting. We would like
    to learn a little bit more about this contracting with managed-
    care support contractors. I am always concerned when I hear
    about changing TRICARE, because during its national
    implementation, TRICARE had problems with, as you pointed out,
    program instability, beneficiary confusion, less than desirable
    customer service levels, and poor administrative performance.
        We were overwhelmed, quite frankly, a number of years ago
    with complaints about TRICARE. I think we worked through all
    that. TRICARE now enjoys, as you point out, unprecedented
    stability and extremely high beneficiary satisfaction.
        Let us not make the kind of changes to TRICARE that would
    rekindle all those old problems. With that in mind, what is
    your plan? Is your plan to contract out to HMOs?
        Dr. Winkenwerder. Our plan, Senator, will build upon what
    we have done, and frankly, what we are doing right now. Our
    intention and our plan is to work with the private sector
    health plans, like the plans that we are working with now that
    have done a good job and who I would view as being the leading
    candidates to continue to work with us, given their track
    record and their performance.
        That said, I think it is important that we ensure that
    there is a competitive system that allows others who would love
    to have the chance to work with us and bring innovation and
    excellence in their execution to the table.
        The way we view the role of the prime contractor--which is
    a health insurance or managed care plan--is to build a network
    of hospitals, physicians, and other care providers around the
    military treatment facilities and clinics, so that there is
    greater breadth of access for the covered populations. We
    cannot do all of that within the military treatment facilities.
        We look to them to really be our right arm, to be our
    program managers and integrators of all the services. We do not
    look to change that basic integrator role. In other words, they
    would continue to contract with hospitals and physicians and
    for the breadth of health care services that are part of the
    whole benefit.
        The changes are principally focused on making what I would
    call the back room and the nuts-and-bolts activities work more
    smoothly, the administrative aspects, the financing mechanism.
    I think you would hear from the contractors themselves, if you
    have not already, that there are many things that we can do to
    improve the way we work together. That is what we will be
    focusing upon.
        Now, there is one area where I think we would also agree
    that there is an opportunity for improvement in service and
    cost management, and that relates to pharmacy.
        In today's world, there are companies that are called
    pharmacy benefit management companies. They have come into the
    market place during my experience, over the last 10 years or
    so, in working at companies like Blue Cross and Prudential. The
    health plans, I think, have learned that these companies do it
    better than the health plans could, because they are focused
    totally on the pharmacy world.
        I know the Government is thinking about what role pharmacy
    benefit managers might have with the Medicare program. Our view
    is that there is an opportunity there to improve the TRICARE
    program, in terms of customer satisfaction, capability,
    technology, and cost management, by taking that one piece and
    working to develop a national contract or contracts for those
    services.
        Other than that one significant change, which we have had
    open discussions with our current existing contractors about,
    the basic construct of how we work together would continue.
        We have one or two other very small areas where we want to,
    for example, have a national, uniform look with respect to
    marketing materials, so that the program materials that
    beneficiaries and their families and retirees receive look the
    same, that each health plan is not developing them separately.
    That is a very tiny piece.
        The concerns that the contractor community had last fall
    about making radical changes to the program that would be
    disruptive, I think we have addressed that. We feel quite
    confident that we are going to move forward in a way that
    improves what needs to be improved, but is not going to disrupt
    the experience of the beneficiary.
        Senator Cleland. From my point of view, we have to be very
    careful about contracting out with HMOs. In my experience, HMO
    means Help Me Out.
        I jokingly say that it is a good thing that when I was
    wounded in Vietnam, I was not covered by an HMO for two
    reasons. First, I would have bled to death before I had them on
    the phone; and second, once I got them on the phone, they would
    have said, ``Well, you are not cost-effective.'' I think we
    have to be very careful we walk down that road.
        May I say, Mr. Carrato, that TRICARE has unique claims
    requirements that seem to differ from the industry standard
    Medicare process.
        Some health care providers choose not to participate in
    TRICARE, because they do not want to have to deal with claims.
    In this process that they think the claims are more cumbersome
    than the Medicare claims they file. Some potential contractors
    for managed-care support elect not to compete for TRICARE
    contracts because of the claims process.
        Why can TRICARE not use the same widely accepted claims
    process that Medicare uses?
        Mr. Carrato. Mr. Chairman, the TRICARE program is a bit
    different than the Medicare program. The Medicare claims
    processing system is supporting the Medicare fee-for-service
    program. TRICARE, Mr. Chairman, has an enrolled option, a
    preferred provider/organization option, and a fee-for-service
    option.
        There are some differences. We have done a fair amount of
    work in the claims processing area. As you had talked about,
    among our early challenges as we implemented the TRICARE
    program, claims processing was one of those challenges.
        I am happy to report today that, after a significant amount
    of activity in re-engineering our claims processing, we now
    process 98 percent of our retained claims within 30 days and
    99.9 percent of our retained claims within 60 days. We have
    also reduced turn-around time.
        Having said that, we have made great strides. This is
    certainly one area that we want to look to in the next
    generation of contracts.
        As Dr. Winkenwerder said, there have been great
    improvements in technology, certainly in the claims processing
    technology, and we would like to move in that direction. We are
    mindful of providers' concerns.
        We do not want providers to have to face hassles or have to
    deal with multiple requirements to participate in our program
    and participate in other programs. So we are also keeping an
    eye on what we can do to reduce the hassle factor that has been
    identified to us by providers.
        Senator Cleland. Senator Hutchinson.
        Senator Hutchinson. Thank you, Mr. Chairman.
        Dr. Winkenwerder, in your opening statement, you mentioned
    that the new contractual configuration would have some form of
    risks and fee-based rewards so that you were willing to expand
    on that. Would you explain a little more what you had in mind?
        Dr. Winkenwerder. Yes. We believe that there is a way to
    make changes in the current very complex, very--frankly--
    overly-convoluted bid price adjustment. That is the technical
    term, which is a basic financing mechanism of how the
    Government and the contractor look at the prices that are bid
    and make adjustments and determine payments.
        We think there is a simpler way and a better way to do
    that. One of the ways that certainly was among the broad range
    of options out there, is to have no risk involved simply for
    the contractor to be an administrator and a payer of claims in
    the same way that a traditional insurance company is with an
    employer.
        On the other hand, if we want to provide some financial
    incentive for that contractor who I mentioned has a role in
    integrating all of the services and a network of doctors and
    hospitals and looking at costs, then it might make sense to
    have some portion of that amount of money that they would
    receive at the end of the day, at risk.
        In my experience in the private sector, the private sector
    has experimented with risk sharing over the last decade or
    more. Many people got into these arrangements where the
    contractor--in some cases, it was the health plan, in some
    cases, it was just a group of doctors and hospitals--would take
    the full financial risk. That led to bad decisions.
        I think there may be too much influence and concern on the
    part of the provider, too much thinking about the costs, and
    there may be inappropriate decisions. I think that is where
    some of the bad decisions that some HMOs and some doctors that
    were in HMOs got off on the wrong track.
        I think there is a difference between that and just
    creating a small amount of risk so that there is both up-side
    opportunity, but limit to what might be the down-side. That is
    what we are looking at, a model along those lines. I think our
    discussions with the contractors themselves, that is a model
    that I think we all think makes sense.
        I think they can speak for themselves, but I have had
    enough discussion to get that sense.
        Senator Hutchinson. I share the Chairman's feeling that we
    have gone through a lot of turmoil in TRICARE and taken a lot
    of hits over the years, and that has been worked through and we
    have a very stable and well-received program. Any changes now
    might throw us back into that kind of disarray.
        My understanding is, we gave 1-year relief from the risk.
        Dr. Winkenwerder. Right.
        Senator Hutchinson. In order to implement your new
    approach, you are going to need that to be extended or made
    permanent; is that correct?
        Dr. Winkenwerder. We would prefer to have that, just
    because what I would like as a program manager, what the
    Secretary would like is that flexibility and to be trusted with
    it, that we are going to use it appropriately and not abuse it.
        I have tried to establish a track record so far in speaking
    candidly and talking straight about these issues and saying,
    this is why we want this flexibility.
        Senator Hutchinson. Right.
        Dr. Winkenwerder. But we are going to talk with you as we
    work forward to develop this new round of contracts and the
    further changes. We look forward to and want your input.
        Senator Hutchinson. Thank you. I think in terms of the
    extended flexibility, the subcommittee has to feel that we are
    not going to have beneficiaries who are going to receive less
    service or who are going to be--that this is going to cause
    that kind of turmoil. We will look forward to working through
    that with you also.
        Dr. Winkenwerder, you mentioned Pharmacy Benefit Managers
    (PBMs) and their potential role in a future plan. You referred
    to the administration's plan last year that was actually, I
    think, struck in the courts as not being permissible. How do
    you work through that?
        Dr. Winkenwerder. I am not familiar with all of the details
    of that plan, but my understanding of that plan is that it is
    very different from what I am describing.
        Senator Hutchinson. I hope so.
        Dr. Winkenwerder. Yes. No. It is a different approach. It
    is not a retail network discount approach.
        Senator Hutchinson. Is it a card?
        Dr. Winkenwerder. No.
        Senator Hutchinson. Would it use these managers?
        Dr. Winkenwerder. Right now, we have networks of retail
    pharmacies where people can get their prescriptions, and we
    would continue to have those. It is just that we would have an
    administrator that would assist with our management of those
    networks and that would also help us negotiate discounts with
    the pharmacy manufacturers--if that is the approach that we
    chose.
        The bottom line is that either the Government has to take
    on a role in that negotiation or a benefit management company
    would.
        Senator Hutchinson. Have you decided? Are you going to
    contract, or do it in-house?
        Dr. Winkenwerder. That is an important decision that we
    have not yet come to a final resolution on. That takes a lot of
    careful thinking through, financial and economic evaluation. We
    have to look at our own capabilities and assets.
        There are many factors involved there. We want to make the
    right decision.
        We hope to be able to speak about which direction we would
    like to go in the near future. I would hope it would be within
    the next 2 to 3 months, but hopefully, sooner than that. We are
    working on it.
        Senator Hutchinson. Is there any difficulty now in small,
    independent pharmacies as opposed to the large chains,
    participating in the program?
        Dr. Winkenwerder. I am going to turn to Tom on that matter.
        Mr. Carrato. We deliver prescription drugs through three
    venues: our direct care system, our military hospitals, and
    clinics.
        We also have a national mail-order pharmacy program a
    retail pharmacy benefit. That retail pharmacy benefit delivers
    prescription drugs through a network option. They can be part
    of the network, or our beneficiaries have freedom of choice and
    can go to a non-network pharmacy.
        Senator Hutchinson. They pay more?
        Mr. Carrato. The beneficiary would pay more to go to a non-
    network retail pharmacy.
        Senator Hutchinson. Right.
        Mr. Carrato. In response to the question you posed, I
    think, most of our managed care support contractors who are
    currently responsible for building the pharmacy network go with
    regional chains, because there is broad coverage by large
    retail, either regional or national chains.
        There are some areas where the chains have not penetrated
    yet. In those areas, the networks are supplemented by
    independent pharmacies.
        I know there has been some concern where the contract is
    with a chain. There may be an independent who would like to
    have an opportunity to participate in the network, as well.
        Senator Hutchinson. Yes. I personally would like to be a
    part of your decision-making process on the use of PBMs and how
    you determine whether that is in-house and what kind of program
    is set up.
        Now, Dr. Winkenwerder, you mentioned 2 to 3 months on
    making this decision on the PBM issue. Is that the same time
    frame that you would see for the soliciting, awarding, and
    implementing of new health care support contracts?
        Dr. Winkenwerder. We think it makes sense to come forward
    and have discussions with you as we have worked these issues
    internally with a comprehensive plan.
        Senator Hutchinson. Do you have any time frame on that
    plan?
        Dr. Winkenwerder. It is roughly that time frame that I have
    described. The only caveat I have to give you is that, I have
    some important folk who have to sign off for this program that
    I report to, namely Under Secretary Chu, Secretary Rumsfeld,
    and the office of the comptroller. They have to get a comfort
    level with what we are doing.
        There are many important people that need to get
    comfortable with what we are doing. That is what takes us time.
    It is not only our own analysis, but it is ensuring that
    everybody that has an important say in things at the Defense
    Department is on board with the direction we would like to go.
        Senator Hutchinson. We would ultimately have some say about
    that as well.
        Dr. Winkenwerder. You sure will.
        Senator Hutchinson. The sooner the plan can be presented to
    us, the better.
        Dr. Winkenwerder. You sure will.
        Senator Hutchinson. The beneficiaries, do they have means
    by which they can participate in the development of this new
    plan?
        Dr. Winkenwerder. They do. We have met with the
    beneficiaries, and we meet with the representative
    organizations on a regular basis. I have spoken to the
    leadership.
        We have a group of roughly 15 or 20 leaders of various
    benefit service organizations. I have asked them very directly
    and said, ``Give us your ideas. Give us your thoughts. Tell us
    what you think is working well, what is not, your ideas for how
    we can improve the program.''
        They have been forthcoming, so yes, I think it is
    important, essential, I would say, to get their thoughts and
    input.
        Senator Hutchinson. Thank you, Mr. Chairman.
        Senator Cleland. Thank you very much. Thank you very much
    for being part of our panel today. It means an awful lot to
    have you take time to come and help us sort these issues out.
        We would like to bring the second panel to the table. We
    will take a 10-minute break. [Recess.]
        If we could come back to order here. We thank all of our
    panelists for being here.
        I was just out in the anteroom here in the committee room
    and saw this, quite frankly, incredible sculpture by Rodger
    Brodin. I do not know whether you can see it or not, but it is
    a serviceman helping an obviously wounded fellow serviceman,
    with a female nurse in attendance. It says, ``The price of
    freedom.''
        I think we often forget that we do not send impersonal
    people into battle. We send real live human beings into battle,
    and invariably, there is a price exacted.
        We are very pleased to welcome our second panel, which
    includes the command surgeons from several of our U.S. military
    commands. We have Rear Admiral Mayo from Pacific Command;
    Brigadier General Green from Transportation Command; Colonel
    Maul from Central Command; Captain Hall from European Command;
    and Colonel Jones from Southern Command.
        We have received your prepared statements and they will be
    included in the record. We have also received a prepared
    statement from Lieutenant General Peake, the Surgeon General of
    the Army. If there is no objection, his statement will be
    entered into the record.
        [The prepared statement of Lieutenant General Peake
    follows:]
                 Prepared Statement by LTG James B. Peake, USA
        Mr. Chairman and members of the committee, I am Lieutenant General
    James B. Peake. I thank you for this opportunity to submit a statement
    for the record to your committee. It is my privilege to serve as the
    40th Army Surgeon General.
        This morning I would like to discuss the opportunities and
    challenges that face the Army Medical Department (AMEDD) as we provide
    medical support to the force. As we all know the terrorist attacks of
    September 11, 2001, have dramatically changed America and the world. On
    that day Army medics were front and center providing quality and
    compassionate health care to their fallen comrades at the Pentagon.
    Today as I speak, Army medics are providing that same quality and
    compassionate care in support of Enduring Freedom and many other
    operations around the world to include our homeland. The AMEDD is
    uniquely capable of supporting these operations. We are able to place
    an integrated health care delivery system any place in the world.
    Stories of how our combat medics are providing life saving care to
    injured soldiers in Afghanistan; followed by rapid evacuation to a
    forward surgical team, to a deployed combat support hospital and back
    to Landstuhl Regional Medical Center or Walter Reed Army Medical Center
    demonstrates how we take our combat casualty care from point of injury
    back to the United States for tertiary care.
                  deploy a trained and equipped medical force
        Medics in support enable the soldier to be on point for our Nation.
    In October 2001, we began a new era of Army Medicine. Soldiers began a
    16-week training program at the Army Medical Department Center and
    School to become more skilled and competent medics in the 21st century.
    Training is focused on emergency care, primary care, medical force
    protection, and evacuation and retrieval. All medics now graduate with
    National Registry Emergency Medical Technician certification and will
    be required to routinely revalidate their critical medical skills. Both
    Active and Reserve components are transitioning to the 91W MOS.
        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. Residents receive orientations and lectures concerning war
    zone injuries, trauma, and military deployments. Additionally, they
    attend formal training that includes a centralized combat casualty care
    course, advanced trauma life support, medical management of chemical
    and biological casualties, and the bushmasters course conducted at the
    Uniformed Services University of the Health Sciences. After completing
    an Army graduate medical education, a physician is uniquely qualified
    to deploy at all levels within the theater of operations to support the
    military medical mission.
        We must ensure that the infrastructure and the capabilities of the
    institutional AMEDD are robust and are leveraged to meet our
    obligations to operational forces. We do this through comprehensive,
    planned support to Power Projection Platforms, by deployment of a
    trained and expert medical force through professional officer filler
    system (PROFIS) and assignment rotations, and by targeted new
    initiatives that can fill operational medical gaps anywhere in the
    world as well as in support of homeland defense requirements.
        To have a capable and ready Army medical force, we must have the
    ability to recruit and retain quality, highly skilled health care
    professionals. We are 5 months into what is projected to be a 15-year
    war on terrorism, a war that will take us around the globe and will
    require the sustained efforts of our entire military--active and
    Reserve. Without adequate funding to recruit and retain these vital
    health care professionals we face growing shortages that could prove
    harmful to our deployment platform.
        Our Reserve Medical Forces are valued members of the Army and the
    AMEDD Team. This is particularly true of the AMEDD where in 2002, 63
    percent of the total medical force is in the Reserve components.
    Ensuring that all Reserve forces are medically prepared, and that
    soldiers are healthy, is a critical issue for the military. The Federal
    Strategic Health Alliance (FEDS-HEAL) is an important program to assist
    in providing medical and dental care to Reserve forces. We must ensure
    that our Reserve members are medically and dentally ready, so when
    called upon they can immediately deploy and fulfill their vital role as
    part of 11 the AMEDD.
        Medical evacuation of casualties from the battlefield has been one
    of the AMEDDs modernization priorities 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 AMEDD has
    been working with the aviation community to improve the UH-60 Blackhawk
    and create a state-of-the-art evacuation platform--the HH-60L.
        Another AMEDD modernization effort is exploratory work on the next
    generation of medical shelter systems. These systems will have multi-
    functional design that will allow for quick reconfiguration for
    multiple medical applications. At home or abroad, across the spectrum
    of conflicts and full ranges of environments including chemical and
    biological scenarios, these shelter systems will improve the quality of
    care for our patients.
        To promote tactical mobility, the AMEDD is working with the
    Transportation Corps to define medical requirements for trucks in the
    Family of Medium Tactical Vehicles (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.
        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.
          project and sustain a healthy and medically protected force
        We must provide the capability to train, project, and sustain a fit
    and healthy force that is protected against disease and non-battle
    injury. We must continue to develop and sustain effective disease- and
    injury-prevention programs that increase productivity and improve the
    health and fighting strength of the force. We must improve and
    streamline rehabilitative services for injured and ill soldiers to
    expedite return to full duty status. We must continue to develop and
    maintain surveillance programs and databases to monitor the health and
    medical readiness of the force. Finally, we must be able to reliably
    detect and assess threats to health from the environment this includes
    the timely identification of infectious diseases, chemicals, climatic
    extremes, and other threats.
        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.
    We continue to work towards a longitudinal and queriable patient record
    will facilitate this proactive approach.
        Environmental monitoring entails knowledge of potential health
    threats in the air, water, and soil to which our service members are
    exposed. Army Preventive Medicine Units are currently assessing the
    occupational and environmental health risks to our force in
    Afghanistan, Bosnia, Kosovo, Kuwait, and numerous other locations
    throughout the world. For example, our medics are monitoring our troops
    for altitude sickness a common occurrence when fighting at such high
    altitudes in Afghanistan. There are also some age-old diseases that we
    continue to combat such as tuberculosis and malaria that have the
    potential to affect the combat readiness of our troops and newer ones
    like HIV that we continue to research and study as we plan for future
    operations.
        Army Medicine is more than an HMO. Our system of integrated care,
    teaching medical centers to outlying health clinics, schoolhouse 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 the Chief of Staff's vision of our
    Army's role in alleviating human suffering and ensuring our soldiers
    have world class health care available no matter where they are
    deployed. 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.

        I now would like to offer each of you the opportunity just
    to take a few moments. I know you have traveled a long
    distance, so relax and take your time. Take a few moments to
    make an oral statement to the subcommittee, if you would like.
        Admiral Mayo, we would like to welcome you and have you
    kick it off. Thank you.

       STATEMENT OF REAR ADM. (LOWER HALF) RICHARD A. MAYO, USN,
           COMMAND SURGEON FOR UNITED STATES PACIFIC COMMAND

        Admiral Mayo. Thank you, Mr. Chairman. It is a pleasure,
    and indeed an honor, to be with you here today and speak about
    Health Service Support in the Pacific area of responsibility
    (AOR). I will try to make my comments brief, since a more
    lengthy statement was submitted.
        I want to thank you for including enhanced health care
    benefits in the National Defense Authorization Acts the last 2
    years. You have clearly demonstrated Congress' commitment to
    providing comprehensive, world-class health care to our active
    duty, their families, and retired service members.
        Your efforts to ensure adequate funding of all health care
    programs sends a strong signal that we are truly committed to
    providing quality health care for our family members.
        The Asia-Pacific region, with its large, educated
    populations, wealth, technology, military forces, national
    heritages, and ambitions, is one of the world's most important
    and dynamic regions. The United States Pacific Command Area of
    Responsibility, or USPACOM AOR, contains 43 countries and over
    105 million square miles, totaling 52 percent of the Earth's
    surface.
        The United States has a strong historic commitment to the
    region and has fought three major wars in the Pacific over the
    past 100 years. Since World War II more American servicemembers
    have died there than in any other region. This is the landscape
    on which the U.S. Pacific Command carries out its mission.
        The Commander in Chief U.S. Pacific Command is responsible
    for ensuring a healthy, fit force, medically prepared to
    execute any mission in peace, crisis, or war, and a totally
    integrated, fully capable, and ready military health care
    system prepared to sustain forces to fight and win. We
    implement this mission completely through TRICARE, our
    Department of Defense health care delivery system. TRICARE is
    an integral part of the health care continuum from point of
    illness or injury to our military medical treatment facilities.
        USPACOM has fully integrated TRICARE as our day-to-day
    approach to maintaining the mental and physical well being of
    our forces. In short, we use TRICARE as the foundation for all
    of our health care support functions.
        It is a medical force multiplier, caring for the forces,
    focusing on Force Health Protection, and ensuring we take care
    of family members left behind. Our military medical treatment
    facilities serve as a readiness training platform for
    maintaining the medical skills required to care for our people.
        Now, I will just add that when I talk about that as a
    training platform, it is not only important to maintain skills,
    but it is also the skills or the teamwork that is necessary to
    deploy. I am a general surgeon, and when I deploy, it is very
    important that the OR technicians or the nurses that deploy
    with me are familiar, so that we work together as a team. Our
    medical treatment facilities serve as a venue for that team
    training for deployment.
        Force Health Protection in the Pacific involves maintaining
    a healthy, fit force, preventing injuries and casualties, and
    providing casualty care and management when necessary.
        While challenged by the tyranny of distance, aging DOD
    medical infrastructure, vaccine availability, and realtime
    medical surveillance tools, we can nevertheless support our
    theater. Current operations have demonstrated the ability of
    our outstanding health service personnel to be flexible,
    adapting current medical support capabilities to meet the
    unique situations and multitude of demands that have been
    placed upon them.
        The U.S. Pacific Command has fully capable, rapidly
    deploying assets to meet the current health care needs of
    forces participating in Operation Enduring Freedom. We have,
    and continue to pursue, aggressive Force Health Protection
    programs in support of our multiple deployments.
        Our commanders understand and have implemented our programs
    by command enforcement, commitment, and engagement.
        We will continue to integrate our operations with other
    organizations, as well as with our allies, friends, and
    coalition partners, to ensure the highest level of care for our
    servicemembers and their families at home and abroad.
        Thank you, Mr. Chairman. I would be happy to address any
    questions or concerns that you have or any other members of the
    subcommittee may have.
        [The prepared statement of Rear Admiral Mayo follows:]
                Prepared Statement by RADM Richard A. Mayo, USN
        Mr. Chairman, Mr. Hutchinson, and distinguished members of the
    subcommittee, it is my pleasure and indeed an honor to be with you
    today and speak about Health Service Support in the Pacific Area of
    Responsibility (AOR). I want to thank you for including the enhanced
    healthcare benefits in National Defense Authorization Acts the last 2
    years. You have clearly demonstrated Congress' commitment to providing
    comprehensive, world-class healthcare to our active duty, their
    families, and retired servicemembers. Your efforts to ensure adequate
    funding of all healthcare programs sends a strong signal that we are
    truly committed to providing quality healthcare for our military
    members.
        The Asia-Pacific region, with its large, educated populations,
    wealth, technology, military forces, national heritages, and ambitions,
    is one of the world's most important and dynamic regions. The U.S.
    Pacific Command (USPACOM) AOR contains 43 countries and over 105
    million square miles totaling 52 percent of the earth's surface. The
    U.S. has a strong historic commitment to the region, and has fought
    three major wars in the Pacific over the past 100 years. Since World
    War II, more American servicemembers have died here than in any other
    region. This is the landscape on which the U.S. Pacific Command carries
    out its mission.
        The Commander in Chief USPACOM is responsible for ensuring a
    healthy fit force medically prepared to execute any mission in peace,
    crisis, or war, and a totally integrated fully capable and ready
    military healthcare system prepared to sustain forces to fight and win.
    We implement this mission completely through TRICARE, our Department of
    Defense (DOD) healthcare delivery system. TRICARE is an integral part
    of the healthcare continuum from point of illness or injury to our
    military medical treatment facilities. USPACOM has fully integrated
    TRICARE as our day-to-day approach to maintaining the mental and
    physical well being of our forces. In short, we use TRICARE as the
    foundation for all of our healthcare support functions. It is a medical
    force multiplier, caring for the forces, focusing on Force Health
    Protection, and ensuring we take care of family members left behind.
    Our military medical treatment facilities serve as readiness training
    platforms for maintaining the medical skills required to care for our
    people.
        I would like to start off by addressing some of the most
    significant challenges we have in the Pacific. As I mentioned, our AOR
    is vast, the tyranny of distance manifests itself in many ways, the
    most significant of which are the ability to move medical augmentation
    into theater when required and the ability to move patients back to
    definitive care. In the initial stages of a major operation in the
    western pacific, we are extremely dependent on staffed host nation
    hospital beds provided by our allies in order to provide medical care
    and holding for patients awaiting airlift. In order to move our sick
    and injured to definitive care facilities both within the Pacific and
    back in the Continental United States, we rely on a robust aeromedical
    evacuation system. For example, moving a patient in the Pacific usually
    entails flying 6 hours at a minimum to reach a definitive medical
    treatment facility either in Hawaii or on the U.S west coast. In
    peacetime or conflict, our success is contingent upon continued
    availability of adequate airframes, trained aeromedical personnel, and
    approved and tested aeromedical equipment. Another challenge is the
    aging of all of our medical treatment facilities, many of which were
    built during World War II. For example the United States Naval
    Hospital, Guam provides medical care not only for DOD beneficiaries but
    Department of Veterans Affairs beneficiaries as well. Finally, the
    services are already aware of shortfalls in certain physician and nurse
    specialties. We believe this problem will only be accentuated in time
    of war and directly impact our ability to medically support our
    theater.
        The most valuable, complex weapon systems the U.S. military will
    ever field are its soldiers, sailors, airmen, and marines. These human
    weapons systems require life-cycle support and maintenance just as
    other less complex weapons systems do. Force Health Protection is that
    life-cycle maintenance program for the human weapon system. Force
    Health Protection in the Pacific involves maintaining a healthy fit
    force, preventing injuries and casualties; and providing casualty care
    and management when necessary.
        The specific intent behind USPACOM's Force Health Protection
    program is to provide health protection policy, guidance, and assign
    responsibility for all deployments into the Pacific AOR. While this is
    a considerable challenge, given the size and diversity of the Asia-
    Pacific Region, we have been tremendously successful in promoting
    individual and unit preparedness, injury and disease prevention, and in
    enhancing service members' and commanders' awareness of health threats
    and risks. The low incidence of disease among members of the United
    States Support Group East Timor (USGET) is as an example of our
    successful Force Health Protection efforts. Ensuring compliance with
    recently implemented occupational and environmental health surveillance
    will further our objectives and increase our successes.
        While we have made significant strides in both health threat
    awareness and preparedness, the events since September 11, have made it
    clear that force protection and force health protection are truly
    intertwined. Moreover, the mandate to improve our health threat
    monitoring and surveillance capabilities has never been more evident.
    Implementation of force health protection measures designed to address
    casualty prevention and enhance survivability of our forces continues
    to be an area of concern. Ensuring the health of our forward-stationed
    and forward-deployed forces is directly related to our capability to
    implement effective infectious disease countermeasures. These
    countermeasures include readily available vaccines, adequate supplies
    of antibiotics, automated disease surveillance systems, and greater
    reliance on basic research to combat infectious disease threats. This
    highlights the need for military medical research. A good example of
    this is the ongoing research efforts by our facilities in Thailand and
    Indonesia to develop a malaria vaccine. In the past, we have
    experienced occasional shortages of vaccines, and it indicated to me
    the need to assure vaccine production capabilities, especially for less
    common vaccines. The Global War on Terrorism is pushing us into ever
    more medically hazardous destinations in a time when global patterns of
    disease migration and emergence have made the medical dimension of U.S.
    war operations a greater factor.
        One of our challenges is that health threat risks within our region
    are wide and varied depending on the country. The Naval Environmental
    Preventive Medicine Unit in Hawaii assists us to prepare our force
    health protection country assessments and communicate our guidance
    prior to, during, and after deployments. We are bridging any gaps with
    technology, which allows us to share data, perform real time research,
    and shorten the distance between the need and the capability.
        In partnership with other DOD agencies, we are developing real time
    and near real time data streaming and aggregation of joint service
    medical encounter data, medical facility reports, web-based clinical
    consultation tools, and an advanced medical disease surveillance
    system. These new technologies have the potential to replace old
    medical paradigms. The days of stubby pencils and green log books are
    being replaced with new capabilities that are smaller, lighter, and
    automated, resulting in quicker analyses, more appropriate medical
    responses, and improved force health protection and disease prevention.
        In our role of providing Operation Enduring Freedom support for
    U.S. Central Command forces from Diego Garcia, we gained insight into
    the requirements for medical augmentation required in future
    operations. Through medical augmentation, we transformed a Navy clinic,
    with limited primary care and no inpatient beds into a joint Air Force-
    Navy Expeditionary Medical facility that provides the structure to
    fully care for and stabilize patients until they can be moved to
    definitive care. Health service support in the Philippines is also a
    unique joint requirement. We have an Army Joint Task Force Surgeon
    augmented by Air Force medical and surgical capabilities. The existing
    Marine Corps medical logistics unit in Okinawa is coordinating supply
    orders with the Air Force and Navy medical supply activities and
    ensuring the required items are sent forward as needed. Operation
    Enduring Freedom highlighted the need to continue the ongoing work to
    develop lighter and easily transportable medical support packages that
    are more readily available, tailored to specific requirements, with a
    transition from arrival to fully operational quantified in hours vice
    days or weeks. The services are in the transition phase from having
    medical packages with heavy logistics requirements to those that are
    significantly lighter and more mobile.
        While challenged by the tyranny of distance, shortages of DOD beds
    in the Western Pacific, aging DOD medical infrastructure, medical
    professional personnel shortages, vaccine availability, and real time
    medical surveillance tools we can nevertheless support our theater.
    Current operations have demonstrated the ability of our outstanding
    health service personnel to be flexible, adapting current medical
    support capabilities to meet the unique situations and multitude of
    demands that have been placed upon them.
        In summary, U.S. Pacific Command has fully capable, rapidly
    deploying assets to meet the current healthcare needs of forces
    participating in Operation Enduring Freedom. We have, and continue to
    pursue, aggressive Force Health Protection programs in support of our
    multiple deployments. Our commanders understand and have implemented
    our programs by command enforcement, commitment, and engagement. We
    will continue to integrate our operations with other organizations as
    well as with our allies, friends, and coalition partners to ensure the
    highest level of care for our servicemembers and their families at home
    and abroad.
        Thank you, Mr. Chairman, and I would be happy to address any
    questions or concerns you or the other members of the subcommittee may
    have.

        Senator Cleland. Thank you very much, Admiral. Thank you
    for your service.
        General Green.

    STATEMENT OF BRIG. GEN. CHARLES B. GREEN, USAF, COMMAND SURGEON
                FOR UNITED STATES TRANSPORTATION COMMAND

        General Green. Mr. Chairman, my sincere thanks for this
    opportunity to speak on the role of air medical evacuation in
    support of military operations. It is truly an honor.
        From the very beginning of Operation Enduring Freedom, our
    goal has been to provide seamless and responsive patient
    evacuation for our deployed forces.
        The effectiveness of air evacuation forces far forward,
    coupled with the use of the most responsive airlift, is saving
    lives. Forward trauma stabilizing surgery is being done less
    than 20 minutes after injuries.
        Air evac planes have responded multiple times in less than
    one hour to get patients to the next level of stabilization
    surgery within hours and to definitive care in Europe within
    one to 2 days--superb by any standard, but exceeding the
    American College of Surgeons standards for U.S. trauma care.
        I recently traveled to the Arabian peninsula and found the
    morale of our troops very high. In a recent movement of two
    critically injured Afghan troops and one American soldier, our
    air evacuation crews and critical care teams flew for
    approximately 17 hours--around a 22-hour day to get these
    warriors to definitive care at Landstuhl in Germany.
        Two of these patients were on ventilators with massive
    tissue loss from their wounds and are alive today because of
    the movement and getting them to definitive care.
        The air evacuation mission is vital, even more vital today
    with reduced medical footprints; and to continue to excel in
    this vital mission, we must continue to modernize and
    recapitalize our strategic airlift system.
        We appreciate your concerns and support for our accomedical
    evacuation requirements; and, Mr. Chairman, I submit my
    statement for the record and stand ready to answer your
    questions.
        [The prepared statement of Brigadier General Green
    follows:]
            Prepared Statement by Brig. Gen. Charles B. Green, USAF
        Mr. Chairman and members of the committee:
        I am privileged to testify before this committee as the Command
    Surgeon of the United States Transportation Command (USTRANSCOM) and
    Air Mobility Command (AMC). As I'm sure you know, our Transportation
    Command's mission is ``to provide global air, land, and sea
    transportation for the Department of Defense in peace and war.'' My
    role at USTRANSCOM as Command Surgeon in particular is to serve as the
    Department of Defense single manager for the implementation of policy
    and standardization of patient movement. AMC, as a component of
    USTRANSCOM, is lead command for the Department of Defense's (DOD)
    worldwide Aeromedical Evacuation (AE) system.
        Since the events of September 11, 2001, our ability to accomplish
    this mission has been put to a real-life challenge. Fortunately, our
    patient movement policies and the AE community have more than met this
    challenge. From the very beginning of Operation Enduring Freedom (OEF),
    our singular goal has been to provide a flexible, seamless, and
    responsive system capable of providing an extraordinary level of prompt
    and appropriate patient movement for our deployed soldiers, sailors,
    airmen, marines, coalition forces, and others needing life saving
    medical treatment.
        One of the great success stories has been our ability to carefully
    balance and coordinate the forward deployment of medical assets with a
    robust patient movement capability. This is all the more remarkable
    given the extensive theater of operations that spans several nations
    and thousands of miles in difficult terrain and austere conditions. AE
    uses any available airlift and far forward AE personnel to support
    operations so that we can quickly and safely evacuate patients to a
    higher level of care. This balancing act is only possible through the
    use of cutting edge technology and highly skilled personnel. The
    reduced forward medical footprint requires a robust patient movement
    capability. This capability becomes a true readiness enhancement to the
    war fighters. It gives each of our personnel on the ground the
    confidence that should the need arise; they will indeed receive prompt
    evacuation and appropriate medical care.
        The current AE strategy is ``Targeted Capability.'' This strategy
    entails anticipating requirements and placing AE assets far forward to
    support rapid evacuation. USTRANSCOM has taken the initial definitive
    steps to ensure the AE system is able to support the entire spectrum of
    AE requirements, from peacetime/steady-state to a full-scale casualty
    flow.
        Since the end of the Cold War, the services have significantly
    reduced their medical footprints. AE is now tasked to rapidly evacuate
    casualties from numerous, forward locations supported by small
    expeditionary medical units. This changed operational environment
    demanded paradigm shifts in both the medical community and AE system.
    Significant for AE is the shift to evacuation of stabilized patients,
    use of airlift platforms capable of performing multiple missions, the
    requirement for multi-role AE crews, shift from a requirements-based
    system to a capabilities-based strategy, and positioning of AE teams
    forward to support rapid evacuation.
        The AE system deploys forces based on projected casualty flow. This
    minimizes evacuation delays by strategically positioning AE crews,
    Critical Care Air Transport Teams (CCATT) and Mobile AE Staging
    Facilities (MASF) forward to optimize use of all available airlift.
    This has been extremely successful in OEF, where we have evacuated over
    500 patients on C-130, C-141, and C-17 aircraft already flying in the
    airlift system.
        An equally significant success story has been the TRANSCOM
    Regulating and Command and Control (C\2\) Evacuation System, better
    known as TRAC\2\ES (pronounced TRACES). On July 12, 2001, USTRANSCOM
    activated TRAC\2\ES, a web-based automated decision support tool, which
    provides visibility of patients requiring movement, resources required
    for patient movement, available hospital beds (by medical specialty),
    and patient in-transit visibility. TRAC\2\ES supports the United States
    Transportation Command (USTRANSCOM) mission to combine transportation,
    logistics, and clinical decision elements into a seamless patient
    movement information management system.
        Currently, TRAC\2\ES is being utilized by numerous, forward-
    deployed units in support of OEF. As a result of TRAC\2\ES' flexibility
    and portability, even forward surgical teams and forward support
    medical companies are able to easily input patient movement
    information. This was previously not possible at levels of care below a
    combat support hospital (CSH) or equivalent. Since the beginning of
    OEF, the flexibility and capability of TRAC\2\ES have been challenged
    many times and those challenges have been successfully met.
        Employing these new initiatives, the AE system is now in a period
    of transition from a process that was separately funded, scheduled, and
    flown, to a system that is integrated or ``mainstreamed'' into normal
    airlift processes. Our vision requires AE to be viewed as a specialized
    airlift mission supporting patient movement on any mobility airlift
    platform. To accomplish this, we must achieve the following:

             Develop light, modularized, and independently operable
            AE equipment.
             Design an adaptable, multi-airframe capable,
            palletized litter/seat system.
             Design AE capability into all appropriate future
            mobility airframes.
             Ensure modernization and re-capitalization of multi-
            role airlift platforms.

        These initiatives are transforming the patient movement system to
    best mirror the wartime structure and simultaneously ensure AE
    personnel ``train as we fight and fight as we train.'' The strategy of
    mainstreaming AE into airlift operations and employing the full
    spectrum of lift for the AE mission worldwide ensures DODs AE system is
    capable of providing the finest standard of care for men and women in
    uniform in peace and in war.
        Let me close by saying thank you, once again, for this
    opportunity--to present USTRANSCOM and its ongoing patient movement and
    aeromedical evacuation efforts to this committee.

        Senator Cleland. Thank you, General Green.
        It was an incredible airlift in 1968 that helped save my
    life. It started with a dust-off in Huey, then I was
    transferred to a C-130, and finally to a C-141 that took me
    from Japan to Walter Reed. The whole airlift experience in 1968
    was frankly quite incredible. I know it has been dramatically
    improved upon since then.
        Colonel Maul.

     STATEMENT OF COLONEL RONALD A. MAUL, USA, COMMAND SURGEON FOR
                     UNITED STATES CENTRAL COMMAND

        Colonel Maul. Good morning, Mr. Chairman.
        Senator Cleland. Good morning, sir.
        Colonel Maul. It is an honor to be with you today and speak
    with you about the health care of our troops participating in
    contingency operations, and particularly medical support for
    our forces participating in Operation Enduring Freedom.
        Full spectrum medical care, along with a robust force
    health protection program for our soldiers, sailors, airmen,
    and marines, is critical to ensure the health and welfare of
    these outstanding citizens who proudly defend our Nation. We
    recognize their contributions to this great country, and I
    thank you for your interest to ensure their health care remains
    a top priority.
        Providing full spectrum contingency medical support is a
    continuous process. It starts with maintaining the physical,
    mental, and spiritual wellness of our personnel here at the
    home front and keeping them ready to deploy.
        At U.S. Central Command (CENTCOM), our task is to provide a
    comprehensive, integrated contingency medical support system
    within the Central Region.
        This is a significant challenge, as the United States does
    not maintain an extensive, permanent medical infrastructure
    within this area of the world.
        Before Operation Enduring Freedom, our limited medical
    capabilities within the area of responsibility were focused on
    supporting our forces participating in Operation Southern Watch
    and our Intrinsic Action task force in Kuwait.
        With the deployment of U.S. forces to the region for the
    global war on terrorism, U.S. Central Command has partnered
    with its service components, supporting unified commands, and
    various other Department of Defense agencies and coalition
    members to deploy a sophisticated, mobile, and highly capable
    medical support structure.
        Our focus is always on the prevention of disease and
    injury. However, should prevention efforts fail, our goal is to
    provide state-of-the-art combat casualty care to our forces,
    wherever and whenever they fight.
        While our service components plan medical support for their
    respective forces, the integration of these forces into a
    seamless, synergistic theater-wide health care system is the
    task of U.S. Central Command.
        We look across component planning efforts and align
    capabilities to protect and serve our joint and coalition
    forces, regardless of service affiliation. Further, we provide
    strategic-level oversight of all component medical activity to
    include force health protection and medical surveillance
    policies.
        Prior to Operation Enduring Freedom, an aggressive force
    health protection program was in place to support our forces
    that have remained deployed to the Central Region since
    Operation Desert Storm. This program included policies and
    procedures for immunization of the force, publication of
    preventive medicine guidelines, assessments for the
    identification, monitoring, risk management of environmental
    threats, establishing policies to ensure that safe water and
    food sources are available to our forces deployed to the
    region.
        As Operation Enduring Freedom commenced, and with the
    assistance of the Army's Center for Health Promotion and
    Preventive Medicine, we researched additional environmental
    challenges and potential health threats to our military members
    in the areas of the Central Asian states, as well as
    Afghanistan and Pakistan.
        One particular valuable source of information was drawing
    upon U.S. military lessons learned from past conflicts and, in
    particular, the Soviet experience in Afghanistan.
        The Soviet experience, an example of a modern force whose
    operational effectiveness was seriously hampered by disease and
    poor field sanitation, provided information on some of the
    unique threats in that region. In response to all of these
    assessments, U.S. Central Command implemented a specific robust
    force health protection and medical surveillance program to the
    already established ongoing activities in the area of
    responsibility.
        Preparation prior to deployment, sound prevention and
    surveillance while employed, and follow up upon re-deployment,
    are the key tenets of this program.
        Specific policy guidance for Operation Enduring Freedom was
    developed and communicated through several avenues to our
    service components to assist their planning and preparation
    efforts.
        These included, but were not limited to, publication on
    regional threats by the U.S. Army Center for Health Promotion
    and Preventive Medicine and coordination with the U.S. Air
    Force Institute for Environment Safety and Occupational Health
    Risk Analysis.
        Additionally, guidance was provided to components in
    detailed medical operations planning and preventive medicine as
    part of the Commander in Chief's Operation Enduring Freedom
    campaign plan.
        Force health protection and medical surveillance guidance
    and requirements are specifically articulated in all deployment
    orders. This guidance is based on joint directives and is
    detailed further in the Force Health Protection appendix of the
    Medical Support Annex to the U.S. Central Command Operation
    Enduring Freedom campaign plan.
        The command continually issues follow-up messages with
    guidance on potential threats and specific health issues, such
    as Rift Valley Fever, meningiococcal disease, malaria, and
    tuberculosis.
        The Land Component Command was particularly aggressive in
    anticipating the health threat potential posed by detainee
    operations and instituted sound preventive policies and
    procedures to address that threat.
        At this point, we are satisfied with our efforts, and our
    disease and non-battle injury rates have been among the lowest
    of any U.S. armed conflict, to date.
        U.S. Central Command continues to monitor medical trends
    for potential impact, future threats, and potential
    environmental concerns.
        Ongoing surveillance and close monitoring of food and water
    sources of supply by our service components for compliance with
    command policies has to date nearly eliminated outbreaks of
    food-borne contamination and have alerted other commanders to
    the potential threat when unsafe conditions exist.
        Unfortunately, we are not able to prevent all combat
    injuries and disease. When they occur, we have the obligation
    to provide the best possible care to our forces. Operation
    Enduring Freedom has seen tremendous dividends and returns on
    the investment the Department of Defense has made to re-
    engineer medical readiness following Operation Desert Storm.
        The services' effort to modularize and develop processes to
    task organize their medical systems in conjunction with
    conversion of larger deployable medical systems to lightweight,
    mobile, highly capable, deployable medical assemblages has paid
    off immensely.
        Further, the ability of the services to tailor, improvise,
    and adapt doctrine of the operational realities of this new
    type of warfare has been extremely noteworthy.
        Examples include the far-forward deployment of tailored
    surgical resuscitation assets, coupled with the ready
    availability of casualty and aeromedical evacuation.
        This combination has saved lives, which would have
    otherwise been lost in years past. Additionally, the
    incorporation of critical-care assets into the aeromedical
    evacuation system has brought an added dimension of capability
    to our system, which has also saved lives and provided what, I
    believe, will be a template for future operations.
        In summary, U.S. Central Command has fully deployed an
    integrated theater-wide medical system to meet the health care
    needs of forces participating in Operation Enduring Freedom. We
    have established strong force health protection and medical
    surveillance programs and policies now being executed by our
    deployed components in support of Operation Enduring Freedom.
        We will continue monitoring the health and well-being of
    our military forces and search for ways to advance our state of
    the art contingency medical care as we proceed in the campaign
    ahead. Our servicemembers deserve no less than the very best
    quality of care our Nation may provide now and in the future.
        Thank you, Mr. Chairman, and I would be happy to address
    any questions or concerns that you may have.
        [The prepared statement of Colonel Maul follows:]
                 Prepared Statement by Col. Ronald A. Maul, USA
        Mr. Chairman, Mr. Hutchinson, and members of the subcommittee, it
    is an honor to be with you today and speak about the health care for
    our troops participating in contingency operations and, particularly,
    medical support for our forces participating in Operation Enduring
    Freedom. Full spectrum medical care along with a robust force health
    protection program for our soldiers, sailors, airmen, and marines is
    critical to ensure the health and welfare of these outstanding
    citizens, who proudly defend our Nation. We recognize their
    contributions to this great country and thank you for your interest to
    ensure their healthcare remains a top priority.
        Providing full-spectrum contingency medical support is a continuous
    process. It starts with maintaining the physical, mental, and spiritual
    wellness of our personnel here at the home front and keeping them ready
    to deploy. At U.S. Central Command, our task is to provide a
    comprehensive, integrated contingency medical support system within the
    Central Region. This is a significant challenge, as the United States
    does not maintain an extensive, permanent medical infrastructure within
    this area of the world. Before Operation Enduring Freedom, our limited
    medical capabilities within the Area of Responsibility were focused on
    supporting our forces participating in Operation Southern Watch and our
    Intrinsic Action (Operation Desert Spring) task force in Kuwait. With
    the deployment of U.S. forces to the region for the global war on
    terrorism, U.S. Central Command has partnered with its service
    components, supporting unified commands, and various other Department
    of Defense agencies and Coalition members to deploy a sophisticated,
    mobile, and highly capable medical support capability. Our focus is
    always on the prevention of disease and injury. However, should
    prevention efforts fail, our goal is to provide state of the art combat
    casualty care to our forces, wherever and whenever they fight. While
    our service components' plan medical support for their respective
    forces, the integration of these forces into a seamless, synergistic
    theater-wide healthcare system is the task of U.S. Central Command. We
    look across component planning efforts and align capabilities to
    protect and serve our joint and coalition forces regardless of service
    affiliation. Further, we provide strategic level oversight of all
    component medical activity to include force health protection and
    medical surveillance policies.
        Prior to Operation Enduring Freedom, an aggressive force health
    protection program was in place to support our forces that have
    remained deployed to the Central Region since Operation Desert Storm.
    This program included policies and procedures for immunization of the
    force, publication of preventive medicine guidelines, assessments for
    the identification, monitoring and risk management of environmental
    threats, and establishing policies to ensure safe water and food
    sources are available for our forces deployed to the region.
        As Operation Enduring Freedom commenced, and with the assistance of
    the Army's Center for Health Promotion and Preventive Medicine, we
    researched additional environmental challenges and potential health
    threats to our military members in the areas of the Central Asian
    States as well as Afghanistan and Pakistan. One particular valuable
    source of information was drawing upon United States military lessons
    learned from past conflicts and, in particular, the Soviet experience
    in Afghanistan. The Soviet experience, an example of a modern force
    whose operational effectiveness was seriously hampered by disease and
    poor field sanitation, provided information on some of the unique
    threats in that region. In response to all of these assessments, U.S.
    Central Command implemented a specific robust force health protection
    and medical surveillance program to the already established ongoing
    activities in the Area of Responsibility. Preparation prior to
    deployment, sound prevention and surveillance while employed, and
    follow-up upon re-deployment are the key tenets of this program.
    Specific policy guidance for Operation Enduring Freedom was developed
    and communicated through several avenues to our service components to
    assist their planning and preparation efforts. These included, but were
    not limited to, publication on regional threats by the U.S. Army Center
    for Health Promotion and Preventive Medicine and coordination with the
    U.S. Air Force Institute for Environment Safety and Occupational Health
    Risk Analysis. Additionally, guidance was provided to components in
    detailed medical operations planning and preventive medicine as part of
    the Commander in Chief's Operation Enduring Freedom campaign plan.
    Force health protection and medical surveillance guidance and
    requirements are specifically articulated in all deployment orders.
    This guidance is based on joint directives and is detailed further in
    the Force Health Protection Appendix of the Medical Support Annex to
    the U.S. Central Command Operation Enduring Freedom campaign plan. The
    command continually issues follow-up messages with guidance on
    potential threats and specific health issues such as Rift Valley Fever,
    meningiococcal disease, malaria, and tuberculosis. The Land Component
    Command was particularly aggressive in anticipating the health threat
    potential posed by detainee operations and instituted sound preventive
    policies and procedures to address that threat. At this point, we are
    satisfied with our efforts, and our disease and non-battle injury rates
    have been among the lowest of any U.S. armed conflict to date. U.S.
    Central Command continues to monitor medical trends for potential
    impact, future threats, and potential environmental concerns. On-going
    surveillance and close monitoring of food and water sources of supply
    by the our service components for compliance with command policies has
    to date nearly eliminated outbreaks of food-borne contamination and
    have alerted other commanders to the potential threat when unsafe
    conditions exist.
        Unfortunately, we are not able to prevent all combat injuries and
    disease. When they occur, we have the obligation to provide the best
    possible care to our forces. Operation Enduring Freedom has seen
    tremendous dividends and returns on the investment the Department of
    Defense has made to re-engineer medical readiness following Operation
    Desert Storm. The services' efforts to modularize and develop processes
    to task-organize their medical systems in conjunction with conversion
    of larger deployable medical systems to lightweight, mobile, highly
    capable, deployable medical assemblages has paid off immensely.
    Further, the ability of the services to tailor, improvise, and adapt
    doctrine for the operational realities of this new type of warfare has
    been extremely noteworthy. Examples include the far-forward deployment
    of tailored surgical resuscitation assets coupled with the ready
    availability of casualty and aeromedical evacuation. This combination
    has saved lives which would have otherwise been lost in years past.
    Additionally, the incorporation of critical care assets into the
    aeromedical evacuation system has brought an added dimension of
    capability to our system, which has also saved lives and provided what,
    I believe, will be a template for future operations.
        In summary, U.S. Central Command has fully deployed an integrated,
    theater-wide medical system to meet the healthcare needs of forces
    participating in Operation Enduring Freedom. We have established strong
    force health protection and medical surveillance programs and policies
    now being executed by our deployed components in support of Operation
    Enduring Freedom. We will continue monitoring the health and well being
    of our military forces, and search for ways to advance our state of the
    art contingency medical care as we proceed in the campaign ahead. Our
    servicemembers deserve no less than the very best quality of care our
    Nation may provide now and in the future.
        Thank you, Mr. Chairman. I would be happy to address any questions
    or concerns you or the other members of the subcommittee may have.

        Senator Cleland. Thank you very much, Colonel Maul.
        Captain Hall.

     STATEMENT OF CAPTAIN RICHARD B. HALL II, USN, COMMAND SURGEON
                   FOR UNITED STATES EUROPEAN COMMAND

        Captain Hall. Good morning, Mr. Chairman. Thank you for
    inviting us.
        As I figured before this meeting started, my fellow
    surgeons have already stolen most of my thunder, so I will try
    and pick it up from there.
        I think the emphasis that Colonel Maul placed on force
    health protection is very important. It is something that all
    of us are doing on a regular basis.
        Certainly, my area of responsibility includes all of
    Europe, most of Africa, and just a tad of Asia while we have
    your attention there.
        The force health protection requirements that Colonel Maul
    has for his folks in Asia apply equally to the folks in Africa,
    when we send troops down, and in Europe, as well.
        Our command right now, the European Command (EUCOM), is
    engaged in significant medical support for our forces in the
    field. As a supported Commander in Chief, EUCOM is heavily
    engaged in current operations against terrorism on a large
    scale, unexploded ordnance mission in Nigeria, enforcing the
    ``no-fly zone'' in Operation Northern Watch, conducting peace
    operations in Bosnia, Kosovo, and the former Yugoslav Republic
    of Macedonia, and for Maritime Interdiction Operations in the
    Mediterranean.
        In addition, we are doing the same thing in EUCOM that the
    other Combatant Commanders are doing, which including numerous
    activities associated with executing a global war on terrorism
    in our own theater. Of course, our unified command is
    supporting CENTCOM in what they are doing as far as their
    efforts in Operation Enduring Freedom.
        I think that the importance of what he has said and what
    the other surgeons have said so far, is that what we have
    discovered over the couple of years that I have been in my
    office is that the close cooperation among the Combatant
    Commanders surgeons and their bosses has led directly to what
    has happened here as far as the success in CENTCOM.
        Certainly, in addition to the cooperation between the U.S.
    forces, there is also the opportunity for us to cooperate with
    our friends and allies.
        In Kosovo, right now, we have an arrangement called the
    Multi-national Integrated Medical Unit where we operate with
    the British and take care of the patients in the multi-national
    brigade east and multi-national brigade-center sectors. The
    agreement that established this facility has been used by the
    U.S. Central Command as a template for coalition medical
    operations that they are doing in Enduring Freedom.
        I believe that this sort of international and coalition
    cooperation is the wave of the future, insofar as medicine
    goes, for the simple reason that there are not enough assets to
    go around sometimes and this is the best way to make use of
    what we have.
        Finally, key to what we do, as compared to Dr. Winkenwerder
    and his team at TRICARE, is we do not make the tools of our
    medical trade, we employ them.
        The services, individually and in concert, supply us with
    the trained people, with the equipment, and with the supplies
    in order for us to do our job. As marvelous as the teams we
    have right now are--I am talking about the critical care air
    transport teams, the force health protection that we are
    providing, and so forth--we still have a short shopping list
    essential to our moving forward.
        There is a lot of work to be done and a lot of money
    implied in this shopping list. First is what we call measured
    deployable medical platforms, which need to be interoperable,
    need to be modular, and need to be deployable. We have a
    certain amount that is available to us now, and I think in the
    future we are going to have to work especially hard to make
    these inter-operable among the services.
        The second thing that has been mentioned briefly, and I
    would second it--is the need to have vaccines for the various
    diseases in places we are going that you are not going to find
    in Peoria.
        Finally, not really mentioned too much, is the biological/
    chemical warfare specter that is out there. One of the things
    that we are going to need to do as an enterprise is to be
    better at what we do as far as surveillance, detection, and
    real time reporting on what is happening, so that we can better
    protect our troops. Thank you very much.
        [The prepared statement of Captain Hall follows:]
             Prepared Statement by CAPT Richard B. Hall II, MD, USN
        Mr. Chairman, distinguished members of the subcommittee, it is my
    pleasure to appear before you today to discuss Medical Readiness in the
    United States European Command. Medical Readiness is my job. It is the
    name of the staff division I lead and paramount in every decision I
    make. As Command Surgeon I have dual responsibilities. First, I ensure
    our peacetime medical care systems are in place and functioning to
    support our forces, their dependents, and other beneficiaries. Second,
    I ensure the medical care we provide to our forces in the field, those
    at risk both from enemy action and natural diseases, is second to none.
    Both these aspects are critical to the concept of medical readiness. It
    is our peacetime health care that ensures soldiers, sailors, airmen,
    and marines go into the fight healthy and fit. These systems immunize
    them against disease and enhance their morale and mental well being by
    ensuring their loved ones are well cared for. Perhaps more visible is
    the second of my responsibilities, the provision of direct medical care
    to our deployed forces. It is this responsibility that I would like to
    concentrate on today.
        U.S. European Command is at this moment engaged in significant
    medical support to forces in the field. As a supported Commander in
    Chief (CINC), USEUCOM is heavily engaged in current operations
    including: a large-scale unexploded ordnance mission in Nigeria,
    enforcing the Northern No Fly Zone over Iraq, conducting peace support
    operations in Bosnia, Kosovo, and the Former Yugoslavia Republic of
    Macedonia (FYROM) and Maritime Interdiction Operations (MIO) in the
    Mediterranean. In addition to the numerous activities associated with
    executing the global war on terrorism in our own theater, our unified
    command is also extensively involved in supporting the U.S. Central
    Command's (USCENTCOM) efforts. USEUCOM provides hospitalization, blood,
    medical supplies, and patient movement capabilities. In each of these
    operations, we are applying modern and improved philosophies of
    contingency medical support. Fundamentally, these philosophies include:
    protecting our military force from disease and non-battle injuries,
    stabilizing patients as far forward as possible, and providing rapid
    and robust aero-medical evacuation to definitive care. I would now like
    to discuss these points in more detail.
        Historically, the fighting force suffers more casualties from
    disease and non-battle injuries than from direct enemy contact. To
    date, of the Operation Enduring Freedom patients moved to the Landstuhl
    Regional Medical Center in Germany, 75 percent have been the result of
    disease and non-battle injuries, with 25 percent of the patients being
    wounded in action. These numbers are consistent with what we have
    experienced in the Balkans over the last 6 years. When available,
    vaccination programs are one of the very best and most effective means
    of protecting our troops from disease threats. In this regard, I want
    to reaffirm our position that the Anthrax Vaccination Program is a
    critical force protection tool for U.S. military forces. USEUCOM
    appreciates the vigorous support expressed by the Joint Chiefs of Staff
    and the services to support this program. We believe safe and effective
    vaccination, when available, is our best defense against both natural
    diseases and bio-terrorist weapons, and we are looking forward to the
    imminent re-institution of the Total Force vaccination policy for
    anthrax.
        Force Health Protection encompasses more than immunization
    protocols. It is a total approach to maintaining the health of our
    deployed forces. A revised Joint Staff Memorandum on Deployment Health
    Surveillance became effective on March 1, 2002. This memorandum, which
    we are working hard to implement, mandates a detailed program of
    medical surveillance to detect disease outbreaks as quickly as
    possible. In the absence of adequate capabilities to detect and
    identify pathogenic warfare agents, this near real-time disease
    reporting initiative provides our most timely detection system for such
    events. By keeping our forces healthy in a deployed environment we
    preserve their fighting strength and reduce forward medical
    requirements.
        Past conflicts were medically characterized by deploying large
    hospitals in the field, with the idea that patients could be treated
    and, if possible, returned to duty without being evacuated. In part,
    this philosophy was driven by the inability to effectively stabilize
    and transport patients quickly from the area of conflict. Modern
    technology has altered this situation and our military medical forces
    are now stabilizing critically injured patients closer to the forward
    edge of the battle area than ever before through the use of forward
    surgical teams.
        During Operation Focus Relief last year, for example, we placed a
    forward surgical team on the ground in Nigeria to support the Special
    Forces train and equip mission. While attempting to defuse an
    unexploded light anti-tank weapon, one of our soldiers lost his life
    and another was critically wounded. The injured soldier was operated on
    and stabilized by the forward surgical team, and then evacuated to our
    Theater medical center in Landstuhl, Germany for definitive care.
    Without a large field hospital, this soldier's life was saved using
    highly trained medical specialists and responsive patient movement
    systems. We currently have similar forward surgical teams in the
    Balkans and in Nigeria and are preparing to field teams in support of
    the upcoming mission in Georgia as well. In addition, these teams are
    critical to USCENTCOM efforts in Enduring Freedom. Given the demands
    for these teams, they are routinely in short supply.
        Stabilization of the injured far forward is only feasible when we
    can combine this effort with a responsive patient movement system.
    United States Air Forces in Europe (USAFE) uses organic C-9 Nightingale
    medical evacuation aircraft and opportune strategic lift from United
    States Transportation Command (USTRANSCOM) to execute USEUCOM's patient
    movement mission. Our Patient Movement Requirements Center at Ramstein
    Air Base, Germany covers both the USEUCOM and USCENTCOM areas of
    responsibility in peacetime and during contingency operations.
    Currently, it is fully engaged in supporting Enduring Freedom
    operations.
        Moving a stabilized patient from a forward location to definitive
    care is only half of the equation. Many critically ill patients also
    require in-flight care provided by specialized critical care transport
    teams. USEUCOM in-flight medical teams were instrumental in saving the
    lives of the U.S.S. Cole crew members injured in the terrorist attack
    off the coast of Yemen. In this rescue effort, our most critically
    injured sailors were initially treated by French surgeons in Djibouti
    then aero-medically evacuated for definitive care to the Landstuhl
    Regional Medical Center using the Critical Care Air Transport Teams.
    Like the Forward Surgical Teams, these air transport teams are highly
    trained assets. They are critical to stabilizing and rapidly evacuating
    our people to a higher level of care.
        The final phase of our medical treatment to support contingency
    operations depends on the continued ability to maintain the quality
    care, infrastructure, and range of medical specialties available at our
    fixed-base clinics, community hospitals, and medical centers. Our
    concept of evacuating patients to central facilities such as Landstuhl
    Regional Medical Center means that we can obtain maximum productivity
    from very highly specialized physicians, such as vascular surgeons and
    burn specialists. We bring the patients to the specialists rather than
    trying to take the specialists to the place of injury. Maintaining the
    physical infrastructure and the state-of-the-art training of medical
    staff that takes place at these facilities is essential.
        Having addressed our medical support pillars of force health
    protection, forward stabilization, and evacuating our injured
    servicemembers to definitive treatment, I would like to briefly touch
    on a series of coalition partner medical initiatives that are well
    entrenched in both the European and Central Commands.
        Among the Unified Commands, European Command is unique in that it
    works daily with North Atlantic Treaty Organization (NATO) and
    Partnership for Peace nations. We have many years of experience in
    allied and coalition operations, experience heightened by our past 6
    years in the Balkans. I want to specifically highlight our Multi-
    national Integrated Medical Unit initiative in Kosovo. Each of the five
    Kosovo sectors operated by the U.S., United Kingdom, France, Germany,
    and Italy has a significant hospital, but across the Kosovo province,
    an average of only 15 percent of these hospital beds are utilized at a
    given point in time. At Camp Bondsteel, in our Multi-national Brigade
    East sector of Kosovo, we have developed, along with the British
    Forces, a medical facility staffed by both American and British health
    care providers. It provides world-class medical support to all NATO and
    coalition forces in the British and American sectors of Operation Joint
    Guardian. The agreement that established this facility has been used by
    the U.S. Central Command as a template for coalition medical operations
    in Operation Enduring Freedom, and I believe that this type of
    international and coalition cooperation is the wave of the future.
        Let me close by stating that this is an exciting time of great
    change in military medicine, one which is made more challenging by the
    fact that our people know more, and expect more, from their government
    and military. We at USEUCOM are proud to have the opportunity to serve.
    I am proud of the excellent medical support we are able to offer our
    deployed forces and our beneficiaries. On behalf of all military
    medical personnel in U.S. European Command, I wish to thank Congress
    for its continuing support of our Nation's sons and daughters serving
    overseas. I appreciate this opportunity to outline our concept of
    medical support, and will be pleased to provide you with any further
    information you may require.

        Senator Cleland. Thank you, Captain Hall.
        Colonel Jones.

     STATEMENT OF COL. STEPHEN L. JONES, USA, COMMAND SURGEON FOR
                     UNITED STATES SOUTHERN COMMAND

        Colonel Jones. Mr. Chairman, good morning and thank you for
    the opportunity to appear before you today and discuss this
    issue that is really of enormous importance, and that is the
    medical care we provide the men and women was defend our
    Nation. Since I have served as Command Surgeon at U.S. Southern
    Command, that has been my first priority.
        I would like to emphasize just three points from my written
    statement. First is that Southern Command has an aggressive
    Force Health Protection Program. We continually monitor the
    threat to our forces, and we take actions to mitigate those
    risks. We ensure that our commanders and our servicemembers are
    aware of the threat, that they are well trained, and that they
    are implementing the appropriate counter-measures.
        As an example, we require the use of protective masks on
    the flights from Kandahar to Guantanamo Bay. Because we
    instituted that action, 36 servicemembers on one flight and
    over 50 servicemembers on a second flight did not have to
    undergo a several-month drug regimen for the treatment of
    tuberculosis; because we have identified two detainees on those
    two flights with active TB.
        A second issue that I would like to highlight is that the
    Department of Defense provides the same standard of medical
    care in the field as we do in the garrison. Along with the
    commander of the hospital down at JTF Bravo in Honduras, I
    employed the same quality assurance program and provided the
    same standard of care as when I commanded the hospital at Fort
    Belvoir, Virginia, just down the road.
        The quality of the care that we provide is being
    demonstrated on a daily basis now in Guantanamo Bay. One
    detainee arrived from Afghanistan with multiple combat wounds.
    He had malaria, active tuberculosis, and he weighed only 78
    pounds. But today he is recovering in the Fleet Hospital, and
    his weight is up to 98 pounds.
        The Red Cross physician that examined him in Kandahar
    before he flew to us pulled me aside and told me that he was
    dying of tuberculosis. It is a testament to the care that they
    are providing in Guantanamo Bay that this detainee is doing
    well.
        Finally, I would like to emphasize that the ability to
    provide high-quality care on the battlefield requires realistic
    and rigorous training, and not only for our medical personnel,
    but also for our soldiers and, in your cases you mentioned, a
    mortar squad leader.
        As an example, when I was the Division Surgeon in the 25th
    Infantry Division, I would go to the field and take one of the
    family practice docs from the clinic at Schofield Barracks, and
    that is Ron Maul, who is sitting just down from me. It was
    important to have him out in the field, practicing with his
    unit learning how to deploy and provide care in an austere
    environment. But we also recognize that there is a cost to
    that, because while he was in the field, he was not able to
    provide care to the family members back at Schofield Barracks.
        In conclusion, Mr. Chairman, the United States Southern
    Command recognizes our responsibility to the men and women who
    defend our Nation. We recognize the risks they face on a daily
    basis and we are committed to providing them with compassionate
    and quality care.
        Thank you, again, for your steadfast support and the
    opportunity to discuss these issues. I look forward to
    answering your questions.
        [The prepared statement of Colonel Jones follows:]
                Prepared Statement by Col. Stephen L. Jones, USA
        Mr. Chairman, Senator Hutchinson, and members of the committee. I
    appear before you today to discuss an issue that is of enormous
    importance, the medical care we provide America's sons and daughters
    who are defending our Nation. On behalf of the men and women of the
    United States Southern Command, I extend my sincere appreciation for
    your efforts to ensure that they are supported by a world class
    military health care system. I have served as Command Surgeon since
    September 8, 2000, and the protection of the health of our soldiers,
    sailors, airmen, marines, and coast guardsmen has always been my first
    priority. I welcome the opportunity to present the Force Health
    Protection Program of the United States Southern Command.
                                deployed forces
        Currently there are over 6,000 servicemembers deployed to 31
    countries in Latin America and the Caribbean. These forces are
    participating in our global war against terrorism, and are conducting
    engagement activities to strengthen democracy, promote prosperity, and
    foster regional stability.
        Joint Task Force 160 and Joint Task Force 170 are conducting
    detainee operations in Guantanamo Bay, Cuba. Joint Task Force Bravo
    operates a C-5 capable airfield at Soto Cano Air Base, Honduras, and
    provides command, control, and logistical support to operations and
    exercises in Central America. Joint Inter-Agency Task Force East
    provides planning and tactical command of over 30 counterdrug
    operations annually. Additionally, Security Assistance offices in 26
    countries are conducting security cooperation activities.
               medical threat in latin america and the caribbean
        Our deployed forces face numerous medical threats while executing
    their missions. Among these are tropical diseases not present in the
    United States such as malaria and dengue fever. There are over 200
    species of poisonous snakes in the region. Other threats include
    accidents, sports injuries, heat/cold injuries, altitude sickness,
    crime, and environmental hazards.
        Southern Command has long recognized the threat to our forces from
    terrorism. Detainee operations now pose unique challenges. We remain
    alert to the security risk while transporting, guarding, interrogating
    and providing detainees with medical care. Aggressive measures are
    required to prevent the transmission of diseases such as tuberculosis
    to our forces.
                        force health protection program
        Southern Command conducts an aggressive Force Health Protection
    Program to maintain a healthy and fit force, prevent disease and
    injuries, and provide compassionate and quality care. The program
    emphasizes fitness, preparedness, and preventive measures.
        The Surgeon's staff continually monitors the health threat to
    deployed forces and ensures that commanders and individual
    servicemembers are both aware of the threat, and are implementing
    appropriate countermeasures. Crew members and security escorts
    transporting detainees from Kandahar to Guantanamo Bay are required to
    wear protective masks during the flight. Although one detainee has been
    found to have active tuberculosis, the 36 service personnel on his
    flight are not being subjected to several months of anti-tuberculous
    drug therapy because appropriate precautions were taken.
        The Southern Command Emergency Medical Response Program assesses
    the capability of host nations to respond to terrorist incidents at our
    Embassies and Security Assistance Offices. During each assessment,
    instructors from the Army Medical Department Center and School train
    Department of Defense and State Department personnel in Self Aid and
    Buddy Aid. Two weeks after this training was conducted in the Dominican
    Republic last year, a Foreign Service Officer fractured his neck in a
    bicycle accident. An Embassy staff member, who received the training,
    immobilized his spine and instructed the ambulance crew on the
    appropriate method of transporting him. Because of her actions, the
    Foreign Service Officer did not sustain any neurological impairment and
    was evacuated to Miami for treatment.
        Fixed medical treatment facilities in theater include the U.S.
    Naval Hospitals at Roosevelt Roads and Guantanamo Bay, and Rodriguez
    Army Health Clinic, Ft. Buchanan. Deployed hospitals include the Joint
    Task Force Bravo Medical Element and Fleet Hospital 20 at Guantanamo
    Bay which provides Level III Care to detainees.
        Small units may deploy with their medic or independent duty medical
    technician to provide limited sick call services. Larger units may
    deploy with a battalion aid station. On major exercises such as New
    Horizons, a more robust medical element with limited patient holding
    capability may be established.
        In the past year, Southern Command developed deployable teams at
    Joint Task Force Bravo and Roosevelt Roads to provide forward
    resuscitative surgery. These teams can deploy rapidly with their
    equipment in 5 backpacks and perform life- and limb-saving procedures.
        Department of Defense medical personnel provide the same high
    quality treatment to servicemembers whether in garrison or in the
    field. While commanding the Medical Element of Joint Task Force Bravo
    in Honduras, I conducted the same Quality Assurance Program and
    provided the same standard of care as when commanding the hospital at
    Ft. Belvoir, just down the road.
        The quality of this care is being consistently demonstrated in our
    operations at Guantanamo Bay. The staff of Fleet Hospital 20 recognized
    progressive lower extremity paralysis and the development of
    incontinence in a wounded detainee newly arrived from Afghanistan.
    Using an Army mobile CT scanner, they discovered an abscess compressing
    his spinal cord. After emergency surgery and antibiotic therapy, the
    detainee is now able to walk with assistance and has had return of his
    bowel and bladder function.
        Host nation treatment capabilities vary widely throughout Latin
    America and the Caribbean. In several major cities, medical care meets
    U.S. standards. In remote areas, however, host nation capabilities are
    limited. TRICARE Latin America & Canada (TLAC) provides the TRICARE
    Overseas Program benefit to beneficiaries in the Region. Active duty
    and their family members are eligible to enroll in TRICARE Prime
    Overseas. The TLAC travel benefit provides emergent and urgent care to
    active duty personnel deployed, on temporary duty, or on leave. TLAC
    has contracted with International SOS to develop a provider network,
    24-hour call center, case management and claims payment. A
    credentialing process assures the quality of providers in the network,
    and care is cash-less and claim-less.
                               medical readiness
        Southern Command plays a major role in maintaining the medical
    readiness of our Active and Reserve forces. In fiscal year 2002, we
    will conduct 67 Medical Readiness Training Exercises. These exercises
    significantly enhance the readiness of our forces as they learn to
    deploy and provide care in an austere field environment. On January 9,
    2002 members of the Army's Institute of Surgical Research deployed to
    Peru and received outstanding training while providing care to the 162
    survivors of the Mesa Redonda fire.
                                 the way ahead
        Southern Command will continue to conduct Force Health Protection
    activities to promote a healthy and fit force, prevent illnesses and
    injuries, and provide world class medical care to our servicemembers.
    Working with the Walter Reed Army Institute of Research and the U.S.
    Naval Research Lab in Lima, we will expand the Department of Defense
    Global Emerging Infections System, and our ability to detect new
    threats. We will continue to improve the readiness of Active and
    Reserve medical units through our Medical Readiness Training Exercises.
    Activities to professionalize the medical departments of the region's
    militaries, and improve the capabilities of governments to respond to
    disasters, will also enhance their ability to provide care to our
    servicemembers and their families.
                                   conclusion
        In summary, Mr. Chairman, the United States Southern Command
    recognizes our responsibility to the men and women who defend our
    Nation. We recognize the threats they face, and we are committed to
    providing them with exceptional care. Thank you again for your
    steadfast support and for providing me the opportunity to discuss these
    issues.

        Senator Cleland. Thank you very much, Colonel Jones.
        Colonel Maul, I would like to focus on the incident about
    10 days ago, where some four Rangers and one airman died. Those
    four Rangers were stationed in Georgia at the 75th Ranger
    outfit there, and the airman was from Moody Air Force Base.
        Five out of the eight that were killed happened to be based
    in my state. Can you tell me a little bit about the involvement
    of the forward health care personnel that were in direct
    support of that operation, and what was their involvement?
        Colonel Maul. Yes, sir. One success story of Operation
    Enduring Freedom is the first line point of wounding care that
    we have been able to provide.
        Sir, this has been a very intense campaign from the
    standpoint of special operations forces of which these Rangers,
    which you speak of, were members. The special operations forces
    community is very intense when it comes to their medical
    capabilities.
        I am sure you have heard of the special force medics on the
    Army side, the 18 Deltas. They basically are paramedic trained,
    have the special skills, equipment necessary to provide point
    of wounding immediate care, and these types of incidents and
    success stories have been demonstrated many times over in
    Afghanistan--most of which do not make or meet press release
    requirements.
        These obviously did make the press and so forth, but in
    answer to your question, Senator, the health care that is in
    the field with our forward line troops--and not just with our
    special operations forces--but with our conventional forces
    from the 10th Mountain Division or 101st Airborne Division, for
    example, also on the recent Operation Anaconda in Afghanistan,
    have their own organic medics with them. They have non-medical
    troops trained in what we call ``combat lifesaver capabilities
    and techniques,'' so we are very pleased and very proud of our
    capability to provide immediate care at the point of wounding.
        Senator Cleland. I would like for all of you to put on your
    philosophical cap for just a moment. I have been trying to
    think through the impact of September 11, by shifting our focus
    in terms of being on the strategic offensive against terrorists
    versus basically against, shall we say, nation states.
        I am in my sixth year here, and we have bombed Saddam
    Hussein twice. We have gone into Bosnia. We have had a war with
    Milosevic. Now we are in a war against terrorism, particularly
    the al Qaeda and Osama bin Laden.
        In some ways, the war against nation states has certain
    rules of engagement. For instance, POWs may be taken on both
    sides. However in the war on terrorism, it is painfully
    obvious, it is a take-no-prisoners world. The terrorist does
    not seek land or regime survival. The terrorist seeks massive
    destruction of, believe it or not, primarily civilian
    casualties on the other side.
        We saw that when the young airman was down, and he was
    promptly, in effect, assassinated, take no prisoners. I wonder
    in this environment for our forces that are going to be
    deployed if we don't need to maybe ratchet it up a little bit.
    The concept which we see dramatically in the two movies out,
    ``We Were Soldiers,'' which was my old unit, First Air Cavalry
    Division, and ``Black Hawk Down,'' was that they would leave no
    one behind.
        In other words, part of that is going back in for a wounded
    soldier. You saw that in the movie, ``Black Hawk Down,'' where
    a soldier fell out of the chopper, and it caused the chopper to
    stay on site. Ultimately it got hit and went down. The point
    being, I think the ethic of ``leave no one behind'' is
    powerful. It keeps us all focused on looking after one another.
    I think we need that.
        But in a world in which terrorists take no prisoners, it is
    maybe even more important to train all of our young men and
    women that are going to be in harm's way in how to take care of
    one another.
        I know there is standard training out there, and I know
    there is accelerated training for special operations forces. I
    wonder in your line of work--and all of you have been in this
    business for a long time--if that thought has crossed your
    mind. There are new rules of engagement, and it may be in the
    mountains of Afghanistan. It may be in the jungles of the
    Phillippines. It may be in Indonesia. It may be in Africa;
    perhaps Somalia again.
        When our forces are sent there, it does look like the
    people on the point of the spear, the young sergeants, the
    young corporals, the young lieutenants, the young captains, the
    young chopper pilots, the people who really are in the thick of
    the action that must be trained to a new level in order to deal
    with this new world that we are facing. Has that thought
    crossed your mind from time to time?
        Colonel Maul.
        Colonel Maul. Indeed, it has. I might say that part of
    whenever you have a situation where U.S. military forces either
    return to a site to recover remains of a servicemember who has
    been killed in action or to free a servicemember who is alive
    that has been captured, I would submit that part of that is the
    American ethic that you described. But part of that also is
    training.
        We do have in our ethos the creed that we will look out for
    each other, that we will take care of each other, and so forth.
    We actually expect that of our buddies. There have been many
    tales already in this particular campaign.
        What comes to my mind are the marines who first landed at
    Camp Rhino in Southern Afghanistan and later established a base
    at Kandahar Airfield, the first Americans there. In my personal
    dialogue with them on one of the trips that I have made to that
    area, they commented how they were constantly being told, being
    trained to look out for their buddies.
        This war particularly true in the aspects of where they
    went. That country still is very riddled with land mines and so
    forth, and they were taught never to wander off by themselves,
    for example.
        So our servicemembers had that ingrained, but clearly with
    the new enemy that we are facing--and we have faced for these
    last 5 months in Enduring Freedom--yes, we have to be very
    cognizant of the fact that the enemy we are fighting now does
    not take prisoners. There is a mandate to kill Americans. Not
    capture Americans, but kill Americans.
        Senator Cleland. Right, exactly.
        Colonel Maul. So, you are exactly correct that heightened
    awareness is required. Our commanders are teaching that.
        Senator Cleland. Admiral Mayo, you have the Phillippines,
    right?
        Admiral Mayo. Yes, sir.
        Senator Cleland. Has this thought come to your mind?
        Admiral Mayo. Yes, it has. Not only the Phillippines, but
    over the past 2 years or even since the Gulf War, we have been
    focused a lot more on that. Right now with the global war on
    terrorism, as we are sending troops into more medically
    hazardous locations, we have to be very astute. We have to do
    our homework real well to prepare the troops before they go in,
    whether it is with our occupational health assessments or our
    environmental assessments of the area and its endemic disease.
        In a lot of the countries, at least in our AOR, it differs
    from location to location. Our personnel have to be trained
    before they go on what is there, what they have to do for
    preventive measures, how to help each other.
        We also have to try to provide them, not only now but in
    the future, easier ways of doing this. We will. Malaria has
    been mentioned once. Malaria and Dengue fever are things that
    occur in our theater in many locations, as well as many others.
    I pick on those, because right now, at least there is not a
    treatment or a pre-treatment for Dengue, but with malaria, our
    people have to take medications or multiple pills before they
    go, while they're there, and after.
        Compliance can be an issue. You begin to forget doing it.
    We have to have better ways of dealing with it, such as it's
    creating a vaccine, which, in fact, the DOD medical personnel
    are researching in labs there, as well as here in Washington,
    to try to come up with a vaccine to eliminate that.
        That is just an example, and there are a lot of others that
    may be predictable. But whether they are biological infections
    that occur naturally or unnaturally, we just have to be more
    astute with all of them.
        Senator Cleland. General Green, any comments?
        General Green. Sir, we have found that, with our air-evac
    forces far forward now, that we are being asked to actually fly
    on some fairly hazardous missions. In one C130 mission out of
    Uzbekistan, we had some of our critical care teams, who are not
    fully trained in survival in combat operations, where the
    aircraft took two or three RPGs fired at it and one man--
    fortunately, they were not hit, but it has clearly identified
    that we need to train these people to a different level. So I
    agree with your position. We are working on that training now.
        Senator Cleland. Captain Hall, any comments?
        Captain Hall. Yes, sir. We certainly have considered this
    as well. The type of operations that we do in European Command
    oftentimes involve countries down in Africa where hemorrhagic
    fevers, malaria, you name it, are down there.
        So the whole force health protection requirement that we
    all have can be very, very extensive. When folks are going down
    to these countries, we normally will work with both the medics
    who are going to be going with them as well as the troops
    themselves, ensuring that they understand that the requirements
    and the possible problems that they are going to have there and
    ensuring that they are fully prepared.
        This is essential to how we do business. It is certainly
    something we cannot ignore.
        Senator Cleland. Colonel Jones, comments?
        Colonel Jones. Yes, Mr. Chairman. Thank you. Southern
    Command has long recognized the threat from terrorism in our
    AOR, particularly since the bombings of the Israeli Embassy in
    Argentina in 1992 and the Jewish/Argentine Cultural Center in
    1994.
        We have instituted a program that we call our Emergency
    Medical Response Program. The first part of that program is to
    assess the capability of the host nations to respond to a
    terrorist incident in one of our embassies or military groups
    in country.
        We take a look at the ambulance services, the fire
    departments, and the medical facilities there, so that we can
    understand what type of care they can provide. But more
    importantly we also provide first aid training for the Embassy
    staff; and buddy aid train, on how to take care of each other
    in the event of an incident.
        I have a good example of the effectiveness of this training
    that occurred just last year. We conducted some training in the
    Dominican Republic. Two weeks after the team from the AMED
    Center and School in San Antonio left, one of the Foreign
    Service Officers in the Embassy ran his bicycle headlong into a
    concrete barrier and fractured his neck.
        One of the Embassy staff members who attended the training
    responded to the incident, and she was able to stabilize his
    spine. She directed the ambulance crew on the appropriate means
    to transport him to the hospital after the accident.
        Because of her quick action and training, the foreign
    service officer did not have any paralysis and was able to be
    transported to Miami for treatment. We have completed this
    program throughout the AOR and are going back now, on a
    recurrent basis, to the assessments and the training as well.
        Senator Cleland. Thank you. It does seem to me that the
    powerful ethic of the military that we will not leave anybody
    behind and that the servicemen and women knows that is
    dramatically reinforced in your world. If something bad does
    happen to you, if you do get hit, then your buddies, your
    fellow servicemen and women, are trained to help you out as
    the, shall we say, first responders.
        In my case, the first guy to me on the battlefield was a
    young marine who was an expert in mortars. He was not an expert
    in health care, but he had some basic rudimentary understanding
    of what to do in a crisis.
        The second guy to me was actually a Navy corpsman, and the
    third guy was a marine. So the first people to me that really
    stabilized me and helped save my life were just buddies. They
    just happened to be there. They were the so-called ``first
    responders.''
        It does seem to me that your mission out there is a
    powerful one, and that it reinforces the basic ethic that gives
    our young men and women confidence in going into harm's way;
    particularly now in this war on terrorism, a war without rules,
    take no prisoners, without lines, without particularly any
    rules of civilized warfare or engagement in, shall we say, the
    netherworlds of the earth, the mountains of Afghanistan, the
    jungles of the Philippines, the villages of Africa.
        These are not the plains of western Europe that we are used
    to fighting on with rules of engagement, the Geneva convention,
    POW status, and everything else.
        I think this war on terrorism brings with it some new,
    frightful consequences, and a need to dramatically invest
    ourselves in taking care of one another, particularly if bad
    things happen. Let me conclude.
        We are going to have a vote around 11:15. I would like to
    ask each one of you, what do you think the United States
    Congress should do, and could do now, to help you with your
    mission?
        Admiral Mayo, if you would just like to give us a sense of
    what we ought to be doing, or what we ought to be thinking
    about to help you help our young men and women survive.
        Admiral Mayo. Yes, sir. I think you have hit on a few of
    the points already, Senator. From the PACOM AOR, as well as
    probably in all AORs, we need your continued support for the
    health care program.
        I mentioned TRICARE and emphasize it for a reason, because
    without that, our deployed personnel will not feel comfortable
    being alone with their families back home, questioning whether
    there is care available. So, continuing to fund that adequately
    is very important for the morale and to keep the members,
    deployed in isolated locations, focused on their mission.
        In the same vein, as the Department is working on medical
    surveillance tools; we have to make sure that we can get those
    sooner rather than later for the reasons you mentioned. With
    the global war on terrorism, things are more important today
    than planning for the future.
        We have to ensure that not only for our homeland, but also
    for our deployed forces, that we have realtime ways of making
    that determination.
        We also need, in our theater and probably all theaters, a
    mechanism to have assured and safe vaccines before deployment
    for personnel for whatever the vaccines are. This is one of the
    ways to help protect our personnel when they deploy into harm's
    way.
        Thank you, Mr. Chairman.
        Senator Cleland. Thank you.
        General Green.
        General Green. Yes, sir, I agree with what Admiral Mayo has
    said. I am going to stick specifically with TRANSCOM business
    and tell you that over the next years, there are some gaps in
    strategic airlift.
        The C-141, which has been a mainstay in air-evac, is due to
    retire in 2006; the C-9 is aging. We need your help in
    continuing the modernization of strategic lift. No particular
    agenda here, but just to say please stay focused. The air
    medical mission is vital, as you look at what is going to be
    planned in terms of modernizing our strategic fleet.
        Senator Cleland. That old C-141 was my hospital ship, my
    freedom bird home. Every time I see one, I get a little chill
    down my spine.
        But they are aging and will be phased out, and we have to
    keep your global reach now more global and more reach.
        General Green. Yes, sir, exactly correct.
        Senator Cleland. Thank you.
        Colonel Maul.
        Colonel Maul. Yes. As Senator Hutchinson remarked earlier
    about the hospital in the tents that he visited in Uzbekistan
    recently, that is an example of how we strive to maintain the
    same standard of health care in a combat environment that we
    provide our servicemembers and their families back home in the
    States.
        However, that comes with a great deal of cost. Just as our
    fixed facilities in the States, military treatment facilities
    in the States strive to modernize and maintain the
    technological edge in the health care arena, so must we also be
    able to do that in a deployed setting in a combat environment.
        Operation Enduring Freedom is full of so many success
    stories in terms of the medical care that we have been able to
    provide our servicemembers who are deployed. They are not just
    in Afghanistan, but aboard the ships in the Arabian sea and et
    cetera.
        We have the gold standard in the world. No one I will
    submit openly here, that no one can do what the U.S. military
    medical system can do in terms of establishing, taking to the
    servicemembers, and taking to the battle a world-class health
    care system.
        We just ask for your continued support in helping us
    modernize, helping us transform, helping us maintain the
    technological edge and superiority that we have to have to
    maintain that high standard of care. Thank you very much.
        Senator Cleland. Thank you, Captain Hall.
        Captain Hall. Thank you, Mr. Chairman. This question
    actually goes back to my final point, which was my shopping
    list. Rather than repeating it, I would echo what Colonel Maul,
    Admiral Mayo, and General Green have said that the technical
    superiority and the ability to provide this technical
    superiority out to the troops, wherever they are, is incredibly
    important.
        But unless we are working toward advances, we are going to
    be falling behind rather than proceeding ahead, so that the
    deployable medical facilities that I talked about before, the
    safe and effective vaccines and the medical surveillance, which
    each of us have talked about in turn, I think are incredibly
    important.
        The whole thing of TRICARE does not just provide for the
    families back on the home front, it also provides for a fit and
    healthy force. That is incredibly important as well, so that
    your continued support of TRICARE is very important to us.
        Senator Cleland. Thank you.
        Colonel Jones.
        Colonel Jones. Thank you, Mr. Chairman. I do not need to
    repeat the comments of my colleagues here. I just need to thank
    you again for all the support and say that we have a world-
    class health care system, and we will continue to improve it.
        Senator Cleland. Thank you very much. Winding up on a high
    note, for those who came back from being wounded in the recent
    operation in Afghanistan, where 8 servicemen were killed, it is
    interesting to note that out of the 49 others who were wounded,
    apparently 34 are back on duty, which is quite a testimony to
    them and to all of you. Thank you very much for coming.
        The subcommittee adjourned.
        [Questions for the record with answers supplied follow:]
     Questions Submitted by Senator Max Cleland and Senator Tim Hutchinson
                                lessons learned
        1. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, last fall, DOD proposed a new TRICARE delivery strategy called
    T-NEX (TRICARE Next Generation). The proposal called for the
    ``unbundling'' of the successful regional TRICARE contracts into
    component parts of healthcare delivery, claims processing, marketing
    and education, etc. DOD did not consult with Congress prior to
    announcing T-NEX, a proposal that would dramatically alter the existing
    TRICARE program. The Fiscal Year 2002 Defense Appropriations Conference
    Report provides clear direction to DOD to confer with Congress prior to
    proceeding with any public proposals for significant structural changes
    to TRICARE managed care support contracts. What are DOD's plans for
    consultation with Congress on its procurement strategy for any upcoming
    TRICARE contract modifications?
         Dr. Winkenwerder. The direction provided in the fiscal year 2002
    Defense Appropriations Conference Report is understood and is reflected
    in the T-NEX Communications Plan. The Department did receive very
    constructive input from industry based on a deliberate attempt to float
    a viable concept proposal for comment and consideration. The industry
    forum held in October 2001 did result in the refinement of our concept
    of unbundling Administrative Services such as claims processing from
    Healthcare Delivery requirements. The direction we are heading in will
    result in regional contracts that are similar to what is in existence
    today with only retail pharmacy and some overarching elements of
    marketing and education being carved out.
        The Department's communications plan incorporates consultation with
    Congress prior to going public with solicitation documentation. The
    major decisions resulting in change in procurement strategy will be
    shared with Congress during the very beginning of our external
    coordination process. I have included a slide to more clearly
    illustrate our steps.

        2. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, in developing the T-NEX contracts, did you review the current
    contracts to identify which components worked well and which ones did
    not in order to incorporate specific ``lessons learned'' into the new
    procurement approach? Please describe the ``lessons learned'' that you
    are going to address under T-NEX and how you plan to address them.
        Dr. Winkenwerder. Yes, we accomplished a number of reviews of the
    current contracts over the last 5 years to determine which component
    and which approaches are most suited to the delivery of unique services
    required by the Department. These reviews were accomplished with
    representatives of industry, current contractors, beneficiary groups,
    consultants, and representatives of our Military Treatment Facilities,
    Lead Agents, and Surgeons General. From these many sessions and our
    daily management of and initiatives to improve the current contracts,
    we've learned that the focus of future contracts must be on the
    Government's high level objectives. This focus encourages prospective
    contractors to offer contemporary approaches for achieving the
    Government's required outcome. This focus is included in our initial
    drafts of T-NEX. This focus, however, does not eliminate Government-
    specific tasks. These defined tasks were specified only after careful
    review to determine if industry practice and/or inconsistent
    administration of the program through the application of best practices
    by various contractors could not be accepted. Examples of these
    specific requirements include a Government mandated appeals system to
    ensure beneficiaries are treated fairly, a legislatively directed
    reimbursement system, automatic data processing (ADP) interfaces with
    Government systems, and covered benefits.
        We've also learned that it is critical to structure the contracts
    in a manner that incentivizes the contractor to deliver the services
    while also holding the contractor fiscally responsible for failure to
    perform.

        3. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, in developing T-NEX, how did you take into account industry
    trends and best practices? Please provide specific examples of how the
    industry best practices were incorporated into T-NEX.
        Dr. Winkenwerder. When discussing ``Best Practices,'' there is no
    single ``industry wide'' best practice. Rather, most third-party payers
    have their own proprietary best practices that are used in responding
    to their clients. Within TRICARE we will adopt the best practices of
    the winning bidder for each contract. The key we have emphasized
    throughout the development process is to mandate outcomes, rather than
    prescriptive processes, wherever possible. This allows the winning
    contractor to use their proven techniques to manage TRICARE and, more
    importantly, to continuously improve upon these techniques as the
    situation, technology, or other factor dictates. The T-NEX contracts
    will be structured to allow contractors to implement contemporary best
    practices without requiring a Government change order.

        4. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, we are aware that a consultant provided recommendations for
    the design of the T-NEX contracts. Please describe the recommendations
    you incorporated and why you chose to do so as well as the
    recommendations you chose not to use and why.
        Dr. Winkenwerder. In the aftermath of the operational hold on
    further development of TRICARE 3.0, a consultant received a Government
    contract to support the Defense Medical Oversight Committee (DMOC) in
    concert with their analysis of what steps should be taken to improve
    the structure and direction of the Defense Health Plan (DHP). Some of
    the consultant's recommendations that specifically address medical
    acquisition strategy have been included in T-NEX strategy and concept
    of operations.
        Summary of adopted strategies: A number of consultant's Business
    Planning Recommendations were reviewed and found suitable with minimal
    modification. One qualifier to note relates to specific references to
    ``58 Market Managers'' and ``38 Integrated Delivery Systems (IDS)
    Managers.'' Our adopted strategy incorporates elements of their local
    market concept, but instead, focuses on Empowered Lead Agents versus a
    multitude of IDS Managers. This practical adaptation allows the
    department to better accommodate many of their other recommendations.
    TMAs updated expectations of ``empowered'' TRICARE Regional Offices
    (TRO) is supplemented to include a limited number of ``Market
    Managers.'' Our concept is modeled around ``Market Managers versus IDS
    managers and centers around established referral patterns in our direct
    care system. The use of the term Market Manager better reflects our
    concept of operations than does the IDS Manager Model. This concept
    favorably reflects elements of their advice. Other adopted strategies
    include:

             Operate regional business enterprise with managers who
            do budget and planning in coordination with the services over
            all DHP resources in their region
             Local control over all DHP expenditures where possible
             Accurate performance information on their region
             Locally developed tactics for optimization and
            recapture to direct care system

        From a system-wide perspective our strategy of national control and
    regional implementation encapsulates the following additional
    recommendations:

             Contract for health plan services (similar to large
            employers)
             Purchase administrative services on a firm fixed price
            basis where possible

        Some of the main features of our procurement development activities
    include:

             We held a Government Industry forum in October to
            obtain industry input and put them in the context of the MHS
            health plan
             Our requirements documents are being built by cross-
            functional Working Integrated Program Teams
             We are shortening the selection process by utilizing
            ``Commercial Buys'' to the greatest extent possible
             We are aligning performance incentives for maximum
            flexible response by the government and creating easy to track
            performance guarantees that will require demonstrated savings
             The consultant helped justify Pharmacy Benefit Carve-
            Out for award to a national vendor and also called for flexible
            choice for MTFs to choose support services they most desire
            through local TRO facilitated contracts.

        The pace and timeline of this program have required analysis of
    multiple recommendations from many sources combined with a series of
    lessons learned from the TRICARE 3.0 venture. Based on these inputs, we
    have made a major shift toward industry standards regarding how health
    benefits are managed. We are contracting for services in more discrete
    and industry standard groupings. We will try to limit benefit changes
    to annual pending legislative approval, and our fast paced contracting
    process will facilitate the replacement of poor performing vendors. The
    consultant's articulated ``elements of an optimal model'' have been
    understood and now help bolster the foundation of our adopted strategy
    and concept of operations.
        Conversely, the consultant recommendation to have DOD bear the
    financial risk for health costs (i.e. self-insure) is not widely
    accepted. Analysis and development of our financial model is still in
    progress. The specific elements of risk and/or risk sharing with
    contractors is not yet determined.

        5. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, what input has the Department solicited from existing TRICARE
    contractors to ensure best industry practices are included?
        Dr. Winkenwerder. Prior to the initiation of the T-NEX activities,
    Tricare Management Activity (TMA) senior management met with
    representatives of the Surgeons General and approved an outcome-based,
    best practices approach to the development of the contracting structure
    to continue the TRICARE program in all regions. Management approved the
    establishment of an integrated product team (IPT) (known as the request
    for proposal (RFP) Development Team (RDT)) to develop the concepts of
    the new performance-based contract. The RDT, composed of
    representatives from the Surgeons General, each TMA directorate, and
    each Lead Agent, developed the Government's objectives and
    requirements. Interspersed between these Government-only meetings were
    2 week-long public forums attended by health care delivery industry
    representatives to include the current TRICARE Managed Care Support
    contractors (MCSCs), consultants, and TRICARE beneficiary fraternal
    organizations. The RDT, upon considering the public's input, developed
    a draft RFP and posted it on the TRICARE website for comments. A third
    public forum was held to provide the government an opportunity to
    present the concepts contained in the RFP and once again solicited the
    public's input, which again included input from the incumbent
    contractors. Meetings on the retiree dental program, National Mail
    Order Pharmacy (NMOP) and contract design were held on January 10,
    2002, September 26, 2001, and October 25-26, 2001, respectively.
        The T-NEX contracts' development has greatly benefited from this
    public and industry input as many of the concepts developed for a best
    practices approach will be carried over into the new contracts. Our
    partnership with industry, to include all current TRICARE contractors,
    continues as evidenced by their active participation in the recent
    industry forums held for the TRICARE Retiree Dental Program, the
    TRICARE National Mail Order Program and the proposed design for the
    contracts to replace the MCSCs. These forums are invaluable as we
    continue to explore industry best practices to improve on the current
    TRICARE contracts structure while not changing the basic structure of
    the program. Occasional items of concern will dictate further input
    from industry. In each instance public notices will be posted followed
    by a comment period for e-mail comments.

        6. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, has the Department considered extending the best performing
    contracts and conducting limited test of its new T-NEX concept?
        Dr. Winkenwerder. Yes, we have considered this approach and we will
    continue to consider all possible options as we continue to develop T-
    NEX.

        7. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, the RFP for the current TRICARE contracts were large, complex,
    and costly to bid-all of which hindered competition. How are you going
    to avoid repeating this situation under T-NEX?
        Dr. Winkenwerder. The Department is in the process of replacing its
    current TRICARE contracts and, using the lessons learned from prior
    procurements, is preparing the RFPs in a manner that promotes
    competition among bidders. In particular, T-NEX requirements are less
    prescriptive, outcome-based, and have financial incentives weighted
    toward performance. Additionally, the Department has made it a priority
    to use best business practices as a means to promote competition among
    bidders. While the Department wants to maximize competition among
    prospective bidders, it will be important to ensure that the number and
    structure of these contracts are also manageable. In discussions with
    industry, there was considerable discussion about whether the T-NEX
    contracts should be structured as one national contract or even upwards
    to 50 contracts. Although this decision is close to being made, it has
    always been deliberated with an interest in maximizing competition.

        8. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, contractors allege that the prescriptive requirements of the
    current contracts restrict the use of best practices. How are you going
    to adjust the level of prescriptiveness to create best practice
    opportunities to improve cost efficiency and quality of care? Please
    provide specific examples.
        Dr. Winkenwerder. Our new contracts will be less prescriptive,
    thereby promoting the use of best practices by offerors. T-NEX is
    operationally predicated by ``objectives'' that represent desired
    outcomes. There is a wide latitude of freedom by contractors to propose
    their best business practices to achieve the outcome. In order to
    achieve consistency across the country, the Managed Care Support (MCS)
    contractors will meet with the Government on a quarterly basis to
    review ``current policies and procedures'' to determine where proven
    best practices from the participant's Government and private sector
    operations can be implemented in the administration of TRICARE. This is
    intended to help further TRICAREs leading role as a ``world class
    health care delivery system.'' There are also performance incentives
    associated with exceeding standards that will help drive efficiencies
    in meeting contractual obligations. It would be misleading to state
    that best practices will be entertained in all facets of T-NEX as the
    Department has certain areas where statutory requirements necessitate
    prescriptiveness; however, the Department is pleased that this will be
    the exception rather than the rule. Given our strong partnership with
    industry there are many areas where the Department welcomes best
    business practices--specifically in the areas of clinical management,
    population health and network management.

        9. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, more than 1,000 changes to the current contracts contribute to
    both program instability and funding shortfalls. How do you plan to
    deal with future contract changes to minimize or eliminate these
    problems?
        Dr. Winkenwerder. Contract changes are required due to benefit
    changes, updates to allowable amounts, improvements/new developments in
    the practice of medicine, base closures, the call-up of Reserve
    members, et cetera. Some of these changes will continue to occur in
    future contracts. But designing the new contracts as outcome-based,
    processes necessary to remain up-to-date with current trends in third
    party administrator procedures will be accomplished by each contractor
    through the implementation of their best practices for the delivery and
    financing of health care services without requiring change orders.
        In the fall of 2001, we built on the very successful Global
    Settlement initiative to develop an Integrated Product Team (IPT)
    approach for our current list of proposed contract changes. We grouped
    the changes in lots, and established IPTs with TMA experts in all
    facets of contract, program and product line management. To support the
    IPT process and facilitate resolution of the outstanding change orders,
    we implemented a temporary moratorium on contract changes. The IPTs are
    progressing well and we track their progress weekly.
        Now, TMA is expanding the IPT process to include our industry
    partners in a bilateral negotiation strategy for most currently
    mandated and future change orders. Under the bilateral process, TMA
    will meet with the Managed Care Support (MCS) contractors on proposed
    changes that have been approved for negotiation by the TMA Change
    Management Board, and discuss change-related concerns or assumptions.
    The goal of this initial meeting is to establish a framework and
    timeline for follow-on meetings. The follow-on discussions will be more
    detailed and focus on the contractors' change implementation approach
    and price. When a mutual understanding is reached, the contractor will
    submit a package that reflects the results of the meeting discussions.
    The Government team will review the proposal, and, if necessary,
    schedule additional meetings to resolve differences. Once a mutually
    acceptable negotiated position has been reached the supplemental
    agreement (bilateral modification) and the settlement documentation
    (Price Negotiation Memorandum) will be finalized. We expect this
    structured approach to stabilize the planning and budgeting processes,
    and increase the predictability of programmatic and financial
    requirements.

        10. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, complicating the design of the current contracts is the
    periodic adjustment to the contract price for health care costs. DOD's
    current method of adjusting these costs has been fraught with problems,
    including faulty assumptions regarding the shift in patient workload
    between military treatment facilities (MTFs) and the contractors'
    networks. In addition, contractors have expressed concern about the
    accuracy and completeness of the data used to determine MTF workload.
    How will you simplify and improve this adjustment process under T-NEX?
        Dr. Winkenwerder. The Department completely agrees and is
    considering a number of financial models for T-NEX that completely
    eliminate or replace the current Bid Price Adjustment (BPA) formula.
    The Department is aware of concerns about MTF data and is attempting to
    minimize the use of such data in contract pricing. We have solicited
    comments from the private sector to get their views, and are
    incorporating them into the new contracts as much as possible.

        11. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, current contracts have provisions that directly relate to MTF
    behavior, such as resource sharing. However, while good in concept,
    these provisions failed to achieve projected cost savings, which
    resulted in payments to some contractors. What type of provisions will
    you incorporate in T-NEX to ensure the sharing of resources and
    enhanced cooperation between the contractor and the MTF commanders that
    will ultimately result in increased cost efficiency?
        Dr. Winkenwerder. We are still evaluating the options available for
    financing the T-NEX contracts. In our assessment of the many available
    models, we are ruling out models that rely on projections of MTF
    capability and capacity. Concurrently, we are examining financing
    models to ensure that fiscal responsibility is properly assigned to
    either the contractor or the MTF and to ensure that contractors are
    directed to fully utilize the MTF before purchasing care in the
    civilian sector.

        12. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, in February 2000, DOD issued an RFP for a new TRICARE contract
    commonly referred to as TRICARE 3.0. This RFP was pulled 6 months later
    due to concerns about its design. Further, the contractors voiced
    continuing concerns about the level of prescriptiveness as well as
    concerns about the fairness of the structure for financial penalties
    and incentives. How do you plan to address or avoid these issues under
    T-NEX.
        Dr. Winkenwerder. The TRICARE, 3.0 RFP was withdrawn to allow the
    Department an opportunity to reevaluate our internal management
    structure as well as our data systems. This process began when a
    consulting firm was chartered to offer input and recommendations on a
    number of areas including management structure. The development process
    for T-NEX contracts was designed in a manner that does not rely upon
    DOD's decisions for regional governance and organizational structure.
    The contracting milestones will be appropriately achieved regardless of
    the number and location of TRICARE Regional Offices. Additionally, we
    were able to eliminate the concern with DOD's data systems by
    considering contract finance models that are not reliant on this data
    at the micro facility level, as was the case with 3.0. Positive and
    negative incentives are also being re-evaluated for application with
    contractor compliance performance standards.

                 rfp development and transition planning issues
        13. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, how many RFPs do you plan to issue? Please list the RFPs along
    with their intended functions.
        Mr. Carrato. Our current plans are to issue RFPs for the following
    services:

             Healthcare/Administrative Services: This RFP will
            include the majority of the functions included in our current
            Managed Care Support Contractors (MCSC) contracts. These
            functions include the provision of provider networks in areas
            surrounding all military treatment facilities and base
            realignment and closure sites; customer service and education,
            including TRICARE Service Centers; claims processing and
            reporting; and medical management.
             Marketing and Education: This RFP is designed to have
            a single contractor produce consistent marketing and education
            materials for use by the Health Care/Administrative Services
            Contractor, MTFs, Surgeons General, and TMA.
             TRICARE Retiree Dental Program: This RFP will continue
            the current Retiree Dental Program.
             TRICARE Mail Order Pharmacy: This RFP will continue
            the current National Mail Order Pharmacy Program.
             TRICARE Retail Pharmacy: This RFP will enable the
            Government to have a single, national contractor for retail
            pharmacy services. This single contractor will eliminate the
            problems traveling beneficiaries currently encounter with
            regional pharmacy contracts (as part of the larger regional
            MCSC contracts) while bringing the expertise of a specialty
            contractor to bear in managing the fastest growing segment
            (pharmaceutical costs) of health care.
             National Quality Monitoring: This contract will
            continue the quality monitoring services currently obtained
            through this contract.

        14. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, do you have a time line for issuing and awarding each of the
    RFPs? If not, when do you plan to have one? If so, please provide your
    timeline as well as your current progress compared to it.
        Dr. Winkenwerder. We do not have definite timelines for the health
    care/administration RFPs at this time as we are still in he process of
    developing requirements. In addition, significant contract related
    decisions have not been finalized. Once these key decisions have been
    made we will be able to develop timelines.

        15. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, what type of organizational structure and/or process do you
    have in place for developing the RFPs?
        Mr. Carrato. TMA has tailored program management principles as
    described (and governed) in the DOD 5000 Series instructions for
    purchased care acquisitions and major program changes. ``TMA,''
    approach is managed, resourced, and facilitated by the TMA Program
    Management Office (PMO) and TMA-appointed Project Managers. Although
    PMO has used program management concepts as a foundation for numerous
    successful projects, the first tailored use in an acquisition program
    resulted in the successful award of the TRICARE Dental Program (TDP).
    This $1.8 billion procurement was guided to completion using DOD 5000-
    tailored program management principles. Since activation 3 years ago,
    the Program Management Office's use of the DOD 5000 Program Management
    Model has led to completion of 23 major projects.
        Elements and Practices Taken from DOD 5000: The PMO Users Guide
    (TMA guidance document) and human resources applied to TMA projects
    follow a disciplined approach that includes structured project
    oversight and reporting protocols. Project Managers (PMs), with cradle-
    to-grave responsibility, report to a Program Executive Officer (PEO),
    who in turn reports to a Milestone Decision Authority (MDA). DOD 5000
    management tools and core documents also include Mission Needs
    Statements, Milestone Charts, Project Structure Charts, Phase and Gantt
    Timeline Charts, and administrative documentation associated with
    advancing the program. Project Managers lead cross-functional
    Integrated Project Teams (IPTs) that in some cases are further
    supported by sub-groups called Working Integrated Project Teams
    (WIPTs). Project deliverables are identified with a signed Charter and
    milestones are closely monitored. The T-NEX Acquisition Program has
    incorporated all of these elements as prescribed and modeled in DOD
    5000 Series documents.
        The attached slide illustrates our structure for producing Requests
    For Proposals.

        16. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, given DOD's continuing effort to provide as much health care
    as possible within the Military Treatment Facilities (MTFs) versus the
    contractors' civilian network, how will you accurately reflect the
    shift in workload in the RFPs?
        Dr. Winkenwerder. The Department has as an objective with its T-NEX
    contracts to optimize the use of the MTF and has maintained language,
    e.g., first right of refusal on referrals, etc., to ensure that this
    occurs. In addition, performance standards have been included to ensure
    that the contractor fulfills this objective.

        17. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, how do you plan to ensure that the data provided in the RFP is
    complete and accurate? For example, how do you plan to provide data on
    non-enrolled beneficiaries who are potential system users?
        Mr. Carrato. In the RFP, the Department will provide complete
    information on all defense-eligible individuals using data from the
    Defense Manpower Data Center (DMDC). The information will provide
    demographic data on enrollees, partial users, and total non-users
    alike. The information on partial and total non-users will inform
    prospective bidders about potential system users that are not currently
    enrolled. The Department will provide information on multiple years of
    purchased care claims for enrolled and non-enrolled beneficiaries, and
    on multiple years of care provided in military facilities for enrolled
    and non-enrolled beneficiaries. In addition, the Department will
    provide descriptions of the operating capabilities of military health
    care facilities obtained from the Service Surgeons General and the
    regional Lead Agents. Analysts from the TRICARE Management Activity
    will check the accuracy and completeness of all data prior to release.

        18. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, how will the RFPs address the issue of providing care in areas
    where there is a shortage of doctors willing to participate in the
    TRICARE program?
        Mr. Carrato. T-NEX will require the development and maintenance of
    provider networks surrounding Military Treatment Facilities (MTFs) and
    in Base Realignment and Closure (BRAC) sites. In these areas, the
    contractors have the ability to pay up to the legislatively mandated
    Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)
    Maximum Allowable Charge (CMAC). In addition, contractors will have the
    opportunity to pay bonuses, reduce administrative burdens, offer
    incentives such as payment within 10 days, et cetera. The key is that
    the Government will establish requirements for access (the timely
    availability of providers) in the contracts while allowing the
    contractors to implement their best practices to ensure adequate
    networks.

        19. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, please explain what role the Department of Veterans' Affairs
    (DVA) will play in T-NEX.
        Dr. Winkenwerder. First, we have been very deliberate in our
    efforts to bring VA desires relative to T-NEX to the table. The
    Overarching Integrated Project Team (IPT) now includes two senior DVA
    representatives who actively articulate VA interests in the T-NEX
    development process. This has the effect of creating an environment of
    greater understanding of how the two healthcare systems can participate
    in beneficial endeavors. An example of how this is being played out is
    best illustrated by the inclusion of VA desires for T-NEX in the agenda
    of IPT meetings.
        Seven items were presented for inclusion. Through the work of the
    project team, all but the major policy issues which center on the
    status of the VA medical facilities under T-NEX appear to be a definite
    ``go.''
        What I can say at this point is it is very likely we will include
    VA specific information in network provider briefings by contractors,
    and incorporate the use of TRICARE Service Centers by the VA for
    distributing information. We will also make our networks available to
    both Civilian Health and Medical Program of the Department of Veterans
    Affairs (CHAMPVA) and veterans on a voluntary basis without adding any
    encumbrances to the provider population.
        The VA would like CHAMPVA eligibles and Veterans to have access to
    TRICARE network providers at the same discounted rates and have the
    claims sent to appropriate locations. As stated above, this is
    achievable on a voluntary and case-by-case basis for referrals from VA
    Medical Centers.

        20. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, have you developed a plan to transition from the current
    contracts to T-NEX to ensure a seamless process for beneficiaries and
    providers? If not, when do you plan to have one? If so, please provide
    a copy of your plan.
        Mr. Carrato. We have analyzed our options on how these new
    contracts will be phased-in across the Nation. The transition plans and
    schedule, though not risk free, are being designed with our
    beneficiary's best interests at stake. We have implemented a
    Transition, Planning, and Integration workgroup composed of staff from
    the TRICARE Management Activity, the services and selected Lead Agent
    offices. They are tasked to integrate the development of all new
    proposed contract language, analyze the risks and develop transition
    requirements accordingly. We have instituted a proven program
    management support structure that helps mitigate transition risks. We
    understand that the uninterrupted provision of health care to all
    beneficiaries plus minimal disruption to our providers during
    transition is essential to the continued success of the TRICARE
    Program.
        As of yet there are no transition plans. This information will not
    become known until the RFPs are completed and proposals are received
    and discussed. The requirements for the plans will be spelled out
    either in each contract's RFP or a contract's companion operations
    manuals. In addition, proposed transition plans are submitted with each
    bidders proposals and are evaluated for completeness and integration.
    The actual plans are not fully developed until after award and all
    parties, government and contractors, meet to detail and integrate the
    required activities.
        Furthermore, we have developed a communication plan that includes
    contacting all stakeholders in a logical pattern so that no one is left
    out of the decisional, coordination, or information processes.

        21. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, to date, all of the TRICARE managed care support contracts
    have been protested, which resulted in delayed contract start dates.
    Given the likelihood of bid protests, what is your contingency plan for
    handling associated schedule delays?
        Mr. Carrato. The Department, in previous protests, has used the
    ``urgent and compelling'' justification to extend current contracts.
    This approach has worked to ensure that no disruption in patient care
    occurred during the protest period.

        22. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, how will you ultimately evaluate contractor compliance and
    performance under T-NEX?
        Mr. Carrato. Concurrent with the development of each contract
    provision, we also develop a surveillance plan that will allow us to
    monitor contractor performance on a continuing basis. When a contractor
    fails to perform, we have a number of options that range from working
    with the contractor to reach a satisfactory level of performance to
    termination of the contract. In critical areas, we will also be
    including positive and negative financial incentives to provide an
    additional motivation for the contractor to deliver the required level
    of service.

                               cost effectiveness
        23. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, how did you determine that contracting for specific functions
    is the most cost effective approach?
        Dr. Winkenwerder. In determining the proposed structure of the T-
    NEX contracts, the Department looked at the core competencies of
    various companies within the industry, held industry forums to discuss
    the approach, evaluated the cost of subcontracts when the bundling of
    services exceeds core competencies, and reviewed redundancies to
    determine where it was appropriate to eliminate duplications. In our
    current proposal, for instance, we will be contracting with a single
    contractor for the development of marketing and education materials.
    These materials are currently being prepared by each of our managed
    care contractors and, to varying degrees, by each of the services and
    by a number of our Military Treatment Facilities (MTFs). This
    redundancy is very expensive and does not always result in the best
    product. We believe eliminating these redundancies will result in much
    better products and will, undoubtedly, result in the elimination of the
    costs associated with duplicate efforts.
        Pharmacy services is a prime example of where the health care
    industry has identified opportunities to ``carve out'' these services
    as a means of better managing and overseeing both the quality of
    services delivered while simultaneously providing better visibility of
    the costs associated with delivering the benefit. The concept of
    separate contracts positions the organization to be more responsive to
    managing the costs.

        24. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, what type of analysis did you use to identify the specific
    functions for which you will solicit contracts? For example, why is
    there a national contract for marketing and education but not for
    claims processing or appointments?
        Dr. Winkenwerder. As noted in our response to your previous
    question, our analysis included the examination of the industry to
    determine how it is structured to deliver the services the Department
    requires and what redundancies occur in our current model. In your
    example, marketing and education materials will be contracted for from
    a single source to eliminate the redundancies involved with every
    managed care contractor developing materials covering the same topic.
    On the other hand, the development of provider networks,
    credentialling, and negotiating provider reimbursement levels must be
    fully integrated with claims processing activities. Additionally,
    medical review must be fully integrated with claims processing to
    ensure medical management programs are fully enforced. With fully
    integrated services, it is efficient to award a single contract
    responsible for the entirety. Appointing presents a third situation. We
    have determined that services required to support the internal
    operations of a specific, MTF should be excluded from the world-wide
    contracts. There are a number of contracting options available to the
    Department for obtaining local services and we are continuing to
    explore these options to determine the best approach for each
    situation.

                               pharmacy carve-out
        25. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, DOD proposes to carve the TRICARE pharmacy benefit from the
    current managed care support contracts and offer it as a single
    nationwide contract. What is DOD's rationale for the benefit carve-out,
    and what are its advantages and disadvantages?
        Dr. Winkenwerder. The rationale behind consolidating the current
    multiple managed care support retail network contracts under one
    contract is based on management and control principles not possible
    under the current scenario. Advantages of consolidation include reduced
    administrative costs through centralized pharmacy claims processing and
    customer service. It will also resolve portability problems in the
    current retail network benefit. Consolidation will permit uniformity in
    policy implementation by reducing the risk of multiple interpretation
    and will allow centralized Government controlled formulary management.
    Disadvantages to the Government are few and relate primarily to the
    risk of relying on a single contractor.

        26. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, could the carve-out harm the current integrated structure?
        Dr. Winkenwerder. We do not believe consolidating the retail
    pharmacy benefit under one contractor will put the integrated structure
    at risk. On the contrary, while acknowledging that transition and
    integration issues will exist, we believe that we will be able to
    provide substantially improved service to our beneficiaries in terms of
    customer service, drug utilization review and quality control.
    Integration may be enhanced as a result of consolidation leading to an
    improved management structure.

        27. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, when will an RFP for the TRICARE Consolidated Pharmacy Benefit
    be released?
        Dr. Winkenwerder. The requirements of the RFP are still being
    determined. After the draft RFP is written it must undergo review by
    our Office of General Counsel and the Contracts Management Board of
    Review. The time associated with the preparation and review process can
    take anywhere from 6 months to a year. Although a firm release date is
    not yet available, the RFP will be released on a schedule to allow
    implementation of the retail pharmacy benefit coincident with the T-NEX
    healthcare/admin contract(s).

                               national contracts
        28. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, DOD plans to carve beneficiary and provider marketing and
    education from the current TRICARE contracts and provide those services
    through a single, national contract. What is the timeline for RFP
    release for the carve-out? What is DOD's rationale for proposing this
    administrative carve-out? How does DOD plan to address the distinct
    geographic area needs and the uniqueness of provider communities and
    beneficiary populations in the RFP?
        Dr. Winkenwerder. DOD's decision to use a single contract to
    provide marketing and education was based on the current production and
    performance of marketing materials and education/training throughout
    the TRICARE program. Review of current marketing and education
    activities demonstrated that marketing and education activities were
    performed throughout the program by multiple entities, to include the
    Uniformed Services, Lead Agents, and managed care support contractors.
    As each entity developed their marketing and education program,
    customized to fit their requirements, the program gained multiple
    images, thereby resulting in a lack of consistency in the message that
    is shared.
        The proposed strategy to use a single contract to provide all
    marketing and education services was briefed at an industry forum and
    was well received. DOD has determined that in order to gain the maximum
    benefit and contain costs from marketing and education resources, the
    Government would be better served to have a single, national contract
    for the development, design, and distribution of marketing and
    educational materials. Cost containment will be achieved through the
    payment of costs incurred by one contractor for the development,
    design, and distribution of marketing materials rather than by multiple
    entities. The resulting advantage to the government will be the
    assurance that TRICARE maintains a single image and that a consistent
    message is provided throughout the program. In addition, the
    development of a training program by one contractor will ensure
    consistency in the provision of program information to TRICARE
    beneficiaries. In spite of the fact that the TRICARE program and its
    benefits are uniform throughout the country, DOD also recognizes the
    need to address differences in program delivery unique to distinct
    geographic areas. In order to maintain a single image and consistent
    message, DOD plans to ensure unique nuances of the program that are
    geographic specific, are identified and addressed through the
    facilitation of interfaces between contractors and incorporated into
    marketing and educational materials developed by the contractor.
        The timeline to release the RFP will be closely tied to the release
    of the healthcare/administration contract(s). The exact date is still
    unknown at this time.

        29. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, have you determined the financing arrangements for these
    contracts yet? If not, when will these fundamental decisions be made?
    If so, please describe the type of contract envisioned (i.e. fixed
    price or cost plus) and who will assume the financial risk for health
    care costs. Please explain the rationale used to arrive at these
    decisions to include the advantages and disadvantages of each
    arrangement.
        Dr. Winkenwerder. No final decision on the financing model has been
    made to date. It is not clear precisely when the decision will be made.
    My staff is currently evaluating the various options and estimating how
    the options under consideration will affect the performance of the
    contracts in the future. Currently, contract types under evaluation
    include cost plus fixed fee, cost plus incentive fee, cost plus award
    fee, and fixed price. Associated risk for health care varies by
    contract type and financing model. Criteria for evaluation of the
    models include:

             Incentives and impact on Military Treatment Facility
            optimization
             Ability to forecast budgetary requirements
             Ability to close out prior fiscal years
             Simplicity of financing mechanisms
             Ability to implement change orders
             Incentives for quality care and customer service
             Ease of implementation
             Avoiding requests for equitable adjustments (REAs)
             Ease of bidding and evaluation
             Enhancing competition

                                  competition
        30. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, attaining sufficient competition is key to obtaining the best
    quality for the best price for the T-NEX contracts. What steps, such as
    benchmarking with the industry, are you taking in your procurement
    strategy to maximize competition?
        Dr. Winkenwerder. We believe that continually seeking comments and
    suggestions through industry forums and publishing draft documents for
    comments keeps the interest of potential bidders high. This allows
    numerous industry entities to participate in the development and
    formulation of the T-NEX contracts, ensuring their needs and concerns
    are considered. Also, we continue to explore industry best practices to
    ensure, where possible, that the future contract requirements are less
    prescriptive and are outcome-based as opposed to the current contract
    requirements that are one-of-a-kind Government-designed, and are
    procedures driven. In conjunction with our financing design, we will
    have incentives for superior performance and service.

                             utilization management
        31. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, attaining sufficient competition is key to obtaining the best
    quality for the best price for the T-NEX contracts. What steps, such as
    benchmarking with the industry, are you taking in your procurement
    strategy to maximize competition.
        Dr. Winkenwerder. We have held conferences with the industry over
    the last 5 years to obtain and use their input in designing our
    contracts. We are continuing this benchmarking by making public, to the
    maximum extent possible, all proposals and asking for both industry and
    beneficiary input. We are also changing the contract structure to focus
    on outcomes rather than process. This will allow industry the
    opportunity to sell the Government its best practices rather than
    creating separate units simply to comply with TRICARE requirements.
    This will reduce the cost of proposal preparation to a fraction of
    previous proposal costs and should encourage competition while also
    reducing the ongoing infrastructure requirements and associated costs,
    which will also increase competition.

                                tricare regions
        32. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, we understand that you are considering reducing the number of
    TRICARE regions. What would be gained (i.e., cost efficiency) by
    realigning the regional structure? Have you made this decision yet? If
    not, when do you expect to do so? If so, please describe the new
    regional structure as well as the rationale supporting the new
    configuration.
        Dr. Winkenwerder. By realigning the regional structure, we look to
    reduce TRICARE administration burden by reducing the number of contract
    change orders, eliminating redundant contractor overhead costs, and
    decreasing the number of contracts to monitor. We are also looking at
    minimizing disruption of the beneficiary and provider communities
    during transitions between regions; and lessening jurisdictional issues
    and regional differences.
        We expect to finish our analysis and decide on whether or not to
    change the current of number of TRlCARE regions prior to the end of the
    fiscal year.

        33. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, further, how will reducing the number of regions impact the
    role of the lead agent in terms of consolidation and regional
    authority? What additional ramifications do you envision from such a
    change (i.e. impact on competition)?
        Dr. Winkenwerder. Reducing the numbers of regions will result in
    increased responsibility for the Lead Agent--in terms of the number of
    covered lives, number of Military Treatment Facilities, and contract
    responsibilities for a larger geographic region. Because of the
    increased scope and complexity associated with a larger region, the
    Lead Agent must have the authority and resources to integrate
    operations. Therefore, it will be necessary to ensure that the Lead
    Agent has a strengthened role in management of both the direct and
    purchased care entities within the region. Roles, responsibilities,
    authorities, and reporting authorities under several consolidation
    scenarios are under study.
        Benefits of consolidation include reduction of TRICARE
    administration burden through reducing the number of contract change
    orders, eliminating redundant contractor overhead costs, and decreasing
    the number of contracts to monitor. Other effects of consolidation
    include minimizing disruption of the beneficiary and provider
    communities during transitions between regions; and lessening
    jurisdictional issues and regional differences. Consolidation could be
    viewed as limiting competition to only current incumbents or other
    large players due to regional size and financial risk. However, the
    potential effect of consolidation on competition is more than offset by
    simplification of the RFP process and the move away from prescriptive
    Government requirements resulting in a health care delivery model much
    more familiar to potential bidders than any of the current TRICARE
    contracts.

            beneficiary protection (continuity and quality of care)
        34. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, how do you plan on educating beneficiaries about the potential
    changes under T-NEX, such as new regions and contractors?
        Mr. Carrato. In an effort to educate beneficiaries regarding
    potential changes under T-NEX, TMA has begun developing a
    communications plan that identifies the specific objectives, goals, and
    strategies to educate beneficiaries and other target audiences
    regarding potential program changes such as new regions and
    contractors.
        The communications plan includes key messages to be conveyed to
    each target audience, and the appropriate communication vehicles and
    tools that will be used to carry the message to the target audiences.
    Such vehicles will include major U.S. media, military and Government
    media. Service Surgeons General and Lead Agent public affairs offices,
    the TRICARE Web site, meetings and other interactions with The Military
    Coalition and the National Military and Veterans Alliance groups.
        Communication tools include a suite of integrated marketing and
    communications products such as briefings, marketing materials, news
    releases, fact sheets and frequently asked questions. We also will make
    T-NEX a theme for our TRICARE Communications Plan, and focus on the
    changes in the Executive Director's column, ``Plain Talk,'' in the
    ``Salute to the Heroes of TRICARE,'' ``Champion of TRICARE,'' ``The
    Doctor Is In,'' the Media Readiness Room, and other vehicles. Through
    the Media Readiness Room, our Media Roundtable, and our Public Affairs
    Officers Video teleconference, we can ``pitch'' T-NEX related topics
    and subject matter experts to our media sources for interviews and news
    features.

        35. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, how are you going to incorporate continuity and quality of
    care for beneficiaries into the transition plan? How do you plan to
    notify beneficiaries about changes in the network, Obtaining their
    prescriptions, and who to contact for health care information?
        Mr. Carrato. Experience has shown that very little change will
    occur in the network of participating institutions and individual
    providers. Our expectation is that all bidders will contact existing
    network providers and negotiate continuing contracts. Certainly, we'll
    encourage this behavior through the evaluation factors. Nevertheless,
    we will employ a massive marketing campaign, including public service
    announcements, flyers, handouts, and briefings to ensure that our
    beneficiaries are aware of any changes. We will also be individually
    contacting any beneficiary whose primary care manager (PCM) has changed
    in order to assist them with a obtaining a new PCM.

                                financial model
        36. Senators Cleland and Hutchinson. Dr. Winkenwerder or Mr.
    Carrato, DOD has expressed concern for the underlying financial models
    of existing TRICARE contracts and their linkage to budget
    predictability, and change order implementation and negotiation. In
    developing its strategy for the next generation of contracts, is DOD
    proposing a new financial model? If so, was a comprehensive independent
    analysis performed and if yes, please share this report to the
    committee. Does the new methodology cure the financial difficulties
    associated with the bid price adjustment and alternative financing
    processes in current managed care support contracts? Does it provide
    the contractor with the appropriate incentives and shared risk?
        Dr. Winkenwerder. DOD has used both internal and external
    evaluators for T-NEX financing model options under consideration. DOD
    has not selected a financing option to date. Elimination of the current
    bid price adjustment process is a key requirement for all of the
    financing models under consideration. DOD is in support of the
    principles behind alternative financing and believes that the
    difficulties associated with its early implementation in Regions 1, 2,
    and 5 have been eliminated. There is strong support from the services
    to expand alternative financing to the rest of the regions regardless
    of the contract type or risk arrangement selected in the final
    analysis. DOD believes that alternative financing is a key feature of
    population health, supports optimization, and is an integral part of
    the alignment of incentives between our managed care support partners
    and the direct care system.
                                     ______

                 Questions Submitted by Senator Tim Hutchinson
                   health care management oversight structure
        37. Senator Hutchinson. Dr. Winkenwerder, are you considering any
    modification to the current regional management structure either
    organizationally or geographically?
        Dr. Winkenwerder. We are considering modification of our current
    regional management structure. By modifying our current regional
    structure we look to reduce TRICARE administration burden by reducing
    the number of contract change orders, eliminating redundant contractor
    overhead costs, and decreasing the number of contracts to monitor. We
    are looking at minimizing disruption of the beneficiary and provider
    communities during transitions between regions and lessening
    jurisdictional issues and regional differences.
        We are in the process of studying the best regional structure to
    achieve our vision of being the best world class integrated healthcare
    delivery system that efficiently and cost effectively provides quality
    healthcare services to our beneficiaries. Roles, responsibilities,
    authorities, and reporting authorities under several organizational and
    geographical scenarios are under study.

                                resource sharing
        38. Senator Hutchinson. Dr. Winkenwerder, a component of the
    current contractual structure provides flexibility to the military
    health care system and increased utilization of the direct care
    resources through a program called ``resource sharing.'' For example, a
    managed care support contractor could provide staff or equipment for a
    vacant or under-utilized clinic on a military post and avoid costs both
    for the military and the contractor. This appears to be a win-win
    situation. Is this a viable component of the next generation of
    contracts? If the process is too cumbersome, is there a way to simplify
    its implementation to ensure its continued benefit to the direct care
    system?
        Dr. Winkenwerder. The Department, too, views resource sharing as a
    win-win proposition and, depending upon the financial model chosen for
    T-NEX, will include language in the T-NEX contracts that supports this
    concept.
        A number of the financing models under consideration provide a
    strong incentive to the managed care support partner to invest in the
    capabilities of the Military Treatment Facility in order to lower the
    overall health care cost in the region. This reduction in heath care
    costs would result in shared savings for the program and would increase
    the fee or profit that the contractor could earn. Elimination of the
    current bid price adjustment (BPA) process will greatly simplify the
    implementation of resource sharing under the new contracts.

              special pays for military health care professionals
        39. Senator Hutchinson. Dr. Winkenwerder, there has been no
    legislative modification increasing special pays for military health
    care professionals for over 10 years. We have seen in the past that
    these special pay authorities lose their buying power over time. Have
    you seen any evidence of shortages of military health care providers,
    and is there any consideration of proposals to enhance existing special
    pay authorities or to modify the existing legislative framework?
        Dr. Winkenwerder. Over the past 10 years the Department has
    performed analyses on special pays of physicians on an annual basis and
    for other health professions periodically. These analyses have resulted
    in upward adjustments to the discretionary pays, but in some cases to
    the limit of maximum authority, as is the case for several physician
    specialties. Consequently, the special pays are no longer serving their
    intended purpose.
        We do have evidence of shortages. The shortages vary among the
    services, in many cases, in a way that makes increased cross-leveling a
    possible alternative. We have senior service officials evaluating that
    as one option. Other shortages exist across all services and are, or
    are projected to become, significant enough in magnitude that
    recommendations for major changes to the pay authorities are being
    crafted to simplify existing incentive legislation. These
    recommendations are aimed at adding flexibility and expanding fiscal
    authority for the incentives programs aimed at attracting and retaining
    quality personnel to meet our mission requirements. They are designed
    to continue present incentives that are important to the success of our
    program, while combining some and removing restrictions from others to
    allow the Department to make timely changes currently restricted by the
    languorous process of law.
        The Center for Naval Analyses (CNA) has completed a study called
    Health Professions Retention/Accession Incentives Study (HPRAIS), in
    which they support a more broad, simplified authority for use of
    incentives based on analysis of manning levels and gaps in civilian-
    military pay. There has been similar broad authority granted in the
    fiscal year 2001 National Defense Authorization Act for a Critical
    Skills Retention Bonus (CSRB) with certain restrictions that make it
    inadequate for health professions. The two main problems are that CSRB
    limits the career total of retention bonus funds to be received by an
    individual to $200,000, and that it does not allow payment of bonus
    funds to those who will exceed 25 years of active duty service during
    the obligation period incurred by participating.
        The key points of the incentive simplification plan being crafted
    are:

             Add and/or change language of Title 37, Chapter 5 to
            facilitate optimal use and to simplify statutory restrictions
             Create 5 broad health professions incentive
            authorities vice the 19 currently available: Variable Special
            Pay; Board Certification Pay; Incentive Special Pay; Retention
            Bonus; Accession Bonus
             Each of the five new incentive authorities will have
            the flexibility to be targeted for all health professions

        In fiscal year 2000, the Department commissioned the Center for
    Naval Analyses to take a look at our incentive program for health
    professions, including pay gaps and potential recommendations for
    changes to the incentive program. This study validated many of the
    Department's concerns. CNA's evaluation is being used in developing the
    Department's plans addressed above.

                                homeland defense
        40. Senator Hutchinson. Dr. Winkenwerder, how do you interact with
    the Office of Homeland Security on healthcare issues, especially,
    chemical and biological defense?
        Dr. Winkenwerder. Homeland Security Presidential Directive-1
    established eleven Homeland Security Council Policy Coordinating
    Committees (HSC/PCCs) to coordinate the development and implementation
    of homeland security policies throughout the Federal Government. These
    PCCs provide policy analysis and proposals for consideration by
    Governor Ridge and the Cabinet-level Secretaries or Deputy Secretaries
    of departments or agencies who meet as needed to gain consensus on
    policies to be forwarded for presidential decision. Each PCC is chaired
    by a designated Senior Director from the Office of Homeland Security
    and comprised of functional representatives from each of the executive
    branch departments, offices, and agencies with a stake in the eleven
    policy areas.
        To ensure DOD's efforts and concerns are conveyed to the Office of
    Homeland Security, the Department of Defense stood up a Homeland
    Security Task Force Office for the purpose of coordinating with the
    Office of Homeland Security and other Federal, state, and local
    agencies. To ensure all the policy initiatives are addressed, our
    Homeland Security Task Force Office has developed a series of eleven
    PCCs as well, each with a designated lead and assist organization. My
    office has the lead for the Medical and Public Health Preparedness PCC.
    I have designated my Deputy Assistant Secretary of Defense for Force
    Health Protection and Readiness to head this up with assistance from
    other organizations within OSD, the Joint Staff, and other Federal
    agencies such as the Armed Forces Medical Intelligence Center (AFMIC).
        We have been working extensively with the Office of Homeland
    Security, Department of Health and Human Services, the Department of
    Veterans Affairs, and others to look at effective means to counter
    potential threats of biological and chemical agents that might be
    deliberately introduced into a targeted population. We expect to
    continue interagency coordination on this topic well into the
    foreseeable future. My office will remain engaged as an active partner
    with these agencies while maintaining our focus on our mission of
    protecting and preserving the health of DOD personnel, their
    beneficiaries, and retirees.

                               pharmacy contracts
        41. Senator Hutchinson. Mr. Carrato, I understand that a RFP was
    recently issued to nationally procure mail-order pharmacy support for
    the Department of Defense. I believe that one or more retail pharmacy
    support solicitations are still under consideration. The ``President's
    Task Force to Improve Health Care for Our Nation's Veterans'' has
    vigorously pursued investigation of consolidated purchasing of
    pharmaceuticals by the Departments of Veterans Affairs and Defense and
    believes there is significant opportunity for cost efficiency in a
    joint endeavor. Did you consider any type of joint initiative prior to
    issuing the recent RFP for the mail order pharmacy support contract? If
    no, why not?
        Mr. Carrato. Yes we did consider a joint initiative. However, the
    VA does not have or offer to its beneficiaries a full service mail
    order pharmacy program to include filling new prescriptions written by
    civilian physicians mailed in by the beneficiary. The VA's Consolidated
    Mail-Out Patient (CMOP) pharmacy program is a refill mail-out program
    only and is best described as an electronic extension of VA medical
    facility pharmacies. The TRICARE Pharmacy Benefit includes a
    comprehensive mail order pharmacy program as a ``stand alone'' pharmacy
    and is not simply an extension of DOD's Military Treatment Facility
    (MTF) pharmacies. Since the VA does not offer a full-service mail order
    program comparable to the current DOD National Mail Order Pharmacy
    Program (NMOP) it is unable to meet the requirements of the new RFP.
        It should be noted, however, that the DOD and VA have entered into
    an agreement to initiate a pilot program at three DOD military medical
    facility pharmacies to utilize the VA CMOP for prescription refills.
    Beneficiaries who have new prescriptions filled at one of the three DOD
    sites will be offered the opportunity to have refills mailed to their
    homes through the CMOP. Although not a full service program like the
    NMOP, the joint CMOP pilot will offer added convenience to the
    beneficiaries and resource utilization efficiencies.

        42. Senator Hutchinson. Mr. Carrato, are you exploring this
    opportunity and its advantages or disadvantages prior to moving forward
    with a decision on a retail approach?
        Mr. Carrato. We are continuing to explore all areas where pharmacy
    related best business practices can best be achieved through joint
    efforts with the VA. Currently, TRICARE's 40,000 retail pharmacies are
    an integral part of the purchased care TRICARE pharmacy benefit. The
    next generation retail contracts will further improve and refine this
    portion of the benefit. The VA does not offer or participate in a
    retail pharmacy benefit, making a joint effort unrealistic at this
    time.

        43. Senator Hutchinson. Mr. Carrato, how can smaller independent
    retail pharmacies participate in large Federal programs with the ``most
    favored nation'' clauses that most large insurance companies require?
        Mr. Carrato. ``Most favored nation'' clauses are imposed by State
    governments for Medicaid programs. TRICARE retail pharmacy networks are
    not under the purview of State run programs. Small independent retail
    pharmacies may become part of the large TRICARE retail pharmacy
    networks by accepting reimbursement rates negotiated with the
    contractor responsible for establishing TRICARE networks. Currently,
    the regional TRICARE Managed Care Support contractors are responsible
    for establishing retail networks and negotiating rates with
    participating pharmacies. It is our intent to follow commercial
    business practices to the greatest extent possible in the next
    generation retail contract. The offerors submitting proposals and the
    resulting successful contractor will be responsible for establishing
    and maintaining networks in accordance with the terms of the contract
    and Federal and State law.

                                    vaccines
        44. Senator Hutchinson. Dr. Winkenwerder, the Department of Defense
    is well aware of my frustration regarding the military's vaccine
    acquisition strategy. As we sit here today, our troops that are
    deploying across the globe are critically and unacceptably vulnerable
    to biological weapons. This is a truly frightening situation. We know
    that each member of the ``axis of evil'' has some biological warfare
    capability. For over a decade, numerous studies have been done that
    point to one solution to this deficiency . . . the creation of a
    Government-owned vaccine production facility. However, the Department
    refuses to move forward. This is especially frustrating in light of the
    fact that the Department itself has issued two reports advocating this
    approach. I understand that your office does not handle the acquisition
    of vaccines. However, you do represent the health interest of our men
    and women in uniform. When Under Secretary Chu testified before this
    subcommittee recently, he said that the Department was conducting a
    review of the anthrax inoculation program. In fact, he said that a
    decision on this is to be made ``very shortly.'' Has the Department
    revised its anthrax inoculation program?
        Dr. Winkenwerder. The Department of Defense is considering its
    policies regarding the vaccination of U.S. forces against the very real
    threat of anthrax. As we do this, DOD must balance the manufacturer's
    recent FDA approved production capability with the demands of providing
    adequate protection to personnel in higher threat areas. In addition,
    we are working to ensure that the requirements of other Federal
    agencies are also included.

        45. Senator Hutchinson. Dr. Winkenwerder, do you believe that
    vaccination is the best defense against biological weapons? Do we
    currently have adequate quantities of vaccines against these kinds of
    weapons? Do we have vaccines for botulinum toxin or ricin? (Botulinum
    and ricin are biological weapons that Iraq has reportedly developed.)
        Dr. Winkenwerder. Vaccination represents the best defense against
    biological weapons when there is time to prepare for the threat. It is
    the medically preferred method for enhancing military readiness and
    protecting U.S. Forces facing a potential biological warfare (BW)
    threat. From a cost/benefit perspective, vaccines are the most cost-
    effective method for protecting large populations against BW threats.
    The protective immunity vaccines can last for months or years. In the
    absence of prior vaccination, drugs (e.g., antibiotics) and immune
    serum (e.g., antitoxins)--either as prophylaxis or post-exposure
    treatment--may offer immediate protection/therapy. Additionally, there
    is some scientific evidence that post-exposure vaccination can provide
    therapeutic benefit against select BW threats. From a national
    perspective, we must use a systematic approach to dealing with
    bioterrorism, balancing use of different products available for optimum
    protection or therapy.
        The Department of Defense is expanding its stockpile of vaccines
    against high threat biological agents and analyzing requirements for
    vaccines against other biological warfare threats in order to ensure an
    adequate supply.
        We have an existing stockpile of botulinum toxoid vaccine and we
    are in advanced development on a new vaccine that is safer to
    manufacture. There are also a limited number of botulinum antitoxins
    available for post-exposure therapy. Several ricin vaccine candidates
    are in early development. None of these vaccines are currently licensed
    by the Food and Drug Administration.

                             anthrax vaccine status
        46. Senator Hutchinson. Admiral Mayo, General Green, Colonel Maul,
    Captain Hall, and Colonel Jones, in the statements that you have
    submitted to the subcommittee, many of you spoke about the need for
    adequate vaccine protection. Captain Hall, I was particularly
    interested by your perspective. You wrote:

            ``I want to reaffirm our position that the Anthrax Vaccination
            Program is a critical force protection tool for U.S. military
            forces. USEUCOM appreciates the vigorous support expressed by
            the Joint Chiefs of Staff and the Services to support this
            program. We believe safe and effective vaccination, when
            available, is our best defense against both natural diseases
            and bio-terrorist weapons.''

        Do you believe that the problems that the DOD has had in procuring
    adequate stocks of anthrax vaccine has placed our troops in the field
    at risk? Should ensuring that our military has a reliable source of
    vaccines be a top priority?
        Admiral Mayo. Yes, ensuring the health of our forward-stationed and
    forward deployed elements is directly related to our capability to
    implement effective infectious disease countermeasures. These
    countermeasures include readily available vaccines (such as anthrax
    vaccine), adequate supplies of antibiotics, automated disease
    surveillance systems, and greater reliance on basic research to combat
    infectious disease threats such as at DOD medical research facilities
    in Thailand and Indonesia. A good example of this is the ongoing
    research efforts by these facilities to develop a malaria vaccine.
        Ensuring that our military has a reliable source of vaccines must
    be  top priority. We have seen that there are occasionally shortages of
    commonly used vaccines, this highlights the need for improved assured
    vaccine production capabilities, especially for those other less common
    vaccines. The global war on terrorism is pushing us into ever more
    medically hazardous destinations in a time when global patterns of
    disease migration and emergence have made the medical dimension of U.S.
    war operations a greater factor.
        General Green. Yes, anthrax tops the DOD list of agents that could
    easily be used against our deployed forces. There are numerous reasons
    why anthrax is such a credible threat to include: it is highly
    infective, it is easy and cheap to make, it has a short incubation
    period, it can easily be mass produced, there is a low immunity to this
    bacteria (except for our personnel that are immunized), it is stable
    and persistent, it is highly lethal, it is easily weaponizable, it is
    difficult to detect, and it is a breathable-sized particle. Deployed
    U.S. forces that are unvaccinated are at increased threat of anthrax.
        The Centers of Disease Control (CDC) just wrote an excellent
    summary of the huge impact vaccines have had in the control of
    infectious diseases, ``Vaccines have reduced, and in some cases,
    eliminated, many diseases that routinely killed or harmed many infants,
    children, and adults.'' CDC has compiled this excellent table to show
    the impact vaccines have had in controlling diseases in America, see
    attachment titled ``Cases of Vaccine-Preventable Diseases in the U.S.
    Reduced Dramatically in the Twentieth Century!''
        Colonel Maul. The force health protection of our soldiers, sailors,
    airmen, and marines is a top priority. The anthrax vaccine is a safe
    and effective medical pre-exposure countermeasure against what I
    consider to be one of the greatest biological warfare threats in the
    world today. In view of the impending threat of anthrax as a weapon,
    and the current unavailability of adequate stocks of anthrax vaccine,
    mitigation steps have included providing each servicemember with a mask
    to protect against a known inhalation exposure of anthrax, and the use
    of biological agent detectors near troop concentrations. In addition,
    in the U.S. Central Command region, servicemembers carry a 3-day supply
    of antibiotics to initiate a post-exposure treatment in the event of an
    attack, while larger supplies of pre-positioned antibiotics are moved
    to exposure locations.
        Without question, vaccines are a most effective means of providing
    protection against, and thereby preventing, many infectious diseases.
    This is true with both naturally occurring diseases and those
    potentially produced by weaponized biologic agents. Clearly, vaccines
    play a key role in promoting and maintaining a fit and healthy force.
    Any means to further enhance force health protection should be a top
    priority.
        Captain Hall. This question requires a ``good news, bad news''
    response--the bad news is that during the suspension of the Anthrax
    immunizations, the level of force health protection has dropped,
    translating into increased risk. But the good news is that the Anthrax
    vaccination is a much more effective vaccine than realized back in the
    1970s. So the residual protection is effective much longer than
    officially recognized by the Food and Drug Administration (FDA). There
    is good clinical evidence to suggest that those who have had the
    vaccine series (at least three, possibly even as few as two shots) will
    maintain protection up to 2 years. That means that many of these troops
    have not yet outlived the usefulness of their original series, even
    while there has been a hiatus--far more troops than would have been
    projected by official figures.
        The second part of your question states U.S. European Command's
    position: safe and effective vaccines are the best defense against both
    natural diseases and biological weapons. Thus they should be a top
    priority in the military establishment for research, development and
    fielding.
        Colonel Jones. Ensuring that our military has a reliable source of
    vaccines is critical and should be a top priority in our Force Health
    Protection Program. However, because the risk of exposure to anthrax in
    the United States Southern Command's theater is extremely low, problems
    in the procurement of adequate stocks of anthrax vaccine have placed
    our troops in the field at minimal risk.

                percentage of troops inoculated against anthrax
        47. Senator Hutchinson. Admiral Mayo, General Green, Colonel Maul,
    Captain Hall, and Colonel Jones, what percentage of the troops in your
    commands have been inoculated against anthrax?
        Admiral Mayo. Pacific Command does not monitor a database detailing
    anthrax vaccinations administered to our servicemembers. This
    information is reported through our service components on separate
    databases, the information of which is fed into a DOD worldwide
    database, the Defense Eligibility Enrollment Reporting System (DEERS).
    The DEERS database reveals the percentage of servicemembers in the
    Pacific Command that have been inoculated (received at least one
    inoculation of anthrax vaccine) against anthrax to be 28 percent. By
    service component, the figures are U.S. Army--19 percent; U.S. Navy--25
    percent; U.S. Air Force--38 percent; U.S. Marine Corps--35 percent.
        General Green. In TRANSCOM, 25.5 percent of the total deployable
    personnel have initiated the series of anthrax vaccinations.
        Colonel Maul. Typically, each of the services track anthrax vaccine
    compliance. U.S. Central Command (USCENTCOM) establishes the
    requirement for anthrax vaccine in its region. The services provide
    their respective soldiers, sailors, airmen, and marines with the
    vaccine (when available) and ensure compliance with USCENTCOM
    requirements. Due to the shortage, the current Anthrax Vaccine
    Implementation Policy (AVIP) only targets special mission units and
    personnel in research programs. As a result, DOD has been in a 2 year
    slowdown period. It is the AVIP agency's best estimate that, because of
    the slowdown, only 20 percent of the total force has had at least the
    first three injections of the series (-95 percent immunity) and will
    need the fourth as soon as the new policy is executed. We have received
    similar comments from each of the services and the USCENTCOM
    components, stating the same estimates.
        Captain Hall. For U.S. European Command (USEUCOM), the approximate
    percentages, by Component, of those who have at least begun the anthrax
    immunization series are as follows:

            Army: 14 percent
            Air Force: 34 percent
            Navy: less than 10 percent

        Because of the movement of personnel into and out of the USEUCOM
    Theater, especially concerning ships that enter and leave the area,
    these percentages are our current best estimates. The figures for those
    who have actually completed the six-shot series are much lower, with
    the majority of individuals having stopped taking immunization shots.
        Colonel Jones. Of the troops assigned to the United States Southern
    Command, 15 percent have begun and 3 percent have completed the anthrax
    immunization series.

        [Whereupon, at 11:18 a.m., the subcommitte adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2003

                                  ----------

                           WEDNESDAY, MARCH 20, 2002

                                   U.S. Senate,
                             Subcommittee on Personnel,
                                   Committee on Armed Services,
                                                        Washington, DC.

               RECRUITING AND RETENTION IN THE MILITARY SERVICES

        The subcommittee met, pursuant to notice, at 9:39 a.m. in
    room SR-232A, Russell Senate Office Building, Senator Max
    Cleland (chairman of the subcommittee) presiding.
        Committee members present: Senators Cleland and McCain.
        Majority staff member present: Gerald J. Leeling, counsel.
        Minority staff members present: Patricia L. Lewis,
    professional staff member; and Richard F. Walsh, minority
    counsel.
        Staff assistants present: Dara R. Alpert and Nicholas W.
    West.
        Committee members' assistants present: Andrew
    Vanlandingham, assistant to Senator Cleland; Marshall A.
    Hevron, assistant to Senator Landrieu; Christopher J. Paul,
    assistant to Senator McCain; James P. Dohoney, Jr., and Michele
    A. Traficante, assistants to Senator Hutchinson.

           OPENING STATEMENT OF SENATOR MAX CLELAND, CHAIRMAN

        Senator Cleland. The subcommittee will come to order. Good
    morning. Senator Hutchinson and I welcome you to this hearing.
        We are going to receive testimony regarding recruiting and
    retention of military personnel. Recruitment and retention are
    the core of the subcommittee's business. Everything that we do
    is designed to care for our service members and their families.
    Our goal is to make military service an attractive option to
    all young Americans and a desirable career for those who choose
    it.
        During my time on this subcommittee, under the leadership
    of Senators Kempthorne, Allard, and Hutchinson, we have done a
    lot to improve the lives of our service members and their
    families. These improvements should make military service more
    attractive to young Americans. Over the last 5 years we have
    approved pay raises that total over 20 percent, we have
    directed the Secretary of Defense to assist those members who
    qualify for food stamps with a special pay of up to $500 a
    month, we removed the requirement that service members living
    off post pay 15 percent of their housing cost out-of-pocket,
    and authorized increases for the basic allowance for housing to
    eliminate out-of-pocket expenses by 2005.
        We improved the retirement benefits by providing an
    alternative to the unpopular REDUX retirement system and
    authorizing service members to participate with other Federal
    employees in the Thrift Savings Plan. We have made significant
    improvement to TRICARE, the military health program. We enacted
    provisions that improved the quality of health care and access
    to health care providers. We authorized TRICARE Prime Remote
    for families of active duty personnel assigned where military
    medical facilities were not available. We eliminated copayments
    for active duty personnel and their families when they receive
    care under the TRICARE Prime option, and we authorized TRICARE
    for Life for our Medicare-eligible military retirees and their
    families.
        Both recruiting and retention are improving. Just a few
    years ago, the services reported great challenges in meeting
    recruiting goals, and service members were leaving at alarming
    rates. I like to think that the improvements in benefits that I
    just described helped to turn our recruiting and retention
    around.
        I understand that the downturn in the economy and the
    terrorist attacks on our Nation also contributed to the
    increase in the desire to serve our Nation. I know that we
    recruit individuals and retain families.
        With this in mind, we have two panels of witnesses. The
    first panel is one of our favorites, the recruiters themselves.
    We look forward to their candid assessment of the recruiting
    market and the tools they have for enlisting young Americans.
        The second panel consists of the officers responsible for
    service recruiting and retention policies, the personnel chiefs
    and recruiting commanders of the services. We are anxious to
    hear from them about innovative recruiting and retention
    practices that are helping the services to man the force.
        We are glad to have Sergeant Gwyn, is it?
        Sergeant Gwyn. Yes, sir.
        Senator Cleland. Petty Officer Piatek, is it?
        Petty Officer Piatek. Piatek, sir.
        Senator Cleland. We are glad to have you.
        Gunnery Sergeant Parker.
        Sergeant Parker. Here, sir.
        Senator Cleland. Tech Sergeant Quintana.
        Sergeant Quintana. That is correct, sir.
        Senator Cleland. We are glad to have you all here.
        I would like to have your candid thoughts about recruiting.
    Your assessment is very important to us. In earlier years
    recruiters told us their number one challenge was lack of
    access to potential recruits in high schools. We responded by
    passing a law that would require schools to give you the same
    access to students as they give to other potential employers
    and colleges and universities. Last year we made this provision
    even stronger by requiring secondary schools to provide to
    military recruiters upon request student names, addresses, and
    telephone listings unless the student or parent has submitted a
    request that this information not be released without prior
    written parental consent. This law will go into effect in July.
        The point I am trying to make is that we listened to you
    and tried to respond to your concerns. Would each of you tell
    us a little bit about yourself, where you are from, how long
    you have been in the service, and where you are assigned now?
    Sergeant Gwyn, we will start with you.

      STATEMENT OF SGT. LINDSEY E. GWYN, USA, UNITED STATES ARMY
                               RECRUITER

        Sergeant Gwyn. Senator, first of all my name is Sergeant
    Lindsey Gwyn. I am a recruiter in Lapeer, Michigan, where I am
    originally from. I grew up in Lapeer, Michigan, sir. I joined
    the Army in January of 1999, went to basic training and
    Advanced Individual Training (AIT) in Fort Jackson, South
    Carolina, and was then stationed at Fort Bragg, North Carolina.
    I have been deployed overseas to Bosnia-Herzegovina for 7
    months. Then I applied for recruiting duty under the Corporal
    program as an E-4 and went to recruiting.
        The Corporal program is a 12-month tour of recruiting to
    get the younger service members and recruiters out so they can
    relate with the younger students and college students better.
        Senator Cleland. I am curious to why you wanted to
    volunteer to be a recruiter.
        Sergeant Gwyn. Sir, I love to interact with people and
    being able to relate with the younger students in high school
    and in college. It is a great honor to be able to be out and
    have this ability and the privilege to do it at my point in
    service.
        Senator Cleland. Wonderful. Thank you.
        Petty Officer Piatek.

    STATEMENT OF ELECTRICIAN'S MATE FIRST CLASS PETTY OFFICER BRUCE
           PIATEK, USN, UNITED STATES NAVY ENLISTED RECRUITER

        Petty Officer Piatek. Yes, sir. I am originally from
    Lockport, New York. I joined the Navy shortly after graduating
    from high school, went to basic training in Orlando, Florida,
    followed that with advanced training and nuclear power school
    in Orlando, Florida, and then went to school up in Balson Spa,
    New York, for a nuclear power prototype. After that school I
    stayed as an instructor.
        Following that tour of duty for 2 years, I went to the
    U.S.S. Hampton, a submarine based out of Norfolk, Virginia,
    where I spent the next 4\1/2\ years as a submariner, did two
    and a half deployments basically. Following that tour, I
    volunteered for recruiting duty.
        Why did I do that? I will go ahead and answer that now. I
    went to recruiting duty because I am always looking for a new
    challenge, something new. I saw it as a challenge. I heard a
    lot of people talking about how difficult it would be, and I
    felt I was up to the challenge, and here I am today.
        Senator Cleland. Maybe you were just coming up for air.
    [Laughter.]
        Petty Officer Piatek. Maybe so, sir.
        Senator Cleland. I admire anybody in the submariner force.
        Gunnery Sergeant Parker.

          STATEMENT OF GUNNERY SERGEANT RYAN L. PARKER, USMC,
        NONCOMMISSIONED OFFICER IN CHARGE, RSS MARIETTA, GEORGIA

        Sergeant Parker. Yes, sir. How are you doing today, sir?
        Senator Cleland. Nice to see you.
        Sergeant Parker. I am originally from Philadelphia,
    Pennsylvania, sir. Once I graduated from high school, I joined
    the military, the Marines, and went to recruit training in
    Parris Island, South Carolina. Upon graduation of recruit
    training in the school of infantry, I went to communications
    school in California; stationed out in California for the first
    2 years and then was stationed in Japan; then after Japan went
    to Guantanamo Bay, Cuba. After being stationed in Cuba, I went
    to North Carolina and spent some time in North Carolina, sir,
    where I did several deployments.
        Once I left North Carolina, I was an instructor in a
    leadership school. After being an instructor at a leadership
    school, I volunteered for recruiting duty. I have been on
    recruiting duty now for almost 3 years sir, RS Atlanta in
    Georgia. My main area I concentrate on is Marietta in the Cobb
    County area.
        Recruiting duty is a challenge. I wanted to take on a
    challenge, something different and unique. I believe I learned
    a lot and it helped me out a lot as far as improving myself as
    a better marine, sir.
        Senator Cleland. I appreciate your courage. You volunteered
    for recruiting duty. Any particular reason?
        Sergeant Parker. I just wanted to take on a different
    challenge, sir. Being a marine itself is challenging.
        Senator Cleland. Amen.
        Sergeant Parker. But just taking on a different type of
    challenge at a higher level was something that I was definitely
    willing to do. I believe if you can survive recruiting duty,
    you can do almost anything, sir.
        Senator Cleland. My cousin was a marine in Vietnam and
    ultimately retired as a gunnery sergeant in the recruiting
    force. So I appreciate you.
        Sergeant Parker. Thank you, sir.
        Senator Cleland. Sergeant Quintana.

    STATEMENT OF TECHNICAL SERGEANT GABRIEL QUINTANA, USAF, UNITED
                  STATES AIR FORCE ENLISTED RECRUITER

        Sergeant Quintana. First of all, sir, just a sincere note
    to let you know: Thank you and all the panel members for what
    you guys do for us. It is critical that we have this and just
    really go out and say thanks because you guys listen to us and
    help us, and that is really important.
        Senator Cleland. Thank you.
        Sergeant Quintana. I graduated from high school and had an
    option from my father that said: Look, it is either going to be
    one of the services, or you can come work with me. I was not
    going to work with my dad, just was not going to do that. But I
    knew that the program was my ticket out for coming to the Air
    Force. I knew that that was my ticket. It was going to provide
    me a lot of opportunities, and that is why I joined the Air
    Force.
        I did the 6 weeks of basic military training in San
    Antonio. From there I went to school at Colorado. I did an
    overseas assignment in Italy, came back to San Antonio,
    volunteered for Desert Storm, went out there where the U-2 is,
    and then from there came into recruiting.
        I joined recruiting because of the program. I am a true
    testament to the program that the Air Force offers. What better
    way to go out and tell those men and women out there it can be
    done, it can happen--here is proof.
        This recruiting job here, make no mistake about it, it is
    the most challenging and difficult job that there is. Twenty-
    four hours a day, 7 days a week, we are out there recruiting.
    It is tough, very tough, but most rewarding by far. I love
    every minute of it.
        Senator Cleland. Thank you all very much for taking on this
    challenge. It is a challenge for us all.
        I was the product of a draftee environment, but I
    volunteered for ROTC and other missions. I think the country
    itself is challenged to exist with a great force in an all-
    volunteer environment. I think it is like reaching for
    infinity. We continue to try to improve the opportunities to be
    in the force and the quality of life in the force, but we never
    reach infinity, because there is always that challenge hanging
    over our heads that, if we do not continue to improve, we begin
    to lose and not get the kind of people we want or the numbers
    of people we want.
        It is a challenge for the country and you all are out there
    on the cutting edge of it.
        May I just ask as we go down the line again, what is your
    take on the impact of September 11? Are young Americans
    responding to you, the uniform, your pitch, shall we say,
    better or worse, or what changes have you seen? Sergeant Gwyn?
        Sergeant Gwyn. Sir, the changes in the recruiting
    environment were, I am in a very small city in Michigan and
    military is kind of viewed upon, honestly, as a fallback,
    because I am in a very upper class area. The parents have a lot
    of money to send their children to college, and a lot of them
    are from the post-Vietnam era, they are Vietnam veterans, and
    if they have enough money they grow up with a silver spoon in
    their mouth, and they do not see it.
        It is usually the kids that want to go somewhere, that want
    to get away, that do not want mom and dad's money to go to
    school. They come and see us, and we provide the opportunity.
    We are not really viewed upon as one of the main influences in
    the community.
        Since September 11 we have gotten a lot more respect. We
    used to not be able to go into shopping centers in uniform.
    They did not like us talking to their employees, afraid that we
    were going to try to take their employees, to recruit them. It
    has changed a lot. The attitude has changed a lot. There has
    been a lot more patriotism towards us in uniform when we go out
    in public.
        There is a lot more respect from the schools. Our schools
    in our area do not release complete directory lists. They do
    not give us access. We have access two times a year in our city
    high schools, our two biggest high schools, with over 300 kids
    in their senior class alone. That is in each school. We can go
    in twice a year, once a semester, for a lunch room set-up, and
    that is it. They have no exception. It is very supervised. They
    do not like us actually approaching the kids themselves. They
    want the kids to come approach us.
        There is a lot of openmindedness in the kids now. It has
    drawn a lot from the high school market recently. They pay a
    lot more attention to us now. They see it as something that
    they would really like to do. A lot of the young men, even more
    women, I would say, since September 11 have come around to talk
    to me. Especially seeing me in uniform, it makes a very big
    impact on the community, and also not ever having a female
    recruiter in the area before.
        Senator Cleland. Thank you.
        Petty Officer Piatek.
        Petty Officer Piatek. Yes, sir. I am a recruiter, ranking
    recruiter in charge in the recruiting station here in
    Annapolis, Maryland. I see a lot of flags waving, I see a lot
    of patriotism going on. I see a lot of people coming to my
    office, primarily those that are unqualified to join the Navy.
    What I mean by unqualified is they are retirees, people that
    have already served. They want to come back in.
        Senator Cleland. Put my father down as one of them. He
    served in Pearl Harbor after the attack. He is 88. I have to
    tell you a good story. I received an award from the Association
    of the United States Army, the General Abrams Award. About a
    week ago, my father and mother got this invitation in the mail
    to come and attend. This is a true story, just to show you a
    little bit about the greatest generation and one of the reasons
    why they are still great.
        Down at the bottom it said ``Duty uniform required.'' My
    daddy thought he was required to get back in his old Navy
    uniform, which was down in the basement. He looked at me and he
    said: Son, I am not sure I can get in it. [Laughter.]
        I said: Daddy, you have not been in the Navy since 1945.
    You do not have to get in your uniform. It is funny that in his
    mind he was ready to suit up and attend if he could fit into
    his uniform. I thought that was kind of cute.
        I have had people approach me, from World War II
    especially, they are ready to sign back up. You are right, I
    think it is an incredible phenomenon. It is a really incredible
    country.
        Others that you see, young people who might not be
    qualified, why would they not be qualified?
        Petty Officer Piatek. The Navy, the Armed Forces, we are
    looking for the most qualified individuals. We are competing
    with the colleges, we are competing with the job market. We do
    not want a person that is minimally qualified. We will take
    them if they qualify, period.
        What are the qualifications? Physical, moral, and mental.
    Morally, do you have drug usage? Have you committed any crimes?
    You see that occasionally. Convicts are very patriotic
    sometimes, and they come in. Mentally, can they pass the
    entrance exam? They may or may not meet some of those
    qualifications.
        Initially, after September 11 happened I did have a few
    individuals come in. I actually had one join, and that was the
    reason he joined. Other than that, I have not had anybody say
    that was the reason they joined. Once again, you have people
    coming in, you see a lot of flags waving, but you do not see
    them joining the Navy or joining any of the branches of the
    military to serve their country in that fashion.
        Senator Cleland. Gunnery Sergeant Parker?
        Sergeant Parker. Yes, sir. Similar to what the Petty
    Officer was talking about as far as when the initial attack
    took place there were a lot of phone calls, people wanting to
    join the military, but they were unqualified, high school
    dropouts, moral disqualifications, just a lot of people who
    thought that the military was the place to go now to get their
    life back on track, but they were not initially qualified.
        The actual target market that we are looking for, there was
    really no change as far as the patriotism. A few individuals
    that we had talked to prior, the event either made them totally
    afraid to join the military or it was just the event that it
    took to make them make the hard decision and actually join the
    military. So there has been an increase in patriotism, but not
    really anyone that is qualified to join the military.
        Senator Cleland. Wow.
        Tech Sergeant Quintana?
        Sergeant Quintana. Sir, my perspective is a little bit
    different in that up to September 11 the Los Angeles area where
    I recruit out of was doing fantastic. September 11 happened and
    a silence. No more calls from folks that were wanting to come
    into the Air Force. It just stopped.
        However, the market from 17 to 25 stopped, but phone calls
    I was receiving were age 25 and up: Hey, I want to come back
    in; I am ready to go right now; please take me; and I will do
    whatever I can to help you guys out.
        Fast forward to today. After September 11 folks are coming
    in now at a gradual pace and saying: Up to that point I was
    going to come in anyway, but after September 11 I just needed
    to see what was going to happen; things have calmed down, and I
    am ready to follow through. So there was a spell there.
        Senator Cleland. Let me ask you an interesting, shall we
    say, cultural question. The movies, the silver screen, have
    always been a trend-setter, motivator, setting the tone,
    especially for, I think, young people. I can well remember that
    after the Vietnam War the media message out of Hollywood was
    extremely negative: Vietnam veterans were drug-addicted
    crazies, Robert DeNiro in ``Taxi Driver,'' or else winning the
    war single-handedly, a la ``Rambo,'' that kind of image, naked
    with a bow and arrow. I thought that was pretty interesting.
        In other words, the media message was just all over the
    place and primarily negative or not suitable for belief. We
    have had two movies come out, both based on a true story: one,
    ``We Were Soldiers,'' which is my old outfit, the First Air
    Cavalry Division, based on the battle of the Ia Drang Valley in
    1965, is the powerful message of Lieutenant Colonel Hal Moore
    and his battalion that ran into the equivalent of a North
    Vietnamese Division.
        Part of the message, what makes it so important, is the
    sense in which there is an obligation: We will leave no one
    behind.
        I saw ``Blackhawk Down'' and there was also a powerful
    message there: We are not going to leave our buddy on the
    ground; we are going to go in and get him. As a matter of fact,
    the two Medal of Honor recipients out of that incident were two
    young men who volunteered to go down and rescue a helicopter
    pilot, and they knew that they would not be rescued. That kind
    of thing, that is significant.
        When you lay those stories out, and you match it up with
    what we saw in Afghanistan a couple weeks ago, where one young
    airman was down and others went to retrieve him and risked
    their lives, that sense of moral obligation, that sense of
    military ethic, shall we say, I think has been strongly
    underscored.
        I look at the firefighters going back into the inferno of
    the Twin Towers. They do not think they are heroes, they are
    just ``doing their job.'' The same thing occurred in the
    Pentagon here.
        I just wonder if you are picking that up. In other words,
    these media messages, particularly through the movies and on
    television, where in effect we have cultural heroes now. We had
    respect for people in uniform on September 10, but now, with
    the loss of life in Afghanistan, young men and women risking
    their lives for the rest of us, media messages, powerful
    movies, top-notch characters like Mel Gibson and others playing
    the role, being the hero--has that had any effect? Do you pick
    that up among young people? Do you see any of that?
        Sergeant Gwyn.
        Sergeant Gwyn. Sir, in relation to the movies and the young
    people, I think they relate more to what is going on over in
    Afghanistan. I do not really get many comments when they relate
    it to us. They do not ask many questions about it. The movies,
    they do not really relate a lot to it. I think the movies kind
    of have an aura about them because, like you said before, they
    have a lot of misconceptions in the movies. The newer movies
    that are coming out now definitely benefit us versus before
    when a lot of the movies did not. But I have not really gotten
    any feedback on it, sir.
        Petty Officer Piatek. Yes, sir. As a recruiter, I relate
    the Navy to anything I can. You have to be very resourceful.
    You have to relate to anything you can that you can explain
    things in their terms, so they can understand what it is you
    are talking about, because you do not really understand
    anything until you experience it yourself.
        You and I know that teamwork is important. That is what we
    are doing. We are here as a team. They do not know that. They
    do not know what teamwork is. They are thinking about
    themselves.
        Yes, sometimes I use the movies. Sometimes I use other
    things, sports examples, all kinds of different things to
    relate that to them.
        Senator Cleland. Sergeant Parker?
        Sergeant Parker. Yes, sir. I think to some extent the
    movies do create, you can say, such a sense of awareness about
    the military and what possibilities may lie if you go into
    combat, things of that nature. Sometimes it helps out a lot of
    guys, especially the ones who are seeking that eventual
    lifestyle. They want to do the infantry. It gives them a sense
    that this is what they want to do.
        In a sense, it does pay to paint a positive picture as far
    as what we do in the military.
        Senator Cleland. There is a powerful movie soon to be
    released about the Navajo talkers, ``The Wind Talkers,'' which
    will paint a picture of the Marine Corps under combat.
        Movies are such an important part of our lives. We have the
    Academy Awards coming up. I just was wondering if you all are
    picking any of that up.
        Sergeant Parker. Yes, sir. Any source of media, Internet.
    Nowadays, the younger generation is quite different than when I
    grew up, because everything you learned was on the outside,
    from movies and television. But now the younger generation, the
    movies, television, sporting events, anything that can produce
    advertisement and just expose awareness to what is going on in
    the world definitely is a ticket as far as creating awareness
    about the Marine Corps.
        Senator Cleland. Sergeant Quintana, what about the movies
    and the establishment of culture heroes from September 11?
        Sergeant Quintana. Sir, it has done both. It has helped and
    it has also hurt. I would hope that they would just be a little
    bit more careful. Remember, these minds are young and can be
    influenced very easily. It is not like the generations in the
    past where there was a sense of loyalty to your country. When
    you were called to arms you did not have to ask, you went and
    did it willingly--loyalty, the older generations.
        This generation is not like that. When you go watch the
    movies, you are influenced very easily, sometimes good,
    sometimes bad. It affects, certainly it does. Lately they have
    been doing real well, I agree, with the team unity and the
    honor, and they have been showing that, and that is good. I
    just hope that they are vigilant and keep being careful.
        Senator Cleland. I want to ask you something that I have
    been personally interested in for quite a while, ever since a
    report came out about 3 years ago that looked at the benefit
    structure in the VA and in DOD and talked about the possibility
    of transferability of the GI bill to spouse and to kids. We
    were able to pass some legislation that I was interested in and
    a key part of about giving the service secretaries authority
    under certain critical skills to allow a service man or woman
    to take half of their unused GI bill benefit and apply that to
    their spouse or to their youngsters.
        That is probably more a retention question, but I wonder if
    you see that as a plus or an arrow in your quiver when you talk
    about educational opportunity. I understand that about three
    out of four reasons why anybody joins the military has to do
    with education. Do you want to talk a little about education
    and its role in your sales pitch and anything you want to
    comment about in terms of that specific spin on critical skills
    using the GI bill for transferring to your spouse and kids to
    keep people in the military?
        Sergeant Gwyn.
        Sergeant Gwyn. Sir, just last week I had a young couple
    come in that are getting married in a few weeks, and his
    fiancee asked if she could use any of his college money, if it
    were available. It is amazing, because she is going to college
    right now and that was one of the biggest appeals, that he is
    getting all this college money, and he can go for 75 percent
    tuition paid. She wanted to know if she could.
        As of right now, that is not something that I can offer
    them. But that was definitely something that would have totally
    sealed that contract. He actually has already enlisted and they
    are good to go now. But it is definitely something that I think
    would be a very positive thing.
        Senator Cleland. The thing that called my attention to it
    was that we have a married force now.
        Thank you very much.
        Petty Officer Piatek.
        Petty Officer Piatek. Yes, sir. I am married. I have a wife
    and two children. If my wife could use the benefits, I am sure
    she would be smiling ear to ear. As a matter of fact, with the
    benefits that we have for us career folk, those of us who are
    staying in for the full haul, by the time I get out I am not
    going to use the Montgomery GI Bill. I have already used
    college benefits to get my college degree. So the Montgomery GI
    Bill is just going to go away for me more than likely.
        You find that those that are using the Montgomery GI Bill
    are those that do one or two terms, not the people that are
    staying in for their career.
        As far as education and my sales pitch, it is always part
    of it. Education is very important to a lot of people and there
    are a lot of great educational opportunities out there.
    Anything that we can do more for that definitely would help.
        Senator Cleland. Thank you.
        Petty Officer Piatek. Yes, sir.
        Senator Cleland. Sergeant Parker.
        Sergeant Parker. Sir, education is definitely on the minds
    of everyone who wants to join, and if it is not on their mind
    it is definitely on the minds of their parents, who ultimately
    have a big influence on a young person's decision whether to
    join the military or not. If they are not talking about it,
    their parents are definitely talking about it.
        I also think that the GI bill, if it can also be used for
    family members it would definitely help out, not only in
    recruitment, but also in retention. There are a lot of service
    members right now who are helping their spouses to get through
    school out of their own pocket. We have marines who have
    spouses who are going to medical school, things like that, and
    the costs can get expensive. If there were funds from the GI
    bill that could be used for the family members, that would help
    a lot.
        Senator Cleland. I always thought it was ironic that, as
    the Petty Officer here pointed out, the people who in effect
    put the most time in and have actually earned all of these
    credits, these benefits under the GI bill, that if you really
    do stay for the long haul, the service man or woman has already
    gone to school on the bootstrap and gotten a college degree,
    maybe a master's degree, and so forth, and by the time they
    exit at 25 or 30 years old all that educational benefit
    structure that was created for them, in effect they may not
    need it or use it now.
        However, they accrued it. They earned it. So it was
    surprising to me to learn that only half of the people that in
    effect earned the credits for the GI bill actually ever use it.
    Of course, the GI bill was originally created for a single
    disposable force, not for a married retainable force. That is
    why I thought we had to make the benefit structure more family-
    friendly, especially for retention.
        It is interesting now you are running across, Sergeant
    Gwyn, some young married couples or soon to get married that
    are looking at the benefit package, not just what is good for
    the service man or woman, but how does the spouse fit in. I was
    running across that in Hawaii when I interviewed a young E-5
    and he said he was losing a lot of good people because, in
    effect, if mama ain't happy ain't nobody happy. If mama wants
    to get out of the military 80 percent of the time that is what
    the family is going to do. So it is a concern.
        Sergeant Quintana.
        Sergeant Quintana. On this side, sir, I think that is a
    good program. I believe that it will only help us. However, my
    question is, being single, what do I get to do? Do I get to use
    it for my brother or my sister? I am sure that that will be
    worked out, but that is going to be an issue that will arise.
        Should we use it for a wife? Most definitely, yes. It is a
    great program. Is our education process as far as the Air Force
    is concerned--you mentioned retention versus recruiting. When
    crossing into the blue, make no mistake about it, our
    applicants that come in, their priority is education. On this
    side, the Air Force, our folks are going to school. They are
    using that education. They are getting that 4-year degree and
    associate's and moving on, they definitely are. They come in
    asking about it.
        We use it as a sales pitch per se. It is an effective tool.
    It is a great tool for our program.
        Senator Cleland. Speaking of tools, and I will wrap it up
    here and then we will take a 10-minute break and change panels,
    if there was one thing the United States Congress could give
    you as a tool, Sergeant Gwyn, what would that be?
        Sergeant Gwyn. Sir, over the last few years there have been
    a lot of things that we have gotten totally disbursed, like
    laptop computers, cell phones, Government vehicles for every
    recruiter. In the area that I am in, everybody has adequate
    tools of those.
        The thing that a lot of the kids these days, the new age
    kids, their computers, Internet, they are always on the
    computer. I have a 14-year-old brother who is always on the
    computer. The one thing that I would say, that you would need
    to just keep the funding up for the Internet and all the online
    accessibilities. It is an amazing program, because they can get
    online and they can talk to recruiters, and they can talk to
    the people and get advice about everything, because that way
    they are not there themselves. They like to make their own
    minds up before they come in and feel like they have to be
    pressured or have somebody watching over their shoulder. It is
    kind of an independent thing on their part.
        But I would say funding for Internet is definitely a big
    one, sir.
        Senator Cleland. I forget, I have traveled so much I do not
    know whether it was Bosnia or Korea. That narrows it down, does
    it not, or Bosnia or Korea. But I remember the image that I
    saw. Where did the young soldiers spend their time off-duty to
    a certain extent? The library is virtually empty. Some people
    were on the phones. But the computer room to email back home,
    that had waiting lines to get to that equipment.
        That is a generational thing. My generation, of course,
    used the phone. The phone was the thing. We sent tapes home,
    but then if you could get a phone that was really hot stuff.
    But now, as you point out, youngsters expect to be connected.
    They expect to be wired. If they are in an environment in which
    they are not wired and connected, that is alien. To me, being
    wired and connected is alien.
        It is an interesting point that you raise as part of our
    efforts to recruit young people.
        Any comment, Petty Officer Piatek?
        Petty Officer Piatek. Yes, sir. I think Congress is doing a
    great job in providing the funding that they currently are.
    More money always helps. There are always new things that you
    can do. One thing, I do not know how do you do it, would be to
    change the attitude of people saying military is not the second
    fallback choice, it is a first choice. How do you do that,
    though? Got any suggestions?
        Senator Cleland. That is why I asked the question about
    culture. December 7, 1941, was the day of infamy for my
    father's generation. We have a U.S. Senator here, Jesse Helms,
    who went down and enlisted the next day. The next day was
    Monday. He enlisted December 8. There was no question. You run
    across tales of people who just filled the recruiting lines the
    week after the attack on Pearl Harbor.
        That is why I wondered about our generation's day of
    infamy, what were you seeing, what were you picking up. I think
    it is fascinating.
        Also, about World War II, there are 500 movies about World
    War II, all of which showed the good guys winning. That did not
    necessarily follow after the Vietnam War. So I wondered about
    the cultural aspect of the movies, of the media message,
    particularly coming out of Hollywood, the portrayal of people
    in uniform, are they good guys or bad guys, heroes or not. That
    is why I asked the question.
        Petty Officer Piatek. One thing along those lines is after
    September 11 happened and I had these retirees coming in and
    they were saying, what can I do to help you, I would give them
    a stack of business cards and say, pass them out for me, tell
    them your story, get them to come into my office so I can talk
    to them. That is a lot of it, people that were in that
    generation, who know what it is like; they can go out there and
    talk, spread the word.
        Senator Cleland. Good point.
        Gunnery Sergeant Parker.
        Sergeant Parker. Yes, sir. Anything additional that you can
    do will always help out. With the new law passed with access to
    schools and all this, I just think the number one concern with
    that is just the word actually getting down to some of the
    educators. So just a more heightened awareness that the
    military is around and we are not trying to do any harm, we
    just want to do what is good and serve the country.
        Senator Cleland. Thank you. Good point about the lists and
    our staff will take that under advisement. Thank you.
        Sergeant Quintana.
        Sergeant Quintana. The program. We are in a competitive
    business. Colleges, doctors, lawyers--we are competing. We have
    to have a great program. Funding, internet, you name it. You
    are an 18, 19-year-old man or woman out there, you are looking
    for the best program. We have to continually offer the best
    program. We have a great program crossing into the blue.
        The decisions that you guys will make today, tomorrow, will
    affect a year from now, 2 years from now. It is a great
    program; let us better it. How can we do that? That is not at
    my level. That is at your guys'. We need a great program.
        Senator Cleland. Well, thank you very much. One of the
    things we know is we have great recruiters out there like you.
        We will adjourn this panel, take a 10-minute break, and
    call the second panel. Thank you very much for your service to
    our country. [Recess from 10:20 a.m. to 10:33 a.m.]
        If we can have a seat, we will continue our hearing on
    recruiting and retention issues confronting our military.
        We are honored to welcome Lieutenant General Le Moyne and
    Major General Rochelle from the Army, Vice Admiral Ryan and
    Rear Admiral Voelker from the Navy, Lieutenant General Parks
    and Major General Humble from the Marine Corps, and Lieutenant
    General Brown and Brigadier General Deal from the Air Force.
        Admiral Ryan, I understand that you will be retiring later
    this year and that you think that this is maybe the last time
    you will testify before us. Well, we have good news and bad
    news. The good news is you are retiring, the bad news is you
    may have to come before us again. It may be your last
    opportunity to testify as the Chief of Naval Personnel, but I
    understand the you have been selected as the new President of
    TROA, The Retired Officers Association. I am a retired officer,
    and as long as I pay my dues I expect full respect from you. We
    frequently ask members of The Retired Officers Association to
    testify at our hearings, so do not think that you are off the
    hook. We might just bring you back in your new capacity.
        It has always been wonderful to deal with you and to
    receive your testimony, your insight into some of our
    challenges in terms of recruitment and retention. We look
    forward to working with you in your new capacity. Thank you for
    your wonderful service to our country and to our sailors and
    congratulations on your selection as President of TROA.
        At this point I would like to invite each of the services
    to make a short opening statement. Your prepared statements
    will, of course, be included in the record. I will let you
    decide who wants to speak for the service. Why do we not just
    start off with the Army, General Le Moyne.

     STATEMENT OF LT. GEN. JOHN M. LE MOYNE, USA, DEPUTY CHIEF OF
    STAFF FOR PERSONNEL/G1, UNITED STATES ARMY; ACCOMPANIED BY MAJ.
       GEN. MICHAEL D. ROCHELLE, USA, COMMANDING GENERAL, UNITED
                     STATES ARMY RECRUITING COMMAND

        General Le Moyne. Mr. Chairman, thank you very much for
    today. We are pleased to be here today to testify before you. I
    want to emphasize that the Army thanks you and your committee
    members personally for the successes we have had in the
    personnel policies reflected in the Fiscal Year 2002 National
    Defense Authorization Act. Your concerns and those of your
    staff provided proven support to our service members, men and
    women in uniform, their families, our civilian work force, and
    our retirees.
        We appreciate the pay raise, the Montgomery GI Bill
    changes, the education savings bond legislation, the Thrift
    Savings Plan, the benefits under the College First program, and
    TRICARE for Life. These programs will clearly increase the
    overall well-being of our force.
        Sir, when the terrorists flew a jetliner into the Pentagon
    on September 11, the Office of Deputy Chief of Staff for
    Personnel (DCSPER) suffered close to 20 percent casualties in
    dead and wounded. The very next day, the surviving DCSPER work
    force was back at work. You look at the casualties, sir, and
    you will find that there are service members, civilians,
    contractors, and retirees of various ages, ranks, and
    religions. They truly represent America's military and our
    Nation.
        This global war on terrorism, sir, has emphasized the
    critical importance of manning America's Army. Recruiting to
    man the force will continue to be our first priority. Our
    recruiting requirements are based on a steady state of just
    over 180,000 new soldiers each year in our Active, National
    Guard, and Reserve Forces, more than all the other services
    combined. We will meet our recruiting goals again this year.
        Our continuing success in recruiting, coupled with the
    record number of soldiers deciding to reenlist in our Army, has
    allowed us to fill our warfighting units to levels not seen
    since the Gulf War. As the Army's Human Resources Manager, sir,
    my concerns center on maintaining the momentum that we have
    achieved in manning the Army and the well-being of our
    personnel.
        Thank you, sir, for the opportunity. I look forward to your
    questions.
        [The prepared joint statement of Lt. General Le Moyne and
    Major General Rochelle follows:]
    Prepared Joint Statement by Lt. Gen. John M. Le Moyne, Deputy Chief of
    Staff, G1, and Maj. Gen. Michael D. Rochelle, Commander, United States
                            Army, Recruiting Command
        Mr. Chairman and members of the committee, on behalf of the men and
    women of the United States Army, we appreciate the opportunity to
    appear before your subcommittee today to give you a military personnel
    overview of America's Army. I would like to start by publicly
    expressing our thanks for your support and assistance in the major
    successes and achievements in the human resources environment this past
    year.
        When terrorists flew a commercial jetliner into the Pentagon
    September 11, the Office of the Deputy Chief of Staff for Personnel
    suffered almost 20-percent casualties in dead and wounded, yet the
    surviving personnel workforce was back functioning the next day. They
    were working 24/7 within a week at the Hoffman Building in downtown
    Alexandria, Virginia. It is a source of pride for me, and at the same
    time humbling, that the G1 staff sections are filled with heroes--
    quiet, compassionate, and sincere. Look at the casualties and you will
    find the Army of One well represented. They are soldiers, civilians,
    contractors, and retirees of varying ages, ranks and religions, truly
    representing America.
        As we move into the 21st century, the momentum of the professional
    Army continues, marked by dramatic changes and proud accomplishments.
    The Army of today is facing challenges in the proper manning and
    readiness of the force, but we feel we are taking the necessary steps,
    with your help, to ensure that it remains the best Army in the world.
    We would like to discuss several key issues.
                                   recruiting
        In the aftermath of September 11, the greatly increased security
    requirements here in the U.S. and the challenges of fighting terrorism
    serve to emphasize the critical importance of Army recruiting. The Army
    continues to recruit in a highly competitive environment. The private
    and public sectors, to include post-secondary educational institutions,
    are all vying for high quality men and women. Maintaining adequate
    resourcing for recruiting is essential to ensure that we sustain our
    improvement over the past 2 years. Recruiting will continue to be my
    first priority for manning the force.
        The Army's recruiting requirements are developed from projected
    needs based on a steady state of 480,000 soldiers. The recruiting
    environment remains tough with youth unemployment holding at record
    lows. Even with the current economy, youth unemployment has remained
    relatively steady. This makes for a very tight labor market. The Army
    must recruit far more than any other service. We must recruit quality
    applicants from the non-propensed market with incentives and innovative
    programs as well as the positively propensed market in order to meet
    our goals. To make this possible, the Army must continue to be equipped
    and resourced to meet its accession goals. By maintaining our
    competitive edge, the Army will meet its recruiting goals.
        In fiscal year 2001, the Army made its recruiting mission and met
    or exceeded all three DOD quality goals with 90.2 percent having a High
    School Diploma, 63.2 percent scoring in the top 50th percentile on the
    Armed Forces Qualification Test (categories I-IIIA) and only 1.9
    percent scoring in category IV (26th to 30th percentile).
        To fulfill the fiscal year 2002 enlisted accession mission, the
    Active component must write 97,500 new contracts to cover the 79,000-
    accession requirements and build an adequate Delayed Entry Program
    (DEP) of 35 percent to start fiscal year 2003. The Army Reserve must
    access 41,457 and the Army National Guard, 60,504. These workloads
    combine to require productivity not seen since 1990 and under more
    difficult market conditions.
        We are on track to meet our goals. Through February 2002, we have
    exceeded our Active component accession requirements by 553
    enlistments. The Army National Guard and the U.S. Army Reserve are also
    exceeding their missions. We are fully engaged to meet this year's
    accession missions and believe we can accomplish all three components'
    missions. We are implementing initiatives to expand the recruiting
    market in cost-effective ways, without degrading the quality of the
    force.
        We continue to address the minority equation (e.g. African
    American, Asian-Pacific-Islander, Hispanic), understanding that
    diversity is key to reconnecting with America today and representing
    our population in the future. One significant effort is our continuing
    outreach to the Hispanic demographic. We know that Hispanics are
    underrepresented in the Army relative to their share of the U.S.
    population. As a result of our efforts, enlisted Hispanic population
    increased from 8.3 percent of the Army as of September 1999 to 9.1
    percent as of September 2000 and 9.7 percent as of September 2001. One
    program that the Recruiting Command has implemented to help accomplish
    this goal is the Foreign Language Recruiting Initiative (FLRI). The
    FLRI is a 2-year pilot program designed to increase the number of
    Hispanics in the Army. The Army will access 200 recruits per year
    during the 2-year pilot program. The program began 2 January 2002 and
    will provide quality individuals who speak Spanish with an opportunity
    to improve their ASVAB score and use of the English language. As of 31
    January 2002, Hispanics account for 12.1 percent of all fiscal year
    2002 contracts.
        In recent years, you have passed legislation to assist us in our
    recruiting mission. Two of those programs were the ``College First''
    test and the ``GED Plus--the Army's High School Completion Program.''
    There were 673 enlistments in College First through fiscal year 2001,
    and 237 in fiscal year 2002 as of 27 February 2002. You granted us
    changes to the College First program for fiscal year 2002 that will
    improve the test and the ability to determine expansion to the bound-
    for college market. The GED Plus program achieved 3,449 accessions in
    fiscal year 2000, and exceeded the 4,000 (5,947 Total Regular Army)
    program limit in fiscal year 2001. As of 27 February 2002, there have
    been 3,680 accessions through this program.
        In fiscal year 2002 you gave us the opportunity to conduct an 18-
    month enlistment option pilot test designed to increase the
    participation of prior-service soldiers in the Selective Reserve and
    assistance in building the Individual Ready Reserve.
        Additionally, you directed us to conduct a test of contract
    recruiters replacing active duty recruiters in 10 recruiting companies.
    The Army is implementing this initiative. The plan is to bring on the
    10 company contractors throughout fiscal year 2002 and run the full
    test from fiscal year 2003 through fiscal year 2007. We have awarded
    this pilot program to two independent contractors each receiving
    contracts to perform the full complement of recruiting services,
    including prospecting, selling, and pre-qualifying prospective
    applicants for the Regular Army and Army Reserve, and ensuring that
    contracted applicants ship to their initial entry training starting
    this spring in selected locations across the country.
        Finally, our partnership with industry program, the Partnership for
    Youth Success has been a resounding success with the business
    community. Savvy business leaders are eager to recruit the young
    soldier who is ending his or her tour of duty with the Army, knowing
    they are getting top-notch individuals with leadership and skill
    training, as well as self-discipline, maturity, and values.
        Today's young men and women have more employment and educational
    opportunities than ever before. Competition for these young people is
    intense. The enlistment incentives we offer appeal to the dominant
    buying motive of young people and allow us to fill the skills most
    critical to our needs at the time we need them most. The flexibility
    and improvements you provided to our incentives in the past have helped
    us turn the corner regarding recruiting. The initial four $20,000
    Enlistment Bonus specialties have seen dramatic increases in volume and
    quality fill. The combination of all incentives will help fill critical
    specialties as the Army continues its personnel transformation. The
    combined Montgomery GI Bill and Army College Fund, along with the
    Army's partnership with education, remain excellent programs for Army
    recruiting and an investment in America's future.
        While the actions we have taken will help alleviate some of the
    recruiting difficulties, we also know more work has to be done to meet
    future missions. We must continue to improve the recruiting efforts
    from developing a stable, robust resourcing plan to improving our core
    business practices. We must capitalize on the dramatic improvements in
    technology from the Internet to telecommunications and software. We
    must improve our marketing and advertising by adopting the industry's
    best business practices and seeking the most efficient use of our
    advertising dollars.
        Business practices, incentives, and advertising are a part of
    recruiting, but our most valuable resource is our recruiters. Day in
    and day out, our Army recruiters are in the small towns and big cities
    of America and overseas, reaching out to young men and women, telling
    them the Army story. We have always selected our best soldiers to be
    recruiters and will continue to do so. These soldiers have a demanding
    mission. We owe it to these recruiters and their families to provide
    them the resources, training, and quality of life that will enable them
    to succeed.
        The Army appreciates Congress' continued support for its recruiting
    programs and for improving the well-being of our recruiting force. We
    are grateful for recent congressional initiatives to increase military
    pay and benefits and improve the overall well-being of our soldiers. We
    believe these increases will not only improve quality of life and
    retention, but will greatly enhance our recruiting effort, making us
    more competitive with private sector employers.
                               enlisted retention
        The Army's Retention Program continues to succeed in a demanding
    environment. Our program is focused on sustaining a trained and ready
    force and operates around five basic tenets:

             Reenlist highly qualified soldiers who meet the Army's
            readiness needs.
             Enlist or transfer qualified transitioning soldiers
            into a Reserve component unit based on the soldier's
            qualification and unit vacancy requirements within geographic
            constraints.
             Achieve and maintain Army force alignment by
            reenlisting qualified soldiers in critical skills.
             Maintain maximum command involvement at every echelon
            of command.
             Ensuring that a viable and dynamic retention program
            continues is critical to the sustainment function of the Army's
            personnel life-cycle.

        Our retention efforts demand careful management to ensure that the
    right skills and grades are retained at sufficient levels that keep the
    Army ready to fulfill its worldwide commitments. Our Selective
    Retention Budget continues to provide this leverage, which ensures a
    robust and healthy retention program.
         Over the past several years, retention has played an even greater
    role in sustaining the necessary manning levels to support our force
    requirements. Retention has been a key personnel enabler, considering
    the difficult recruiting environment that has existed over that period.
    This past year was an excellent example of the delicate balance between
    our recruiting and retention efforts. Through a concerted effort by the
    Department of the Army, field commanders and career counselors, the
    Army not only made it's fiscal year 2001 mission, but finished the year
    by retaining 982 soldiers above that adjusted mission for a
    reenlistment percentage of 101.5 percent.
        Although the annual mission is below the 64,982 soldiers who
    reenlisted last year, the decreasing separating soldier population will
    make the annual mission just as difficult. Last year the retention
    accomplishments equated to 67 percent of all separating soldiers, which
    was a historic high for the Army. This year the retention mission is
    56,000. This requires us to retain 67 percent of all separating
    soldiers.
        The ultimate success of our retention program is dependent on many
    factors, both internal and external to the Army. External factors that
    are beyond our ability to influence include: the economy, the overall
    job market, and the world situation. While we are enthusiastic about a
    healthy economy and high employability of our soldiers in the job
    market, we are also aware that these factors play heavily on the minds
    of soldiers when it comes time to make reenlistment decisions. Our
    force today is more family oriented. Today 55 percent of the Army is
    married. Army spouses, who are equally affected by these external
    factors as the service member, have great influence over reenlistment
    decisions. The internal factors that we can influence include: benefit
    packages, promotions, the number of deployments, adequate housing,
    responsive and accessible health care, attractive incentive packages,
    and reenlistment bonuses. Not all soldiers react the same to these
    factors. These factors challenge our commanders and their retention
    non-commissioned officers (NCOs) to provide incentives to qualified
    soldiers that encourage them to remain as part of our Army.
        Our incentive programs provide both monetary and non-monetary
    inducements to qualified soldiers looking to reenlist. These programs
    include:

             The Selective Reenlistment Bonus, or SRB, offers money
            to eligible soldiers, primarily in the grades of Specialist and
            Sergeant, to reenlist in skills that are critically short or
            that require exceptional management.
             The Targeted Selective Reenlistment Bonus program, or
            TSRB, is a sub-program of the SRB that focuses on eleven
            installations within the continental United States and Korea
            where pockets of shortages existed in certain military
            occupational specialties (MOS). The TSRB pays a reenlisting
            soldier a higher amount of money to stay on station at a
            location in the program or to accept an option to move.

        Both of these programs, which are paid from the same budget, play
    key roles in force alignment efforts to overcome or prevent present
    shortfalls of mid-grade NCOs that would have a negative impact on the
    operational readiness of our force. We use the SRB program to increase
    reenlistments in critical specialties such as Infantry, Armor, Special
    Forces, Intelligence, Communications, Maintenance, and Foreign
    Languages. The fiscal year 2001 SRB budget, as a result of the
    congressional markup, was increased by $44 million to $106.3 million.
        Non-monetary reenlistment incentives also play an important role in
    attracting and retaining the right soldiers. We continue to offer
    assignment options such as current station stabilization, overseas
    tours, and CONUS station of choice. Training and retraining options are
    also offered to qualified soldiers as an incentive to reenlist. By
    careful management of both the monetary and non-monetary incentive
    programs, we have achieved a cost-effective program that has proven
    itself in sustaining the Army's career force.
        The Army's retention program today is healthy. Into the second
    quarter of fiscal year 2002, as of 31 January 2002, we have reenlisted
    109 percent of our year-to-date mission and are on track to make the
    56,800-reenlistment mission that is required to sustain our 480,000
    soldier Army. Our Reserve component transition efforts during last year
    were also successful. We transferred 12,099 Active component soldiers
    into Reserve component (RC) units against a mission of 10,500 for a
    115.2 percent success rate. For fiscal year 2002 year-to-date, we have
    transferred 2,925 soldiers into RC units against a mission of 2,441 for
    a rate of 120 percent. The Army is expected to exceed its annual RC
    mission again this year.
        Despite these successes there are a growing number of concerns
    surrounding the direction and future success of the Army Retention
    Program. With the eligible separating population of soldiers decreasing
    during the next 3 years, the actual retention rate will have to be
    sustained at about 67 percent, which is 7 percent above what the Army
    has previously accomplished prior to fiscal year 1999. Additionally,
    MOS support skills, which include required language proficiency, signal
    communications, information technology, and maintenance, present a
    significant challenge caused by those external factors mentioned
    earlier (e.g., the economy, the job market, and increased PERSTEMPO).
    Even in the current economy, civilian employers are actively recruiting
    service members with these particular support skills. They are offering
    bonuses and benefit packages that we simply cannot expect to match
    under current bonus allocation rules and constrained budgets. Although
    retention in the aggregate is healthy, we continue to be concerned with
    retaining the right numbers of soldiers who possess these specialized
    skills.
        To achieve our retention mission, we concentrate our efforts
    primarily on first-term and mid-career soldiers. It is within these two
    mission categories that the foundation for the career force is built.
    However, retention decisions are significantly different between these
    two groups. First-term soldiers cite educational opportunities and
    availability of civilian employment as reasons for remaining in the
    Army or separating. Mid-career soldiers are affected more by health
    care, housing, compensation, and availability of commissary, exchange,
    and other post facilities. Consequently, a higher percentage of mid-
    career soldiers are married, although the number of married first-term
    soldiers continues to increase. We continue to monitor both groups
    closely for any change in reenlistment behavior. They are the key to
    continuing a successful retention program. First-term retention rates
    continue at historic levels, as they exceeded 52 percent during fiscal
    year 1999, fiscal year 2000, and fiscal year 2001. Mid-career rates
    continue to be above the pre-drawdown levels, at approximately 74
    percent. We consider these rates to be the minimum levels necessary to
    sustain the force. Non-retirement-eligible soldiers continue to remain
    in the Army at a 98 percent rate. However, retirement-eligible soldiers
    who are still retention-eligible are leaving the service at higher than
    expected rates. The Army is keeping the right number of soldiers in the
    force necessary to maintain our readiness. This is due in large part to
    the help from Congress, existing incentive programs, and the continued
    involvement by Army leaders at all levels.
                               officer retention
        It is anticipated that we will finish fiscal year 2002 at slightly
    below our officer budgeted end strength of 77,800. We continue to
    monitor officer retention rates, particularly that of captains. Post-
    drawdown (1996-1999) captain loss rates remain slightly higher than
    pre-draw down (1987-1988) loss rates (.9 percent difference); manning
    levels are constrained by deliberately under-accessed cohorts during
    the drawdown years. However, the impact of the captain shortage has
    been historically offset by a lieutenant overage, in aggregate number.
    The Army steadily increased basic branch accessions beginning in fiscal
    year 2000 with 4,000, capping at 4,500 in fiscal year 2002 and beyond,
    to build a sustainable inventory to support captain requirements.
        Administration and congressional support on pay table reform serve
    to redress the pay issue. We continue to promote captains above the
    DOPMA goal of 90 percent and are currently promoting all fully
    qualified lieutenants to captain at the minimum time authorized by
    DOPMA (42 months).
        Army initiatives to improve retention among its Warrant Officer
    AH64 (Apache) pilot population have stabilized attrition trends; a
    reduction from 12.9 percent in fiscal year 1997 to 8.6 percent in
    fiscal year 2001. Since fiscal year 1999 we have offered Aviation
    Continuation Pay to 665 eligible officers, of which 565 accepted (88
    percent take rate). Additionally, we have recalled 209 pilots since
    1997, and have 21 Apache pilots serving on active duty in selective
    continuation status.
        During fiscal year 2001, the Army Medical Department's recruiting
    faced stiff competition from the civilian health care sector and other
    services, specifically in the recruitment of active duty, fully
    qualified nursing, dental, physician, pharmacy, and optometry health
    care providers; and Reserve nursing, oral surgery, physicians,
    pharmacy, and optometry health care providers. Despite the stiff
    competition, and the documented national shortage of nurses, AMEDD
    recruiters achieved 91 percent of their overall mission with over-
    production for the total Reserve mission. There was a healthy 25
    percent improvement in accomplishment of the critical Reserve physical
    mission that could be directly credited to more aggressive market
    penetration.
                                   well-being
        A significant part of Army Transformation is Army well-being. Army
    well-being is the driving force for a successful transformation because
    it directly impacts the human dimension of the force. Army well-being
    is the personal--physical, material, mental, and spiritual--state of
    soldiers, retirees, veterans, families, and Army civilians that
    contribute to their preparedness to perform and support the Army's
    mission. Army well-being encompasses and expands upon quality of life
    successes by providing a standardized, integrated approach to programs
    at the soldier, community/installation and senior-leadership level.
    Well-being provides a clear linkage between quality of life and Army
    institutional outcomes such as performance, readiness, retention, and
    recruiting--outcomes that are strategically critical to sustaining a
    healthy Army into the future.
        The motivating force of Army well-being is ensuring we consistently
    and adequately provide for the people of the Army while improving
    readiness. Helping individuals connect to the Army, feel part of the
    team, and derive a sense of belonging is inextricably linked to
    readiness. Well-being pursues an adequate standard of living for
    soldiers and Army civilians and their families. Well-being connects
    soldiers, civilians, retirees, veterans, and families to the Army by
    fostering pride and a sense of belonging. Well-being encourages members
    to grow by providing meaningful and supportive personal enrichment
    programs.
        Well-being seeks to enhance morale, recruiting, and retention by
    incorporating all well-being related programs such as command, pay and
    compensation, health care, housing and workplace environment,
    education, family, and recreational services into an integrated
    approach that succinctly communicates to soldiers, civilians, retirees,
    family members, veterans, and leaders the various programs and
    resources provided by the military. It gives members of the Army a
    holistic view that the Army is pursuing fair, balanced, and equitable
    compensation benefits; consistently providing safe, affordable,
    excellent housing; ensuring quality health care; enhancing community
    programs; and expanding on educational and retirement benefits by
    developing universal standards and metrics to evaluate and deliver
    these programs.
        Well-being will continue to be linked to the capabilities,
    readiness, and preparedness of the Army as we transform to the
    Objective Force. Well-being means predictability in the lives of
    soldiers and their families, access to excellent schools and medical
    facilities, educational opportunities, housing, and recreation. Well-
    being means soldiers and civilians will not be put in the position of
    choosing between the profession they love and the families they
    cherish.
                                    closing
        We know that military service offers tremendous opportunities to
    America's youth. Our soldiers, sailors, airmen, and marines return to
    America's communities better educated, more mature and with the skills
    and resources to prepare them for a productive and prosperous life.
    They make valuable contributions to their communities.
        Our recruiting mission continues to be a challenge. The success of
    our retention program rests on the shoulders of unit commanders,
    leaders and our retention professionals throughout the Army. Our
    concerns for the remainder of fiscal year 2002 and beyond center around
    the momentum that was initiated by the administration and Congress last
    year to improve the lives of our soldiers through improved pay
    initiatives.
        We are hopeful that your support and assistance will continue as we
    demonstrate our commitment to fulfilling the manpower and welfare needs
    of the Army; Active, Reserve, civilian, and retired.
        Again, thank you for the opportunity to appear before you today.

        Senator Cleland. Thank you, General Le Moyne.
        For the Navy, Admiral Ryan.

      STATEMENT OF VICE ADM. NORBERT R. RYAN, JR., USN, CHIEF OF
    NAVAL PERSONNEL AND DEPUTY CHIEF OF NAVAL OPERATIONS (MANPOWER
      AND PERSONNEL); ACCOMPANIED BY REAR ADM. GEORGE E. VOELKER,
         USN, COMMANDER, UNITED STATES NAVY RECRUITING COMMAND

        Admiral Ryan. Mr. Chairman, thank you very much. You
    mentioned the improvements that we have all made in recruiting
    and retention, and certainly we owe a great debt of thank you
    to all of you for your support of our men and women. We have
    made our recruiting goal for the last 3 years. Our retention of
    our first term sailors has gone in 2 years from 45 percent to
    65 percent and our attrition is down 10 percent. As a result
    today, Mr. Chairman, we have 103 ships deployed in this global
    war on terrorism, 49,000 of our best men and women like Petty
    Officer Piatek who just testified before you.
        In fact, one of those ships will be home a week from today,
    the Teddy Roosevelt. The Teddy Roosevelt you may remember
    surged over there early. It is coming home about 8 days late.
    In between they spent 5 straight months on deployment, no port
    calls, 24 hours a day, 7 days a week, flight operations. 4,000
    combat sorties later, they are coming home.
        Those are the types of men and women that we see out there,
    thanks to the support that we have received from particularly
    this committee and Congress, and we are very grateful.
        The big question for me as the Chief of Naval Personnel is
    can we sustain this effort. Our Chief of Naval Operations (CNO)
    has asked us to look at a 5-year horizon. I believe we can
    sustain the effort and get a better balance between what we
    have in the Active and Reserve. Our mobilization of our
    Reserves has been inspirational. We have about 10,000 Reserves
    on active duty right now that have really helped us in the
    force protection area, particularly with the 315 ships that we
    have. That was a new thing for us to really take on as a
    mission, with the degree of effort that we have.
        For us, can we sustain our effort? Yes. But to do that we
    need the CNO's top priority, we need help in the funding area,
    and that is for an additional 4,400 active duty personnel in
    the force protection area, because right now we have too many
    Reserves doing that function. To ask them to do it for a 5-year
    type of horizon will be very challenging. But with that number
    of people, I think we can maintain the tempo and take care of
    the quality of service and the families of those that are
    involved in this kind of higher tempo operation.
        We are very optimistic about where we are going. We have
    asked for your consideration in that one initiative. I think we
    will continue to make you and the rest of the country proud of
    what our men and women are doing. Thank you.
        [The prepared joint statement of Admiral Ryan and Admiral
    Voelker follows:]
     Prepared Joint Statement by Vice Adm. Norbert R. Ryan, Jr., USN, and
                        Rear Adm. George E. Voelker, USN
                                  introduction
        Mr. Chairman and distinguished members of the subcommittee, thank
    you for this opportunity to appear before you today to testify on
    behalf of the outstanding men and women of the United States Navy. I
    want to express our deep gratitude for the outstanding support
    Congress, especially this subcommittee, continues to show for Navy
    people and their families during this unprecedented time in our
    Nation's history.
        Even as we continue to wage war on terrorism, the military
    readiness of the greatest Navy in the world continues to improve. Navy
    men and women are at the top of the Chief of Naval Operations' (CNO)
    top five priority list and he has remained committed over the last
    year-and-a-half to the resources necessary to win our battle for
    people. This year's Navy military personnel budget request continues
    the momentum we have been building. We have met recruiting goals for
    the past 3 years and our reenlistment rates are reaching unprecedented
    levels and we continue to reduce the attrition of our junior sailors.
        The pay raises, both across-the-board and targeted; enhancements to
    special and incentive pays, especially career sea pay; efforts to
    improve housing and reduce out-of-pocket housing expenses; the
    authorization to participate in the Thrift Savings Plan and
    improvements in medical care and retirement reforms, are among the most
    significant factors that have helped us attract and retain the sailors
    we need today, many of whom will form the core of tomorrow's Navy
    leadership. As a result of these and other accomplishments, battle
    groups deploying to execute the Nation's global objectives are better
    manned than any time in recent memory.
    Readiness Dividend
        The investments made in our people over the last few years paid off
    when Navy was called into action on September 11. Five Carrier Battle
    Groups and Amphibious Readiness Groups have deployed (some early) in
    support of Operation Enduring Freedom in the highest states of
    personnel readiness. They have operated at wartime tempo--24 hours a
    day, 7 days a week--without requiring additional personnel. Having the
    right number of people with the right skills on deck as the war started
    enabled Navy to lean forward and strike the first blows into
    Afghanistan without having to wait for more people to arrive.
        Last year, Navy made a strategic decision to pay for approximately
    4,000 additional strength above the original budget submission, to
    improve fleet readiness. Today, we are continuing those efforts to
    maintain the highest states of personnel readiness by minimizing gaps
    at sea, especially for deploying units. On average, battle group
    manning has increased by approximately 800, with additional personnel
    arriving as early as 12 months before deployment.
                               sustaining the war
        Since the attacks of September 11, Navy has activated over 10,000
    reservists, from those who provide force protection and intelligence
    capabilities to linguists and medical personnel. Navy also invoked a
    limited stop-loss which impacted less than 10,000 people in the same
    skill areas, but recently reduced that requirement by about half. The
    CNO has directed the Navy staff to develop plans for a prolonged
    conflict, which will require phasing out the first wave of mobilized
    reservists with new reservists, active personnel or technological
    alternatives to force protection functions.
        New requirements have emerged in force protection as we increase
    our baseline posture across the Navy to heightened threat conditions.
    The Reserve activation has gone a long way in helping us fill these
    requirements in the short-term, but our ability to maintain the
    heightened security posture will gradually diminish as Selected
    Reserves are demobilized.
        We are continuing to examine our evolving manpower requirements.
    While the fiscal year 2003 budget request seeks an active end strength
    authorization of 375,700, we are working to adjust our force mix as new
    or increased requirements in particular skill areas emerge. Our
    retention success this year, while significantly improving fleet
    readiness, has also led to more people remaining on active duty than
    originally anticipated. This has permitted us to reduce our recruiting
    accession mission by 4,000 (from 54,000 to 50,000).
    Readiness Challenges
        Even in the current wartime environment, we must continue to
    closely monitor the individual personnel tempo of our sailors to ensure
    that we are not overburdening them and degrading our long-term
    personnel readiness. We are striving to minimize the increased wartime
    operational tempo of the fleet through careful planning and innovative
    training. We are continuing to examine the best way in which to
    properly balance the need to keep our forces forward deployed, ensure
    their preparedness for operations during deployment work-ups, and still
    permit them to enjoy quality of life at home and time with family and
    friends.
                       continuing to invest in our people
    Pay Raise
        The significant pay raise in fiscal year 2002 was a critical step
    in ensuring our ability to recruit and retain a force in sufficient
    numbers and quality to meet our military manpower needs. While we made
    progress, we must continue to ensure that basic pay achieves
    competitiveness with the private sector.
    Career Sea Pay (CSP)
        Using the authority enacted by Congress in fiscal year 2001, Navy
    recently increased CSP rates and expanded it to E-1 to E-3 and all
    officers, regardless of time at sea, thereby adding 25,000 people on
    sea duty to the 86,000 already receiving CSP. This pay directly
    recognizes and compensates for the arduous nature and sacrifices of
    those serving at sea. This action was taken as Navy men and women were
    deploying around the world in support of the new war against terrorism.
    Fleet feedback has been overwhelmingly favorable.
    Basic Allowance for Housing (BAH)
        Reducing the BAH out-of-pocket expenses to 11.3 percent in fiscal
    year 2002 was another major compensation enhancement that has resonated
    very well in the fleet. The fiscal year 2003 budget submission reduces
    out-of-pocket expenses even further, to approximately 7.5 percent. This
    brings us closer to the goal of zero percent (on average) out-of-pocket
    expense by 2005.
        Another major initiative this past year was extending BAH to single
    E-4 sailors on sea duty. Allowing single sailors to reside off the ship
    while in homeport is one of our most important quality of service
    initiatives. While we are currently paying BAH only to those E-4s with
    over 4 years of service, we are considering options to move all sailors
    off of ships over the next several years.
    Thrift Savings Plan (TSP)
        The net effect of the compensation improvements this past year was
    to give sailors more opportunity to invest in their futures. TSP has
    proven to be the investment vehicle of choice for a significant number
    of our people. Our Navy men and women, like their Federal workforce
    counterparts, now have the opportunity to develop individual savings,
    which will greatly enhance their chances for long-term financial
    security. As of the end of January 2002, nearly 68,000 active and
    Reserve Navy members have enrolled in TSP. This represents 16 percent
    of the total force. Through continued wide-scale educational efforts,
    we hope to increase this number substantially during the next open
    season this May.
    Individual Personnel Tempo (ITEMPO)
        Since October 1, 2000, Navy has been tracking the individual
    deployment days of its sailors in accordance with the fiscal year 2000
    and fiscal year 2001 National Defense Authorization Acts. Navy fully
    supports the congressional intent of managing individual member
    deployments, but has concerns with some elements of the legislation and
    its unintended consequences on sailor choice. In the interest of
    national security, the Deputy Secretary of Defense, on October 8, 2001,
    suspended certain ITEMPO management constraints and the accumulation of
    deployment days in determining per diem payments. After this
    suspension, Navy, with the support of the Secretary of Defense,
    invested $150 million in CSP enhancements, sending an immediate signal
    to our people that their deployment time mattered and is recognized by
    leadership. CSP has long been Navy's most effective tool for
    compensating those whose primary duty it is to deploy.
        Navy is working with the Secretary of Defense in developing the
    required Report to Congress on the impact of, and suggested changes to,
    ITEMPO legislation. Navy favors a system that adequately compensates
    individuals whose ITEMPO exceeds that which would normally be
    associated with an expeditionary force. The system should not force
    Navy to limit an individual's personal preference by imposition of a
    fiscal penalty. Navy also fully supports congressional intent that
    payment should be from the Operations and Maintenance account.
    Educational Enhancements
        I am a strong proponent for ensuring that the Montgomery GI Bill
    (MGIB) remains an effective tool for attracting young men and women
    into the military services and, more importantly, that it adequately
    recognizes them for their selfless commitment to service to our Nation.
    This helps them transition when they eventually leave our ranks and
    bring their wealth of experience, training, education, and
    professionalism back into the civilian workforce. Our sailors
    appreciate recently enacted enhancements to MGIB and will benefit from
    them personally and professionally.
        Mr. Chairman, I am grateful for your foresight in recognizing the
    desire for choice that sailors have consistently expressed as a
    priority when it comes to their benefits package. We are currently
    examining ways in which we might best implement the new authority by
    which sailors could transfer to eligible family members a portion of
    their Montgomery GI Bill benefits so that it is cost-effective and
    yields the greatest return on investment. We see this authority as a
    potential incentive for retaining certain senior, experienced, members
    serving in critical skill areas, who might otherwise opt to transfer to
    the Fleet Reserve at the earliest opportunity, rather than staying Navy
    until they reach mandatory retirement thresholds. Our ability to retain
    such sailors will permit us to continue to capitalize on their many
    years of experience, advanced training, leadership and mentoring
    expertise, and will support our efforts to grow the seniority of the
    force to reflect validated requirements in the 21st century high-tech
    Navy.
                                   retention
        We continue to challenge our leaders to motivate and retain the
    sailors under their charge. That leadership coupled with expanded
    reenlistment bonuses, enhanced special and incentive pays, increased
    advancement opportunity, and significant quality of service
    improvements has paid off. In fiscal year 2001, we saw impressive
    improvements in reenlistment rates across all zones of service, most
    noticeably in our critical initial term population (less than 6 years
    of service) where reenlistment rates improved nearly 19 percent over
    the previous year. Mid-career and career reenlistment rates also showed
    improvement over the previous year. Equally important, we saw 8.5
    percent fewer initial term attrition losses than the previous year
    thereby allowing more young sailors to complete their obligations.
    Early indications are that fiscal year 2002 will be equally successful.
    While challenges still exist, we will continue to cultivate a command
    climate throughout Navy that offers plentiful opportunities, encourages
    participation, and is conducive to personal and professional growth.
        Overall officer retention in fiscal year 2000 and fiscal year 2001
    showed marked improvement over previous years; however, we must
    continue to work to improve officer retention, especially among our
    aviator, submarine, and surface warfare officers.
        Direct fleet engagement in the retention battle is critical to our
    continued success. Through a variety of means, we have carried
    leadership's message directly to fleet sailors to ensure that they are
    aware of the things being done to improve their quality of service. At
    fleet concentration areas, teams of retention and professional
    development experts host Career Decision Fairs (CDF) and speak to
    sailors and their families about various aspects of Navy life including
    compensation and benefits, and career opportunities. In the last 18
    months, these CDFs have reached over 50 commands and 35,000 sailors and
    family members, resulting in the immediate decisions of more than 600
    sailors to stay Navy. In return, CDFs provide a means by which issues
    most important to sailors are brought to the attention of Navy
    leadership at the highest levels. For example, sailors want greater
    choice in their assignment process, so Navy has begun a number of
    initiatives to make the process more sailor-centered, including a
    Sailor Advocacy Program that has expanded outreach by personnel
    managers to sailors. This type of initiative will move Navy into the
    future as we broaden our human resource horizons.
        Navy retention experts also share success stories and best
    practices with command leadership teams and brief all prospective
    commanding officers, executive officers, and command master chiefs at
    the Command Leadership School and Senior Enlisted Academy, thereby,
    ensuring that those in critical leadership positions are well informed.
        Other initiatives include collecting sailor feedback on areas of
    Navy life that they find enjoyable or unattractive, and using
    advertisements and the latest information technology to provide sailors
    with timely and quality career decision information. For example, since
    it was launched nearly a year ago, the www.staynavy.navy.mil website,
    commonly known in the fleet as the ``one-stop shop for career
    information,'' has registered over 1.2 million visits, averaging over
    4,000 visits per day. The site is an extremely popular tool that
    provides sailors and their families, worldwide, with high-tech, timely,
    and accurate career information. The Naval Media Center has also
    produced televised public service announcements (PSAs) addressing
    various pay and benefit topics. PSAs began airing on Armed Forces Radio
    and Television Service in December 2001 and will continue throughout
    2002. More than 180 ship and shore units have access to these
    commercials, which reach a daily viewing audience of over 200,000.
    Initiatives such as these will allow us to continue building upon
    recent retention successes.
    Special and Incentive Pays
        Special and incentive pays are a key component in retaining sailors
    with critical skills and experience, and are an essential part of the
    total military compensation package.
        Selective Reenlistment Bonus (SRB) continues to be our most cost-
    effective and successful retention and force shaping tool. Our
    retention successes are largely attributable to improvements in
    reenlisting members in critically manned skills who are eligible for
    these bonuses. It is vital that we continue to maintain a robust SRB
    program while continuing our efforts to improve reenlistments among
    ratings that are not eligible for SRB. With recent enactment of
    authorizations of continuation pays for Surface Warfare Officers and
    Special Warfare Officers and enhancements to Aviation Continuation Pay
    and Nuclear Officer Incentive Pay, we have seen improvements as we
    strive to retain these highly trained and experienced warfighters.
        We appreciate your recognition of the importance of these
    incentives and your support for keeping them the effective tools that
    they are. We solicit your continued assistance as we explore further
    improvements, which will enhance Service Secretary flexibility in
    adjusting and targeting cost-effective special and incentive pays to
    react quickly to the ever-changing recruiting and retention picture.
    More Senior/Experienced Force
        As the Navy force structure has stabilized somewhat since the end
    of the drawdown, it has become increasingly evident that our smaller
    more high-tech force would require us to change the mix of our
    personnel both in terms of skills and level of experience. As a result
    of constrained advancement opportunity during the drawdown, as a cost
    saving measure, our top six enlisted pay grades were limited to less
    than 70 percent of the force. As we replaced older labor intensive
    ships and aircraft with more modern platforms, validated fleet
    authorizations for sailors in the top six grades grew to over 75.5
    percent of the force. A widening of the inventory to authorizations gap
    among the top six pay grades has resulted in billet mismatches with
    sailors routinely being tasked to perform at levels above their pay
    grade and level of compensation. We have been focused on shifting the
    balance of our grade mix by increasing the number of people in the top
    six enlisted pay grades.
    Personnel Distribution Incentive Pay
        Navy is pursuing establishment of a flexible, market-based
    incentive to encourage service members to volunteer for hard-to-fill
    jobs or less desirable geographic locations. This would replace more
    costly or ineffective measures currently in use. For example, we
    currently use a variety of monetary and non-monetary incentives to
    compensate for assignments to billets in different locations. However,
    existing incentives are neither flexible enough nor sufficient to
    encourage the required number of qualified volunteers to fill these
    billets. We have also used many non-monetary incentives such as sea
    duty credit, neutral duty credit, points towards promotion, choice of
    assignment or homebase, and other means to attract sailors to serve in
    billets in both the continental United States and overseas. Although
    traditional incentives have been somewhat effective in manning these
    billets, they have unintentionally imposed an adverse impact on the
    sea/shore rotation structure. With shortages in critical sea intensive
    ratings, any incentive that adversely impacts our ability to assign
    members to sea duty only exacerbates the problem.
        Distribution Incentive Pay would augment existing special pays and
    compensation, while replacing the non-monetary incentives described
    above. It would enable the services to provide monetary incentive to
    encourage adequate numbers of volunteers for hard-to-fill jobs in an
    effective and responsive manner.
    Permanent Change of Station (PCS) Moves
        The fiscal year 2002 Appropriations Act cut $30 million from Navy's
    PCS account, which has significantly impacted our ability to move many
    people. Since accession and retirement moves must be funded, the true
    impact of the cut is on operational and training moves, now at a
    critical juncture with the war in progress. We are working to mitigate
    the effects of the PCS cut on readiness, but it has already had an
    effect on the fleet. Up to 5,000 planned moves may not occur this
    fiscal year, potentially disrupting the lives of many sailors and their
    families. Additionally, mandated PCS reductions could adversely impact
    our ability to move sailors from ITEMPO-intensive jobs.
                        meeting the recruiting challenge
        While we have been successful in sustaining an all-volunteer force,
    it is important to emphasize that we still have to recruit our people
    and compete against other career and educational opportunities.
    Recruiting success demands a professional recruiting force that has the
    tools they need to get the job done. We have invested in maintaining
    the right number of recruiters and recruiter support programs. Our
    recruiters have been delivering.
        Navy Recruiting met its overall goal for the last 3 years and in
    fiscal year 2001, achieved 90 percent High School Diploma Graduates
    (HSDG), with more than 63 percent scoring in the upper half of the
    Armed Forces Qualification Test (AFQT). We also achieved our very
    important Nuclear Field and General Detail (GENDET) sailor mission.
        Through February 2002, we are on a string of 7 consecutive months
    in which we have met new contract objective and cumulative accession
    mission--a feat we have not accomplished since the drawdown of the
    early 1990s. Meeting new contract objective is important because it
    builds our Delayed Entry Program (DEP) to a level suggesting a high
    probability of long-term recruiting success. This success is partly
    attributed to a new dynamic approach to monthly accession goaling of
    our recruiting districts, which allows them to work as a team and
    ensures that accession shortfalls at individual districts do not
    preclude attainment of the national mission. While there were some
    early adjustments to this new system, the results speak for themselves
    in how our professional recruiting force has responded.
    Improving Quality
        Our data clearly indicates that a higher quality recruit is less
    likely to attrite in the first term of enlistment. The higher quality
    recruit is also well suited for the highly technical Navy of the future
    that will require sailors to develop and maintain increasingly complex
    skill sets through higher levels of education and a broader range of
    training. Recruit quality, in this context, is measured by the
    percentage of HSDGs, percentage scoring in the upper half of the Armed
    Forces Qualification Test (AFQT), number enlisting with college credits
    and the number requiring waivers of standards.
        This year we are raising our target of HSDGs from 90 to 92 percent
    and are focused on recruiting 2,500 new accessions from junior colleges
    (up from about 1,850 in fiscal year 2001) to help grow Navy's career
    force of the future. We are on track to meet the 92 percent HSDG goal
    for fiscal year 2002 and have provided recruiters with tools with which
    to increase penetration into the college market.
        Navy is rewarding recruits with college credits by offering
    advanced pay grades and bonuses based on college credit attained.
    Applicants who have satisfactorily completed 20 semester hours of
    college credits are enlisted in pay grade E-2, while applicants with at
    least 45 semester hours are enlisted in pay grade E-3. Additionally, we
    offer an enlistment bonus of $2,000 for those with as little as 24
    semester hours of college credit, and up to $8,000 for those with a
    bachelor's degree.
        Recognizing the importance of the college market, Navy is
    developing a college penetration strategy. One Navy Recruiting District
    (NRD) in each of four recruiting regions will participate in a pilot
    program designed to incorporate the expertise of education specialists,
    advertising representatives, public affairs officers, and officer
    recruiters already familiar with recruiting in the college market.
    Using the best practices and lessons learned from the pilot, all NRDs
    will incorporate a junior college penetration strategy into their
    annual marketing plan.
        Another way in which Navy is working to improve quality is
    reflected in waiver standards. The number of recruits requiring waivers
    dropped from over 14,000 in fiscal year 2000, to 9,835 in fiscal year
    2001. A full review of waiver standards is underway to identify those
    that should be further restricted or completely removed. By raising the
    bar on these standards, Navy expects to continue decreasing first term
    attrition, further contributing to improved fleet readiness.
    Advertising
        Navy's ``Accelerate Your Life'' advertising campaign was rolled out
    approximately 1 year ago. The campaign communicates Navy as an
    adventure that will accelerate one's life to the highest level of
    achievement. Its objectives have included building awareness and
    consideration of the Navy as a career option and generating leads for
    recruiter follow-up. During the campaign's inaugural year, the strategy
    has focused on media channels and creative solutions targeted at the
    18-24 year old audience. Navy has increased spending in radio (95
    percent of teens listen to radio at least 10 hours a week) and makes
    full use of the Internet (target market on-line time is 50 percent
    greater than that of adults). Television advertising has been targeted
    to youth-oriented programming. Action-oriented imagery provides a sense
    of urgency and excitement in all our messages, while showing sailors
    getting hands-on experience with the latest technology.
        The centerpiece of our campaign is the Interactive Life Accelerator
    found on the Navy.com website. It enables individuals to indicate their
    likes/dislikes and translates their interests into a range of
    possibilities for a Navy career. Leads are captured and sent directly
    to the National Advertising Leads Tracking System providing recruiters
    with timely and invaluable prospect information. At launch, the website
    averaged 12,000 visitors per day. This number continues to grow, and
    today the site averages 18,000 visitors per day. Through February,
    nearly 230,000 people have logged on to the Life Accelerator with 85
    percent completing the assessment. Many recruiters report prospects
    walking into recruiting offices with Life Accelerator assessments in
    hand.
        Navy's recognition of rapid growth in the Hispanic community has
    led to the development of El Navy.com, a Spanish/English recruiting
    website that deploys within Navy.com and addresses the Hispanic
    community to include parents family members, and other youth
    influencers. We effectively communicate the benefits of the Navy
    experience to this audience by tailoring the look, language, and
    subject matter of the site to Hispanic culture and traditions. The site
    focuses on Navy Hispanic heritage, achievements and success stories;
    and depicts education, benefit, and travel/recreation opportunities
    available to those who choose Navy.
    Non-Instrumented Drug Testing (NIDT)
        Based on attrition levels for fiscal year 1999 and fiscal year
    2000, recruit drug screening failures at boot camp cost Navy over $10
    million in lost resources each year. To reduce these lost funds and
    improve recruit quality, the Secretary of the Navy authorized a new
    Pre-Accession Drug Testing Program pilot aimed at reducing Recruit
    Training Center (RTC) attrition and associated losses. Through an
    inexpensive field test instrument, Navy now tests recruits for drugs
    prior to sending them to boot camp. If tested positive upon arrival at
    boot camp a recruit is discharged and permanently disqualified from
    future naval service. Individuals testing positive on the NIDT are not
    shipped to RTC but are evaluated by the NRD commanding officer to
    determine if they are a good prospect for naval service. If deemed to
    be so, the individual's ship date to boot camp is delayed a minimum of
    45 days. If they remain drug free throughout this period, during which
    they are provided further indoctrination on Navy anti-drug use policy,
    they are offered a second opportunity to attend boot camp. Attrition
    due to positive drug tests at boot camp was reduced by 30 percent from
    fiscal year 2000 to fiscal year 2001 as a direct result of this
    program. NIDT is credited with saving $3.3 million in RTC resources
    during its first 12 months. Navy is committed to continued use of the
    program following its initial pilot phase.
    Influence of September 11 on Recruiting
        While the tragic events of September 11 resulted in a significant
    increase in the volume of calls to our toll free Navy Recruiting phone
    line (1,586 on September 11 alone; a 112 percent increase over the
    previous Tuesday), it has not translated to a measurable increase in
    qualified applicants who want to enlist in the Navy.
        We have, however, observed American patriotism and willingness to
    support Navy in other ways. Navy Recruiting District public affairs
    officers, who assist in getting airtime for PSAs have noticed an
    increased access to local media outlets as a result of strong patriotic
    sentiment in the aftermath of September 11. Through new PSAs entitled
    ``Freedom Campaign,'' which are distinctly different than the paid
    ``Accelerate Your Life'' campaign, we are focusing on the freedoms
    Americans enjoy that the Navy has protected for over 200 years.
    Officer Recruiting
        While officer recruiting has been generally successful thus far in
    fiscal year 2002, several communities still face significant
    challenges. Fiscal year 2002 goals for pilots, naval flight officers,
    surface warfare officers (conventional and nuclear), nuclear reactor
    engineers, cryptologists, intelligence officers, aviation maintenance
    duty officers, public affairs officers, Civil Engineering Corps
    officers, and Judge Advocate General officers, have been met. The
    Chaplain, Supply and Nurse Corps and the Medical Service Corps
    specialties of Health Care Administration, Environmental Health,
    Optometry, and Pharmacy remain communities of greatest concern.
        Nuclear, Civil Engineering, and Chaplain Corps recruiting have
    improved over the last few years. Officer recruiters adopted strategic
    plans between the recruiters and their respective officer communities.
    By making the officer communities aware of the recruiting challenges
    and offering practical ways in which the communities could help,
    recruiters gained valuable support and the additional leads necessary
    to realize significant accession increases. These strategic plans have
    served to improve accession results in these communities and we will
    continue to export best practices to other communities.
    Diversity
        Navy's fiscal year 2001 enlisted accessions (20.9 percent African
    American, 15.7 percent Hispanic and 9.8 percent Asian/Pacific Islander/
    Native American) largely match the diversity of the American
    population. Cognizant of projections for continued growth in minority
    populations we continue in our efforts to ensure all segments of the
    American population are aware of the opportunities and benefits
    associated with Naval service.
        Accession of minorities into our officer ranks in fiscal year 2001
    (8.0 percent African American, 5.8 percent Hispanic and 7.1 percent
    Asian/Pacific Island/Native American), although significantly lower
    than their respective enlisted accession percentages, closely resemble
    minority representation in the college market. To improve performance
    in accessing minority officers, we have conducted three flag-level
    diversity summits this past year to share best practices among the U.S.
    Naval Academy, the Reserve Officer Training Corps (ROTC), Officer
    Candidate School, and Officer Indoctrination School. In conjunction
    with these summits, we are taking junior officer volunteers from the
    fleet to minority conferences to talk to college students about their
    Navy experience and to demonstrate that officers do not lose their
    cultural identity while serving in the Navy. These visits have been
    uniformly well received and generate great interest from students who
    see their peers doing well in the Navy. Organizations such as the
    National Society of Black Engineers, the Society of Hispanic
    Professional Engineers, and the Society of Mexican American Engineers &
    Scientists, have been valuable partners in these outreach efforts.
    Continued partnership will ensure that minorities possessing technical
    backgrounds are aware of the many exciting opportunities available in
    today's Navy.
        Another successful initiative has been offering minority officer
    applicants the opportunity to make VIP trips to fleet concentration
    areas. Applicants visit various afloat units and other commands, where
    they meet with Naval officers (many of whom are minorities) who
    illustrate the point that upward mobility is available to all talented
    individuals. The results of these VIP trips over the past 2 years have
    been very encouraging. Of the 39 participants, 27 have submitted
    applications with 8 more still working on their applications. Of the 27
    applications submitted, 19 were selected and 17 accepted their
    commission.
                                quality of life
        The events of September 11 and the declaration of war on terrorism
    were a call to enhance support for sailors as they rise up to defend
    our Nation. The Navy team of professionals who manage and deliver
    Morale, Welfare, and Recreation (MWR) and Family Support services
    around the world embraced the challenge posed by the President. Navy
    has developed an MWR program that is a major sailor-centered force,
    which acts aggressively to meet the heightened level of needs of
    sailors and their families. The CNO has targeted a 20 percent increase
    in the level of MWR program support provided to deployed sailors and
    their families. Navy MWR is well on the way to meeting this challenge.
        Navy's goal is to make an unequivocal and tangible statement of its
    commitment to ensure outstanding support to our sailors. The approach
    is to ``wow'' sailors and their families with new, innovative, and
    expanded programs delivered with the speed and intensity that sends the
    message, ``You are important and your Navy is deeply committed to
    meeting your needs.''
        Building on outstanding core programs, MWR has stepped up the pace
    and ``raised the bar'' to respond to the special wartime needs of
    sailors at sea who are deployed in pursuit of freedom. I will share a
    number of actions to enhance MWR support and reinforce the message that
    the Navy is committed to meeting sailors' needs as warfighters while
    also supporting their needs at home. Among the actions taken are:
        - Navy MWR, with the support of the Navy Exchange, completed a
    sponsorship agreement that provided over 400,000 15-minute CONUS/OCONUS
    prepaid calling cards that were issued free to all active duty
    personnel and active reservists. In addition, Navy MWR issued free 10-
    minute prepaid calling cards to all Naval reservists recalled to active
    duty. Working together under the banner of ``Let Freedom Ring'' penny-
    a-minute phone calls were arranged for sailors from every ship afloat
    over the holiday period. All of these services were a big hit in the
    fleet and allowed sailors to stay connected with their families during
    the holidays, which are always a difficult time to be away from home.
        - Arduous deployment schedules required expanded fleet recreation
    opportunities. Navy MWR procured and delivered to afloat units over 530
    pieces of cardiovascular fitness equipment, and over 300 deployment
    kits consisting of 89,000 recreational games and sports equipment. Navy
    MWR sent 221 pallets containing over 314,862 items of holiday and
    recreation material to units afloat and ashore during the holiday
    season with particular emphasis on commands in the Middle East, Arabian
    Sea, and Central Asia.
        - Navy MWR had teams of forward deployed recreation programmers at
    Naval Support Activity Bahrain to provide support and assistance to
    deployed units. These trained recreation professionals worked as
    expeditors and recreation programmers.
        - Navy MWR has, and continues to, furnish programming materials for
    deployed units for special celebrations and events such as Super Bowl
    parties, Valentine's Day, March Madness, Mardi Gras, and steel beach
    picnics ensuring sailors have an opportunity to enjoy these events.
        - Fleet sailors around the world, responded enthusiastically to
    operation ``HO, HO, HO'' (Helping Our Heroes Overcome Holiday
    Obstacles) in which holiday kits were distributed, including six foot
    tall stockings stuffed with electronic games, T-shirts, battery
    operated fans, and post cards. Every sailor and embarked marine in the
    Operation Enduring Freedom area of operation was provided a candy
    filled stocking.
        - Special holiday snack packs were provided for all sailors and
    marines on the ground in Afghanistan. The shipment of over 5,000
    individually wrapped Famous Amos Cookies and over 2,500 half-pound bags
    of energy mix were delivered before Christmas.
        A program entitled ``Saluting Sailors and Their Families'' was
    recently created to provide greatly expanded recreational opportunities
    for sailors and families. The purpose of the program is to send a clear
    message to sailors that, as a result of their Naval service they have
    access to high quality, high profile leisure activities that are not
    available anywhere else. The goal for 2002 is to touch over 100,000
    sailors and family members with a wide variety of events that create
    memorable and special experiences.
        Fleet and Family Support Centers also expanded several programs to
    ensure services are available to every member of our Navy community, at
    every point in their career. The Spouse Employment Assistance Program
    has entered a pilot program called Career Accelerator with a world
    class staffing services company. Recruiters will help military spouses
    take command of their careers by providing them career counseling,
    training and placement in temporary and full-time jobs.
        The Personal Financial Management program provides education that
    focuses on money management and proactive, long-range, financial
    planning. The program is aimed at preventing financial crises often
    faced by our sailors and their families. The Fleet and Family Support
    Centers also responded to the needs of our sailors and their families
    during Operation Enduring Freedom with increased support in the areas
    of pre-deployment briefs for deploying units and families, crisis
    incident stress debriefings, and reserve mobilization support.
                                   conclusion
        History will remember September 11 for how it changed the course of
    events of our Nation. At the same time, it will look critically at how
    we, as a Nation, responded to the newest threat to our national
    security. I will reflect that Navy was ready. Largely, because of the
    sweeping improvements to our pay and benefits, the manning of our
    operational units reached unprecedented levels due to success in
    recruiting and retaining top quality people.
        Service matters. So too does the recognition of that service by
    those in positions of leadership, both in uniform and civilian. Our
    people are grateful for the support from Congress, and this committee
    in particular. We have a long struggle ahead of us, both in fighting
    the war and in retaining our volunteer force with the high tempo of
    operations we face in the coming years. Our Navy men and women deserve
    nothing less than an absolute commitment to recognize their service and
    support their families while the Nation is at war.

        Senator Cleland. We are very proud of you.
        I would like to recognize Senator McCain, who just walked
    in. Senator, if we could just go through the brief opening
    statements here, I will turn it over to you and see if you have
    any opening statement or questions.
        Senator McCain. I have no opening statement, Mr.Chairman. I
    will have some questions for the witnesses at the appropriate
    time. Thank you, Mr. Chairman.
        Senator Cleland. Thank you very much.
        General Parks.

     STATEMENT OF LT. GEN. GARRY L. PARKS, USMC, DEPUTY COMMANDANT
     FOR MANPOWER AND RESERVE AFFAIRS, UNITED STATES MARINE CORPS;
      ACCOMPANIED BY MAJ. GEN. JERRY D. HUMBLE, USMC, COMMANDING
         GENERAL, UNITED STATES MARINE CORPS RECRUITING COMMAND

        General Parks. Mr. Chairman and distinguished members of
    the subcommittee: It is my pleasure to report on the personnel
    status and future manpower picture of your Marine Corps and to
    thank you for your support of our families, our civilian
    marines, and their devoted families as well.
        Today's Marine Corps is comprised of young men and women of
    character who possess a strong work ethic, solid moral fiber,
    and a desire to be challenged, as our previous witness
    testified to his desire to be challenged as a Marine recruiter.
        The President's budget continues to raise their basic pay
    and reduce their out-of-pocket expenses for housing.
    Additionally, this budget provides valuable funding for
    recruiting and retention programs, the very issues that are so
    important to today's demanding personnel environment. We
    continue to remain optimistic about our posture in this
    challenging environment. Due to the hard work of our recruiters
    and indeed our leaders all across the Corps, we will once again
    exceed all recruiting and retention goals for fiscal year 2002.
        Paralleling the retention interest of this subcommittee is
    the need for passage for the Military Homeowners Equity Act.
    The Taxpayer Relief Act of 1997 delivered sweeping tax relief
    to millions of Americans. However, due to extended active duty
    and frequent relocation, active duty military personnel are
    often unable to qualify for the home sales provision. This
    inequity should be eliminated so service members can enjoy the
    same tax benefit as the Americans that they defend. Thank you
    for your support on this important matter.
        Finally, I wish to express the Marine Corps' thanks for the
    subcommittee's desire to safeguard the needs of the Marines as
    we seek to positively influence recruiting, retention, and
    morale by increasing pay, benefits, and the quality of life of
    our marines and their dedicated families.
        Mr. Chairman, I look forward to answering your questions.
        [The prepared joint statement of General Parks and General
    Humble follows:]
      Prepared Joint Statement by Lt. Gen. Garry L. Parks, USMC, and Maj.
                           Gen. Jerry D. Humble, USMC
        Mr. Chairman and members of the subcommittee: we are pleased to
    appear before you today to provide a recruiting and retention overview
    of your Marine Corps. Your commitment to increasing the warfighting and
    crisis response capabilities of our Nation's Armed Forces and to
    improving the quality of life of our marines is central to the strength
    your Marine Corps enjoys today. We thank you for your effort in
    ensuring that marines and their families were poised to respond to the
    Nation's call in the aftermath of the events of September 11, 2001, in
    a manner Americans expect of their Corps. The Marine Corps achieved its
    recruiting and retention goals for fiscal year 2001. We recruited
    37,335 non-prior service regular and Reserve marines, with 96.3 percent
    being high school graduates, as well as 1,610 new commissioned
    officers. Additionally, the Marine Corps will meet both enlisted and
    officer recruiting objectives for fiscal year 2002.
                              recruiting overview
        Mr. Chairman, as we begin this report about your Marine Corps'
    recruiting efforts, I would like to thank you and your colleagues for
    supplementing our advertising funds over the past 2 years. Put simply,
    it was money that produced success. This added financial support is
    enabling us to affect more awareness of the Marine Corps in America's
    youth, which in turn yields more of the result we desire--attracting
    and recruiting the Nation's finest young men and women to the Marines.
    These results are tangible, as evidenced in the success we have enjoyed
    over the past year. Additionally, we would like to thank you for the
    extraordinary legislative efforts aimed at increasing recruiter access
    to high schools and colleges. This emphasis will assist in bridging the
    gap between the educational system and the military. With your
    continued support, we will overcome the increasing challenges of this
    very demanding, but vital business of national defense.
    Fiscal Year 2001 Update
        It is important that we update you on key recruiting projects
    initiated last year--the Marine Corps Recruiting Information Support
    System-Recruiting Station (MCRISS-RS), our web-based initiatives, and
    our nationwide restructuring effort. Put in place at the end of fiscal
    year 2001, MCRISS-RS replaced a 20-year-old mainframe system that
    merely captured information on applicants after enlistment. The new
    system allows users to capture data electronically, just as soon as an
    applicant declares they would like to become a marine. MCRISS-RS is
    streamlining the entire enlistment process and providing immediate
    benefits in man-hour savings by eliminating redundant data entry and
    improving the speed and quality of information available.
        Our totally revamped web-based recruiting tools continue to
    successfully target the population interested in opportunities as an
    enlisted marine in Marines.com and for commissioning opportunities,
    Marineofficer.com. Our aim is to attract, engage, and encourage those
    qualified applicants to register their contact information. We believe
    that individuals who are influenced by our advertising will actively
    seek out these sites to pursue more information on opportunities than
    those who receive direct mail. Both these sites are focused in scope:
    to attract prospects to recruiters. Our increased emphasis with initial
    electronic contact is to maximize a personal one-on-one exchange
    between a recruiter and a prospect. That is, we do not seek to replace
    Marine recruiters with virtual recruiters.
        To ensure that our recruiters are given equal opportunities to be
    successful, we continue to adapt our recruiting force. This nationwide
    optimization effort balances recruiter areas of responsibility, based
    on a distribution of assets among the 2 recruiting regions, 6
    recruiting districts and 48 recruiting stations. The final phase of
    this current effort is planned for execution in fiscal year 2003.
    Fiscal Year 2002 Prognosis
        For almost 7 years, the extraordinary efforts of marines assigned
    to recruiting duty have successively forged a formidable reputation of
    recruiting high quality people to transform into America's Marines. In
    fiscal year 2001, the Marine Corps Recruiting Command attained 103
    percent of enlisted recruiting objectives and 100 percent of officer
    accession requirements. Nevertheless, despite our previous successes,
    it is essential that the command not rest on its laurels. Recruiting is
    a battle that must be won every day. Meeting our accession requirements
    is difficult work and will become increasingly more difficult as time
    progresses. Therefore, to ensure continued success in recruiting young
    men and women of character, we have focused our recruiting initiatives
    in four strategic areas:
        1. Exploit success through focused leadership, selecting the Corps'
    best for recruiting duty and innovative marketing;
        2. Achieve the next level of organizational efficiency and
    effectiveness with a renewed emphasis on fiscal accountability and
    comprehensive organizational review and restructure;
        3. Recruit our recruiters, making recruiting a duty where marines
    want to be assigned; and
        4. Improve safety and quality of life for marines and families.
    Exploiting Success
        The cornerstone of any organization rests in the strength of its
    leadership. This is particularly critical in our recruiting stations,
    and the Marine Corps takes pride in placing great leaders in these
    positions. As an illustration of this fact, 24 percent of the current
    general officers in the Marine Corps have served on recruiting duty. To
    serve in this environment brings out the best in marines and enhances
    leadership qualities and traits requisite for expeditionary operational
    command. We believe that the Recruiting Station Commanders are our
    strategic centers of gravity, and that the Officer Selection Officers,
    and the Recruiting Sub-Station Commanders are our tactical centers of
    gravity in the continuous battle to achieve the recruiting mission. To
    support this belief we handpick all Recruiting Station Commanders using
    a command selection board. Additionally, focusing education, training,
    and support to these key individuals reinforces successful leadership
    and ensures our continued success. To this end, we have completely
    overhauled our training to include a new Commanders Course for
    Recruiting Station Commanders. These efforts and initiatives have
    produced unprecedented quality as evidenced by a 1.9 percent and 4.5
    percent increase in high school graduates and upper mental group
    attainment, respectively, compared to this time last year.

                             Fiscal Year                            Percent

    2001 High School Grads......................................        96.3
    2001 Mental Group I-IIIA....................................        63.8
    2002 High School Grads......................................        97.2
    2002 Mental Group I-IIIA....................................        68.3

        A residual effect from this success has been a steady, albeit
    small, increase in early mission attainment, further enhancing our
    recruiters' quality of life.
        The next tenet to exploiting success is innovative marketing,
    stretching every advertising dollar to maximize awareness. At first
    glance, because of the high level of patriotism, it appeared that
    increased interest in military service stemming from September 11 might
    add to the number of qualified individuals seeking military service.
    There is no evidence, however, to indicate that this perception has
    translated into an easier recruiting environment. In the weeks
    immediately following the terrorist attacks, we did see a surge in
    overall interest in military service. However, that increased interest
    was very short lived. In fact, according to Office of the Secretary of
    Defense (OSD) polls, propensity levels in subsequent weeks indicate
    that individuals expressing interest in joining the military when asked
    have remained relatively constant since September 11.
        In light of this fact, it is imperative that we continue to seek
    ways to exploit the success we have enjoyed by delivering the Marine
    Corps' message to America's populace in new and innovative ways. From
    our new television commercial campaign, labeled ``The Climb,'' to what
    can be described as ``guerilla marketing'' techniques in other areas,
    we continue to spread our brand messages of ``Transformation of Young
    People'' and ``Tough, Smart, Elite, Warrior,'' to the American people.
    ``The Climb'' marks a turning point in our advertising campaigns in
    that it not only portrays enlisted marines, but also features a female
    marine. It is also designed to appeal to the new millenial generation
    that has recently come of military enlistment age. This is achieved by
    illustrating our humanitarian capabilities in addition to our strong
    warfighting heritage. An example of our guerilla marketing techniques
    would be the recognition of our birthday broadcast on CNN this past
    November. Regardless of the medium, the aim is simple and constant--to
    exploit success and make our dollars have more impact.
        To gain increased awareness in minority circles, we continue to
    participate in several minority workshops and media events such as the
    National Association for the Advancement of Colored People (NAACP),
    National Council of La Raza (NCLR), and The Society of Mexican American
    Engineers and Scientists (MAES). Furthermore, we are increasing our
    involvement with the fraternities and sororities of historically black
    colleges and universities as well as canvassing marquee-sporting events
    like the Bayou Classic and the College Inter-Athletic Association. We
    believe this, combined with advertisements in publications such as
    People En Espanol and Ebony, will further elevate awareness of the
    Marine Corps and provide a rich recruiting venue.
    Achieve the Next Level of Organizational Efficiency and Effectiveness
        As with any organization (regardless of how successful it may be)
    there is always room to increase efficiency and effectiveness.
    Consequently, the Marine Corps Recruiting Command has conducted an
    internal analysis of its organizational structure as well as its
    current business practices.
        In an effort to maximize our overall effectiveness, we have
    structurally reorganized our headquarters staff as well as our command
    relationship with our two Recruiting Regions in a way that more
    supports unity of command and unity of effort. After detailed internal
    analysis, we have eliminated redundant responsibilities within the
    command and created new ones commensurate with operational staff models
    and contemporary staffing requirements. This restructuring has created
    better visibility on critical staff functions, increased
    accountability, streamlined staff work, and ultimately provided better
    support to the recruiters out on the street.
        We have increased fiscal efficiency with more utilization of
    available military transport aircraft for long distance travel,
    increased usage of ground transportation, and utilization of video
    teleconferencing. As an illustration of these efforts, we have
    decreased our headquarters' temporary additional duty travel spending
    nearly 50 percent compared to the first quarter of last year.
    Recruit the Recruiter
        Our data clearly shows that volunteers succeed at a higher rate
    than those who are ordered to the task of recruiting. To achieve the
    Marine recruiting mission in today's recruiting environment is not an
    easy task and is one that ultimately falls on the shoulders of our
    recruiters and their immediate commanders. This mission has implied
    responsibilities: first, they must accomplish that mission while
    maintaining quality standards; second, they must take care of their
    recruiters and their families; and third, they must ensure that they
    represent the Corps as ambassadors to the Nation's citizens. The Marine
    Corps is constantly trying to improve our recruiter selection teams in
    order to select the best that the Corps has to offer for this demanding
    duty. This emphasis on selecting high-quality Marines to be recruiters
    is directly responsible for our continued success. We have also
    enhanced our awards system so we can better recognize our recruiters
    for their superlative efforts.
        In another new effort to help ease the difficulties of recruiting
    duty, the Marine Corps' Career Retention Specialists are diligently
    working to show the benefits of continued services to those marines
    considering separation, ultimately reducing the burden on the
    canvassing recruiter. Additionally these Career Retention Specialists
    are actively seeking those marines that demonstrate the skill and
    desire to become recruiters and identifying them to our screening
    teams. As a part of this new incentive, we are allowing each marine who
    volunteers for recruiting to select his or her recruiting district for
    assignment.
        Through the above mentioned and other initiatives, we have begun to
    see an increase in the number of volunteers for enlisted recruiting
    duty from roughly 20 percent to about 35 percent in the past 8 months.
    This progress is also exemplified in the fact that 100 percent of all
    our Officer Selection Officers are volunteers. Recruiting duty in the
    Marine Corps is becoming increasingly sought after by all ranks.
    Improve Safety and Quality of Life
        Marine Corps Recruiting is committed to improving the health and
    safety of all marines, sailors, civilian-marines, and members of the
    officer and enlisted entry pools. Safety is inextricably linked in our
    operational commitments. Through continued support of initiatives that
    convince individuals of the importance of reducing vehicle speed, using
    safety belts, and appropriate personal risk management techniques, we
    will reap the benefits of a revitalized safety campaign plan. Our goal
    in this is to achieve the mission with reduced risk, injury, and damage
    to personnel and equipment.
        Along with improving overall safety, we are also employing various
    measures to gauge the effectiveness of our quality of life programs
    that support our family members. Recruiting is a lifestyle that is
    especially demanding on families, in which many are isolated on
    independent duty from the kinds of support structures common on posts
    and stations throughout the Marine Corps. Accordingly, we realize that
    in many cases, the strongest support a recruiter can have comes from
    his or her own family. ``Welcome Aboard'' programs that help prepare
    marines and their families for recruiting duty and the surrounding
    community, TRICARE Prime Remote to address health care needs, obtaining
    affordable housing, and a dynamic and viable Key Volunteer Network with
    top down leadership participation, contribute to the quality of life
    issues most important to marines and their families.
        The Marine Corps Recruiting Command recently instituted a survey to
    measure the effectiveness of quality of life support to marines and
    family members at the lowest level, which is the recruiter on the
    street. We are trying harder to ``walk the talk'' and affect better
    quality of life programs that are responsive and action oriented. The
    uniqueness of serving in this assignment demands that we pay attention
    to these quality of life areas as they have great impact on a
    recruiters' continued quest to attain and exploit success.
                               retention overview
        A successful recruiting effort is merely the first step in the
    process of placing a properly trained marine in the right place at the
    right time. The dynamics of our manpower system then must match
    occupational specialties and grades to our Commanders' needs throughout
    the operating forces. The Marine Corps endeavors to manage stable,
    predictable retention patterns. However, as is the case with
    recruiting, civilian opportunities abound for our marines as private
    employers actively solicit our young marines for lucrative private
    sector employment. Compensation is one of the main reasons marines
    decide not to reenlist. The Marine Corps appreciates the efforts the
    members of the committee have made to help raise the compensation level
    of our marines. We need to keep pay competitive with the civilian
    sector. Reduction of the out-of-pocket (OoP) expenses should continue
    at a pace to achieve the goal of reducing the average OoP expense to
    zero by 2005.
    Enlisted
        We are very mindful of enlisted retention issues. Our enlisted
    force is the backbone of the Corps and we make every effort to retain
    our best people. Even though we are experiencing minor turbulence in
    some specialties, the aggregate enlisted retention situation is
    encouraging. Some shortages exist in a number of high tech Military
    Occupational Specialties (MOSs) that represent an important part of our
    warfighting capability, and these young marines remain in high demand
    in the civilian sector. We are a young force, making accessions a chief
    concern for manpower readiness. Of the 154,000 active duty enlisted
    force, over 28,000 are still teenagers--108,000 are still on their
    first enlistment. In fiscal year 2002, we will have reenlisted
    approximately 27 percent of our first term eligible population. These
    5,908 marines represent 100 percent of the marines we need to
    transition into the career force. This will be the ninth consecutive
    year we will have achieved this same objective. Prior to fiscal year
    2002, we had experienced a slight increase in the number of marines we
    needed to reenlist. To counter this rising requirement, we are now
    focusing greater attention on retaining marines in their 6th through
    12th years of service. The Subsequent Term Alignment Plan (STAP) was
    introduced, in fiscal year 2002, to focus on retaining experience. Due
    to a strong draw from the civilian sector, we must elevate the
    importance of retaining our career force by paying additional attention
    as well as allocating resources to keep the experience level of our
    force on par with previous years.
        This year we continue to see smaller first term non-Expiration of
    Active Service (EAS) attrition rates similar to the lower attrition we
    experienced in fiscal years 2000 and 2001. The implementation of the
    Crucible and the Unit Cohesion programs continue to contribute to
    improved retention among our young marines. The impact of lower non-EAS
    attrition allowed us to reduce our accession mission in fiscal year
    2001 and fiscal year 2002. This ``good news'' may allow us to continue
    this trend in fiscal year 2003. The ``bad news'' is it has increased
    the cost of our manpower account by extending the average length of
    service of individual marines. This is the type of ``bad news'' we
    don't mind having, as these positive results have reduced the burden
    placed on our recruiters, as well as provided our operating forces with
    more experience.
        In the larger context, we are extremely pleased with our recruiting
    and retention situation. We anticipate meeting our aggregate personnel
    objectives and we continue to successfully maintain the appropriate
    balance of first term and career marines. The management of youth and
    experience in our enlisted ranks is critical to our success and we are
    extremely proud of our accomplishments.
        We attack our specialty shortages with the highly successful
    Selective Reenlistment Bonus (SRB) program. These shortages persist in
    some highly technical specialties such as intelligence, data
    communications experts, and air command and control technicians.
    Currently, the Marine Corps has allotted $48.4 million in new SRB
    payments to assist our reenlistment efforts in fiscal year 2002. These
    payments will be split 60/40 between the First Term Alignment Plan and
    STAP, respectively. The SRB program has significantly aided our
    reenlistment rates and improved retention for some of our critical
    skill shortages. In fiscal year 2003, we anticipate alloting $51.7
    million in new payments. In fiscal year 2002, we continued lump sum
    payments increasing the net present value of the incentive and
    positively influencing highly qualified personnel who are currently
    undecided. This is an incredibly powerful incentive for the undecided
    to witness another marine's reenlistment and award of SRB in the total
    amount. With the Thrift Savings Plan having begun this year, our
    marines can now confidently invest these funds towards his/her future
    financial security.
    Officers
        Overall, officer retention continues to experience success with
    substantive improvements in retention, beginning in fiscal year 2000.
    Our fiscal year 2002 results continue to reflect an overall officer
    attrition rate that is lower than historical rates. We believe that the
    reduction of voluntary separations may be attributed to the
    Congressionally approved compensation triad and the strategic, albeit
    limited, use of specialty pays. As with the enlisted force, we still
    have some skill imbalances within our officer corps, especially in the
    aviation specialties, intelligence, and command/control.
        Although we are cautiously optimistic, pilot retention remains a
    concern. Fixed wing pilot ``take rates'' for the fiscal year 2002
    Aviation Continuation Pay (ACP) Plan have not met retention targets
    because of an inadequate eligible population that resulted from large
    previous years' losses. The aggregate fiscal year 2002 retention target
    for aviators is anticipated to be met based on ``take rates'' from the
    rotary wing and naval flight officer communities. Retaining Marine
    Corps aviators involves a concerted Marine Corps effort in multiple
    areas that have been identified as impacting an officer's decision to
    remain in the Marine Corps. Many recent fiscal year 2000 and fiscal
    year 2001 retention initiatives have made substantial corrective
    strides, strengthening the Marine Corps' position towards retaining
    aviation officers (i.e., Marine Aviation Campaign Plan, and pay
    reform). Supplementary pay programs such as ACP can provide an
    additional incentive by lessening the significant difference between
    civilian airline and military compensation. We will continue to focus
    on retaining our mid-grade aviators (junior majors and lieutenant
    colonels) and will continue to reevaluate our aviation retention
    situation to optimize these resources.
        The Marine Corps officer and enlisted retention situation is very
    encouraging. Through the sensational efforts of our unit commanders, we
    will achieve every strength objective for fiscal year 2002 and expect
    to start fiscal year 2003 solidly poised for continued success. Even
    though managing our retention success has offered new challenges such
    as maintaining the appropriate grade mix, sustaining quality
    accessions, and balancing occupational specialties, we will continue to
    press forward and meet all challenges head on. In this difficult
    recruiting/retention environment, the so-called ``War for Talent,'' the
    Marine Corps remains optimistic about our current situation and expect
    these positive trends to continue.
                                civilian-marines
        Civilian-marines are an integral part of the Corps' Total Force
    concept. We have approximately 13,000 civilian-marines, which is
    approximately 2 percent of the total DOD civilian workforce. The Marine
    Corps has 1 civilian-marine per 12 active duty marines. Our civilian-
    marines fill key billets aboard Marine Corps bases and stations thus
    freeing our Marines from the supporting establishment to return to the
    operating forces. Like other DOD agencies, our civilian workforce is
    aging and within the next 5 years, 30 percent of our workforce will be
    optional retirement eligible. Although historical data indicates only
    25 percent of those eligible in any given year actually retire, our
    growing eligible population will still produce significant losses. In
    fiscal year 2002, we have embarked on a new program centered on the
    career and leadership development of our civilian-marines. Our goal is
    to make the Marine Corps the employer of choice within the DOD.
                                  end strength
        For the past decade, the Marine Corps has continued to aggressively
    examine its existing force structure. This is to ensure proper staffing
    of our operating forces at the level required for the tempo and variety
    of our full spectrum capabilities, and the efficient and effective use
    of marines and civilian-marines. Through various efforts, we have made
    substantial progress to increase the manning in our operating forces by
    shifting approximately 2,500 marines from the supporting establishment.
    However, the new security environment has increased our operating
    forces needs. The Marine Corps has responded by reactivating the 4th
    Marine Expeditionary Brigade (Anti-Terrorism) (4th MEB (AT)) that
    requires an increase of 2,400 marines to our end strength. Our fiscal
    year 2003 end strength goal is a total of 175,000 active duty marines.
    The 4th MEB was activated utilizing existing Active-Duty Forces and has
    already been deployed to Capital Hill (anthrax), Incirlik (Force
    Protection), and Kabul (reactivation of the U.S. Embassy). The 4th MEB
    (AT) provides the Unified Commanders a new capability for joint force
    operations. The increased marines and funding for the 4th MEB (AT) has
    been included in the fiscal year 2003 President's budget, and we
    respectfully request that you support this important initiative.
                            total force integration
        The events of September 11, 2001 forced the services to shift their
    priorities to meet new challenges. The Marine Corps ``Total Force
    Team'' was ready to meet these new challenges. Our Active forces
    reacted initially, while we selectively integrated our Reserve Forces
    to meet mission requirements. We have mobilized Individual Mobilization
    Augmentees (IMA) and Individual Ready Reserve (IRR) Marines to meet
    staff augmentation requirements in the communications, intelligence,
    force protection, and headquarters planning areas. Selected Marine
    Corps Reserve (SMCR) units have been activated to provide Homeland
    Security and Quick Reaction Force missions in Federal Emergency
    Management Agency regions 3 and 9. To date, we have filled our
    requirements with ``volunteers.'' In respect to stop loss, the Marine
    Corps has made judicious use of the authority and to date have only
    held 106 marines beyond their EAS. Under current conditions the maximum
    number of marines that may be affected by stop loss is 395.
           managing time away from home (personnel tempo--perstempo)
        The Marine Corps is in compliance with PERSTEMPO legislation, and
    we are meeting the OSD tracking and reporting criteria. We remain
    committed to maintaining the proper balance between operational
    deployments and the quality of life of our marines and their families.
    But, marines join the Corps to train and deploy, and we do not
    disappoint them. Service in the Marine Corps requires deployments for
    readiness and mission accomplishment. As written, PERSTEMPO legislation
    is inconsistent with the Corps' expeditionary, forward deployed nature
    and could have adverse effects on our unit cohesion, stability,
    training, and readiness. Therefore, in concert with the Navy, we have
    recommended modifications to PERSTEMPO legislation be included in the
    Secretary of Defense's March 2002 PERSTEMPO report to Congress.
    Summary
        We remain optimistic about our current status in this challenging
    recruiting and retention environment. Due to the hard work of our
    recruiters and Marine leaders all across the Corps, we will once again
    exceed our recruiting and retention goals.
        The Marine Corps continues to be a significant force provider and a
    major participant in joint/combined operations. For 6 percent of the
    DOD budget, the Marine Corps provides 20 percent of the active ground
    maneuver battalions, 20 percent of the active fighter/attack squadrons,
    19 percent of the attack helicopter squadrons, and nearly one-third of
    the active duty combat service support. Your Marine Corps remains
    strong and able to accomplish its mission, yet only a sustained
    increase in resources will yield the flexibility and resilience we need
    in both the short and long term. Our successes have been achieved by
    following the same core values today that gave us victory on
    yesterday's battlefields.
        With your support, we can continue to achieve our goals and provide
    our marines with what they need to accomplish their tasks. Marines are
    proud of what they are doing. They are proud of our Eagle, Globe, and
    Anchor and what it represents to this country. It is our job to provide
    for them the leadership, resources, quality of life, and moral guidance
    to carry our proud Corps forward. With your support, a vibrant Marine
    Corps will continue to meet our Nation's call as we have for the past
    226 years!

        Senator Cleland. Thank you very much, General Parks and
    General Humble.
        General Brown.

    STATEMENT OF LT. GEN. RICHARD E. BROWN III, USAF, DEPUTY CHIEF
    OF STAFF FOR PERSONNEL, UNITED STATES AIR FORCE; ACCOMPANIED BY
     BRIG. GEN. DUANE W. DEAL, USAF, COMMANDER, UNITED STATES AIR
                        FORCE RECRUITING SERVICE

        General Brown. Yes, sir. Mr. Chairman and Senator McCain,
    it is my honor to come before you and address our recruiting
    and retention challenges and initiatives on behalf of the
    dedicated men and women of the United States Air Force. Every
    airman owes Congress and particularly the members of this
    committee their gratitude for your staunch support last year,
    which included improving military pay and compensation through
    targeted pay raises and reducing the out-of-pocket expenses of
    all service members.
        Operations Noble Eagle and Enduring Freedom have levied
    significant additional operational requirements for homeland
    security, anti-terrorism, and force protection, and our total
    force today is overstressed. In order to meet the near-term
    challenges and complexities of world events, we mobilized our
    forces and implemented stop-loss to sustain the surge in these
    new requirements. This is a coordinated effort with our Air
    Reserve component.
        Many of our critical assets are in the Air Reserve
    component. In some mission areas, the Guard and Reserve perform
    100 percent of the total Air Force mission. They own 83 percent
    of the air medical evacuation, more than 55 percent of our air
    refueling, and 33 percent of our security forces.
        Stop loss is not a viable option for sustaining this long-
    term campaign. Therefore, our number one priority this year is
    to meet the increasing demand of our warfighting skills. Our
    long-term strategy is to shift resources from tail to tooth
    through the transformation of the force.
        Secretary Rumsfeld has challenged us to pursue innovative
    solutions to offset the need for end strength growth. We see
    this as one more dimension of our transformation effort and are
    investigating a variety of options for shifting resources. But
    we intend to meet our programmed end strength of 358,800
    through continued robust recruitment and retention. To help
    fund these programs, we are pursuing supplemental funding to
    replace the unprogrammed reduction to our military personnel
    appropriations (MPA) account.
        The Air Force is well postured, if needed, to increase
    recruiting goals. We exceeded our enlisted recruiting goals and
    line officer accession target in fiscal year 2001 and we expect
    to do so again here in fiscal year 2002. However, we do
    continue to fall short in some enlisted skill areas and
    officers, such as scientists, engineers, and health care
    professionals. In response to these critical shortfalls, we
    have enhanced the initial enlistment bonus program and are
    working to fund an officer accession bonus in fiscal year 2003.
        Meeting our retention targets remains our greatest
    challenge. To retain the high caliber of professionals we need
    to decisively win America's wars, we must provide a
    comprehensive compensation package that rewards service,
    provides for an acceptable standard of living, and assures a
    high quality of life.
        Now, we have seen almost 100 pilots return to active duty
    since September 11. The post-September 11 long-term bonus take
    rate has increased over 11 percent over last year's take rate
    for pilots. Despite the patriotic dividend, we ended fiscal
    year 2001, though, over 1,200 pilots under the requirement. We
    project to end fiscal year 2002 short by about 900 pilots. The
    pilot force is not well, but the pain is just a little less
    severe than it was.
        The aviator continuation pay program, coupled with pilot
    production increases and other initiatives, have helped to
    arrest the inventory declines. Many of our skilled airmen,
    scientists, engineers, air traffic controllers, comm-computer,
    are also in high demand by the civilian sector, making
    retention even more challenging.
        Thanks to Congress and this committee, we have received
    several bonus authorities that provide us the flexibility to
    target our critical officer and enlisted skills. However, when
    we lose program funding, we lose our flexibility and our
    troops' trust and confidence.
        We are also concerned with our civilian force manning. In
    the next 5 years more than 40 percent of our career work force
    will be eligible for optional or early retirement. While we are
    meeting today's mission needs without the proper civilian
    force-shaping tools, we put at risk the possibility of not
    being able to meet future challenges.
        Sir, we greatly appreciate Congress', especially this
    committee's, tremendous support in recognition of our troops by
    providing them a top-notch quality of life. I look forward to
    discussing the challenges and any questions that you have.
    Thank you.
        [The prepared statements of General Brown and General Deal
    follow:]
           Prepared Statement by Lt. Gen. Richard E. Brown III, USAF
                                  introduction
        Mr. Chairman and distinguished members of the committee, it is a
    tremendous honor to appear before you to present our Air Force
    Personnel priorities on behalf of the dedicated men and women of the
    United States Air Force. Every airman owes Congress, and particularly
    the members of this committee, their gratitude for your staunch support
    last year which included improving military pay and compensation
    through targeted pay raises (largest pay increase since 1982), and
    reducing out-of-pocket expenses of all service members. Your passage of
    last year's National Defense Authorization Act sent a very clear
    message to America's Air Force that their valiant efforts and selfless
    service are appreciated.
        The events of 2001 brought poignant change to our people focus in
    the Air Force. On average, we were deploying our people at a rate three
    times higher than 10 years ago. However, after the events of September
    11, 2001, the demand on the Total Force warfighting skills
    significantly increased; and we are stepping up our efforts to meet the
    challenge. Operations Noble Eagle and Enduring Freedom have levied
    significant additional operational requirements for homeland security,
    anti-terrorism, and force protection. The Total Force is overstressed
    due to these operations.
        To bear the complexities and challenges of September 11 world
    events in the short term, we mobilized our forces and instituted stop
    loss to sustain the surge in new requirements. This has been a
    coordinated effort with our Air Reserve component. However, these
    initiatives are not viable options for sustaining this long-term
    campaign. It is imperative that we address the need to meet our
    warfighting requirements in the near term to enable the release of stop
    loss specialties, provide relief on augmentation, and to begin the
    demobilization process. Our long-term task is to shift resources from
    ``tail'' to ``tooth'' through the transformation of the force.
    Recognizing these initiatives will take time, we are seeking relief in
    the short term. The Air Force cannot lose pace as we continue to
    concentrate our efforts on attracting and retaining the right people
    with the right skills to lead us in the 21st century.
        We are giving top priority to quality of life initiatives and
    competitive compensation and benefits legislation. These initiatives
    help us achieve our recruiting goals and make steady strides in
    retaining our best people in the right skills, despite the increasing
    demands we are placing on our people.
        Due to the terrorist attacks, increased operations and homeland
    defense have further amplified the stress on our critical career
    fields. Our attention now turns to sizing the force appropriately to
    meet new demands, steady state maintenance of our recruiting
    initiatives, and continued focus on achieving our retention objectives.
    We will continue to review and improve on how we develop, educate, and
    train our people to keep our military force technologically superior.
        With that in mind, we have formally established the Developing
    Aerospace Leaders Support Office chartered to understand the leadership
    needs of our transforming aerospace force and design a requirements-
    driven, competency-based development strategy that creates Air Force
    members better prepared to serve and lead in that environment. Our
    Expeditionary Aerospace Force (EAF) calls for more diversified
    leaders--airmen with the balanced depth in mission area and breadth
    necessary to effectively integrate the full range of air and space
    capabilities, achieving desired military effects.
        The bottom line: people are the key to readiness and
    transformation. To retain high quality people, we must provide not only
    the appropriate compensation, but also deliberate educational and
    training opportunities so they develop into the kind of airmen we need
    to lead our Air Force in the future. Further, our civilian force needs
    our continued attention to ensure we have the force management
    flexibilities in place to properly size and shape the force. Our
    civilian force is exceptional; however, the Air Force is facing
    difficulties replacing the loss of a skilled and experienced civilian
    workforce.
                            personnel force shaping
        Our primary ``people'' focus this year is to meet the increasing
    demand for our warfighting skills. Through the implementation of the
    EAF structure, the Air Force has been able to better measure manpower
    requirements from TEMPO over time. We identified an enduring TEMPO of
    2+ AEFs in the pre-September 11 environment with acute impact on
    manpower requirements supporting high demand/low density (HD/LD)
    assets. Before September 11 we projected having on board 358,800 by the
    end of this fiscal year.
        The events of September 11 exacerbated our overall TEMPO and have
    resulted in an ongoing reassessment of Air Force total manpower
    requirements. While we meet our short-term end strength requirements
    through the partial mobilization of the Reserve components and stop
    loss actions, these tools may negatively affect Total Force retention
    down the road. We must plan to exit from stop loss, while also allowing
    our dedicated Air National Guard and Air Force Reserve personnel to
    return to their normal, citizen-airman roles in the future.
        In achieving that end, Secretary Rumsfeld has challenged us to
    pursue more innovative solutions to offset the need for end strength
    growth. We see this as one more dimension of our transformation effort,
    and are investigating a variety of options for shifting resources from
    ``tail'' to ``tooth.'' We are also looking at cross leveling within our
    force to lessen impact on stressed career fields. Consistent with this
    strategy, the AF needs tools to shape our force as we transform, while
    maintaining a stabilized end strength with the correct skill mix. These
    ``fixes'' will take time to develop and implement. However, the stress
    on our force is very much here and now.
                                   recruiting
        In 1999, the Air Force fell short of its recruiting goal for the
    first time in 20 years. In response, we pulled out all the stops to
    fight the ``recruiting war'' and we're winning. Without lowering
    standards, we exceeded the fiscal year 2000 enlisted recruiting goal of
    34,000 by over 400 and fiscal year 2001 goal of 34,600 by almost 800.
    We still require 99 percent of our recruits to have high school
    diplomas and nearly 75 percent to score in the top half of test scores
    on the Armed Forces Qualification Test. In addition, we brought 1,155
    prior-service members back on active duty; nearly double the number
    from fiscal year 1999.
        Meeting our overall goal is a positive trend; however, the United
    States economy continues to affect Air Force recruiting. We are
    transforming our force to meet mission requirements and to be
    successful; we must enlist airmen whose aptitudes match the technical
    requirements we need. In response to our missed fiscal year 2000
    recruiting goal for mechanical aptitude, we developed targeted
    recruiting programs for mechanically skilled recruits. A successful
    effort, we exceeded our goal in fiscal year 2001 for these skills by
    763. We did, however, fall short of our recruiting goal in the general
    skill area by 203. This area includes the Special Forces career field,
    which, like Security Forces, has become vital in light of current
    operations. We continue to focus our attention on these critical areas.
        The Air Force is well postured, if needed, to increase recruiting
    goals. We can meet future recruiting challenges through our previously
    approved increases in advertising, a more robust recruiting force, and
    competitive compensation and benefits. In order to meet the growing
    enlisted accession requirements; we are employing a combination of
    accession bonuses, more recruiters, and improved marketing including
    broader recruiter access to secondary and college school students. For
    fiscal year 2002, we programmed an additional $9 million for the
    enhanced initial enlistment bonus program, up from $123.8 million in
    fiscal year 2001. These bonus programs help to recruit hard-to-fill
    critical skills and to encourage recruiting during historically
    difficult recruiting months. Additionally we budgeted $89.65 million
    for recruiting advertising in fiscal year 2002, which is nearly five
    times the amount from fiscal year 1998. Laying the foundations of more
    competitive compensation, a robust recruiting force, and increased
    advertising are the cornerstones for meeting future Air Force
    recruiting needs.
        We face many of the same challenges with officer recruiting--a
    competitive job market for high-tech skills. Although we met overall
    officer accession goals in fiscal year 2001, we continue to fall short
    for certain critical skills. We were nearly 250 below the accession
    goal for scientist and engineering career fields. In response to these
    critical shortfalls, we are working to fund an officer accession bonus
    in fiscal year 2003 to attract these critical skills. Overall in fiscal
    year 2001, we achieved 105 percent of our line officer accession
    target, despite a projected shortfall, up from 97 percent of our
    accession target in fiscal year 2000. The Reserve Officer Training
    Corps (ROTC) produced a surplus of more than 100 officers in fiscal
    year 2001, and projects a surplus of 100 in fiscal year 2002. To
    attract more candidates, we offer contracts to freshmen cadets rather
    than waiting until their sophomore year, and a 1-year commissioning
    program to attract both undergraduate and graduate students.
    Additionally, recent legislative gains which increased the maximum age
    for appointments as cadets into Senior ROTC scholarships programs
    further increases our recruiting opportunities.
        We are also finding it difficult to recruit health care
    professionals. Many medical, dental, nurse, and biomedical specialties
    are critically short. For example, only 80 percent of our clinical
    pharmacy positions are currently filled. We are now reviewing accession
    initiatives for pharmacists.
                                   retention
        We are a retention-based force that continues to prove that
    experience improves readiness and mission capability. Retention remains
    a top priority and continues to challenge our resources. In fiscal year
    2002/2003, approximately 46 percent of the enlisted force will be
    eligible to make a reenlistment decision. Things have changed since
    this time last year that may impact retention. The economy is not as
    strong; yet, patriotism is stronger than ever. With the help of
    Congress, our airmen now have better benefits. What has not changed is
    the increase in workload and TEMPO and the availability of higher-
    paying civilian jobs that match the experience and high-tech skills of
    our airmen. To sustain our readiness posture for rapid deployment, we
    must retain our highly trained, experienced, and skilled people. When
    we lose our experience, we increase recruiting and training
    requirements. Maintaining our technical expertise helps alleviate
    increased TEMPO in our stressed career fields. We are watching the
    affects of stop loss and the increased TEMPO of Operations Noble Eagle
    and Enduring Freedom and the possible negative affects on retention.
        It is painstakingly clear that to retain the high caliber
    professionals we need to decisively win America's wars; we must provide
    a robust compensation package that rewards service, provides for an
    acceptable standard of living, and ensures a high quality of life. In
    this package we must continue to provide appropriate pay increases and
    continual reduction of out-of-pocket expenses incurred through moves,
    deployments, and other temporary duty. The Air Force must remain
    competitive if we are to maintain a superior all-volunteer force.
        Because retention is more than improving quality of life,
    leadership must ensure all airmen know what they do is valued. As such,
    we created the Career Assistance Advisor (CAA) position to assist
    commanders in developing wing-level retention programs for our enlisted
    personnel. Career Assistance Advisors are making a positive impact
    across the force. Today, Air Force members are more aware of how they
    fit into the military and the benefits of service, which make them
    better equipped to make critical career decisions.
        We also initiated an aggressive campaign to ``re-recruit'' our
    present force, to capitalize on efforts already begun by focusing on
    retaining our quality people. We recognize that our high-caliber airmen
    expect and need mentoring and career counseling. Initially, the re-
    recruiting effort focused on engineers; however, we will expand this
    effort to other critical skills, to include, but not limited to,
    pilots, navigators, and scientists.
        We are paying close attention to officer retention trends,
    especially in critical skills. We monitor these trends through the
    officer cumulative continuation rate (CCR), or the percentage of
    officers entering their fourth year of service (6 years for pilots and
    navigators) who will complete their 11th year of service given existing
    retention patterns. Although the fiscal year 2001 CCR for pilots
    increased from 45 percent in fiscal year 2000 to 49 percent, it's
    significantly lower than the high of 87 percent in fiscal year 1995. We
    have fully manned our cockpits, but our pilot staff manning has fallen
    to 51 percent. Since September 11, we have witnessed a short-term
    patriotic dividend, but caution that long-term shortages remain. Since
    September 11, we've seen 92 pilots return to active duty, but despite
    the ``patriotic dividend,'' we ended fiscal year 2001 short 1,239 (9
    percent) pilots and project to end fiscal year 2002 short 902 (7
    percent) pilots. Additionally, the airlines are forecasted to hire
    approximately 1,500 new pilots in calendar year 2002. The pilot force
    still is not healthy--the pain is just less severe. Simply training
    more new pilots does not solve the problem; retention of experienced
    pilots is the key.
        The Aviator Continuation Pay program, coupled with pilot production
    increases and other initiatives, have helped to arrest inventory
    declines, and the pilot shortage has remained steady at approximately
    8-9 percent of the requirement over the last 3 years. Because of the
    low production ``bathtub'' year groups created in the 1990s, even with
    relatively low retention assumed in our forecasting models, we expect
    to make some improvement in aggregate pilot inventory over the future
    year defense plan with increased production. However, toward the end of
    the decade, growing numbers of losses in larger year group sizes
    diminish much of the headway made until the effects of the 10-year
    active duty service commitment take hold soon thereafter. Granted, this
    situation is affected by recent events, but with the goal being
    economic recovery and operations tempo promising to remain a challenge,
    a continued robust Aviator Continuation Pay program will further
    diminish these negative effects toward the end of the decade.
        The good news is the post-September 11 long-term bonus take rate
    has increased to 43.2 percent, a 13 percent point increase over last
    year's rate. On the other hand, this year's group of eligible pilots is
    small. Therefore, the higher bonus take rate has not resulted in
    greater number actual numbers of pilots being retained, but the trend
    is positive. But, we continue to believe the pilot bonus continues to
    be the most effective tool to keep pilots.
        The mission support officer fiscal year 2001 CCR has held steady at
    44 percent, although lower than the fiscal year 1994 rate of 66
    percent. Conversely, retention rates for several high-tech specialties
    have decreased--scientists (36 percent), developmental engineers (32
    percent), and acquisition managers (40 percent). Navigator and air
    battle manager (ABM) rates in fiscal year 2001 were 72 percent and 47
    percent respectively, not high enough to solve our long-term problems
    in both of these areas.
        Our retention trends and philosophy have not changed significantly
    since September 11. Bonuses continue to be an effective tool in
    retaining our members, and the recent legislative gains are a positive
    step. Thanks to prompt congressional action, we have the authority to
    implement bonuses, adjust funding to create retention allowances, and
    work toward implementing special salary rates for the most difficult to
    retain career fields. The Air Force recognizes the great need for these
    bonuses and has programmed funds accordingly. However, funding levels
    were cut during the appropriations process.
        As mentioned earlier, the flexible Aviation Continuation Pay (ACP)
    program is an important part of our multi-faceted plan to retain
    pilots. Our fiscal year 2001 program, where we offered ACP payments
    through 25 years of aviation service at up to $25,000 per year,
    resulted in a substantial increase in committed personnel. Because of
    this success, we implemented a very similar design for the fiscal year
    2002 ACP program. In the near future, we plan to offer ACP to the other
    rated career fields: navigators and ABMs. Both the SECAF and the CSAF
    have approved the policy decision to implement a navigator and ABM
    bonus. Our navigators are a critical rated resource that is being used
    to fill pilot vacancies in headquarters staff positions--as a direct
    result of the Air Force's pilot shortage. Using navigators to fill
    pilot staff positions has brought headquarters rated staff manning up
    from 51 percent to 76 percent. Currently, 22 percent of the navigator
    force is retirement eligible with no remaining service commitment and
    almost half the navigator force will be retirement eligible within the
    next 5 years. Our ABMs are just as important; they are a high demand/
    low-density career field, currently manned at only 76 percent. This
    already overstressed career field has been stretched even further since
    September 11. We need to retain every ABM and navigator to maintain our
    warfighting capability; we hope to do this by offering them a bonus.
        Personnel in 82 percent of our enlisted skills are now receiving
    reenlistment bonuses. The authorization to pay both officer and
    enlisted personnel in critical skills a retention bonus of up to
    $200,000 during a career should help retain individuals in high demand
    by the civilian sector. We are initially targeting this new authority
    to officer career fields, to include scientists, developmental
    engineers, and program managers. Also, the authority to increase
    special duty assignment pay provides the flexibility to target our
    arduous enlisted skills. The fiscal year 2002 NDAA authorizes
    installment payment authority for the 15-year career status bonus, and
    the transfer of Montgomery GI Bill benefits to family members to
    encourage re-enlistment in critical specialties.
                             training and education
        There is no substitute for highly skilled, trained people--tied to
    successful readiness and transformation. Flexible, agile training
    enables rapid response to dynamic missions. However, meeting our
    training requirement has been a challenge in today's expeditionary
    environment. The war on terrorism and protecting our homeland from
    further attack has put additional strain on our infrastructure.
    Increased accessions stress our trainers as well as our training
    facilities. For example, during surge periods, we operate at maximum
    capacity by triple-bunking students in two-person dorm rooms.
        Although we are holding steady on retention, lower enlisted
    retention rates add to our increasing training burden. Despite these
    challenges, our technical training schools have been able to meet their
    mission. To ensure we continue to have world-class training, we have
    increased our use of technology and streamlined training processes
    through advanced distributed learning to produce fully qualified airmen
    ready to support the mission. Since training is a continuous process
    throughout the member's career, we are also using emerging technologies
    to establish a training management system capable of documenting and
    delivering the right training, at the right time, to the right people.
        Increased TEMPO also makes educational pursuits difficult. Our
    learning resource centers and Advanced Distributed Learning initiatives
    address this situation by offering deployed personnel education and
    testing opportunities through CD-ROM and interactive television.
    Additionally, we have joined with the other services, the Department of
    Labor, and civilian licensing and certification agencies to promote the
    recognition of military training as creditable towards civilian
    licensing requirements.
        If we are to transform the Air Force to meet 21st century
    challenges, we must invest in human capital. We can strengthen
    intellectual capital with increased and focused investment in advanced
    education. Our target is to increase the number of Air Force funded
    advanced degrees from world-class institutions in mission critical
    competencies. Our plan is to shape the Air Force Institute of
    Technology (AFIT) and Naval Postgraduate School partnership, creating
    Centers of Excellence and sustaining both schools as world-class
    educational institutions.
        In summary, training and education has an impact on recruiting and
    retention. The expectation of receiving valuable training makes people
    want to join the Air Force. For 6 consecutive years, the Basic Military
    Training Survey Report validated that ``gaining skills'' and ``job
    experience'' was the second most compelling reason for joining the Air
    Force (from among 18 factors).
        Defining the Air Force's institutional training and educational
    requirements for leadership development allows the services to better
    weigh resource decisions and emphasizes to our people the institution's
    investment in their careers. The Air Force is pursuing leadership
    development and career mentoring strategies, to prepare the Air Force
    Total Force for leadership in this century. These competency-based
    strategies are focused on understanding the leadership needs of our
    transforming force and creating a development process that will create
    airmen better prepared to serve and lead in that environment. The Air
    Force is examining more deliberate career broadening, emphasizing two
    categories of competencies--occupational (what we do) and universal
    (who we are). We are also examining potential changes to the
    professional growth of officers including the rationalization of
    advanced degrees and professional military education. Force readiness,
    sustainability, and mission performance all depend on selecting,
    training, and retaining the best individuals with the necessary skills,
    as well as motivating every member of the service and taking care of
    Air Force families.
                           civilian workforce shaping
        Since 1990, the Air Force has drawn down 100,000 civilian slots and
    constrained hiring as we attempted to minimize impact on existing
    employees. As a result, less than 10 percent of our civilians are in
    their first 5 years of service. In the next 5 years, more than 40
    percent of our civilian career workforce will be eligible for optional
    or early retirement. While not all will retire simultaneously,
    historical trends indicate that approximately 33 percent of white-
    collar employees and 40 percent of blue-collar employees will retire
    the year they become eligible. In addition, downsizing over the past
    decade skewed the mix of civilian workforce skills, compounding the
    loss of corporate memory and lack of breadth and depth of experience.
    While we are meeting mission needs today, without the proper civilian
    force shaping tools, we risk not being ready to meet tomorrow's
    challenges.
        The Air Force is facing difficulties replacing the loss of skilled
    and experienced staff. We are committed to accession and retention
    planning from the perspective of identifying the skill sets tomorrow's
    workforce will need.
        To meet the demands of an increasingly technical force, we must
    invest in our current workforce. Our focus is on career broadening
    expansion, supervisory training, and skill training/retraining. To help
    shape the civilian workforce, it is imperative that we fund civilian
    degrees and tuition assistance programs as well as provide flexibility
    to pay for job licenses and certifications. In fact, the fiscal year
    2002 NDAA authorized the payment of expenses to obtain professional
    credentials.
        In addition, separation management tools are essential in shaping
    the force by opening the door to new talent so we are able to create
    the right skill mix. These initiatives include pay comparability and
    compensation and extending special Voluntary Separation Incentive Pay
    (VSIP) and Voluntary Early Retirement Authority (VERA) for workforce
    restructuring. Also, the fiscal year 2002 NDAA provided the authority
    for a pilot program allowing for payment of retraining expenses.
                                quality of life
        We place intense demands on our mission-focused Total Force, and
    it's imperative that we provide our airmen with a quality life. The Air
    Force will pursue necessary manpower; improve workplace environments;
    provide fair and competitive compensation and benefits; balance
    deployments and exercise schedules; provide safe, affordable, and
    adequate housing; enhance community and family programs; improve
    educational opportunities; and provide quality health care, as these
    have a direct impact on our ability to recruit and retain our people
    and sustain a ready force.
        We thank Congress for the Fiscal Year 2002 National Defense
    Authorization Act (NDAA), which provided the largest pay raise in 20
    years. The mid-level and senior NCOs received 7-10 percent, junior
    enlisted members received a 6-6.7 percent pay raise, and captains and
    majors received a 6-6.5 percent raise. All other personnel received a 5
    percent raise. In addition, you improved the Basic Allowance for
    Housing (BAH) rates effective 1 January 2002, based on 11.3 percent
    out-of-pocket for the National Median Housing Cost for each grade and
    dependency status. The fiscal year 2002 NDAA also authorizes several
    additional travel and transportation entitlements that will reduce out-
    of-pocket expenses for our military personnel.
        Providing safe and adequate housing enhances readiness and
    retention. The Air Force Dormitory Master Plan and Family Housing
    Master Plan identify and prioritize our requirements through new
    construction, revitalization, and privatization of existing military
    family housing and dormitories, while DOD is championing the reduction
    of median out-of-pocket housing expenses to zero by fiscal year 2005.
        The Air Force sets the standard in providing quality childcare and
    youth programs. Air Force child care centers and all of its before- and
    after-school programs for children 6-12 are 100 percent accredited. In
    fiscal year 2002, the Air Force will test using the extended duty
    childcare program to provide care to members working at missile sites
    and who need care for their mildly ill children.
        The Air Force recognizes the economic benefit our members derive
    from the activities and services provided within our base community.
    Programs like child development, childcare, youth programs, fitness
    centers, libraries, skills development, clubs, golf courses, and
    bowling centers all offer programs and services that support and
    enhance the sense of community and meet our members' needs for
    relaxation and stress reduction. Beyond these benefits, on-base
    programs are part of the non-pay benefit system providing savings over
    the cost members would pay to receive similar services off base.
        The Air Force continues to support the commissary and exchange
    benefits as vital non-pay compensation benefits upon which active duty,
    retirees, and Reserve component personnel depend. Commissaries and
    exchanges provide: value, service, and support; significant savings on
    high quality goods and services; and a sense of community for airmen
    and their families wherever they serve.
        The recent implementation of DOD health care initiatives such as,
    TRICARE for Life provide the missing link to the Air Force Medical
    Service's (AFMS) population-based health care strategy. The AFMS
    continues to make great strides in its population health initiatives
    and customer satisfaction. Central to the AFMS's population health plan
    is its Primary Care Optimization program. This program improves
    clinical business processes through best use of medical personnel and
    other resources, assisted by robust information management systems that
    support effective decisionmaking. The Primary Care Manager by Name
    program provides much-needed continuity of care and, ultimately, better
    patient management by providers. Other population health initiatives
    include the Air Force Suicide Prevention program, which has served as a
    model for DOD and the Nation in their efforts to address this
    significant public health issue. As a result of the expanded senior
    benefit and the AFMS's population health initiatives, health care
    customer satisfaction continues to rise in the Air Force. According to
    the latest Customer Satisfaction Survey Results, 90 percent of the Air
    Force's enrolled beneficiaries indicate they would enroll or re-enroll
    in TRICARE Prime if given the option. The overall satisfaction with
    clinics and medical care exceeds national civilian HMO averages.
                                   in closing
        Our number one priority is to increase our warfighting skills to
    meet mission requirements. We understand we must optimize our current
    force, and transform the force to meet critical skill shortages over
    the long term. However, we have short-term requirements that are
    becoming more difficult to sustain.
        The Air Force continues to attract and retain the highest quality
    individuals. We are successful when we have the flexibility to use the
    right tools to target needed areas, such as retention and force
    shaping. We also understand that we can never take our eye off
    recruiting and will continue our steady state maintenance of recruiting
    initiatives.
        Although the Air Force was successful in fiscal year 2001 in
    meeting recruiting goals, we have not been as successful in meeting
    retention goals. Meeting retention targets will continue to provide us
    the greatest challenge. There is no getting around the fact that
    bonuses have been our most successful incentive. We thank Congress for
    providing the authorities that give us the flexibility we require in
    targeting key skills. However, when funding is eliminated from our
    accounts, we lose our flexibility to target key warfighting skills
    which, which impacts our force readiness and mission capability.
        We also recognize the increasingly important role of civilians to
    our Armed Forces. They are our leaders, scientists, engineers, and
    support force who provide reachback for deployed and forward-based
    forces. We need flexible tools and policies to manage this force.
        We depend on a highly skilled, educated, and technologically
    superior force. We continue to state that there is no substitute for
    high-quality people. Our airmen have met challenge after challenge and
    are proud to serve our Nation, but they are tired. They consistently
    identify their number one quality of life issue is to have enough
    personnel to do the job. We continue to expect more and more with
    little relief in sight. It is imperative that we address our short-term
    warfighting needs today.
        We thank you for the many tools you have provided--your continued
    support is critical to the Air Force future and to the future of our
    Nation. We need your continued support to ensure the quality of life
    for our people and their family remains a priority.
        I appreciate the opportunity to speak to this committee and share
    the concerns of our proud and capable Air Force people.
                                     ______

              Prepared Statement by Brig. Gen. Duane W. Deal, USAF
                                  introduction
        Mr. Chairman and distinguished members of the committee, I'm
    honored to appear before you on behalf of the dedicated men and women
    of the Air Force Recruiting Service to present a few perspectives
    regarding recruiting. To echo General Brown, we owe Congress, and
    particularly the members of this committee, our deepest gratitude for
    your tremendous support last year, and particularly your passage of the
    National Defense Authorization Act. Your actions demonstrate to our
    airmen, soldiers, sailors, and marines that you both understand and
    appreciate their service.
        Fiscal year 2001 proved to be a banner year for recruiting the
    Nation's finest young men and women into America's Air Force. Our
    Nation can be proud of the selfless dedication, integrity, and effort
    that Air Force recruiters and recruiting support personnel put forth
    every day in fulfilling the recruiting mission. Recruiting lays the
    foundation for readiness, and charts the Air Force's ability to respond
    to any call with trained, professional airmen.
                              enlisted recruiting
        As you're well aware, we continue to perform the recruiting mission
    in an extremely competitive environment. Continued relatively low
    unemployment, higher college opportunities and enrollments, and a
    declining awareness among young people of the advantages and benefits
    of life in the military all add to the challenges facing our Nation's
    recruiting forces. Until 3 years ago, we were seemingly able to meet
    most of our recruiting objectives with significantly less manning and
    less funding than is necessary today. Fiscal year 1999 accessions
    numbers proved the inadequacy of previous manning and funding levels.
    While fiscal year 2000 numbers looked better and overall goal was
    exceeded, we were still not recruiting enough of the needed skills to
    meet all of the Air Force's needs. I am pleased to inform you that in
    spite of the increased recruiting demands of fiscal year 2001, our
    recruiters were able to exceed their goals and ship more airmen to
    basic training than in any year since fiscal year 1990. We exceeded the
    goal by putting hundreds of new recruiters on the street, along with
    additional marketing and bonus programs. With such course corrections
    made, enlisted production is not only on the upswing, it is currently
    meeting all of the current category needs that can be satisfied by
    young airmen--specifically, needs in the mechanical, administrative,
    general, and electronic aptitude areas.
        But quality is not being sacrificed for quantity. In terms of
    quality, the Department of Defense asks the services to access at least
    90 percent of its new recruits as ``Tier 1''--high school graduates or
    individuals with 15 or more semester hours of college. Compared to a
    DOD standard of 90 percent, the Air Force maintains a target of 99
    percent--and we exceeded that in fiscal year 2001. Against a DOD
    benchmark of 60 percent of new accessions scoring in the top half (Cat
    I-IIIA) of the Armed Forces Qualification Test (AFQT), last year the
    Air Force surpassed 75 percent. A further reflection on quality is our
    first measure once they put on a uniform: compared to an historic Basic
    Military Training attrition rate of 9 percent, attrition last year
    dropped to 6.8 percent--a low level not seen since fiscal year 1983.
        Even through fiscal year 2001, we knew that challenges would remain
    and evolve regarding the fiscal year 2002 accessions goal of 36,000.
    Already this fiscal year, this goal has been raised twice in order to
    support homeland defense and the war on terrorism, and currently rests
    at 37,283. Without the increased recruiter manning and funds for
    enlistment bonuses, we would not have been able to dig our way out of
    the enlistment contracts deficit; as things presently stand, we have
    been able to exceed by 867 our goal of 13,612 accessions for the first
    5 months of fiscal year 2002. We expect our summer months to be very
    productive in terms of new enlistment contracts--we plan to ship more
    airmen to basic training than in any year since fiscal year 1989 and
    anticipate being well postured to start meeting fiscal year 2003
    accessions goals.
                               officer recruiting
        The challenges that face our officer accessions recruiters continue
    to grow. These men and women must persuade doctors, dentists, nurses,
    and other professionals with high-earnings potential and often
    significant college debt to become members of the Air Force. Despite
    this challenge, fiscal year 2001 was punctuated with many successes in
    officer recruiting. The men and women of Air Force Recruiting Service
    attained at least 100 percent of their production goals in physician
    scholarships, dental scholarships, medical administration specialists,
    and non-technical line officers. The nationwide nurse shortage has
    impacted us as well, making nurse recruiting particularly difficult; as
    a result, we could recruit only 228 of a desired 349 nurses in fiscal
    year 2001. Other shortfalls occurred with biomedical scientists,
    dentists, and technical officers. Officer recruiting in fiscal year
    2002 is presenting yet another challenging year. To address officer
    recruitment difficulties, we are pursuing a number of initiatives with
    the Air Staff, which include expanded bonus and loan repayment
    programs. We are grateful for the fiscal year 2002 National Defense
    Authorization Act increasing the individual limits for an officer
    accession bonus from $30,000 to $60,000, and allowing us to offer
    bonuses to line officer candidates with skills certified as critical by
    the SECAF. This act is a good start on our road to achieving our bonus
    and loan repayment needs.
                                   marketing
        We continue to make great strides in creating and implementing new
    ways to get the Air Force message across to young Americans. During
    fiscal year 2001, Air Force Recruiting Service began partnering with
    the GSD&M advertising agency from Austin, TX. GSD&M began last year
    concentrating efforts last fall to develop and field our ``Cross Into
    The Blue'' advertising campaign through various media efforts,
    including television, radio, print, the Internet, motor sports, and
    other interactive projects. In concert with in-house Government
    civilian marketing experts and field-proven recruiters, GSD&M continues
    to develop and research new ideas to help the Air Force achieve
    recruiting and retention goals by increasing public awareness of the
    opportunities an Air Force career offers.
        With our target audience spending an average of 10-12 hours per
    week on-line, we are increasingly using the Internet as a front-line
    weapon to reach this increasingly technology-savvy audience. Activity
    on our web site continues to increase dramatically; inquiries from the
    site in 2001 were up over 165 percent from 2000 alone. To help capture
    and attract the teenage audience, AirForce.com launched a new site on 5
    November 2001 promoting the ``Cross Into The Blue'' campaign. The site
    includes multiple sections to help people learn more about Air Force
    careers, educational opportunities, and the Air Force lifestyle. Also,
    it provides the public a chance to read about specific airmen serving
    today and how they support the Air Force mission. In addition, the site
    provides the ability to contact a recruiter and locate the closest
    recruiting office.
        Although the new site has been operating for only 3 months, initial
    figures show it to be extremely popular. In November-December 2001,
    there were over 1.5 million visits to the page, over 100,000 locator
    searches were conducted, and 15,000 leads were generated from the
    website. Each month our team of recruiters supporting the Internet site
    responds to over 2,250 inquiries, answers questions from site visitors
    about all aspects of the Air Force, and provides additional information
    on how to join. The team also e-mails, reviews, and routes over 600
    health professions and engineering resumes per month via the
    Monster.com system and other career search sites.
        In addition to the advancements made on the web, concentrated on-
    line media placement has also increased. Links to AirForce.com and Air
    Force advertisements can now be seen on ESPN.com,
    SportsIllustrated.com, the MSNGaming Network, Yahoo.com, and many more
    high-traffic web sites. The Air Force also posted job descriptions on
    various career search pages including Monster.com, producing high-
    quality leads for officer accession recruiters.
        We have experienced increasing, quantifiable success promoting the
    Air Force through our television campaign. At the beginning of March
    2002, approximately one quarter of 18,000 Air Force applicants and
    active duty members said they were influenced by television advertising
    material. To complement this effort, our national print campaign has
    produced new advertisements currently appearing in Teen People, VIBE,
    and U.S. News and World Report.
        We continue our outreach to minorities and women. We were gratified
    when the Air Force was one of five companies nationwide recognized for
    their diversity outreach during last July's NAACP convention in New
    Orleans; we were also gratified that just last month the Black
    Collegian magazine cited the Air Force as number 3 of the Nation's top
    100 companies in outreach to African-American college graduates. As a
    new element of such outreach, we are currently fielding a campaign
    honoring the distinguished Tuskegee Airmen. This campaign reflects the
    expertise, courage, and dedication this group of airmen displayed
    during a time of immense hostility, at home and abroad. The campaign
    involves both print and television advertisements. With tag lines such
    as ``They escorted bombers into Europe, and equality into America,''
    and ``Before the Air Force broke the sound barrier, these airmen broke
    the race barrier,'' this campaign will appeal not just to the minority
    population, but also to the public at large. Other campaigns honoring
    women aviators and celebrating the centennial anniversary of flight are
    being prepared.
        This year marks the second year the Air Force has been an associate
    sponsor of NASCAR Winston Cup Series driver Elliot Sadler and the
    legendary Wood Brothers' No. 21 racing car. We're particularly excited
    with a new venture as this year we are also teaming with the Office of
    National Drug Control Policy (ONDCP) to sponsor a Busch Series car.
    Sponsorship of this car creates an ideal partnership between our Air
    Force and the ONDCP, sending both a public service and anti-drug
    message. Finally, a NASCAR Air Force show car is making its way across
    the country serving as a recruiting tool to use at high schools, local
    shopping arenas, and other places and events which may attract our
    target market. This Air Force blue show car enables teens, children,
    and families to see inside the car and speak with recruiters about our
    job opportunities.
        As the Air Force continues to compete with the general market for
    overall qualified applicants, there are certain career fields that
    continue to remain hard to fill and pose a problem for targeted
    marketing. Principal challenges in the enlisted arena include such
    skills as our Special Tactics and Rescue Specialists--or STARS;
    formerly called Air Commandoes, these include our combat controllers
    and pararescue airmen, vital skills not often associated with the Air
    Force. Officer challenges include chaplains, nurses, pharmacists,
    physicians, dentists, and engineers. To help recruiters attract people
    to these positions, we use brochures, posters, sales aids
    (``giveaways''), targeted advertisements, distinct sections on
    AirForce.com, and direct mailings that target these groups.
                        resource utilization and support
        Our efforts are supported by our growing ability to exploit current
    and emerging technologies that improve the recruiter's ability to
    target and interact with the market and capitalize on opportunities to
    enter educational institutions.
        Resources dedicated to increasing our technological edge and
    modernizing the recruiting processes have seen enlisted and officer
    accessions recruiting become automated through our web-based
    application processing. We are able to gather information and provide
    statistical analysis to support informed decisionmaking, and that
    capability is being expanded continuously through targeted reporting.
        Internet technology promises to grow into our greatest asset and
    tool by allowing communication and coordination to widespread manpower
    assets, as well as reaching a vast pool of potential applicants for
    marketing purposes. We continue to build web-based tools to assist our
    recruiters and support infrastructure to become more effective as a
    single-minded entity, despite the complications of being spread across
    every state and six countries around the world. As goals increase for
    our recruiters, our investment in computer and web-based solutions must
    continue to grow to meet the on-line, time-sensitive demands of our
    target audience.
        ``LifeWorks'' is a very successful contracted work/life balance and
    employee assistance program for Air Force Recruiting Service's
    geographically separated personnel and their families. Initiated in
    1999, LifeWorks offers 24 hours per day, 7 days per week, 365 days per
    year toll-free and Internet access for counseling, information, and
    referral on a multitude of family coping issues such as legal,
    financial and work issues, and education and schooling issues. Customer
    feedback has been overwhelmingly positive. As briefed to and
    highlighted by the previous Secretary of Defense, more than 7,000 U.S.
    corporations also use LifeWorks, with a combined dispersed workforce
    totaling more than seven million employees; the other services are now
    benefiting from LifeWorks as well.
        TRICARE Prime Remote is a huge ``Quality of Life'' boon for
    geographically separated AFRS personnel and their families. Occasional
    isolated challenges arise in locating participating health care
    providers in some areas and specialties, but access to care is
    improving, as is payment timeliness for care received. This benefit is
    critical to ensuring adequate medical care for our recruiters, who are
    often great distances from Military Treatment Facilities.
        The Air Force accounts for 11 percent of the total number of
    production recruiters in the Armed Forces. With a total of 1,436
    offices, the Air Force Recruiting Service supports the DOD's effort to
    revise its space and quality standards to benefit all services,
    upgrading the location and appearance of offices while providing more
    space.
                                   conclusion
        Before I close, I thought it appropriate to share one of our
    current thrusts in the Air Force Recruiting Service. In the 48-year
    history of our Recruiting Service, never before has our sense of
    mission been as heightened as it has been since September 11. For
    starters, we have a recruiting office only a block away from the
    devastation of the World Trade Center; like thousands of others in the
    many nations affected, we could not contact our friends and family in
    Manhattan for many hours after the attack, and thus shared a common
    bond not only with the Nation, but especially within our own command. I
    had the opportunity to tour that site with some fellow recruiters last
    month. We were escorted by a Member of Congressman Fossella's staff,
    Mr. Larry Morrish, who had attended 38 of his friends' burials; the
    police officer with us was Detective Joe Nolasco, who witnessed the
    attack, had lost 20 dear friends, and was unable to sleep for 2 weeks
    after the attack. While our hearts went out to them and to the workers,
    police, and firefighters at Ground Zero, it took us aback to have them
    stop their work and applaud us as we visited the site in our military
    uniforms. Goosebumps aside, that experience truly drove home the bond
    between the citizen and the soldier, between all public servants, and
    how we're linked--whatever and wherever duty may lead us. In
    recruiting, we have always known we're contributing to our Nation's
    readiness by recruiting America's finest for America's Air Force; this
    cowardly attack on our Nation's soil against thousands of innocents
    sharpened our resolve. To underscore that resolve, we have employed our
    own component of Operation Noble Eagle throughout our worldwide offices
    with its motto that we are ``Recruiting today--to win tomorrow.'' With
    your support and resolve, backed by our Nation's determined recruiting
    force, we will indeed win.
        Mr. Chairman, members of the committee, it has been an honor for me
    to present you with testimony on what I consider the key enabler of our
    great Nation's air and space power--its recruiters. In summary, coming
    off a strong fiscal year 2001, the recruiting mission is poised for
    even greater success in fiscal year 2002. Continued funding to support
    outreach initiatives and improvements in infrastructure are necessary
    to sustain these positive trends. Incorporating and adapting creative
    marketing ideas will keep us continuously plugged into America's
    awareness. Our new information systems and emerging technologies will
    allow for decreased applicant processing time and productivity
    increases. With your support, we will fully utilize existing tools
    while exploring new paths to improve the processes, support, and
    quality of life for our most formidable resource, and the foundation of
    our future readiness--the Air Force recruiter. Thank you again for this
    opportunity.

        Senator Cleland. Thank you very much, General Brown. You
    have touched on some points we want to follow up on.
        I would like to recognize Senator McCain for some
    questions.
        Senator McCain. Thank you, Mr. Chairman.
        I want to thank the witnesses for being here this morning
    and all of the great work that they are doing.
        My first comment is that we have 85,000 National Guard and
    Reserve men and women who are extended, I guess indefinitely,
    over their period of service. I would be interested in the
    witnesses' view if that is not a problem over time and a
    challenge that we need to meet because of the longevity
    associated with the war on terrorism, and if they had any
    thoughts. I would be glad to begin with whatever pecking order
    is appropriate here.
        Senator Cleland. Shall we begin with General Le Moyne.
        General Le Moyne. Sir, I will start for the Army and tell
    you that we are very concerned about overextending our National
    Guard and Reserve men and women. Sir, we do try to regulate the
    flow and have a rotational system that allows that without
    impinging on their civilian occupations and careers. We do make
    adjustments, particularly in the medical professions, for that
    directly.
        Testimony earlier, sir, made a comment that we are looking
    at a 5-year focus on this, and the Army is doing the same
    thing. We are very carefully trying to balance what our needs
    are today with what we think they will be in the future to
    allow this rotation policy to stay vibrant. Sir, it is on our
    plate directly.
        Senator McCain. Admiral.
        Admiral Ryan. Sir, I mentioned in my brief opening remarks
    that this is a big concern for the Department of the Navy. We
    have had 10,000 of our men and women mobilized very rapidly and
    they have performed remarkably. But we do not think that we can
    sustain that level for the horizon we are planning on, which is
    5 years. So we are rapidly trying, particularly in the force
    protection area, to increase the active side of force
    protection so that we can draw down the Reserve requirement in
    that area and get to a level that we think we could sustain for
    a period of time.
        We are working very hard on that. It is the CNO's number
    one unfunded priority, to get a better blend between our active
    and Reserve mix in this particular area. What we intend to do
    is to work each one of the Reservists who are mobilized as an
    individual and if at the end of 1 year we still need that
    particular billet filled, if they want to volunteer we are
    going to let them. If they want to get back home to their
    business and family, which we assume most of them will want to,
    we are going to do our darnedest to let that happen and bring
    somebody else on, and do it in that fashion, but very much pay
    attention to the individual and do it as an individual
    assignment for those that come up, whether or not they want to
    say a second year.
        We do want to change that blend. We do not have the right
    mix right now and we are trying to get that.
        General Parks. Senator, we have looked at this very
    judiciously from the outset. Starting with a cap of our
    intended, estimated picture of 7,500, we have mobilized now in
    the vicinity of 4,600. As the Navy is doing, we are looking at
    each one as they are coming up on their end of their obligated
    time as an individual. Some are electing to stay, some are not.
        Senator McCain. Some are being involuntarily extended.
        General Parks. We have not gotten to that level yet, sir.
    The ones we have brought in, those that have been mobilized,
    have been mobilized for up to a year, and we will not cross
    that threshold, obviously, until much later.
        But we are looking at them as a group and as individuals
    within, if they are in a unit, of course as a unit, evaluating
    that for the long term. We had the benefit that those who were
    activated as individuals were volunteers, and that pool has
    evaporated now. We will now have to find more creative ways to
    look at it.
        We just held a conference last week on those that are
    mobilized, looking at the long-term role in how we would face
    that for the rest of the time.
        General Brown. Sir, it is a huge concern to the Air Force.
    As I indicated, we initiated stop loss on the Active-Duty
    Force. We actually did it across-the-board, active duty, Guard,
    and Reserve. We have about 28,000 mobilized and another 10,000
    have volunteered to come on active duty. So we probably have
    the highest number of all the services that have come to active
    duty. It is a great concern to us.
        Senator McCain. Particularly with your requirements to have
    these flights over major cities in America.
        General Brown. Yes, sir.
        Senator McCain. Mr. Chairman, I do not think this is
    something we ought to make a decision on yet, but one of the
    options that we may have to consider in this subcommittee is
    increasing end strength. I know how expensive it is, and I know
    that the services have not asked for it. I would not expect the
    witnesses here to give us that kind of opinion because of the
    fact that it is such a very sensitive issue.
        But, Mr. Chairman, we may have to look at that, maybe on a
    service by service basis. I do not know, but clearly I do not
    think we can sustain, particularly as the Air Force has pointed
    out, this kind of demand on our Guard and Reserve Forces.
    Otherwise we are going to suffer enormously with recruiting and
    retention.
        I thank you for your consideration. Mr. Chairman, I only
    have one more question I would ask the witnesses. I want to
    begin by thanking you for co-sponsoring our Call to Service Act
    that gives Americans an opportunity to serve their country. I
    am very pleased the President has been very involved in leading
    in this effort to give Americans an opportunity to serve, and I
    want to thank you because no one embodies service more than you
    do, Mr. Chairman.
        I want to elicit a response from our witnesses. I know they
    have been looking at this issue and how it would fit in.
    Putting it in the context, we have a long way to go, a lot of
    hearings to conduct before we finish this. The President has
    made national service a priority. In my view a key element of
    it, besides Americorps, the Peace Corps, the Senior Service
    Corps, and all the others, would be an opportunity for
    Americans to serve in the military.
        We are not wedded to a specific proposal. That is why we
    have asked you to look at this. Yet we want this proposal to
    maintain a careful balance between service to country and a
    compensation reward component, but that not being the
    incentive. Otherwise we lose the whole idea of what national
    service should be all about.
        So I would like to ask the witnesses for their general
    thoughts on the subject and any ideas they would like to render
    at this time or for the record, recognizing we are going to go
    through a process here that does not require definitive answers
    at this moment in time. But since these witnesses are the ones
    who have been charged with the most serious responsibility of
    the men and women in our military, I think they are best
    equipped to respond.
        I thank you for your courtesy in allowing me to do this,
    Mr. Chairman.
        General Le Moyne.
        General Le Moyne. Yes, sir. We have discussed this, and the
    Army's position is that the call to national service strikes a
    tone, and we think a very good one. From this, sir, we think
    that there will be a growing propensity of America's youth, men
    and women, to look at the military as service. So in the call
    to national service there is definitely a military part to
    this, and we look forward to working this thing out.
        Senator McCain. There is obviously, in the context of
    homeland security, a requirement for men and women to preserve
    homeland security. If you look at our ports, our borders, our
    power plants, our reservoirs, there are enormous requirements
    out there and they are personnel requirements, many of them. I
    do not know if you wanted to add anything to that, General.
        General Le Moyne. On the specifics, sir, I do not. But we
    endorse that call to national service and certainly the
    military part of that. Wherever we find the requirements, we
    have to fill them. Each of us may be slightly different where
    the need may be.
        Senator McCain. Thank you.
        Admiral.
        Admiral Ryan. Senator, three quick thoughts. First, the
    bottom line: Sign the Navy up. Number 2, thank you for your
    leadership on this. Then I would say finally, we think this has
    a lot of merit, not only in exposing men and women to
    connection to the Armed Services, but frankly we are looking
    for something that would also expose men and women to service
    in our Reserve. We think this fits very nicely with what we are
    trying to do and where we are trying to go with the Reserve
    also. It has really good implications for where we want to go,
    and we are ready to sign up and work with you on it.
        Senator McCain. Thank you, Admiral.
        General Parks. Senator, I think from our approach I would
    simply reinforce that service in the military is national
    service, and as we look at extending this there are additional
    opportunities here to continue to serve our Nation. It follows
    the national patriotism that we have all felt so vibrantly
    recently. It may provide an additional opportunity to narrow
    either a perceived gap or a real gap between military and
    civilian.
        I think there are clearly opportunities there. As was
    mentioned, as we craft this we may need some tweaks that fit
    each service and each service's culture so that it parallels
    the former panel that we had and what they are selling, if you
    will, on a daily basis. But I think there is opportunity there,
    sir.
        Senator McCain. Thank you.
        General.
        General Brown. Senator McCain, the Air Force absolutely
    applauds the concept of national service. We think that our
    country would benefit. As we heard the young recruiters
    earlier, you were not in the room, but they talked about part
    of their need was to get a generation that would think about
    patriotism, think about service to country. National service
    would do that sort of thing for this young generation today,
    the same thing that the greatest generation and the generation
    we served in thought about.
        So there is no doubt national service would be tremendous
    for our Nation and the Air Force would want to play a role in
    that.
        Senator McCain. I thank all the witnesses.
        I just want to make one additional point that I know that
    you have thought about, that we have to get around. The
    criticism against this concept will be that you are creating
    two classes of men and women in the military. I do not think
    that that holds water, but we are already starting to hear it.
    I would hope that the recommendations and ideas that you come
    up with would address that aspect of it as well. I think that
    any American who is charged with homeland security feels that
    they are carrying out a vital and necessary mission for the
    security of our fellow citizens.
        I thank you. I thank you, Mr. Chairman. I appreciate the
    time.
        Senator Cleland. Thank you, Senator McCain. I want you to
    know that it is an honor to co-sponsor your legislation. I
    think it is timely, no more timely than the challenges we face
    since September 11. Thank you for your leadership. No one
    personifies service to this great Nation, both in terms of
    military service and as a civilian, than you do, and it is an
    honor just to sit at the same table with you here and discuss
    the issue.
        I was just thinking about what you brought to my mind, that
    national service seems to embody a continuum. It can be
    civilian service, it can be homeland defense civilian service,
    it can be military service. Looking at my own family history
    here, my father was an original member of the CCC, the Civilian
    Conservation Corps that Roosevelt created in 1934. That was a
    civilian part of the service where he learned a trade and a
    skill, which was as a truck driver. If you were just off the
    farm in the Great Depression, that was a pretty good skill,
    which he applied to get his first job.
        Second, at one time in the early part of World War II he
    was a security guard at the old Bell bomber plant, which is now
    Lockheed Martin, guarding the mockup of the B-29. That was kind
    of like a homeland security role. Then of course, he joined the
    Navy and was stationed at Pearl Harbor after the attack.
        In effect my own father did the whole thing. I grew up with
    the spirit of national service at every level. I think it is a
    classic American trait to be interested in all parts of
    national service and I think this is a great model that we can
    evolve, and we will need your help and input as we go along.
        Any further questions from the Senator from Arizona?
        Senator McCain. No, thank you.
        Senator Cleland. Thank you very much.
        Let me follow up on the end strength question. I asked the
    Chiefs when they came before the Armed Services Committee about
    being in effect under strength for the new missions that we are
    accomplishing now. I mentioned that a couple years ago Senator
    Pat Roberts and I took the floor of the Senate five or six
    times and talked about the overextension or the almost
    hyperextension of American forces in our global reach around
    the world.
        Then we were just engaged in Bosnia and Kosovo with the
    Balkan war. Now we are in Afghanistan. We are still pursuing
    our initial objective there, Osama bin Laden and the terrorist
    cadre. We have made a lot of progress, but we are very much
    committed there and very much involved there.
        Lord knows what is going to happen in the Middle East. Tom
    Friedman in the New York Times today talks about a U.S.
    occupation force separating the Israelis and the Palestinians,
    in effect guaranteeing certain security there, as well as an
    occupation force in Afghanistan, creating security there. In
    other words, every time you turn around it looks like the
    American military forces are called upon to do more and more,
    in many ways with less and less.
        In the direct questioning with the Chiefs, the Chief of
    Staff of the Army mentioned that he felt he was 40,000 troops
    short. That is a lot of folks. That is about three or four
    divisions at least. That is a powerful undermanning.
        We went to the Navy, the Marine Corps, the Air Force, and
    so forth, all of which felt that they needed more troops. If
    you added all that up, that is more than 50,000 members of the
    United States military that are underfunded or undermanned.
        I do not want to get you involved in that, except to ask
    you the question, if we somehow added powerfully to our end
    strength in order to meet these challenges to our national
    security abroad and our extension, almost hyperextension, of
    the American military abroad, would you be able to then recruit
    that kind of force? What would you need from Congress, any
    particular thing, any particular new wrinkle, in order to do
    that?
        If you had to add, General Le Moyne, 40,000 troops to the
    United States Army in the next year to fulfil some obligation--
    Afghanistan, the Middle East, or some other contingency plan
    that we run into--could you do that and what would it take?
    Tell us some of the challenges you would face.
        General Le Moyne. Sir, let me give you a snapshot. Then I
    will turn it over to General Rochelle, who is our Chief of
    Recruiting, because he has the details, and he has also been a
    recruiter.
        Right now, sir, Congress gave us the latitude to have a
    plus or minus 2 percent strength above our baseline. We are on
    a glide path right now, sir, to finish this year about 5,000
    over our baseline of 480,000. That is a prudent, measured, well
    managed increase overall and inside the limits that Congress
    has given us.
        The Secretary of Defense has asked us to look internally
    first. Sir, we are doing that, to see where we can make the
    adjustments based on the change in conditions that you just
    alluded to. Once we have done that, sir, I think we will come
    back to you with a hard figure. A prudent ramp-up of about
    5,000 a year is what we are doing right now and that allows us
    to stay inside our training base constraints and our budget
    cycle.
        If you want to go to 40,000 a year, sir, I will turn that
    over to Mike Rochelle to talk about what he thinks we need as
    far as plus-ups.
        Senator Cleland. Thank you.
        General Rochelle. Mr. Chairman, first of all, let me take
    this opportunity to thank you on behalf of the 7,200 Army
    recruiters across our country for whom you and this
    subcommittee and Congress in general have absolutely done
    magnificent things in the last several years. Those incentives,
    the support, predominantly are the reason why we are in such
    magnificent shape in recruiting the strength that the Army
    needs today. I want to thank you on their behalf.
        As General Le Moyne said, we are currently programmed to
    come in about 5,000 above where we thought we were going to be
    at the beginning of the year. I would submit to you that the
    incentives we have in place and the magnificent young
    recruiters, Sergeant Gwyn being a magnificent example of those,
    are the reasons why we are on that excellent ramp.
        Whether or not we could achieve 40,000 in a single year, I
    am not prepared to answer that right now. Clearly it would
    require a review of all of our incentives, vis-a-vis national
    service incentives, so that there might be a natural synergy
    created between them. We may even at that point have to look at
    additional recruiter resources to be able to reach a larger
    segment of America more effectively than we can today.
        Senator Cleland. Admiral Ryan, if you had to crank up and
    bring in 8,000 more people in the Navy in the next year, what
    would it take to do that?
        Admiral Ryan. I will turn it over to Admiral Voelker, but
    just to give you a snapshot, Senator, right now we are funded
    for 376,000. We expect to end the year at 382,000, 6,000 above
    that. We have had no trouble recruiting the number of
    individuals we need or, as I mentioned, in retaining people. So
    all our vectors are in the right direction.
        With the number of Reserves we have on active duty, we are
    actually at 390,000. The CNO's number one unfunded priority is
    4,400 more people. I think if you gave Admiral Voelker the same
    sort of level funding that you have now in advertising and
    recruiter support, he has made his goal for 3 years in a row,
    his new contract objective. Our delayed entry program is
    rising. That means we have more and more of a bench waiting to
    come in the service.
        I think we could certainly confidently bring in 4,000 more
    if we had to, but frankly I already have the people in the
    service right now.
        George, would you want to add anything?
        Admiral Voelker. Mr. Chairman, I would like to echo General
    Rochelle's comment about our gratitude in the Navy Recruiting
    Command for all that you have provided us in allowing us to be
    successful. The 5,000 enlisted production recruiters that we
    have today across from Italy on the east side to Yokosuka,
    Japan, on the west side and the 350 or so officer recruiters
    are getting the job done, as Admiral Ryan has indicated.
        I share General Rochelle's comments about the need for
    potentially additional inducements or incentives, but primarily
    I would say that the most important thing we should do is, if
    we go back historically and look at recruiting over the years,
    what we find is that it is a very cyclical business. We see a
    significant rise in resources and then as the services begin to
    make their goals or the outside dynamics change, we see a
    reduction in resources.
        I think the cyclical nature of that business ends up
    hurting us, and when we get behind the power curve when the
    requirement for accessions goes up that seems to happen more
    quickly than the resources get turned on and we end up
    potentially in a situation where we are unable to execute. So I
    think stability of resources is an important thing to help us
    over the long haul continue to be successful and remain
    postured for success in the event of an increase of an
    accession mission.
        Senator Cleland. Thank you.
        General Parks, I think the budget actually provides about
    3,400 or 3,500 additional marines. I gather you are able to
    handle that?
        General Parks. Sir, to be specific, we have been studying
    our end strength now for a number of years and wanted to ensure
    that we looked internally first before we came and asked for
    additional end strength. As a result, as a direct outgrowth of
    September 11, we stood up a new unit, the Fourth Marine
    Expeditionary Brigade, Anti-Terrorism. It has been used in
    multiple areas already and clearly proven its worth.
        That cost us about 2,400 marines. Because of that, we asked
    for that and that is the figure that you just alluded to that
    is in the budget for another 2,400 end strength, which would
    take us from 172,600 to 175,000 for fiscal year 2003. We are
    absolutely confident that we can recruit to that level, and the
    time line and the specifics of that, I will ask General Humble
    to address that.
        General Humble. Mr. Chairman, I also would like to
    acknowledge the efforts of the committee over the years, which
    has helped us sustain almost 7 years of success in our
    recruiting efforts. The funding you put in a couple years ago
    for advertising and marketing really has paid off now, I think,
    for all the services.
        To answer your question about the ability to recruit to the
    needs of the Marine Corps, absolutely, we could accomplish that
    this year if we had the funding to reach that end strength of
    2,400 more marines.
        Senator Cleland. Thank you.
        General Brown.
        General Brown. Sir, our former Chief, General Ryan, even
    before September 11 this past summer had indicated and gone on
    record that he thought that our Air Force needed about another
    10,000 with the new missions that had come on board and the new
    requirements that we were being asked of around the world. That
    was before September 11. Now, since September 11, we have done
    a relook and again, like the other services, looked at what
    kind of strength we need to sustain the current activity in
    future and what is the realm of the possibility.
        I will tell you, the strength number over the FYDP we think
    we might need is even greater than that 10,000 that the Chief,
    General Ryan, talked about last summer. I will let Duane Deal
    talk a little bit specifically about what we can handle within
    the Recruiting Command and the Training Command to absorb those
    young recruits, because we have a goal for this year. I have to
    also add that Secretary Rumsfeld, as we have gone in and talked
    to him about end strength for this year, has asked us all to
    first relook to see if we can solve some of the problems from
    within. That is why I talked about the transformation that we
    are trying to look at, the things that we could stop doing and
    turn uniforms into the requirements that we need.
        Let me let General Deal talk about specifically what we
    could accomplish if given the opportunity to raise end
    strength.
        General Deal. Sir, I share exactly and echo what my
    counterparts have already said, expressing extreme gratitude
    for the work of this committee and yourself. We have come a
    long way since the dark days of fiscal year 1999 when the Air
    Force missed its goal for the first time in 20 years. We have
    exceeded the goal the last 2 years. As a matter of fact, as we
    sit today, between those we have already brought on active duty
    in this fiscal year and those on contract, we are above 90
    percent. We are well poised to finish this year well ahead of
    goal as well. We thank you for that.
        General Brown alluded somewhat to what we are already doing
    within the Air Force in the event we are given the go-ahead to
    access more people. We have had what we call a long haul task
    force in place and steering groups examining what the needs
    would be if we are given a green light to go ahead. Most of it,
    as you would well expect, boils down to resource needs.
        In the Recruiting Service by itself, as General Rochelle
    was talking, in the Air Force we are poised for a surge. We
    could surge up with our current number of recruiters, which is
    resting around 1,600 right now, we could surge up to
    approximately 40,000 new accessions. However, that would be for
    a short time period, when we start burning people out with the
    same type of recruits per recruiter per month that we had back
    in 1999 when we missed the goal. We are poised for a surge, but
    not to sustain.
        Part of what this long haul task force has done is that it
    looked at what it will take for different levels of accessions.
    Some of it will involve, as my counterparts have said,
    additional incentives. We will need more marketing emphasis out
    there to reach and make sure the American public is aware of
    our needs, and we will also need to plus up our recruiter
    numbers.
        Then, as General Brown was mentioning, that is only the
    front of the pipeline here, sir. We would have to look at the
    rest of our pipeline, which involves physical plants,
    throughput at our different training facilities, bed space,
    meals, you name it, everything involved logistically putting
    people through our training pipeline.
        But we are poised to do that should we be given the green
    light. Thank you, sir.
        Senator Cleland. Thank you.
        I really do believe that we are approaching a critical
    point here in terms of management of our personnel with the
    missions that we have picked up. I was concerned back with the
    Bosnian incursion. Then I was additionally concerned with the
    expansion into Kosovo and the Balkan war. Now I am really
    concerned with the war in Afghanistan and in effect a permanent
    war against terrorism, which is our worst nightmare. It drives
    your planners nuts, it drives us nuts. What is the end game,
    how many people, go where, do what? All those questions are on
    the table.
        I am beginning to be concerned about burnout. General Le
    Moyne, great commander of our infantry school down at Fort
    Benning, thank you for your service there. I am beginning to
    pick up things about assignments to Korea, where we have been
    in effect manning the ramparts for well over 50 years at a
    pretty high rate of readiness and focus, which is still to some
    extent required. As they say, ready to fight tonight. That is a
    tremendous strain on the people there.
        General Le Moyne, I hear that officers, senior enlisted,
    are beginning to turn down assignments to Korea, leadership
    opportunities, promotional opportunities, command
    opportunities, everything that we train everyone to want. When
    it seems to come to Korea, there is a pushback, there is a
    backoff, there is termination of service.
        I wonder in terms of assignment--I guess it has to do with
    the officer corps--if the Army has thought about maybe a 12-
    month assignment instead of a 2-year assignment there. I am
    sure you have looked at this from time to time, and your good
    colleague there may want to comment. With all the other
    commitments around the world the United States Army has and the
    pressure that the people in Korea feel, is there some ray of
    hope here that you could give us in terms of some hope that we
    will not see burnout to the extent that we are seeing it now?
        General Le Moyne. Yes, sir, I can address it specifically
    Army-wide and also about Korea. We are watching our force
    requirements very carefully, sir, and then moderating that both
    with the Guard and Reserve callups and our Active force to see
    what the balance is. As we have said earlier, we are looking at
    a 5-year focus right now.
        As the force requirements generate from that, we will see
    what the force availability is. From that, sir, we will have to
    make the adjustments. We may change our structure based on
    that. We may come to you and request permission to adjust our
    Guard or our Reserve and our Active forces.
        Specifically for Korea, sir, we had a spike last year in
    command declinations. Specifically, we had five for Korea in
    the brigade command level, which surprised us. Three officers
    turned down the same command and two officers turned down a
    second command. It made us look at how we do our notification
    process and the options those officers have. We have changed
    that process to give them more latitude, so it is not a career-
    ender, so they have time to discuss it with their families and
    their extended family and look at the impacts across-the-board.
    We think this will make a difference for us. Those policies
    went into effect this year.
        We had a no-show rate in Korea of 21 percent. That is now
    down to 17 percent for all people on orders. Most of that is
    predicated on, a soldier gets orders, and his commander has an
    alert notice to go somewhere else; the commander will ask us to
    take them off orders to keep that soldier to do something else
    for a 6-month or a 12-month period. But that is now down to 17
    percent.
        Better news is the fact that the requests to extend in
    Korea has risen. We implemented a $2,000 bonus for enlisted
    personnel that want to extend in Korea and that has increased
    their extensions about 10 percent. That shows a very positive
    sign for us. We are looking at other options we can do to
    increase that.
        Senator Cleland. Thank you.
        General Brown, can we talk a little bit about integration
    and pilots?
        General Brown. Yes, sir. You have hit on a real key issue
    for both the Army and the Air Force, since we have the bulk of
    the folks stationed in Korea. I will go into the pilot side,
    too. I just came from being the commander of the personnel
    center, which is down in San Antonio, and our main job there is
    handing out assignments and promotions, all the execution part
    of the personnel business. I will tell you that the single
    biggest problem we have in the assignment business is putting
    those 10,000 folks onto those remote assignments in Korea.
        That is probably one of the single toughest issues driving
    our assignment system.
        We have been constantly looking at what can we do about
    that, looking at incentives that we can give for a Korea
    assignment. We are clearly a much more married force, as all of
    us are today, than we were when we were all younger. We recruit
    the individual, we retain the family. The biggest problem with
    the Korea assignment is the bulk of the people that go there go
    without their families. We have folks who continually raise
    their hand and go, but that is a tougher issue today than it
    ever was before in our past.
        We need to look at more incentives, more ways to encourage
    folks to serve us there, because we still have heavy
    requirements.
        The pilots that go to Korea, they actually enjoy the tours,
    and once they get there they have some of the best flying that
    they get and some of the top-notch operational flying. But many
    of them go without families, so that makes it difficult. Mama
    ain't happy, nobody is happy.
        So Korea is a tough issue. Across-the-board for our pilot
    force, right now they are more active than they have ever been.
    They are deployed all over the world. You talk to the younger
    jock, he or she that is out in Afghanistan or Saudi Arabia or
    Korea, they love the camaraderie, they love the focus and the
    fact they have a mission, and they know what mission they need
    to accomplish.
        But we are starting to press the burnout, because they have
    been deployed for a long time. They might come home for a few
    months and then they are back deployed again on another mission
    somewhere else. That is a big concern to us in the Air Force
    today.
        Senator Cleland. You are 1,400 pilots short.
        General Brown. Sir, we started fiscal year 2001 a little
    over 1,200 short. We expect to finish this year, 2002, at about
    900 short. Actually we are going to have a net increase of
    around 300 pilots, because our retention is up and, as I
    indicated, we have had 100 pilots come back and rejoin the Air
    Force that had either separated or retired.
        So the trend is in the right direction, but we are still
    under strength in the pilot force. We still must stay with an
    1,100 pilot production every year. We must constantly go out
    and recruit young pilots.
        Senator Cleland. We appreciate Moody Air Force Base
    returning in many ways to its original mission in World War II,
    and that is training pilots.
        General Brown. Sir, it is a great base and one that we
    treasure.
        Senator Cleland. I was in Georgia at Warner Robins Air
    Force Base with General Jumper, who actually went through Moody
    as a young pilot.
        I would like to go across-the-board now and talk about
    aviation and pilot retention. What should we in Congress be
    thinking about that we have not done before in terms of
    retention? This can include the jets as well as chopper pilots
    and so forth. General Humble, do you have any ideas that you
    want to share with us?
        General Humble. Well, sir, coming from Recruiting Command,
    we recruit a lot of pilots, and I have a lot of pilots that
    work for me as recruiters and so forth. I think the family life
    and the salaries we pay are important factors. They do enjoy,
    as General Brown said, the mission and flying, but when it
    comes to the family, pay raises, those things do have an impact
    for our pilots. Having commanded in the operational forces, our
    pilots enjoy their missions, but life at home and what they are
    compensated is awfully important.
        Senator Cleland. Thanks.
        General Parks, anything to add to that?
        General Parks. Yes, sir, I do. We have instituted aviation
    continuation pay and that has had a big impact on the retention
    of our pilots, particularly among our rotary wing and our naval
    flight officers. The challenge that we face, as the Air Force
    faces, are fixed wing pilots because the opportunity for them
    to make a considerably increased pay is there, and it is at a
    later level in their career than it used to be because of the
    opportunities in the aviation industry.
        Obviously, as a direct result of September 11 that has been
    muted somewhat for the near term, but, as has been mentioned by
    a number of folks, these are behavioral decisions, they are
    family decisions. They are people trying to do the very best
    they possibly can. They love what they do. They love the
    service. But economically, they are able to find a different
    opportunity and can net the same result later in their career
    than they have been able to previously.
        Senator Cleland. That was a point that drove me to pursue
    the whole transferability issue as a spousal and family issue.
    The service man or woman, if they are going to stay in, they
    are going to be pretty much taken care of in their 20- or 30-
    year career in the military in terms of opportunities for
    education and bootstrapping and so forth. But the GI bill is
    only 50 percent used by American military forces, and what a
    great tool it is. If you allow for the transfer, all of a
    sudden it becomes an arrow in your quiver to allow the spouse
    to be educated.
        The concern that I have heard, where that pilot,
    particularly an aviator, has been in 8 or 9 years, they come in
    with tears in their eyes and salute and say: Sir, I have to get
    out. Why? Not because you are scared, not because you do not
    like flying. You love the missions, and you are doing what you
    are trained to do. It is: But my wife and kids, and then it
    goes on from there, particularly the kids. They are thinking
    about, if I stay in 13 more years or so, how am I going to
    educate Sam and Suzy, where am I going to get the money and so
    forth.
        All of a sudden, about that particular period of time, it
    seems to me, there is a pressure point for senior enlisted,
    senior captains, particularly aviators. They begin thinking
    about the family and particularly the kids. That is why I was
    trying to provide the service secretaries the option of taking
    up the issue of transferability, so that we could help the
    families to have a reason to stay in, not get out.
        Is that pretty much on target, General Parks, as far as you
    know?
        General Parks. Sir, I appreciate your creativity in looking
    at that, as you alluded to, the latitude to look at things
    differently in the way we package them. We think that this
    transferability idea may well be very popular. We are working
    with OSD in that regard and going to do an internal poll to
    find out the desirability of the MGIB transferability vis a vis
    our selective reenlistment bonus vis a vis the savings
    education program, the U.S. savings bond plan, to see what the
    take rate would be, what the interest level is, following which
    then we can go out and budget for that, because of course we
    are not currently budgeting for that.
        Yet the other side, we have to balance that against the
    aspect of the desire to have that for all marines, because
    otherwise we create different communities of the haves and
    have-nots. So these are very delicate ecosystems that we are
    dealing with and we have to make sure that we get it right.
        Senator Cleland. We would appreciate that feedback from all
    of you here. It is just we are all struggling with the same
    bear and some have a foot, some have a neck, and we see it
    differently. But any feedback you can give the committee based
    on your studies, your polling data, your surveys, and your
    feedback from the troops would be welcome.
        Admiral Ryan, any particular comment on this point,
    particularly in relation to aviators? Are we doing good things
    by our aviators? What else can we do?
        Admiral Ryan. I would say first of all, to echo what
    General Brown has said, we have a shortage of 600 pilots in the
    Navy. It was not necessarily a retention problem initially. It
    was that we did not bring enough in the mid-1990s, so we are
    short 600 pilots right now.
        What has helped is the support of Congress in giving us the
    bonus program and last year allowing us to offer the bonus 1
    year early. We have a 10 percent increase in our pilot
    retention rate overall since we have implemented the bonus
    program.
        What the CNO and the Secretary of the Navy are trying to do
    is also take on the issue that you alluded to, the concern over
    the quality of service, as we call it: Do they have a good
    plane to fly with plenty of parts and plenty of gas? Do they
    have a good mission, and have we balanced their time between
    deployments?
        As we have gone from a 600-ship Navy to a 315-ship Navy, we
    have gone from having 20 percent of our ships deployed to
    having one-third of our ships deployed, as they are today. So
    we are in a very busy tempo of operations. What we need to do
    is keep that in balance and make sure that we provide quality
    service for those men and women and their families.
        I think Congress has done a lot. We are headed in the right
    direction with the program that we have now. I think we just
    have to sustain it.
        Senator Cleland. Thank you.
        Admiral Voelker, anything you would like to add?
        Admiral Voelker. Nothing to add, Mr. Chairman.
        Senator Cleland. General Le Moyne?
        General Le Moyne. Sir, we are about 500 warrant officers
    short. Most of those are aviators. We have had a selective
    recall for those that wanted to come back in. That has had some
    success for us. We have had continuation of service to allow
    those to stay that were not subject to promotion. Like the
    other services, we have added to our aviation incentive pay at
    the mid-career level and that is having an impact on us.
        We also have an initial entry program for our recruiters to
    enlist young men and women who want to join the Army to be
    aviation warrants. Mike handles that for us, sir. I will let
    him address that.
        Senator Cleland. Thank you.
        General Rochelle. Sir, thank you for the opportunity. That
    is a very popular program. It is our means within the Army to
    expand rather quickly our aviation warrant officer assets. As
    General Le Moyne said, we have both technical warrants, who are
    military intelligence and other specialties as well as
    aviators, but we are the only service that allows an individual
    to walk right out of a high school graduation ceremony and
    literally, if you will, into the front seat or cockpit of a
    helicopter or a fixed wing aircraft. That is a powerful seller
    for us, very powerful.
        Senator Cleland. Thank you very much.
        We will end the hearing now. I just want to thank you all
    for your service considering the tremendous pressure that you
    are under, to take all of these challenges and try to meet them
    up with resources and innovative ways to keep our military
    staffed with the best people in the world.
        Thank you very much for coming. The subcommittee is
    adjourned. Thank you.
        [Questions for the record with answers supplied follow:]
                   Questions Submitted by Senator Carl Levin
                               nascar sponsorship
        1. Senator Levin. Admiral Ryan, the Navy has experienced great
    success using NASCAR sponsorship to support its retention program.
    Other services report even greater success using NASCAR sponsorship as
    a recruiting tool. It is apparent that NASCAR racing appeals to the
    target audience for our military recruiters.
        Has the Navy considered expanding is NASCAR sponsorship to support
    its recruiting effort?
        Admiral Ryan. Navy has considered expanding sponsorship to support
    recruiting but has chosen to remain in other advertising venues (such
    as television and radio). Research by Navy's recruiting staff and our
    advertising agency has shown that the Craftsman Truck Series is not the
    venue to reach the target market. However, the recruiting advertising
    team is watching the NASCAR retention initiative closely. Given the
    limited advertising budget and the cost of a NASCAR or affiliate
    sponsorship, participation would result in significant cuts in other
    advertising venues.

        2. Senator Levin. Admiral Ryan, the Navy has experienced great
    success using NASCAR sponsorship to support its retention program.
    Other services report even greater success using NASCAR sponsorship as
    a recruiting tool. It is apparent that NASCAR racing appeals to the
    target audience for our military recruiters.
        Why does the Navy limit NASCAR sponsorship to its retention
    program?
        Admiral Ryan. The Navy has limited its NASCAR sponsorship to
    retention because it has not demonstrated a competitive return on
    investment compared to other recruiting advertising efforts. Research
    by Navy's recruiting staff and our advertising agency has shown that
    the Craftsman Truck Series is not the venue to reach our target market.
    The extent of the retention office's successful sponsorship has been
    difficult to gauge. However, we are watching this effort with interest.
    Given the limited advertising budget for CNRC and the cost of a NASCAR
    or affiliate sponsorship, participation would result in significant
    cuts in other advertising venues (such as television and radio).
                                     ______

                  Questions Submitted by Senator Wayne Allard
                                   stop loss
        3. Senator Allard. General Brown, in your written testimony, you
    state that ``it is imperative that we address the need to meet our
    warfighting requirements in the near term to enable the release of stop
    loss specialties. . .'' Additionally, the Air Force Chief of Staff's
    message on September 22, 2002 stated: ``I do not take this
    extraordinary step lightly and we will remove stop loss provisions as
    soon as operational requirements allow.'' I commend the Air Force for
    permitting members to request waivers to this stop loss, and I
    understand that to date the Air Force has approved 80 percent of the
    stop loss waivers. However, I'm concerned about the remaining 20
    percent who haven't been approved. These men and women have served
    their country proudly, and deserve to be treated fairly and
    consistently. What factors are considered when granting a waiver from
    stop loss?
        General Brown. By direction of the Secretary of the Air Force for
    Manpower and Reserve Affairs, waiver approval/disapproval authority
    resides with commanders and vice commanders of our major commands
    (MAJCOMs). The decision to have this authority maintained at this high
    level was multi-fold: (1) these senior leaders have knowledge regarding
    current AF and MAJCOM requirements; (2) assigning them waiver authority
    assures they remain in touch with the field; and (3) offers more
    consistent approval/disapproval actions from MAJCOM to MAJCOM. Primary
    factors each commander considers prior to rendering a waiver decision
    are current mission requirements, manning, backfill availability, and
    personal issues (family, job, etc).

        4. Senator Allard. General Brown, for those members who are in
    critical career fields, how is the Air Force ensuring that authorities
    granting waivers are being consistent across the Air Force?
        General Brown. Our primary tool to aid in the consistency of such
    decisions is maintaining approval/disapproval authority at the major
    command commander and vice commander level. This limits the number of
    ``voices'' in the process. In addition, we have suggested those items
    which should be considered in the approval/disapproval process (current
    mission requirements, manning, backfill availability, and personal
    issues).

        5. Senator Allard. General Brown, what steps is the Air Force
    taking to enable the release of stop loss specialties?
        General Brown. As of 9 April, we have conducted three full reviews
    of specialties to determine which could be released from stop loss
    without mission degradation. We plan to continue these reviews every 60
    days. During each review, we solicit input from each MAJCOM, Air Staff
    and Secretariat functional, Air Force Reserve, Air National Guard, and
    the Air Force Personnel Center. These inputs are reviewed along with
    data on requirements, manning, and mobilization and release
    recommendations are made to the CSAF and SAF/MR for approval. To date
    we have released 61 officer and 99 enlisted specialties from stop loss.
                                     ______

                  Questions Submitted by Senator Susan Collins
                        air force warfighting activities
        6. Senator Collins. General Brown, in your testimony you stated
    that the Air Force is looking at ways to move more personnel from
    support activities (``the tail'') to warfighting activities (``the
    tooth''). Please discuss further, the options you're currently
    reviewing to accomplish this.
        General Brown. The Air Force is actively examining the additive
    requirement impacts brought on by Operations Noble Eagle and Enduring
    Freedom. The initial work is focusing on how the Air Force is
    structured to meet the six AF core competencies: aerospace superiority,
    agile combat support, global attack, information superiority, precision
    engagement, and rapid global mobility. We are examining these areas to
    determine if some military authorizations could be reallocated to these
    military core competencies and the resulting vacancies converted to
    civilian or contractor support.

                           military recruiter access
        7. Senator Collins. Sergeant Gwyn, Petty Officer Piatek, Sergeant
    Parker, and Sergeant Quintana, last year (fiscal year 2001) the
    National Defense Authorization Act contained a provision, starting in
    July 2002, which would require all secondary schools to allow military
    recruiters access to campus and school directories for recruiting
    purposes. This committee continues to follow the issue, and I would
    like to ask each of you about your current ability to access secondary
    schools campuses and their directories. Is the word getting out, in
    regard to the fiscal year 2001 law requiring access, and if granted
    access, how are these ``tools'' assisting you in your job as a
    recruiter?
        Sergeant Gwyn. It is better than it used to be. Every month the
    number of schools that deny access is being reduced. My understanding
    is that there will be fewer than 500 schools that deny access by July,
    down from over 6,000. The reasons schools deny access are varied, which
    makes a blanket solution difficult. I think recruiting personnel should
    continue to make an effort to meet with educators, guidance counselors,
    and school board members as often as possible, to keep the lines of
    communication open.
        In my area, there are six high schools. Most are good about
    allowing us access, but one of the schools follows the letter of the
    law. That is, they only allow us access 2 days a year, 1 day each
    semester. On that day we're allowed into the cafeteria to set up a
    table display where the students can come up to us. The schools still
    see us as pulling their students away from the college track, so we
    don't get directory information. Sometimes we get a list of names and
    addresses, no ages, no phone numbers--so we can send out a mailing.
        What would help? I guess a good definition of the terms ``access''
    and ``directory information'' written into the law.
        Petty Officer Piatek. The new legislation is a great step in the
    right direction and will enable recruiters to contact more possible
    candidates. I have approached the principals of all of my schools
    regarding their current policy. Each has responded in similar fashion
    stating that a Board of Education Policy restricts release of their
    name lists and that name lists will not be provided to anyone for any
    reason. My concern is that the law allows school boards to vote and if
    the majority decides not to, name lists do not have to be released.
    Access to name lists would free up a considerable amount of time that
    is currently spent obtaining the same names through other methods.
    Access to name lists does not force students to join the military, but
    simply allows them to become aware of career opportunities available to
    them through military service.
        Sergeant Parker. Yes, the word is getting out in regard to the
    fiscal year law requiring access. When directory information is
    granted, it greatly assists me in doing my job as a recruiter.
        Sergeant Quintana. Yes, it has become increasingly easier to access
    schools.

                                recruiting tools
        8. Senator Collins. Sergeant Gwyn, Petty Officer Piatek, Sergeant
    Parker, and Sergeant Quintana, I would like to extend my appreciation
    for your service to our country in your difficult job as a recruiter.
    Congress has looked and continues to look at military personnel quality
    of life. In recent years we have increased pay and housing allowance
    and established healthcare initiatives to provide ``TRICARE for Life.''
    These are part of an overall benefits package to provide our men and
    women in uniform a quality total compensation package. As a recruiter,
    are these initiatives helping in your ability to recruit quality
    personnel? Further, if required, what other tools are needed to recruit
    these highly skilled candidates?
        Sergeant Gwyn. As the word gets out, people understand that the
    military is trying to be more competitive in terms of total benefits.
    Anytime recruiters talk to prospects about the Army, they get questions
    about lifestyle and medical care. The single prospects ask about the
    barracks, education services, and entertainment. Questions about
    housing, the commissary, and medical care more often come from the
    married applicants, those who have a family.
        We need state-of-the-art portable computers and cell phones to
    demonstrate in a visible way how ``high tech'' we are. We need to keep
    our stations in good shape and to be located in high traffic areas.
        As for recruiting highly-skilled candidates, we need to keep
    monetary incentives attractive, because highly-skilled candidates have
    so many options to choose from.
        Petty Officer Piatek. Quality of life is extremely important to
    potential military applicants. They ask ``What are living conditions
    like?,'' or ``What is the food like?,'' and so forth. I find myself
    describing military life as an unbeatable package deal. No one thing
    makes the applicant join; it is usually a combination of college
    benefits, pay, training, trade experience, etc. TRICARE for Life is
    great, but most single young applicants don't care about health
    benefits. They are young and feel invincible. Pay is a much larger
    factor, and despite recent improvements, there is still need for
    improvement to effectively compete with the civilian sector. The most
    common reasons a prospect does not join are the desire to continue
    their education and the military's low starting salary. I believe
    improved compensation packages would greatly enhance our recruiting
    abilities.
        Sergeant Parker. Yes, these initiatives help me in my ability to
    recruit quality personnel. Quality day care on base would be another
    tool that would greatly enhance my ability to recruit highly skilled
    candidates. The day care must be affordable, certified, and accessible.
    As most young marines in their first enlistment are married with
    children, quality day care would increase job effectiveness, provide a
    healthy home environment, and assist in the recruitment of new marines.
        Sergeant Quintana. Absolutely. Pay and healthcare are two issues
    recruits often ask about. With regard to other needed tools, I think
    education is the benefit prospective recruits most often ask about. A
    continued focus on college loan repayment, funding for tuition
    assistance, and a healthy Montgomery GI Bill make it much easier to
    recruit.

                               aviator shortfall
        9. Senator Collins. Admiral Ryan, General Brown, Admiral Voelker,
    and General Deal, in your testimony you provide information on
    retention shortfalls of aviators (Navy 600 and Air Force 1,200 aviator
    deficit). Since the events of September 11, you also state that these
    shortfalls have decreased somewhat, because numerous aviators have
    decided to stay on active duty service in support of the global war on
    terrorism. Further, you state that recruitment goals for aviators have
    been met for fiscal year 2002. It appears that the quality of service,
    quality of life, and civilian opportunities are part of a complex
    retention problem.
        Could you elaborate on initiatives your services are taking to
    create more favorable conditions for quality of service (i.e. aircraft,
    spare parts for aircraft, OPTEMPO, etc.) and compensation packages for
    this critical skill?
        Admiral Ryan and Admiral Voelker. Aviators are staying Navy at the
    highest rate in 12 years and their decision to do so is based on a
    combination of factors. The 68 aviator resignations to date for fiscal
    year 2003, represents a 50 percent decrease from this point in fiscal
    year 2002. Aviation retention, currently at 42 percent, is 5 percentage
    points higher than fiscal year 2001 and 11 percentage points higher
    than fiscal year 1999. Additionally, 94 aviators have pulled their
    resignation requests since September 11. Our ability to recruit the
    next generation of pilots and Naval Flight Officers (NFO) has also seen
    a dramatic turnaround. Last year, at this time, Navy still needed to
    recruit 66 NFOs and 51 pilots to meet fiscal year 2001 accession goal.
    Not only have we met fiscal year 2002 accession goals, but we have
    accessed 104 NFOs and 256 pilots for fiscal year 2003, or 38 percent
    and 72 percent of fiscal year 2003 goals, respectively.
        Much of this success can be attributed to a variety of robust
    compensation initiatives including increases in basic pay, career sea
    pay, and Aviation Career Continuation Pay (ACCP), as well as the
    opportunity to participate in the Thrift Savings Plan.
        Navy's primary weapon to retain aviators continues to be ACCP.
    Introduced in November 1999, this has been Navy's key retention tool in
    meeting current and projected aviator requirements and has proven
    successful in improving aggregate aviator retention by 11 percentage
    points above pre-ACCP levels.
        While extremely pleased with the turnaround in aviator retention,
    we remain 600 aviators short of overall requirements, and 1,000 short
    of junior aviator requirements (O-1 to O-3). Consequently, we must
    retain in excess of historic requirements to counter this deficit and
    ACCP will be our most effective tool for accomplishing this.
        Navy continues focusing on improving availability of aviation spare
    parts. This has contributed to a 27 percent reduction in material
    backorders and over 40 percent reduction in average customer wait time
    to fill critical requirements in the past 2 years. Also contributing to
    improving trends is the Defense Logistics Agency's aviation related
    inventory augmentation initiative. It committed $500 million across DOD
    toward aviation material, $190 million of which is for Navy peculiar
    material.
        Naval aviation is working hard to ensure we have enough pilots,
    NFOs, and crew to fight our Nation's global war on terrorism. Community
    performance and retention data show these efforts are paying off.
        General Brown. The Air Force has a multi-faceted approach to ``hold
    the line'' on the pilot shortage amidst today's challenging retention
    environment. These initiatives include both management initiatives to
    improve the quality of service, as well as compensation initiatives.
    The specific steps taken to address the pilot shortage include
    increasing compensation for pilots (through the pilot bonus program),
    sustained pilot production at 1,100 per year, increasing the active
    duty service commitment for pilot training from 8 to 10 years, working
    to better manage OPTEMPO through the Expeditionary Air Force construct.
        The pilot bonus program, officially called the Aviator Career
    Continuation Pay program, has proven to be a viable, cost-effective,
    and vital means to positively influence the retention behavior of
    experienced Air Force aviators, ensuring better force predictability
    and ultimately protecting inventory and combat capability. Of note, the
    rate at which pilots have accepted agreements to remain in the Air
    Force has increased significantly since September 11. Among those
    initially eligible to sign an agreement, the ``take rate'' for long-
    term agreements (meaning greater than 5 years) has risen from 30
    percent in fiscal year 2001, to over 43 percent thus far in fiscal year
    2002. Our short-term ``take rate'' (meaning 3 year agreements) has also
    improved. When combined, the acceptance rate for both long-term and
    short-term agreements totals over 52 percent of the initially eligible
    pilots to this point in fiscal year 2002. In addition to Aviator Career
    Continuation Pay (which rewards pilots who make long-term, agreements
    to remain in the Air Force with a bonus of $25,000 per year in
    additional compensation) a number of other compensation initiatives
    also contribute, either directly or indirectly, to increasing pilot
    retention. These include:
    Aviation Career Incentive Pay (ACIP) [a.k.a. ``flight pay'']
            - Air Force, along with the other services and OSD, is
            exploring proposed increases to ACIP.
    Bunning Amendment
            - Fiscal year 2002 NDAA provided authorization to maintain
            special pays at ``unreduced rates'' that would normally
            decrease at specific intervals as a result of stop loss.
            - This authorization would affect ACIP and some medical special
            pay recipients.
            - Air Force is currently exploring options and seeking approval
            to implement this authority.
        Other Initiatives
        In addition to compensation and management initiatives, the Air
    Force is also working to improve aircraft maintenance and manage
    Operational TEMPO, both of which affect retention.
        The Air Force is working to create ``world class'' maintenance and
    repair operations at the depots. Getting aircraft, engines, and parts
    repaired and returned to our operational units faster is a big help in
    improving the readiness of our forces. This provides the airlift system
    more available airlift assets to better manage the critical flow of
    airlift cargo moving around the world in support of contingency
    operations.
        Air Force efforts to manage Operational TEMPO have made significant
    gains in recent years through the adoption of the Expeditionary
    Aerospace Force (EAF) construct; however, those efforts have been
    superceded by the urgent requirements of the worldwide war on
    terrorism. Increased operations in support of Noble Eagle and Enduring
    Freedom coupled with previous commitments (Operations Northern Watch
    and Southern Watch) have dramatically increased the demand for forces.
    The Air Force is managing this through the EAF and by the Total Force
    involvement of the Guard and Reserve, especially in the area of
    Homeland Defense.
        Over the past several years, officers with critical/technical
    skills experience have separated from military service to seek higher
    wages in the civilian job market. In an effort to reverse this negative
    trend, the Air Force pursued the new Critical Skills Retention Bonus
    (CSRB) to offset the approximate $10,000 pay difference. We identified
    five officer skills in most need for a CSRB designation: Developmental
    Engineers, Scientific/Research, Acquisition Program Mangers,
    Communications-Information Systems, and Civil Engineers.
        These officers will execute a written agreement to remain on active
    duty for at least 1 year. The CSRB will be paid to members with 4-13
    years of commissioned service consisting of a $10E; per year bonus for
    4-year agreements. Members who have completed 11, 12, or 13 years of
    commissioned service would receive 3-, 2-, and 1-year agreements
    respectively also at $10,000 per year.
        The Air Force is also exploring uses of the CSRB for enlisted
    members as a possible expansion of the Selective Reenlistment Bonus.
        The Air Force has long recognized that it recruits individuals, but
    retains families. To aid in this effort, the Air Force focuses on
    numerous initiatives that integrate all aspects of Air Force life into
    a common quality of life emphasis. Our quality of life core priorities
    are necessary manpower, improved workplace environments, fair and
    competitive compensation and benefits, balanced TEMPO, quality health
    care, safe and affordable housing, enhanced community and family
    programs, and improved educational opportunities. Examples of a few of
    our key initiatives follow. To enhance both recruitment and retention,
    the Air Force provides initial enlistment bonuses to 54 percent and
    reenlistment bonuses to 82 percent of the enlisted skills. Also in the
    area of compensation, out-of-pocket housing expenses are being reduced
    in fiscal year 2002 from 15 percent to 11.3 percent, with a projection
    of 0 percent by 2005.
        Housing is a top quality of life priority for both accompanied and
    unaccompanied Air Force people. In fiscal year 2002, the Air Force
    reduced the dormitory deficit by 1,300 rooms and renovated 300
    inadequate rooms. We will continue this trend in fiscal year 2003 by
    reducing the deficit by an additional 1,400 rooms while renovating
    another 200 rooms. At the same time, the Air Force made significant
    strides in family housing in fiscal year 2002 by reducing inadequate
    family housing units by 13,000. Additionally, the Air Force is
    currently constructing 90 Temporary Lodging Facilities (TLFs) at 3
    bases and in fiscal year 2002 funded construction for 190 units at 4
    bases.
        As a final example, the Air Force considers fitness to be a force
    multiplier; therefore our fitness centers must reflect this concept. To
    that end, significant investments in fitness facilities, equipment, and
    programs--$183 million in fiscal year 2000-2005 in quality of life
    funding and $55 million in MILCON funding this year--have been made
    because of the direct impact fitness has upon readiness.
        The most critical factor affecting readiness today is the men and
    women defending our Nation. Our people are crucial to the integrity and
    sustainment of our Nation and our way of life. Quality of life is an
    integral piece of the transformational Air Force. Quality of life
    enables the Air Force to recruit and retain the best people in the
    right skills who think differently and can adapt quickly to new
    challenges and unexpected circumstances. We must ensure that our people
    understand that the Nation is grateful for what they do and that they
    are appropriately compensated.
        General Deal. From our recruiting perspective, none of the items
    mentioned are normal considerations for candidates applying for
    aviation duty via the Air Force Officer Training School program. Air
    Force recruiters do ``sell'' the Air Force as a way of life to aviation
    candidates and highlight the many quality aspects of life in the Air
    Force to include training, additional educational opportunities,
    aviation pay, the high-tech aircraft, etc. However, we also expect our
    recruiters to let all applicants, for officer or enlisted programs,
    know about the expeditionary nature of military service--we rarely find
    this diminishes the interest of an applicant. Specifics on Air Force
    initiatives relating to quality of service and compensation are best
    answered by General Brown.

        [Whereupon, at 11:30 a.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2003

                                  ----------

                            THURSDAY, APRIL 11, 2002

                                   U.S. Senate,
                             Subcommittee on Personnel,
                                   Committee on Armed Services,
                                                        Washington, DC.

                          MILITARY PERSONNEL BENEFITS

        The subcommittee met, pursuant to notice, at 9:42 a.m. in
    room SR-232A, Russell Senate Office Building, Senator Max
    Cleland (chairman of the subcommittee) presiding.
        Committee members present: Senators Cleland, E. Benjamin
    Nelson, McCain, and Hutchinson.
        Committee staff member present: David S. Lyles, staff
    director.
        Majority staff members present: Gerald J. Leeling, counsel;
    and Christina D. Still, professional staff member.
        Minority staff members present: Patricia L. Lewis,
    professional staff member; and Richard F. Walsh, minority
    counsel.
        Staff assistants present: Dara R. Alpert and Daniel K.
    Goldsmith.
        Committee members' assistants present: Brady King,
    assistant to Senator Kennedy; Andrew Vanlandingham, assistant
    to Senator Cleland; Eric Pierce, assistant to Senator Ben
    Nelson; Christopher J. Paul, assistant to Senator McCain;
    Charles Cogar, assistant to Senator Allard; James P. Dohoney,
    Jr. and Michele A. Traficante, assistants to Senator
    Hutchinson.

           OPENING STATEMENT OF SENATOR MAX CLELAND, CHAIRMAN

        Senator Cleland. Good morning, everyone. The subcommittee
    will come to order. Senator Hutchinson and I welcome you to the
    hearing to receive testimony regarding military personnel
    benefits. This is the last of our Personnel Subcommittee
    hearings for this season as we prepare for the Fiscal Year 2003
    National Defense Authorization Act.
        The subject of this hearing, military benefits, is most
    appropriate for our final hearing. I started thinking about the
    relationship between benefits and military demographics when I
    was working on my proposal to authorize servicemembers to
    transfer unused Montgomery GI Bill benefits to family members.
    I realized the GI Bill was designed for a conscripted military,
    mostly single, mostly men, who served for a short time and then
    returned to civilian life--in other words, the disposable
    force.
        The GI Bill then provided an excellent educational benefit
    and other benefits to these veterans when they were in effect
    retired or when they were discharged from the military to their
    civilian occupations.
        The composition of the services, though, has changed a lot
    since then. A mostly male, single, conscripted force has
    evolved to a mostly married force that includes more women,
    families, servicemembers married to servicemembers, single
    parents, and single servicemembers. Today's Active-Duty Force
    has many young adults who are managing major personal
    responsibilities, for example raising children and supporting a
    spouse's career, coupled with the demands and stress of
    military service. This includes frequent time away from family.
    There are frequent moves that can disrupt family and social
    support networks, and concerns about education and health care
    for family members, too.
        The GI Bill transferability provision is the first step in
    bringing the GI Bill benefit in line with these changes in the
    demographics of the military. Senator Hutchinson and I decided
    that we should also look at other benefits to see if they have
    kept pace with the changing demographics. So last August we
    asked the Comptroller General to review current military
    personnel benefits to determine whether they are properly
    structured to support today's forces.
        Our first witness today, Mr. Derek Stewart of the U.S.
    General Accounting Office (GAO), is here to report back on this
    request. Joining him on our first panel is Charlie Abell, a
    very able member of the administration and the Assistant
    Secretary of Defense for Force Management Policy, who hopefully
    will respond to the GAO report and talk to us about the
    adequacy or inadequacy of military personnel benefits.
        Our second panel consists of officers of organizations that
    represent our servicemembers and their families. These
    witnesses are here to discuss personnel benefits from the
    perspective of the users of these benefits.
        This is my sixth year on this subcommittee. As I look back
    over the past 5 years, this subcommittee has done a lot to
    improve the pay and benefits for our service men and women. I
    would like to express my sincere appreciation to the former
    chairmen of this subcommittee with whom I have served, Senators
    Kempthorne, Allard, and Hutchinson. Every year we responded to
    the concerns of our servicemembers. We heard our servicemembers
    say that their pay was inadequate and not competitive with the
    civilian market. We responded by approving pay raises that
    totaled over 20 percent over the last 5 years and put into law
    a provision that requires pay raises at least a half a percent
    above inflation through fiscal year 2006.
        We heard the pleas of our servicemembers that they were not
    fully reimbursed for off-post housing expenses. We responded by
    removing the requirement that members pay 15 percent of housing
    costs out-of-pocket and authorized an increase in the Basic
    Allowance for Housing (BAH) in order to reduce out of pocket
    housing expenses to zero by fiscal year 2005.
        We also directed the Secretary of Defense to implement a
    program to assist members who qualify for food stamps with a
    special pay of up to $500 a month. This is a special interest
    of the Senator from Arizona.
        We heard the concerns about the REDUX retirement system. We
    responded by authorizing servicemembers to choose between the
    traditional high-three retirement system or to remain under
    REDUX with a $30,000 bonus. We also authorized our military
    personnel to participate with other Federal employees in the
    Thrift Savings Plan.
        We heard concerns about health care for our active duty
    members and their families. We responded. We enacted provisions
    that improve the quality of health care and access to health
    care providers. We authorized TRICARE Prime Remote for families
    of active duty personnel assigned where military medical
    facilities were not available. We eliminated copayments for
    active duty personnel and their families when they received
    care under the TRICARE Prime option.
        We heard the military retirees when they called our
    attention to the broken promise of health care for life. We
    started with a series of pilot programs which included access
    to the Federal Employees Health Benefit Program (FEHBP),
    TRICARE Senior Supplement, and Medicare subvention. Ultimately
    we found an even better answer--TRICARE for Life. Under this
    program, TRICARE pays virtually everything that Medicare does
    not pay. This is the best health care program for Medicare
    eligibles in the United States. We are really proud of this
    program.
        We responded to concerns of our absentee military voters by
    passing laws making it easier for military personnel and their
    families to vote in Federal, State, and local elections.
        Recruiting and retention ebbed and flowed during this 5-
    year period. We responded by authorizing special pay and
    bonuses, as well as innovative recruitment initiatives. We also
    passed laws that would require high schools to give our
    military recruiters access to student directory information and
    the same access to students as the schools give to colleges and
    potential employers.
        I know that we recruit individuals, but retain families.
    This committee knows this as well. Both recruitment and
    retention are improving. Just a few years ago, the services
    reported great challenges in meeting recruiting goals, and
    servicemembers were leaving at alarming rates. I like to think
    that the improvement in benefits that I just described passed
    by this committee and by Congress helped to turn our recruiting
    and retention around.
        I understand that the downturn in the economy and the
    terrorist attacks on our Nation also contributed to the
    increase in the desire to serve our Nation. I am anxious to
    hear from our witnesses about whether our current benefits are
    the right ones and structured the right way for today's forces.
    Senator Hutchinson, do you have an opening statement?

                  STATEMENT OF SENATOR TIM HUTCHINSON

        Senator Hutchinson. Yes, thank you, Mr. Chairman. I am glad
    to join you today in welcoming our witnesses. Our first panel
    of witnesses includes someone well known to us here on the
    committee, and I am very delighted that we have the opportunity
    today to receive testimony from Assistant Secretary Abell about
    military personnel benefits and the fiscal year 2003 defense
    budget. Charlie, we welcome you back, and I appreciate all the
    assistance that you gave the committee and particularly gave me
    during your service here on the Hill.
        I understand the committee has received your nomination, we
    are going to perhaps be having you back soon, and I know today
    will prepare you for that session. So we welcome you.
        I would also like to welcome Mr. Stewart from the General
    Accounting Office, who, as the chairman said, has been
    overseeing a significant review of military benefits for the
    subcommittee. I look forward, Mr. Stewart, to your testimony
    and to the GAO report later this year on this very important
    subject.
        Looking ahead to our second panel today, it is always
    productive and helpful to hear from the Military Coalition and
    its representatives. That is a pleasure as well. You provide a
    great service to your membership and to this committee through
    your advocacy on behalf of military members, retirees, and
    their families. We welcome you today.
        Mr. Chairman, there are many elements of a compensation
    package and those of our military members have changed
    considerably over time. You and I have worked together as a
    team to significantly enhance the key components of pay, health
    care, education, and housing benefits over the past several
    years.
        The written statements of our witnesses today recognize
    many important initiatives that we have taken in these areas to
    improve the attractiveness of military service. Mr. Chairman,
    you have outlined some of those, but it is encouraging to hear
    that those initiatives have worked. Pay comparability gaps have
    narrowed, the defense health care program is fully-funded, and
    TRICARE is working. Current success in recruiting, retention,
    and readiness certainly can be attributed at least in part to
    the commitment of this committee to the men and women of the
    Armed Forces.
        As our witnesses have also pointed out, there are areas
    where there is still room for improvement. We must continue to
    enhance the attractiveness of service and address concerns of
    our servicemembers and their families. We cannot be complacent,
    and we cannot take for granted the dedication and sacrifices of
    our personnel.
        So I thank our witnesses today for the contribution that
    you are making to a very essential dialogue. I ask that Senator
    Allard's statement be included in the record at this time.
        Thank you, Mr. Chairman.
        [The prepared statement of Senator Allard follows:]
                   Prepared Statement by Senator Wayne Allard
        Mr. Secretary, this is always an important hearing, and of course
    there is no time more important than when we have thousands of
    uniformed men and women overseas, in combat or under the immediate
    threat of it, to review their health care, family benefits, and all the
    other things not directly related to combat but vital to warfighting.
        I would also today like to offer my thanks to the departing DC
    Guard men and women who have been contributing to the defense of the
    Capitol these last months. It was sobering, but welcome, to learn of
    their talents and abilities. I thank them for their efforts.

        Senator Cleland. Thank you very much.
        Senator McCain.
        Senator McCain. I have no opening statement, Mr. Chairman.
        Senator Cleland. Thank you very much. Thank you all for
    being here.
        Secretary Abell, we are delighted to have you. It is always
    good to see you, and thank you for your service on this
    distinguished committee. We appreciate all that you have
    brought to the country in terms of your service here and your
    service to our Nation in your current position. I commend you
    for being such a staunch supporter of our troops and their
    families.
        Mr. Stewart, the results of your study will be very
    important to us as we review the military benefit structure to
    see if changes are indeed warranted. I think your work will be
    a reference and a benchmark that will be used for many years to
    come.
        Both of you have provided us with written statements which
    will be included in the record. I would like to now offer you
    an opportunity to make an opening statement, beginning with Mr.
    Stewart's report on the GAO study.
        Mr. Stewart.

     STATEMENT OF DEREK B. STEWART, DIRECTOR, DEFENSE CAPABILITIES
             AND MANAGEMENT, U.S. GENERAL ACCOUNTING OFFICE

        Mr. Stewart. Thank you, Mr. Chairman, members of the
    subcommittee. We are pleased to be here today to discuss
    employee benefits that the Department of Defense provides for
    active duty servicemembers. By employee benefits, I am
    referring to compensation above and beyond the servicemember's
    basic take-home pay, benefits like housing, health care,
    education, et cetera.
        The subcommittee has expressed concerns about whether DOD
    benefits have kept pace with changes in the demographic
    composition of the force and whether these benefits position
    DOD to compete with the private sector for high-quality
    personnel. Because of these concerns, you asked us to determine
    two things: one, the impact of demographic changes on active
    duty benefits; and two, how the military's overall benefit
    package compares with the array of benefits offered by private
    sector firms.
        In addition to these two objectives, we also made several
    observations on DOD's new human capital strategic plan for
    military personnel. This plan also addresses benefits and other
    personnel issues.
        As noted, our testimony today is based on preliminary
    results of our work. We plan to issue a final report to you,
    Mr. Chairman, this summer, and that report will address these
    issues in more detail. I will briefly summarize our findings.
        Mr. Chairman, as you noted, the force has undergone a
    number of demographic changes since the advent of the all-
    volunteer force. It is older, better educated, more diverse.
    But the one most significant demographic change has been the
    increase in servicemembers with family obligations. For
    example, between 1974 and 2000 the Active-Duty Force
    experienced increases in the percentage of married
    servicemembers. There were also increases in the percentage of
    servicemembers with children and single parents.
        More than half the force is married. There are over 600,000
    servicemembers with children. Of the 600,000 members with
    children over 85,000 are single parents, and most of the single
    parents are males--almost 63,000 single fathers.
        Mr. Chairman, we are pleased to report that DOD has
    responded positively to the increased numbers of servicemembers
    with family obligations by incorporating a number of family-
    friendly benefits. We did, however, identify opportunities to
    improve several benefits that affect families. For example,
    while DOD has worked successfully to improve the quality of its
    child care programs, there just is not enough capacity.
    However, the Department is working to meet its child care needs
    by 2005.
        Another area needing attention is DOD's spousal employment
    assistance program. The data we analyzed showed that there are
    almost 60,000 military spouses who are unemployed and seeking
    work. That is over 10,000 officer spouses and over 46,000
    spouses of enlisted personnel unemployed, seeking work. The
    Department also has several initiatives planned to assist
    unemployed military spouses.
        The last area we identified was DOD's maternity and
    paternity program. Up to roughly 20,000 female servicemembers
    become pregnant each year. While new mothers and fathers may
    take time off after the birth of a child, the military does not
    offer extended leaves of absence to new parents. DOD told us it
    does not track the number of servicemembers who separate from
    active duty due to parental leave policies.
        Several years ago we issued a report that showed over 2,000
    women separated due to pregnancy before completing their
    initial enlistment period. Given the increasing number of
    female servicemembers and the growing cost to recruit and train
    servicemembers, DOD may wish to explore this area further.
        Mr. Chairman, turning to our second objective, when we
    compared the military's overall benefit package with private
    sector benefits, we did not identify significant gaps in the
    benefit package offered to active duty servicemembers. As shown
    on a chart to my right--Mr. Chairman and members, I believe you
    have this as a handout as well--the shaded areas represent the
    four core benefits offered by most private sector companies,
    that is, retirement, health care, life insurance, and paid time
    off.

        We determined that the DOD also offers these core benefits
    and more, as you see demonstrated there. Furthermore, we found
    that military benefits in some cases exceed those offered by
    the private sector. For example, benefits such as free health
    care for members, free housing or housing allowances, and
    discount shopping at commissaries and exchanges are not offered
    as benefits to the typical private sector employee.
        In closing, Mr. Chairman, I would like to note that, while
    DOD offers a wide array of benefits to servicemembers, the
    current benefit package has taken shape piecemeal over the
    years in the absence of a strategic approach to human capital
    planning.
        However, DOD is developing a human capital strategic plan
    for military personnel, and they shared a draft of that
    component with us last month. Based on our review, we believe
    the plan is a definite step in the right direction. But it
    lacks elements of a fully-realized human capital strategic
    plan.
        For example, the plan does not address work force
    requirements or gaps. A more fully developed strategic plan
    would identify the skills and abilities needed for DOD's future
    work force and the potential gaps that exist between current
    and future work force needs. Once the work force requirements
    have been identified, then the plan could be used by DOD to use
    pay and benefits as tools to shape the work force and to meet
    the current and future requirements.
        We look forward to working with DOD in the future as it
    refines its plan.
        This concludes my prepared statement, Mr. Chairman, and we
    would be pleased to respond to questions you and the members of
    the subcommittee may have. Thank you.
        [The prepared statement of Mr. Stewart follows:]
                     Prepared Statement by Derek B. Stewart
        Mr. Chairman and members of the subcommittee: We are pleased to be
    here today to discuss the employee benefits that the Department of
    Defense (DOD) provides for active duty servicemembers. By ``employee
    benefits'' we are generally referring to indirect compensation above
    and beyond a servicemember's basic pay.\1\ The overall military
    compensation system is a complex structure of basic military pay,
    special pays, and allowances, as well as employee benefits. (See app. I
    for a list of specific elements of the overall military compensation
    system.) This subcommittee has expressed concerns about whether the
    current benefit package available to active duty servicemembers has
    kept pace with changes in the demographic composition of the force and
    whether the benefit package positions DOD to compete with private-
    sector companies for high-quality personnel. Because of these concerns,
    you asked us to determine (1) the impact of demographic changes on
    active duty benefits and (2) how the military's overall benefit package
    compares with the array of benefits offered by private-sector firms.\2\
    In addition, we have made several observations on the military
    component of DOD's new human capital strategy, which addresses benefits
    and other personnel issues. Our testimony today represents the
    preliminary results of our work. We plan to issue a report to you this
    summer that will address these issues in more detail.
    ---------------------------------------------------------------------------
        \1\ The Bureau of Labor Statistics defines a benefit as ``non-wage
    compensation provided to employees.'' For this testimony, we have
    included such benefits as retirement, health care, and educational
    assistance, as well as certain programs and services that support
    military members and their families, including child care, spousal
    employment assistance, and relocation assistance.
        \2\ For purposes of this review, we obtained data on medium and
    large employers. The Bureau of Labor Statistics defines ``medium and
    large employers'' as those having 100 or more employees.
    ---------------------------------------------------------------------------
                                    summary
        Mr. Chairman, one of the most significant demographic changes in
    the active duty military since the advent of the all-volunteer force in
    1973 has been an increase in servicemembers with family obligations.
    Between 1980 and 2000, at least half of the Active-Duty Force consisted
    of married servicemembers. Furthermore, active duty servicemembers had
    about 1.23 million children in 2000. Although DOD has responded
    positively to these demographic changes by incorporating a number of
    family friendly benefits, opportunities exist to improve some current
    benefits in this area. For instance, while DOD has worked successfully
    to improve the quality of its child care centers, the department has
    identified a need to further expand child care capacity. In addition,
    the department has several initiatives planned to assist military
    servicemembers' spouses who are seeking employment. Furthermore, DOD
    faces challenges in reaching out to servicemembers to increase their
    awareness and use of benefits.
        When we compared the types of benefits offered as part of the
    military's overall benefit package with private-sector benefits, we did
    not identify significant gaps in the benefit package offered to active
    duty servicemembers. Although we did not make direct comparisons
    between individual benefits offered by the military and the private
    sector, we did determine that all the core benefits offered by most
    private-sector firms--that is, retirement pay, health care, life
    insurance, and paid time off--are offered by the military. Furthermore,
    military benefits in some cases exceed those offered by the private
    sector. For example, benefits such as free health care for members,
    free housing or housing allowances, and discount shopping at
    commissaries and exchanges are not offered as benefits to the typical
    private-sector employee. During the 1990s, some servicemembers
    expressed concerns that their benefits were eroding, particularly their
    health care and retirement benefits. In response to such concerns, the
    military benefit package was enhanced. In recent years, for example,
    Congress restored retirement benefits that had previously been cut for
    certain servicemembers. Congress also significantly expanded health
    benefits.
        Although DOD offers a wide array of benefits to active duty
    servicemembers, the benefit package has taken shape piecemeal over the
    years in the absence of a strategic approach to human capital
    management. A well-developed human capital strategy would provide a
    means for aligning all elements of DOD's human capital management,
    including pay and benefits, with its broader organizational objectives.
    Pay and benefits are tools that an organization can use to shape its
    workforce and to meet current and future requirements. DOD officials
    told us they plan to issue a human capital strategic plan in April
    2002. The plan includes a component on military personnel. The military
    personnel strategy, however, lacks elements of a fully realized human
    capital strategic plan. For example, the military personnel strategy
    does not

             link human capital goals with DOD's mission and
            programmatic goals;
             include adequate performance measures for assessing
            the effectiveness of human capital approaches;
             address military workforce requirements or gaps,
            especially for mission-critical skills;
             demonstrate a clear linkage between benefits and DOD's
            ability to recruit and retain a high-quality workforce; or
             address the dissatisfaction that servicemembers have
            expressed about their work conditions.
                                   background
        In fiscal year 2002, Congress appropriated over $100 billion for
    pays and benefits. The basic goals of the military's compensation
    system are to attract, retain, and motivate the number and quality of
    people needed to maintain our national security. Although a unique
    institution, the military nevertheless competes with other
    organizations for qualified people. It is the single largest employer
    and trainer of youth, recruiting about 196,000 individuals into active
    duty in 2001. The military may face increased competition for qualified
    people over the next few years in response to projected labor shortages
    through at least 2010. The U.S. Bureau of Labor Statistics projects
    that the civilian labor force will increase by 12 percent by 2010 while
    total employment will increase by 15 percent.
       demographic changes in active-duty force have influenced military
                                    benefits
        The Active-Duty Force has undergone several demographic changes
    since the draft ended and the military became an all-volunteer force in
    1973. The force has become older and better educated, and the force has
    experienced increases in the representation of minority and female
    servicemembers. The percentage of personnel over age 25 increased from
    about 40 percent of the Active-Duty Force in 1974 to nearly 55 percent
    in 2000. The proportion of enlisted personnel with at least a high
    school diploma increased from about 80 percent of the enlisted force in
    1974 to about 95 percent in 2000. During that time period, the
    percentage of officers attaining a degree beyond a bachelor's degree
    increased from 25 percent to 43 percent of all officers. The proportion
    of minority servicemembers increased from 20 percent to 35 percent of
    the Active-Duty Force between 1974 and 2000, and the proportion of
    female servicemembers increased from 4 percent to 15 percent.
        One of the most significant demographic changes has been an
    increase in servicemembers with family obligations. While reliable
    marital data is lacking for the years immediately following the advent
    of the all-volunteer force, various DOD studies cite statistics showing
    increases in the percentage of married enlisted personnel. According to
    these studies, the percentage of enlisted personnel who were married
    increased from approximately 40 percent of the force in 1973 to
    approximately 50 percent in 1977. After a slight decrease from 1977 to
    1980, the marriage rate increased through the mid-1990s. DOD attributed
    the overall increases in marriage rates to the gradual aging of the
    Active-Duty Force. Between 1980 and 2000, at least half of the Active-
    Duty Force consisted of married servicemembers. Other DOD data also
    indicate that servicemembers today have increased family obligations.
    The percentage of servicemembers with children increased from 43
    percent to 45 percent between 1990 and 2000. During that time period,
    the proportion of single servicemembers with children increased from 4
    percent to 6 percent. Figure 1 shows the composition of the Active-Duty
    Force, by family status, in 2000.

        A significant body of research by the military services shows that
    family satisfaction with military life can significantly influence a
    servicemember's decision to stay in the military or leave. On the basis
    of this research, DOD during the last 2 decades established a variety
    of institutions and services to support military families. For example,
    family support centers were established at installations to deliver
    programs such as personal financial management training, spousal
    employment assistance, relocation assistance, new parent support
    programs, and deployment assistance. Health care benefits for military
    families also have been enhanced. For fiscal year 2001, for example,
    Congress eliminated most co-payments for active duty families enrolled
    in TRICARE Prime (the military's managed care health program) and
    expanded benefits for family members living in remote areas. In the
    area of education, Congress authorized DOD in fiscal year 2002 to grant
    reenlisting servicemembers who possess critical skills the option to
    transfer a portion of their Montgomery GI Bill benefits to their spouse
    and dependents. Since the summer of 2001, DOD has been reviewing its
    quality of life programs in an effort to articulate what it terms a
    ``new social compact'' with servicemembers and their families.
    According to DOD officials, the social compact is needed to ameliorate
    the demands of the military lifestyle, which includes frequent
    separations and relocations, and to provide better support to
    servicemembers and their families. The social compact focuses on
    education, housing, work-life, family and community support, and
    health.
        Although DOD has responded positively to increases in
    servicemembers with family obligations by incorporating a number of
    family friendly benefits, opportunities exist to improve some current
    benefits in this area. DOD has identified needs to expand child care
    and spousal employment assistance. Another potential area for
    improvement is maternity/paternity leave. In addition, DOD faces
    challenges in reaching out to servicemembers to increase their
    awareness and use of benefits.
                                   child care
        Active duty servicemembers have a strong demand for child care. In
    2000, the services had more than 600,000 active duty members with
    children, and about 85,000 of these members were single parents. Of the
    1.23 million military children in 2000, nearly three-fourths were 11
    years old or younger. DOD has placed a significant emphasis on
    improving and expanding its child care system which includes child
    development centers, family care centers, and school-age care programs.
    DOD also operates centers for youths and teens. In 1982, we reported
    that many military installations had child care centers that were not
    suitable for the purpose and did not meet fire, health, and safety
    standards.\3\ Following the passage of the Military Child Care Act of
    1989, DOD worked to improve the quality, availability, and
    affordability of military child care. In 1997, the President praised
    the high quality of the military's child development programs, citing
    improved resources, oversight, and training, as well as a commitment to
    meeting national accreditation standards. Today, 99 percent of the 450
    child development centers the military operates are accredited. DOD is
    working to expand capacity to meet a range of child care needs,
    including initiatives to extend care hours and subsidize the cost of
    obtaining child care at commercial centers. The Department is seeking
    to add 45,000 child care slots to the approximately 176,000 slots that
    exist today. DOD hopes to meet 80 percent of its members' child care
    needs by 2005.\4\
    ---------------------------------------------------------------------------
        \3\ See U.S. General Accounting Office, Military Child Care
    Programs: Progress Made, More Needed. GAO/FPCD-82-30 (Washington DC:
    June 1, 1982).
        \4\ In the early 1990s, DOD established a formula to estimate
    military families' need for child care services. The formula was based
    on the number of children up to age 12 in military families whose
    parents worked outside the home and needed some type of child care. A
    DOD official said the remaining 20 percent of military families with
    young children will not request child care either because the parents
    have alternating work schedules or because relatives care for their
    children. See U.S. General Accounting Office, Child Care: How Do
    Military and Civilian Center Costs Compare? GAO/HEHS-00-7 (Washington,
    DC: Oct. 14, 1999).
    ---------------------------------------------------------------------------
                         spousal employment assistance
        DOD also has begun to pay increased attention to employment
    assistance for military spouses. In 1999, 48 percent of officer spouses
    and 55 percent of enlisted spouses were employed in the civilian labor
    force, while 7 percent of officer spouses and 8 percent of enlisted
    spouses were unemployed and seeking work. According to a March 2001
    study conducted for DOD, working spouses of military servicemembers
    contribute up to 40 percent of the family's income and earn an average
    of 24 to 30 percent less than their civilian counterparts. In part,
    this wage differential, which increases for those with higher levels of
    education, is due to local labor market conditions. Some installations
    are located in remote areas characterized by relatively poor labor
    market conditions. Military spouses also face several other employment
    challenges. For example, frequent relocations make it difficult to
    sustain a career and amass retirement benefits. Junior enlisted
    families face particular financial difficulties as the result of
    housing and transportation costs, the high cost of credit, and child
    care expenses. However, income from a spouse's job can help to mitigate
    some of these problems.
        Although DOD has had a formal spousal employment assistance program
    since 1985, the department has taken a number of recent steps to
    enhance the program.\5\ DOD held a spousal employment summit in 2000 to
    identify needed actions. The Department is focusing on establishing
    partnerships with private-sector employers who can offer jobs with
    ``portable tenure,'' which enables spouses to relocate and stay with
    the same employer. Other efforts include expanding employment
    preference for spouses working in Europe and establishing partnerships
    with Federal agencies to increase private-sector career opportunities.
    For example, DOD is developing a partnership with the Department of
    Labor to resolve issues that occur at the State level. According to DOD
    officials, each State maintains varying residency and licensing
    requirements for jobs such as teaching, nursing, and child care.
    Spouses who work in these fields and relocate may need to be
    recertified after meeting residency requirements. DOD is seeking
    Labor's assistance to help spouses overcome these employment barriers.
    The Navy and Marine Corps also have launched a partnership with a
    civilian employment services firm at two installations. These
    initiatives are in the early stages of development. As a result, it is
    too early to gauge their effectiveness in promoting spousal employment.
    ---------------------------------------------------------------------------
        \5\ Congress has urged DOD to provide further employment assistance
    for military spouses. The National Defense Authorization Act for Fiscal
    Year 2002 directed the Secretary of Defense to help spouses access
    financial, educational, and employment opportunities through existing
    DOD and other Federal Government, State, and nongovernmental programs.
    ---------------------------------------------------------------------------
                           maternity/paternity leave
        Up to 10 percent of active duty female servicemembers become
    pregnant each year, according to the military services. As of March
    2001, there were about 75,000 military children under the age of 1.
    While new military mothers and fathers may take time off after the
    birth of a child, the military does not offer extended leaves of
    absence to new parents. New mothers may take 6 weeks of paid
    convalescent leave, which is similar to sick leave in the private
    sector. Both new mothers and new fathers may use annual leave. The
    services stated that they do not track information concerning the
    number of women who separate permanently from active duty service
    because of parental leave policies. We previously reported that of the
    28,353 women without prior military service who enlisted in fiscal year
    1993, 2,074 separated because of pregnancy from the 7th through the
    48th month of their enlistment. These separations represented
    approximately one-fourth of all female attrition.\6\ The Family and
    Medical Leave Act of 1993 does not cover military personnel. The act
    requires private-sector employers with more than 50 employees to allow
    their employees to take 12 weeks of unpaid leave to meet family
    obligations, such as maternity or paternity leave, adoptions, and care
    for a spouse, child, or parent with serious health conditions. Paid
    maternity and paternity leave in the private sector appears to be rare.
    In 1997, only 2 percent of employees had access to paid family leave
    programs, according to the Bureau of Labor Statistics. Of nine private-
    sector companies we contacted,\7\ one allows employees to take up to 3
    years of unpaid leave after the birth of a child and to return to a
    comparable position. Another company gives mothers 12 weeks paid leave
    with the option to take additional unpaid time off. If she returns
    within 6 months, the company guarantees her position; if she returns
    after 1 year, the company guarantees employment, but not the same
    position.
    ---------------------------------------------------------------------------
        \6\ See U.S. General Accounting Office, Military Attrition: Better
    Data, Coupled With Policy Changes, Could Help the Services Reduce Early
    Separations, GAO/NSIAD-98-213 (Washington DC: Sept. 15, 1998).
        \7\ We interviewed representatives from nine companies that have
    been recognized as innovative or effective in strategically managing
    their human capital. The nine companies are Federal Express Corp.; IBM
    Corp.; Marriott International, Inc.; Merck and Co., Inc.; Motorola,
    Inc.; Sears, Roebuck and Company; Southwest Airlines Co.; Weyerhaeuser
    Co.; and Xerox Corp., Documents Solution Group. We previously reported
    on the key principles that underlie these companies' human capital
    strategies and practices. See U.S. General Accounting Office, Human
    Capital: Key Principles From Nine Private Sector Organizations. GAO/
    GGD-00-28 (Washington DC: Jan. 31, 2000).
    ---------------------------------------------------------------------------
                             outreach and awareness
        DOD faces a continuing challenge in making military personnel aware
    of their benefits so they can take full advantage of what is available.
    For example, the military offers a relocation assistance program to
    provide transferring servicemembers with information on reimbursable
    moving costs and other services. A 1999 DOD-sponsored study found that
    the survey respondents who used the program had a higher portion of
    their expenses reimbursed than those who did not use the program.
    Specifically, personnel who used the program were reimbursed an average
    of 62 cents for every reimbursable dollar spent. In comparison,
    personnel who did not use the program were reimbursed 46 cents for
    every reimbursable dollar spent.\8\ According to DOD officials, a
    particular challenge is reaching out to the two-thirds of military
    personnel and their families who reside off-base. In order to improve
    outreach, DOD is increasing its use of the Internet by adding
    information and transactional features to various web sites. DOD
    officials also said the department is pursuing opportunities with the
    private sector to provide certain services, such as fitness facilities,
    child care, and employee assistance programs, especially for members
    who reside in remote areas or away from bases.
    ---------------------------------------------------------------------------
        \8\ The 1999 study defined users of the relocation assistance
    program as any survey respondent who used at least 1 of the 11
    relocation services offered, one of which was information on permanent
    change of station entitlements/travel pay.
    ---------------------------------------------------------------------------
        dod offers wide array of benefits for active duty servicemembers
        When we compared the types of benefits offered as part of the
    military's overall benefit package with private-sector benefits, we did
    not identify significant gaps in the benefit package offered to active
    duty servicemembers. Most important, DOD offers all of the four core
    benefits that are offered by most private-sector firms. These benefits
    are retirement, health care, life insurance, and paid time off. As
    figure 2 illustrates, DOD also offers a wide array of additional
    benefits. Many private-sector firms, of course, offer additional
    employee benefits as well.

        On the basis of our prior work on military compensation and DOD's
    compensation studies, we would like to note several difficulties
    associated with making direct comparisons between military and private-
    sector benefits. Such comparisons must account for: (1) the demands of
    military service, such as involuntary relocation, frequent and lengthy
    separations from family, and liability for combat; (2) certain
    principles of military compensation that are absent in the private
    sector, such as the principle that military compensation must work
    equally well during peace or war; (3) the difficulty in identifying
    appropriate private-sector industries and jobs to use as benchmarks for
    the military; (4) difficulties associated with measuring the value of
    employee benefits; and (5) military personnel practices--such as hiring
    primarily at the entry level and ``up or out'' rules--that are uncommon
    in the private sector.
        For these reasons, we have not made direct analytical comparisons
    between individual benefits offered by the military and those offered
    by the private sector. For instance, we did not attempt to determine
    whether the military retirement system is, based on certain criteria,
    more lucrative or less lucrative than private-sector pension plans.
    However, we sought to identify the types of benefits found in the
    private sector--both traditional and emerging benefits--and used this
    information to determine whether there are potential gaps in the
    benefit package offered to active duty servicemembers. To gather
    information on private-sector benefits, we conducted a broad literature
    search of private-sector benefit practices and used survey results of
    medium and large employers from the Bureau of Labor Statistics and from
    several human resources consulting firms. We also interviewed
    representatives from nine companies that have been recognized as
    innovative or effective in strategically managing their human capital.
        Private-sector employers take a great variety of approaches when
    designing their benefit package. Even so, three thematic trends have
    become evident over the last decade or two. Specifically, private-
    sector companies are: (1) offering a growing number and array of
    benefits--such as long-term care insurance, convenience benefits, and
    elder care assistance--while also making changes to their traditional
    core benefits; (2) introducing more flexibility in their benefit
    packages; and (3) adding benefits to help employees balance work and
    life responsibilities. While private-sector firms use pay and benefits
    packages to attract and retain employees, they are also concerned about
    controlling costs. Employers increasingly are sharing a growing portion
    of benefit costs with employees, particularly health care costs, while
    requiring them to assume more responsibility for managing their
    benefits. Some employers have reduced certain benefits or ceased to
    sponsor coverage. We recently testified that the availability of
    employer-sponsored retiree health benefits eroded during the late
    1990s, and that rising cost pressures on employers may lead to further
    erosion of these benefits.\9\
    ---------------------------------------------------------------------------
        \9\ See U.S. General Accounting Office, Retiree Health Insurance:
    Gaps in Coverage and Availability, GAO-02-178T (Washington DC: Nov. 1,
    2001).
    ---------------------------------------------------------------------------
        Like the military, the private sector also has reacted to
    demographic changes in the workforce. Since the 1970s, the American
    workforce has become more educated, more heterogeneous, and older. The
    numbers of dual-earner families, working women, and single parents have
    increased. Employers have reacted by offering benefits aimed at helping
    employees balance work and life demands. Since the 1980s, employers
    have begun offering benefits such as dependent care assistance,
    parental leave, flexible work schedules, and convenience services.
    Convenience services such as dry cleaning, banking services, and take-
    home meals allow employees to save time by running errands during work
    hours. Flexible schedules that allow employees to adjust the beginning
    and ending of their work day, work more hours per day but shorter
    weeks, or share a job with another part-time employee are some of the
    ways that employers help employees to manage their work and family
    responsibilities. Flexible benefit plans also help employees by
    allowing them to select additional benefits that may help balance work-
    life priorities.
        Our work comparing the military's overall benefit package with the
    array of benefits in the private sector showed that several military
    benefits have their analogues or counterparts in the private sector. As
    we noted earlier, the military offers benefits in the four core areas;
    however, the military may structure its benefits differently. For
    example, whereas the military retirement system requires 20 years of
    service to be vested, private-sector firms typically have much shorter
    vesting periods or no vesting period at all. The military's health care
    benefit is provided through a network of about 580 military treatment
    facilities, supplemented by civilian providers. The cost of this care
    to servicemembers and their dependents is nil or minimal. Private-
    sector firms, in contrast, typically offer individual and family health
    care through private insurers and normally require employees to share
    the cost burden. In 1999, private-sector employers paid the full cost
    of medical coverage for 33 percent of participants with individual
    coverage and 19 percent of those with family coverage, according to the
    Bureau of Labor Statistics. Of those participants required to
    contribute to their medical coverage, the average monthly cost was
    approximately $50 for individual coverage and $170 for family coverage.
    In the core benefit area of life insurance, DOD offers low-cost rates
    on group life insurance. Servicemembers pay $20 a month for the maximum
    $250,000 coverage. In November 2001, coverage was extended to members'
    spouses and eligible children. Finally, in the core benefit area of
    paid time off, all servicemembers receive 30 days annual leave and may
    carry over as many as 60 days accrued leave to the next year. The
    military offers numerous other forms of paid leave for specific
    reasons.
        In some areas, the military offers benefits that would not normally
    be available to civilians working for private-sector firms. For
    example, servicemembers may obtain discount prices by shopping at
    military commissaries (grocery stores) and exchanges (department
    stores). They also have privileges to use an extensive array of
    community facilities to include, among others, fitness centers,
    swimming pools, officer and enlisted clubs, libraries, community
    centers, hobby shops, and golf courses. Some private-sector firms offer
    amenities such as fitness centers and company stores, but few, if any,
    can match the breadth of facilities and programs available on a
    military installation. It also would be rare to find private-sector
    firms offering, as the military does, free housing or housing
    allowances to all of their employees.
        Military benefits, overall, have been enhanced in recent years.
    During the 1990s, some servicemembers expressed concerns that their pay
    was falling behind that in the private sector and that their benefits
    were eroding, particularly their health care and retirement benefits.
    Such perceptions were cited as one cause of the retention problems the
    military was experiencing at that time. Congress subsequently enacted
    legislation to increase military pay and enhance benefits. These
    efforts were aimed at improving the financial well-being and quality of
    life of servicememembers and at addressing recruiting and retention
    problems. For example, Congress approved across-the-board pay raises of
    4.8 percent for fiscal year 2000 and 3.7 percent for fiscal year 2001,
    along with targeted pay raises to mid-level officers and enlisted
    personnel. For fiscal year 2002, Congress approved pay raises ranging
    between 5 and 10 percent, depending on pay grade and years of service.
    Major enhancements to benefits included the restoration of retirement
    benefits that had been cut for military servicemembers who entered
    military service on or after August 1, 1986; increases in the basic
    housing allowance to reduce out-of-pocket housing expenses for
    servicemembers not living in military housing; and expansion of health
    care availability and reduced costs for families and retirees.
       military personnel strategy not linked to broader organizational
                                   objectives
        Although DOD offers a wide array of benefits to active duty
    servicemembers, DOD's benefit package was developed piecemeal in the
    absence of a strategic approach to human capital management. A well-
    developed human capital strategy would provide a means for aligning all
    elements of DOD's human capital management, including pay and benefits,
    with its broader organizational objectives. Pay and benefits are tools
    that an organization can use to shape its workforce, fill gaps, and
    meet future requirements.
        In prior reports and testimony, we have identified strategic human
    capital management planning as a Government-wide high-risk area and a
    key area of challenge.\10\ We have stated that agencies, including DOD,
    need to improve the development of integrated human capital strategies
    that support the organization's strategic and programmatic goals. In
    March 2002, we issued an exposure draft of our model for strategic
    human capital management to help Federal agency leaders effectively
    lead and manage their people.\11\ We also testified last month on how
    strategic human capital management can contribute to transforming the
    cultures of Federal agencies.\12\
    ---------------------------------------------------------------------------
        \10\ See U.S. General Accounting Office, Human Capital: A Self-
    Assessment Checklist for Agency Leaders, GAO/OCG-00-14G (Washington DC:
    Sept. 2000); U.S. General Accounting Office, Human Capital: Major Human
    Capital Challenges at the Departments of Defense and State, GAO-01-565T
    (Washington DC: Mar. 29, 2001); and U.S. General Accounting Office,
    Major Management Challenges and Program Risks: Department of Defense,
    GAO-01-244 (Washington DC: Jan. 2001).
        \11\ See U.S. General Accounting Office, A Model of Strategic Human
    Capital Management, Exposure Draft, GAO-02-373SP (Washington DC: Mar.
    2002).
        \12\ See U.S. General Accounting Office, Managing for Results:
    Building on the Momentum for Strategic Human Capital Reform, GAO-02-
    528T (Washington DC: Mar. 18, 2002).
    ---------------------------------------------------------------------------
        Several DOD studies also have identified the need for a more
    strategic approach to human capital planning within the department. The
    Eighth Quadrennial Review of Military Compensation, completed in 1997,
    strongly advocated that the Department adopt a strategic human capital
    planning approach. The review found that DOD lacked an institution-wide
    process for systematically examining human capital needs or translating
    needs into a coherent strategy. Subsequent DOD and service studies,
    including the Defense Science Board Task Force on Human Resources
    Strategy, the Naval Personnel Task Force, and the DOD Study on Morale
    and Quality of Life, endorsed the concept of human capital strategic
    planning.
        DOD officials have acknowledged the need for a more strategic
    approach and plan to issue a human capital strategic plan in April
    2002. The plan has three components: a military personnel strategy
    (which includes the Reserves), a civilian personnel strategy, and a
    social compact that, as we mentioned earlier, addresses quality-of-life
    issues. Since our work focused on military personnel, we reviewed that
    component of the strategy. We had an opportunity to review a draft of
    the military personnel strategy and to discuss it with DOD officials.
    We will briefly describe the strategy, including the elements that
    address pay and benefits, and then raise issues for consideration that
    DOD may wish to incorporate in future iterations of the strategy.
        DOD officials told us that the military personnel strategy outlines
    a plan of action for the next 3 to 5 years. The strategy identifies
    more than 30 initiatives organized into five ``lines of operation,'' or
    goals. These five goals are (1) increase the willingness of the
    American public to recommend military service to our youth; (2) recruit
    the right number and quality of personnel; (3) develop, sustain, and
    retain the force; (4) transition members from active status; and (5)
    sustain the process and maintain its viability. A majority of the
    initiatives are studies addressing various military personnel issues.
    Some of the issues that DOD will study--such as the lateral entry of
    civilians into the military workforce, the ramifications of variable
    career lengths for officers, and the appropriate grade structure for
    the manpower needs of future weapons systems-could lead to proposed
    changes that have far-reaching impacts. The strategy does not call for
    any near-term changes to pay and benefits. However, as shown in table
    1, the department plans to study several pay and benefit issues.

     TABLE 1: COMPENSATION-RELATED STUDIES AND MILESTONES IN DOD'S MILITARY
                               PERSONNEL STRATEGY
    ------------------------------------------------------------------------
                       Study                              Milestone
    ------------------------------------------------------------------------
    Sabbatical programs that could be           Final report due September
     implemented in DOD.                         2002
    Nonmonetary incentives that support         Final report due December
     retention.                                  2002
    Programs designed to improve retention by   Action plan due December
     informing military members of career        2002
     opportunities and military benefits
     available to them.
    Alternatives to the military retirement     Report due January 2003
     system.
    Proposals of the 9th Quadrennial Review of  Staff recommendations due
     Military Compensation.                      March 2003
    Programs designed to inform members of      Final report due March 2003
     their transition benefits when leaving
     active duty service.
    Military pay levels compared to pay levels  Final report due December
     of civilians by age, education, and         2003
     occupation.
    ------------------------------------------------------------------------

        While DOD has recognized the need for a strategic approach to
    managing its human capital, the military personnel strategy is missing
    elements that would be found in a fully realized human capital
    strategic plan. Since the military personnel strategy is intended to be
    a dynamic document that periodically will be assessed and refined, DOD
    will have opportunities to incorporate additional elements of human
    capital strategic planning in future iterations of the strategy.
    Specifically, DOD may wish to consider the following questions as it
    refines the military personnel strategy:
        How can human capital approaches be linked to DOD's mission and
    programmatic goals? Effective organizations link human capital
    approaches to their overall mission and programmatic goals. An
    organization's human capital approaches should be designed,
    implemented, and assessed by the standard of how well they help the
    organization pursue its mission and achieve desired results or
    outcomes. The new military personnel strategy captures the DOD
    leadership's guidance regarding aspects of managing human capital, but
    the strategy's linkage to the overall mission and programmatic goals is
    not stated. For example, DOD continues to rely heavily on technology to
    carry out its overall mission ``to fight and win wars.'' DOD's human
    capital approach to recruiting and retention--if it were linked to its
    overall mission--would emphasize individuals with the skills needed to
    fight and win ``high-tech'' wars. To the extent possible, DOD may wish
    to determine the kinds of benefits, or combination of benefits, that
    would best position it in the future to attract and retain individuals
    possessing these skills.
        How can human capital performance measures be improved? High-
    performing organizations use data to determine key performance
    objectives and goals that enable them to evaluate the success of their
    human capital approaches. Collecting and analyzing data are fundamental
    building blocks for measuring the effectiveness of human capital
    approaches in support of the mission and goals of an agency. In our
    Government Performance and Results Act work, we raised concerns about
    DOD's human capital performance measures. For example, the performance
    measures did not fully address the extent to which military forces are
    highly motivated or DOD's efforts to develop personnel. The new
    military personnel strategy provides measures of effectiveness for each
    initiative; however, these measures are not adequate to assess the
    success of DOD's human capital approaches because they (1) do not
    describe the significance of outcomes in terms of programmatic goals
    and results, (2) are not always specific or stated as measurements, and
    (3) are activity-based rather than outcome-oriented. For example, one
    initiative calls for a study of sabbatical programs. However, the
    measure of effectiveness for this initiative is to implement guidance
    for a sabbatical-type program. The relationship between sabbatical
    programs and the goal of improving retention is not described.
    Furthermore, the significance of sabbaticals in accomplishing DOD's
    mission is not stated.
        What skills and abilities will be needed in DOD's future military
    workforce to accomplish its mission, and what potential gaps exist
    between current and future workforce needs? Agencies must identify
    their current and future human capital needs and then create strategies
    for filling the gaps. Agencies' strategic human capital planning must
    be results-oriented and data-driven, including, for example,
    information on the appropriate number and location of employees and
    their key competencies and skills. The new military personnel strategy
    does not address workforce requirements or gaps.
        How can benefits be more closely linked to the basic goals of
    recruiting and retaining a high-quality workforce? Our prior work has
    shown that retention decisions are highly personal in nature and that
    many factors, including benefits, may affect the decision of a
    servicemember to stay in the military or leave. The new military
    personnel strategy does not discuss which combinations of benefits,
    pay, and other factors have had the greatest influence on retention
    decisions. In the last DOD-wide survey of active duty personnel in
    1999, key benefits such as housing and health care for families were
    not among the top reasons cited by military personnel for considering
    leaving. In fact, the family medical care benefit was cited as a top
    reason for staying.\13\ On the basis of the 1999 survey, we also found
    that increasing housing allowances would do little to increase
    retention. Less than 1 percent of servicemembers cited housing
    allowances as a top reason to leave.\14\ Our work has shown that first-
    term and mid-career enlisted personnel and mid-career officers
    perceived that compensation was better in civilian life than in the
    military, but they believed the military provided some better benefits,
    such as vacation time and education and training opportunities. First-
    term enlisted personnel cited education benefits and training for
    civilian employment as top reasons for joining. But they were less
    likely to stay on active duty than those who joined for other reasons,
    like personal growth or travel.\15\
    ---------------------------------------------------------------------------
        \13\ See U.S. General Accounting Office, Military Personnel:
    Preliminary Results of DOD's 1999 Survey of Active Duty Members, GAO/T-
    NSIAD-00-110 (Washington DC: Mar. 8, 2000).
        \14\ See U.S. General Accounting Office, Military Personnel: Higher
    Allowances Should Increase Use of Civilian Housing, but Not Retention,
    GAO-01-684 (Washington DC: May 31, 2001).
        \15\ See U.S. General Accounting Office, Military Personnel: First-
    Term Personnel Less Satisfied With Military Life Than Those in Mid-
    Career, GAO-02-200 (Washington DC: Dec. 7, 2001).
    ---------------------------------------------------------------------------
        To what extent should DOD's military personnel strategy address
    servicemembers' dissatisfaction with their work circumstances? The new
    military personnel strategy does not acknowledge or address the
    dissatisfaction that servicemembers have expressed about their work
    circumstances. Work circumstances include the availability of equipment
    and materials, manning levels of units, frequency of deployments, and
    personal time for family. While pay and benefits are important, factors
    other than compensation appear to be a source of dissatisfaction with
    military life that could lead to retention problems. In our prior work
    we found that many factors were sources of dissatisfaction and reasons
    to leave the military for personnel in retention-critical specialties.
    The majority of the factors were associated with work circumstances
    rather than with benefits.\16\ Our work on pilot retention problems
    also confirmed these findings. Pilots raised concerns about their work
    circumstances, leadership, career development, and aviation retention
    bonuses.\17\ On the basis of the 1999 active duty survey, we found that
    military personnel perceived that civilian life was more favorable than
    military life with respect to personal and family time, quality of
    life, and hours worked per week. The survey data also showed that the
    duration of permanent change of station tours was related to
    satisfaction. Those with shorter time spent between moves were less
    likely to be satisfied with the frequency of moves and less satisfied
    with the military way of life.\18\
    ---------------------------------------------------------------------------
        \16\ See U.S. General Accounting Office, Military Personnel:
    Perspectives of Surveyed Service Members in Retention Critical
    Specialties, GAO/NSIAD-99-197BR (Washington DC: Aug. 16, 1999).
        \17\ See U.S. General Accounting Office, Military Pilots:
    Observations on Current Issues, GAO/T-NSIAD-99-102 (Washington DC: Mar.
    4, 1999) and U.S. General Accounting Office, Military Personnel:
    Actions Needed to Better Define Pilot Requirements and Promote
    Retention, GAO/NSIAD-99-211 (Washington DC: Aug. 20, 1999).
        \18\ See U.S. General Accounting Office, Military Personnel: Longer
    Time Between Moves Related to Higher Satisfaction and Retention, GAO-
    01-841 (Washington DC: Aug. 3, 2001).
    ---------------------------------------------------------------------------
        Mr. Chairman, this completes our prepared statement. We would be
    happy to respond to any questions you or other members of the
    subcommittee may have at this time.
                          contacts and acknowledgments
        For future questions about this statement, please contact Derek B.
    Stewart at (202) 512-5140 (e-mail address: stewartd@gao.gov) or Brenda
    S. Farrell at (202) 512-3604 (e-mail address: farrellb@gao.gov).
    Individuals making key contributions to this statement include Ann
    Asleson, Jocelyn Cortese, William Doherty, Thomas Gosling, Stacey
    Keisling, David Moser, Krislin Nalwalk, Stefano Petrucci, Maria-Alaina
    Rambus, Madelon Savaides, Lois Shoemaker, and Earl Williams.
             appendix i: active duty pays, allowances, and benefits
        This appendix lists active duty pays, allowances, and benefits that
    we identified during our review. We compiled this list from Department
    of Defense (DOD) financial management regulations, service budget
    documents, military compensation background papers, DOD and service
    websites, directives, and other Department documents.

        Senator Cleland. Thank you very much, Mr. Stewart.
        Mr. Abell, that beats a poke in the eye with a sharp stick.
    Pretty interesting report. Your commentary?

      STATEMENT OF HON. CHARLES S. ABELL, ASSISTANT SECRETARY OF
                  DEFENSE FOR FORCE MANAGEMENT POLICY

        Mr. Abell. Good morning, Mr. Chairman, Senator McCain,
    Senator Nelson. First of all, let me say it is a treat to come
    back to this majestic room where I have spent so many hours.
        Your letter of invitation and your preamble this morning
    have explained that the purpose of this hearing is to assess
    whether military personnel benefits are properly structured to
    support today's military forces. I congratulate you for
    identifying this subject as one worthy of review, I would like
    to begin by reporting that in my opinion and that of the
    Department of Defense the benefit package that accrues to our
    military personnel is indeed comprehensive and a positive
    incentive to join and to continue to serve.
        As Secretary Rumsfeld recently testified, if we are to win
    the war on terror and prepare for the wars of tomorrow we must
    take care of the Department's greatest asset, our men and women
    in uniform. Smart weapons are worthless to us unless they are
    in the hands of smart soldiers, sailors, airmen, and marines.
        As the members of this committee know well, the widely
    vaunted capabilities of the American military come at a
    substantial cost. It is not because DOD is inefficient, but
    because high end performance requires high end investment. No
    other country in the world could move a force of our size
    halfway around the world to a region with little or no
    infrastructure and have that force operate effectively upon
    arrival.
        Such a feat requires people--people who can improvise, who
    can devise a new solution when faced with unforeseen
    circumstances. We can do it because we have a highly motivated,
    intelligent, well-trained force, the product of the all-
    volunteer concept in which we have invested so much, and about
    which most of our allies have been skeptical until now. It is
    no accident of history that so many of our allies are now
    trying to build the kind of force that we have.
        However, we acknowledge that that force requires
    substantial funding. It cannot be had on the cheap.
        With that report, Mr. Chairman, I would like to make a
    couple of points. First, let there be no doubt that people are
    our highest priority, and I believe the President's budget
    reflects that priority.
        Second, we continuously monitor the recruiting and
    retention environment to determine what is happening and what
    the future portends. You and Congress have generously given the
    Department a rich array of benefits and authorities, and we are
    using them effectively to maintain the quality force that
    America expects and demands.
        Third, as Mr. Stewart has reported, our benefit package is
    unmatched in the private sector. No single company can offer
    the package we provide those who serve in the military.
        In closing, Mr. Chairman, permit me to urge one caution. As
    good as our force is, unmatched in the world, the most
    expensive weapon system in the Department of Defense is the
    individual servicemember. As you are urged by others to
    increase the benefit package or to enrich an existing benefit,
    please remember that it is possible to make our people too
    expensive, and that would drive us to a dangerously low
    personnel level.
        Mr. Chairman, I take a back seat to no one when it comes to
    loving our soldiers, sailors, airmen, and marines. I want the
    very best for them. However, I also want to ensure that the
    taxpayer is getting a good return on our investment. I will
    join with you and your staff to evaluate any proposal to create
    a new benefit or to enrich an existing benefit, and if I am
    allowed to participate in such a review I will suggest that we
    evaluate the proposal from the perspective of do we really need
    it to recruit and retain quality people, or is it a nice-to-do
    expense with marginal return.
        Mr. Chairman, I thank you and this committee for your
    support of our military people, and I think I would be remiss
    if I did not say publicly that I am proud to be an alumnus of
    this committee. I am prepared to answer your questions.
        [The prepared statement of Mr. Abell follows:]
                Prepared Statement by The Hon. Charles S. Abell
                                  introduction
        Mr. Chairman and members of this distinguished subcommittee, thank
    you for the opportunity to be here today and thank you for your
    continuing support of the men and women who serve in our Armed Forces.
        As Secretary Rumsfeld recently testified, ``If we are to win the
    war on terror, and prepare for the wars of tomorrow, we must take care
    of the Department's greatest asset: our men and women in uniform.
    `Smart weapons' are worthless to us unless they are in the hands of
    smart soldiers, sailors, airmen, and marines.'' The Department of
    Defense is competing with the private sector for the best young people
    our Nation has to offer.
        The Defense family has changed over the last decade. U.S. military
    personnel are more senior, educated, and diverse. More military spouses
    work, and they are better educated than they were 10 years ago.
    Opportunities and competition in the private sector for our highly
    skilled and technically competent members have never been greater.
    DOD's transformation of personnel policies, programs and benefits must
    address these changing demographics and the expectations of a 21st
    century military force. The Department must keep its ``side of the
    bargain'' by providing relevant benefits, programs and policies for the
    families who support members of the Armed Forces. DOD has embarked on a
    strategic approach to managing its active and Reserve military force.
    Today, I would like to outline these initiatives, programs and
    benefits, as well as discuss some of the challenges we face.
                        human resources strategic review
        In the past year the Department of Defense has embarked on several
    initiatives to examine the state of our human resource programs and
    determine what we need to do to meet the challenges of the 21st
    century. These challenges are particularly poignant since the terrorist
    attacks of September 11, and we are resolved to meet these challenges
    head-on. One such effort is our recently completed Human Resources
    Strategic plan. This plan will serve as our roadmap for military
    personnel human resources issues over the next 3 to 5 years. The plan
    details objectives, supporting actions, and measures of effectiveness
    within defined lines of operation. It assigns tasks, establishes
    milestones, identifies resource requirements, and facilitates synergy
    for a wide range of military personnel issues. This plan is a dynamic
    document intended to serve as a planning reference and management tool
    for Department of Defense military human resource managers. Through
    continuous assessment and refinement, the plan will provide the focal
    point for ongoing and future military personnel legislative and policy
    efforts.
                                  compensation
        Competitive pay for all personnel continues to be among the key
    components in our efforts to attract and retain top quality, highly
    skilled men and women. In addition to basic pay, compensation includes
    all pays and allowances, such as housing and subsistence allowances,
    and special and incentive pays. We are grateful to Congress for its
    work in improving each of these areas, especially during the last
    fiscal year. The largest military pay raise in 20 years and significant
    progress in reducing out-of-pocket housing costs for servicemembers and
    their families send a clear signal that our Nation values the courage
    and sacrifice required of military service. Over half of today's
    servicemembers in grades E-5 and above have at least some college, and
    over 20 percent of personnel in grades E-8 and above have college
    degrees, based on a DOD survey. We therefore applaud Congress' support
    of the fiscal year 2002 pay raise to target additional raises for NCOs,
    as well as mid-level officers, greater than required by law.
    Housing Allowances
        In addition to maintaining efforts to achieve competitive pay
    tables, the Department recommends continuing to increase military
    housing allowances significantly, with the goal of eliminating average
    out-of-pocket costs by 2005. Building on the current year's increases,
    the fiscal year 2003 budget requests further improvements in housing
    allowances, reducing the average out-of-pocket costs from 11.3 percent
    to 7.5 percent. Understandably, servicemembers view the housing
    allowance as one of the key elements of their total compensation
    package. Therefore, the Department has worked tirelessly to improve its
    data collection to ensure the allowance accurately reflects the housing
    markets where servicemembers and their families reside.
    Family Subsistence Supplemental Allowance
        In concert with Congress' effort to address the issue of
    servicemembers on food stamps, the Department is continuing to monitor
    aggressively the Family Subsistence Supplemental Allowance (FSSA)
    program, which was implemented in May 2001. The number of military
    personnel on food stamps has steadily decreased from 19,400 (9 tenths
    of 1 percent of the force) in 1991 to an estimated 4,200 (3 tenths of 1
    percent of the force) in 2001. In 2002, with FSSA in place, we
    anticipate the number of members on food stamps will be reduced to
    2,100 (1.5 tenths of 1 percent of the force). We expect this reduction
    to occur both because of the large fiscal year 2002 pay raise, and also
    because most FSSA-eligible members will choose to take the allowance.
    Currently, approximately 2,500 servicemembers are FSSA eligible.
        Although it would be ideal if no servicemember had to rely on the
    use of food stamps, 100 percent participation of all eligible
    individuals in FSSA may not be achievable. Participation in FSSA has a
    detrimental effect on member eligibility for other income-based social
    aid programs, such as the Free and Reduced School Lunch Program.
    Additionally, for some, there remains a stigma attached to admitting to
    the chain of command the need for more money. A FSSA website has been
    established to educate personnel and address their concerns, and each
    service has trained personnel available to offer personal assistance.
    Special and Incentive Pays/Combat Zone Tax Exemption
        Since Operation Enduring Freedom resulted in servicemembers moving
    into new operational areas and settings, the Department has been
    aggressively addressing their compensation needs. Military personnel in
    Afghanistan, Kyrgykzstan, Jordan, Pakistan, Tajikistan, Uzbekistan, and
    those serving at Incirlik AB, Turkey in direct support of operations in
    Afghanistan receive Combat Zone Tax Benefits. Members in these
    countries also receive $150 per month in Imminent Danger Pay.
    Additionally, these individuals qualify for Hardship Duty Pay-Location
    at the rate of $50 or $100 per month, depending on conditions in their
    particular location. Deployed members are housed in Government-provided
    quarters and generally continue to receive the housing allowance
    applicable to their home station. Their food is paid for out of the
    subsistence portion of their per diem allowance, so they retain their
    full Basic Allowance for Subsistence. As an example, a typical E-6,
    married with two children, serving in Afghanistan will see a positive
    difference of nearly $600 per month compared with a CONUS station. The
    Department is committed to ensuring servicemembers and their families
    are cared for through appropriate compensation while members are
    deployed serving their country in dangerous locations.
    Military Retirement
        The retirement system for military personnel remains a premier
    benefit for our members. The only area of recent concern was addressed
    by Congress when it authorized newer members to have the High-Three
    retirement or take the REDUX retirement and receive a lump sum career
    status bonus at the 15th year of service, for which we thank you. The
    value of military retirement is substantial. We believe the system is
    among the best in the world and highly competitive with systems
    available in the private sector.
        In conjunction with the retirement system, the Survivor Benefit
    Plan (SBP) protects a portion of a member's retired pay, providing
    continued income for a member's survivors. The program is fully
    subsidized for those who die on active duty and significantly
    subsidized for retired members. SBP is structurally integrated with VA
    survivor payments and those of social security. Together we believe
    these programs represent a significant asset for military personnel and
    their families.
    Thrift Savings Plan
        In fiscal year 2002, in addition to the pay and allowance
    increases, the Department implemented a new authority provided by
    Congress to allow the uniformed forces to participate in the Thrift
    Savings Plan (TSP). This opportunity represents a major initiative to
    improve the quality of life for our servicemembers and their families.
    In its first open season, TSP attracted over 220,000 enrollees. The
    Department estimated that 10 percent of active duty servicemembers
    would enroll in the first year, and we have already exceeded that
    number with two more open seasons remaining. Overall, military
    compensation has made great strides in the last few years, with several
    continued improvements on the way. We appreciate this significant
    support by Congress in acknowledging the sacrifices and dedication of
    our uniformed personnel.
                                quality of life
        President Bush, in one of his first actions last year, issued a
    National Security Presidential Directive to improve military quality of
    life. Secretary Rumsfeld reiterated the President's commitment, stating
    that the Department must forge a new social compact with its
    warfighters and those who support them--one that honors their service,
    understands their needs, and encourages them to make national defense a
    lifelong career. The demographic changes in today's military--60
    percent of troops have family responsibilities--foster the need for
    such a new social contract that promotes a strong military community
    and culture. The Department has undertaken a comprehensive and
    systematic review of quality of life programs, and charted a course for
    the future.
        The partnership between the American people and our warfighters is
    built on the tacit agreement that families, as well as our members,
    contribute to the readiness and strength of the American military.
    Military members and their families make sacrifices in the service of
    our country and face special challenges. A new social compact must
    recognize the reciprocal ties that bind servicemembers, the military
    mission, and families, and responds to their quality of life needs as
    individuals and as members of a larger community. The Department has
    made a renewed commitment to underwrite family support programs and to
    provide quality education and life-long learning opportunities.
    Additionally, the military services are working with Reserve units to
    make child care available through a variety of delivery methods,
    including licensed Family Child Care homes, Child Development Centers,
    and special arrangements for extended care.
    Family Support and Spouse Employment
        There is an integral link between military family readiness and
    total force readiness. We are re-focusing family support programs to
    address the two-thirds of active duty families who live off base, and
    our Reserve families. We envision an outreach strategy that will
    explicitly articulate to servicemembers and their families just how
    important they are. To better underwrite our support to families, the
    President's Budget Request increases funding for family centers by 8.5
    percent or $17 million.
        DOD successfully demonstrated this strategy in the aftermath of the
    September 11 terrorist attack on the Pentagon. The entire Department
    joined efforts to establish a Pentagon Family Assistance Center (PFAC).
    We provided unprecedented outreach support to the families of victims
    who were killed or injured in the attack. Personnel from OSD, military
    service staffs, Government and non-Government agencies worked in
    concert to provide the necessary support services, information, and
    care to meet both immediate and long-term needs of families. Over 2,400
    staff and volunteers donated their time and services to the mission.
        To support the families of military personnel involved in Operation
    Enduring Freedom, the Military Departments activated long-standing
    deployment support programs including information and referral, crisis
    intervention, and return and reunion programs. We paid particular
    attention to communications programs such as Air Force Crossroads, Navy
    LifeLines, Virtual Army Community Service, Hearts Apart, morale calls,
    e-mail, and Web-based streaming video. Reserve components established
    toll-free numbers for family members of National Guard and Reserve
    units. In addition, the Air Force Reserve made child care available to
    reservists and their families, and the Air National Guard implemented a
    test Child Care Program in 13 locations around the Nation to serve the
    child care needs of its mobilized and deployed members.
        An essential element of the quality of life framework is improving
    the financial stability of our military families. For this reason, we
    are embarking on a financial literacy campaign that includes improving
    personal and family financial training. As with most of America's young
    adults, those entering the military have little understanding of the
    basic tenets of personal financial management and little to no
    practical experience managing their own money. As a consequence, they
    often develop poor financial management habits and many become burdened
    with credit card debt. The military services recognize the need to
    increase the amount of training and assistance provided to members and
    their families to ensure they can sustain a financially secure quality
    of life.
        At the same time, DOD has underscored its commitment to the
    financial well being of military families through increased emphasis on
    spouse employment. The 2002 NDAA directed DOD to examine its spouse
    employment programs in the context of Federal, State, and private
    sector programs. We welcome this instruction from Congress and the
    opportunity to create new benchmarks for our programs, while continuing
    to enhance the career options of military spouses through inter-
    Department and private sector partnerships.
    Child Care and Youth
        Providing quality, affordable child care to the Total Force remains
    a high priority throughout the Department of Defense. The fiscal year
    2003 President's budget request increases child care funding by $27
    million, or 7 percent. Although we have child development programs at
    over 300 locations with 800 child development centers and over 9,000
    family child care homes, we still project a need for an additional
    45,000 spaces. We continue to pursue an aggressive expansion program
    through a balanced delivery system that combines center construction,
    an increased number of family child care homes, and partnerships with
    local communities. We are providing family child care both on and off
    the installation, encouraged by subsidies. Since about 99 percent of
    DOD centers are accredited, compared with less than 10 percent in the
    civilian sector, the military child development program remains a model
    for the Nation.
        In support of the war effort, we have expanded operating hours and
    developed innovative co-use practices among child development programs,
    with many locations offering around-the-clock care, as necessary. Many
    have reacted to the needs of geographically single parents by offering
    special operating hours and instituting projects for children to
    communicate with the absent parent.
        Teens also feel the impact of the pressures of the war. Computer
    centers, available in most youth centers, offer a means for young teens
    to communicate electronically with an absent parent. Teens receive
    mentoring when parents work extremely long duty days.
        The military community has made a strong commitment to provide
    positive activities and environments for youth. The computer centers,
    available in all youth programs, offer a means for young teens to
    communicate electronically with an absent parent. Tutors are available
    at the centers to help students complete school homework assignments in
    a supervised setting. This decreases the amount of unsupervised time,
    and increases the opportunities for relationships with caring adults.
    Educational Opportunities
        In the area of educational opportunities for our servicemembers,
    participation in the off-duty education program remains strong with
    enrollment in over 600,000 courses last year. Members were also awarded
    30,000 higher education degrees by hundreds of colleges and
    universities. This is an important benefit that servicemembers say is
    part of their reason for joining. Tuition assistance policies are in
    place to increase support for off-duty education. Effective October 1,
    2002, tuition assistance for servicemembers will increase to the point
    where virtually all of the cost of taking college courses will be borne
    by the Department. The services have increased funding by $69 million
    to implement the new authority.
        In the fiscal year 2002 NDAA, Congress authorized two new programs
    designed to promote reenlistments and extensions in critical
    specialties--Montgomery GI Bill (MGIB) Transferability and an education
    savings bond plan. We welcome the opportunity to explore the viability
    and usefulness of the programs and are currently discussing how best to
    implement them.
        With the support of Congress, DOD last year provided $35 million to
    heavily impacted school districts serving military dependent students
    and an additional $10.5 million in grants to be used for repair and
    renovation of school buildings. The Department is actively working with
    public school districts and State education authorities to lessen the
    displacement and trauma experienced by children of military personnel
    who are forced to change schools frequently due to the reassignment of
    military members. Within the last 2 years we have brought together over
    300 students, parents, military leaders, school personnel, and State
    policy makers to help address and give visibility to these issues which
    affect about 600,000 children of active duty military personnel.
    Troops-to-Teachers
        The Troops-to-Teachers Program has successfully injected the
    talents, skills, and experiences of military servicemembers into public
    education. The program was recently expanded to include Selected
    Reserve members with 10 or more years of service as well as Reserve
    retirees with 20 or more years of service. Both the President and the
    First Lady have expressed support for Troops-to-Teachers and talked
    about the critical need for highly competent individuals to counter
    America's critical shortage of teachers. More than 4,500 participants
    have been hired to teach throughout all 50 States, and 70 percent of
    teachers hired through the program are still in public education after
    5 years. The Department has helped establish and financially support
    placement assistance offices in 25 States. The recent congressional
    appropriation of $18 million for this program will enable the
    Department to again award stipends to help former servicemembers offset
    the cost of becoming certified and employed as elementary and secondary
    school teachers. This injects the best military leadership qualities
    into American school systems.
    Department of Defense Education Activity (DODEA)
        The Department has a school system to be proud of, and we continue
    to address quality issues in the areas of curriculum, staffing,
    facilities, safety, security, and technology. Our dependent schools
    comprise two educational systems providing quality pre-kindergarten
    through 12th grade programs: the DOD Domestic Dependent Elementary and
    Secondary Schools (DDESS) for dependents in locations within the United
    States and its territories, possessions, and commonwealths, and the DOD
    Dependents Schools (DODDS) for dependents residing overseas. Today
    approximately 8,800 teachers and other instructional personnel serve
    more than 111,000 students in 224 schools. They are located in 14
    foreign countries, 7 States, Guam, and Puerto Rico. Students include
    both military and civilian Federal employee dependents.
        The quality of DOD schools is measured in many ways, but most
    importantly, as in other school systems, by student performance. DOD
    students regularly score significantly above the national average in
    every subject area at every grade level on nationally standardized
    tests.
        In addition, students participate in the National Assessment of
    Educational Process (NAEP) tests. NAEP which is known as the ``Nation's
    Report Card'' is the only nationally representative and continuing
    assessment of what America's students know and can do in various
    subject areas. DODEA students do well on NAEP and DODEA African-
    American and Hispanic students, in particular, score exceptionally well
    on this test. This outstanding performance led the National Education
    Goals Panel to commission Vanderbilt University to study the
    instructional program, teaching, and other aspects of DODEA schooling
    to identify the variables that contribute to the students' success. The
    findings, which were published in October 2001, received extensive
    national coverage.
        DODEA's 2001 graduates were awarded nearly $28 million in
    scholarship and grant monies; 29 percent was for attendance at military
    academies and 31 percent for ROTC scholarships. Graduates in 2001
    reported plans to attend 762 different colleges and universities
    worldwide.
        To meet the challenge of the increasing competition for teachers,
    DOD has an aggressive U.S. recruitment program. The program emphasizes
    diversity and quality, and focuses on placing eligible military family
    members as teachers in its schools.
    Morale, Welfare, and Recreation (MWR)
        Morale, Welfare, and Recreation (MWR) programs have proven to be
    important to military communities, providing fitness and recreational
    opportunities for servicemembers and their families. The 469 fitness
    centers in DOD have the highest use rate of any MWR program, with 80
    percent of active duty military using them at least once monthly, and
    52 percent using them 6 times or more per month. The Department views
    improving fitness programs as a high priority, not only due to their
    popularity, but also because of their importance to the maintenance of
    a servicemember's physical readiness. Physical fitness is critical to
    providing forces that are more resistant to illness, less prone to
    injury and the influence of stress, and better able to recover quickly
    should illness or injury occur. Our fitness specialists are working
    with health promotion and physical training specialists to make this
    vision a reality. To accomplish this, the fitness center infrastructure
    will require upgrade to bring them to acceptable standards.
    Commissaries and Military Exchanges
        Military members and their families consider their commissary
    privilege to be one of their top two non-cash benefits, second only to
    health care. The Defense Commissary Agency (DeCA) operates the
    worldwide system of 281 commissaries. DeCA provides a 30 percent
    savings on comparable market baskets in the private sector. Beginning
    in fiscal year 2002, legislative authority permits funding of most DeCA
    operations from appropriations, thereby leaving the Surcharge Trust
    Fund available for capital investment. As a result of this change, the
    fiscal year 2002 major construction program contains 10 commissary
    projects at a total surcharge cost of $94 million--a significant
    increase from prior years.
        We are looking at various ways to reduce the appropriated fund
    subsidy to commissaries. We want to improve how the benefit is
    delivered, with the objective being to obtain the same benefit at
    reduced cost to the taxpayer. We will work closely with congressional
    oversight committees as we explore this issue.
        Military exchanges also form a significant portion of the community
    support program. They are the ``home town store'' for our
    servicemembers and families assigned stateside, overseas, in remote
    locations and to deployment sites around the world--including 16
    tactical field exchanges supporting Operation Enduring Freedom. It is
    important to troops and families stationed around the globe to have
    American goods and services. Being a long way from home should not mean
    giving up what is familiar and what adds comfort to our lifestyles.
    Today's exchanges operate at 694 locations worldwide, with annual sales
    of $9.5 billion.
        Exchanges offer quality goods at significant savings, and then pass
    the majority of their profits back to the MWR program to support
    essential, morale-building programs, and to make capital improvements.
    Our practice of using exchange earnings to support MWR programs is well
    established; the exchanges provide over $320 million annually.
        The Department is taking a very close look at the exchange business
    practices and organizations to maximize efficiencies and improve
    customer service and savings. We are looking closely at the services'
    plans to ensure that the alternatives pursued reduce costs while
    improving customer service, ensuring competitive pricing and continued
    support for MWR.
        Finally, as part of the new social compact with servicemembers, we
    will better define, measure, and communicate the savings and services
    provided to DOD personnel by the commissaries and exchanges.
                                  health care
        An essential element of the new social compact is a high-quality,
    affordable, convenient Military Health System (MHS) that supports our
    8.3 million military beneficiaries. With the numerous authorizations
    you provided in the National Defense Authorization Act last year, these
    beneficiaries have begun to receive that kind of health care. Today,
    military beneficiaries have a comprehensive and generous benefit.
        The MHS is far more than a benefit, however. This acknowledgement
    crystallized for all of us in the aftermath of the September 11
    terrorist attacks and bio-terrorist actions involving anthrax. The
    capabilities of this system and its personnel contributed indispensably
    to the care and treatment of survivors and families and in assisting
    other Federal agencies in their responsibilities to identify remains as
    well as to identify and track anthrax samples. Some of these efforts
    continue even now.
    Military Health System Funding
        As we experience a new sense of urgency within the MHS to ensure
    the ability to operate in a contaminated environment, to be alert to
    potential exposures, and to treat casualties, we have budgeted
    realistically for the Defense Health Program (DHP) for fiscal year
    2003. These funds will support key initiatives to enhance chemical and
    biological preparedness and deployment health support systems.
        In the President's Budget Request for fiscal year 2003, the DHP
    submission is based on realistic estimates of health care benefits to
    DOD eligible populations. It includes inflation assumptions for
    pharmacy of 10.5 percent plus anticipated program growth for an overall
    increase of 15 percent from the fiscal year 2002 program. Private
    sector health costs have been inflated at 7 percent to reflect our
    recent experience; anticipated program growth brings the overall rate
    of change to 12 percent from fiscal year 2002. We will manage the
    health care system to improve performance and contain the health care
    costs within budgeted amounts. We will make prudent decisions that
    result in effective performance. We seek your assistance in making
    permanent the contract management flexibility you provided in the
    National Defense Authorization Act for fiscal year 2002 and in
    alleviating the restrictions on moving resources across budget activity
    groups.
        This budget request reflects implementation of accrual financing
    for the health care costs of Medicare-eligible beneficiaries, including
    their new TRICARE for Life benefits. This will entail both payments
    into the fund ($8.1 billion) to cover the government's liability for
    future health care costs of current military personnel and receipts
    from the fund (projected $5.7 billion) to pay for care provided to
    eligible beneficiaries. Our budget reflects a decrease to the DHP
    appropriation to account for the payments from the Fund and an increase
    to the military services' Military Personnel accounts to cover the
    Department's normal cost contribution. This alignment ensures
    consistency with the accrual funding for the military retirement
    pension costs under title 10, chapter 74. We ask your help in modifying
    NDAA 2001 and 2002, which currently direct that the Defense Health
    Program make the annual contribution to the accrual fund. It is the
    Military Personnel accounts that should make these payments; they have
    received increases for this purpose in the fiscal year 2003 budget
    request.
    Force Health Protection and Medical Readiness
        Even before the events of September 11, the Quadrennial Defense
    Review observed that both terrorism and chemical and biological weapons
    would transform the strategic landscape for the Department. The
    terrorist acts of last fall placed us on a war footing and escalated
    the urgency of our need for preparedness. The MHS has numerous
    activities underway to ensure that preparedness, including formation of
    a high-level working group with Department of Health and Human Services
    representatives to improve collaboration on defense against biological
    and chemical terrorism. Deliberations continue on the future of the
    anthrax vaccine immunization program now that we have confidence in an
    assured supply of FDA-approved vaccine. The MHS has also placed renewed
    emphasis on training military health care personnel in recognizing
    symptoms of and refreshing treatment plans for exposure to chemical and
    biological agents.
    TRICARE
        This military health program benefit provides an essential and
    interdependent link between medical readiness and everyday health care
    delivery. Meeting the force health protection responsibilities of the
    MHS depends upon the success of TRICARE in providing both quality
    health care and challenging clinical experiences for military health
    care providers. Very important to this success is a stable financial
    environment. The President's fiscal year 2003 budget request for the
    DHP provides that stability.
        TRICARE's success also relies on incorporating best business
    practices into our administration of the program, specifically our
    managed care contracts. Our new generation of TRICARE contracts (T-NEX)
    will encourage best business practices by the contractors without over
    direction by the government. Also, we are working with the Department
    of Veterans Affairs to make sure that T-NEX provides appropriate
    opportunities for VA participation in provider networks. We have
    listened to the advice of industry and our beneficiaries on how to
    structure these contracts, and we are confident that the design will
    help us to continue providing high quality care. We enter this new
    generation of contracts with a commitment to our beneficiaries to earn
    their satisfaction and to ensure continuity of quality services.
        Implementation of TRICARE for Life has proceeded exceptionally
    well. As in all new program startups, we have experienced problems.
    Nevertheless, we aggressively handle each one until we reach a
    satisfactory resolution. Since the October 1, 2001 start date, we have
    processed over ten million claims and the overwhelming majority of
    anecdotal information we receive is that our beneficiaries are
    extremely satisfied with TRICARE for Life. They speak very highly of
    the senior pharmacy program as well. This program began April 1, 2001,
    virtually problem-free, and as of April 1 this year, 10.2 million
    prescriptions have been processed, accounting for over 562 million in
    drug costs.
    Coordination with Other Federal Agencies
        The MHS has built many strong relationships among other Federal
    agencies--including Congress, professional organizations, contractors,
    and beneficiary and military service associations. These relationships
    facilitated the MHS's ability to respond in the aftermath of terrorist
    actions last fall. The MHS role in homeland security responsibilities
    will span an array of Federal, State, and local agencies and will
    demand effective cooperation among all involved. Our close working
    relationship with beneficiary associations and contractors led to the
    smooth implementation of TRICARE for Life.
        DOD's collaboration with the Department of Veterans Affairs dates
    back many years and much has been accomplished. We have eight joint
    ventures throughout the country providing coordinated health care to VA
    and DOD beneficiaries. We have over 600 sharing agreements in place
    covering nearly 7,000 health care services. However, not all of these
    agreements are fully utilized. Eighty percent of VA facilities partner
    with us through TRICARE networks, but the level of participation by VA
    within the TRICARE network varies. Our Reserve components capitalize on
    education and training opportunities with over 300 agreements in place.
    With the Indian Health Service, both will collaborate in the Federal
    Health Care Information Exchange, which will enable DOD to send patient
    health care information on separated servicemembers to the VA. While we
    have achieved many successes, it is time to reinvigorate these
    collaborative efforts to maximize sharing of health resources, to
    increase efficiency, and to improve access for the beneficiaries of
    both departments. The focus of our efforts is to move the relationship
    with the VA from one of sharing to a proactive partnership that meets
    the missions of both agencies while benefiting the servicemember,
    veteran, and taxpayer. DOD has provided office space, administrative
    support, and functional experts to ensure the Task Force accomplishes
    its mission of improving coordination of health care for veterans and
    military retirees.
    Military Medical Personnel
        The Quadrennial Defense Review directs development of a strategic
    human resource plan to identify the tools necessary to shape the
    military force with adequate numbers of high-quality, skilled
    professionals. The MHS depends on clinically competent, highly
    qualified, professionally satisfied military medical personnel. In
    developing the MHS human resource plan, we have begun several
    initiatives to determine retention rates, reasons for staying or
    leaving the service, and what factors would convince one to remain in
    the military. The challenges of military service can be unique and
    tremendously rewarding personally and professionally.
        As the MHS pursues the many initiatives outlined above, it will
    become even stronger. The MHS's continued mission-oriented focus on its
    primary mission responsibilities has further cemented its world-
    renowned stature as a leader in integrated health care.
                            military funeral honors
        Since the signing of the National Defense Authorization Act for
    fiscal year 2000, the Department has worked tirelessly to ensure that
    our Nation's veterans receive military funeral honors. It is our
    national obligation to demonstrate the Nation's gratitude to those who,
    in times of war and peace, have faithfully defended our country. The
    rendering of a final tribute and recognition to our Nation's veterans
    is an important tradition in the Department of Defense. Faced with one
    of the largest active and Reserve military drawdowns in history, and
    the increasing numbers of World War II-era veterans' deaths, this has
    been a challenging mission, but one to which we remain committed.
        Our recent policy directive clearly delineates the military
    services' responsibility to provide military funeral honors upon
    request. Additionally, we distributed a military funeral honors kit to
    every funeral director in the country and activated a military funeral
    honors web site. Each has significantly enhanced the ability of the
    military services to respond to requests.
        Recently, we initiated another program called the Authorized
    Provider Partnership Program. This program allows us to partner with
    members of veterans service and other appropriate organizations to
    augment the funeral honor detail. The program will enhance our ability
    to provide additional elements to the funeral ceremony. The Authorized
    Provider Partnership Program symbolizes the continuity of respect for
    deceased veterans by those who are serving and by those who have served
    in the armed forces. Our overall and sustained goal remains the same:
    to render appropriate tribute to our Nation's veterans and honor those
    who serve.
               benefits for reserves and national guard personnel
        On September 11, the response of our National Guard and Reserve men
    and women was both quick and complete. They volunteered and responded
    to the Nation's needs without hesitation. Many reported to their
    armories and Reserve Centers without being asked. Before the fireball
    disappeared from above the Pentagon, Air National Guardsmen and Air
    Force, Navy, and Marine reservists were patrolling the skies over
    Washington, DC, New York, and several other American cities. At the
    same time, New York guardsmen were on the streets of lower Manhattan
    assisting New York emergency service workers. Maryland, Virginia, and
    District of Columbia guardsmen were patrolling the hallways and
    exterior of the still burning Pentagon on September 11. By the next
    morning over 6,000 guardsmen and reservist were on duty--all
    volunteers.
        Today, we have over 90,000 National Guard and Reserve men and women
    supporting Operations Noble Eagle and Enduring Freedom. They are
    performing force protection and security duties here in the United
    States, flying refueling missions over central Asia, and are on the
    ground in Afghanistan. At the President's request, about 7,000 Army and
    Air National Guardsmen are protecting our airports.
        The Total Force policy and our integration efforts of the past
    decade are paying great rewards today. On no notice, America's National
    Guard and Reserve were ``ready to roll.'' Their enthusiasm for the
    mission remains high. They are in it for the long haul. We are
    judiciously managing the force to ensure fair and equitable treatment
    of our Reserve component members, but the bottom line is they are
    committed and capable warriors in the war on terrorism.
        When we call upon the Guard and Reserve, we need to make sure their
    service is productive and meaningful, and that we make every effort to
    take care of them and their families. With the help of Congress, there
    have been many improvements in protections and benefits for mobilized
    reservists and their families since the Persian Gulf War.
    Health Care
        Yet there is more we can and need to do. The transition to a
    different health care system is sometimes not as smooth as we would
    like. To help ease that transition, the Department has undertaken a
    demonstration project that (1) waives the TRICARE deductible fees, (2)
    removes the requirement to obtain a non-availability statement before
    being treated outside military medical treatment facilities, and (3)
    authorizes health care payments up to 15 percent above the allowable
    charges for care provided for non-participating TRICARE providers.
    Civilian Employer Relationships
        We have also encouraged the Secretaries of the Military Departments
    to exempt the service performed by those who volunteer for duty in
    support of Operations Enduring Freedom and Noble Eagle from counting
    toward the Uniformed Services Employment and Reemployment Rights Act 5-
    year limit.
        The increased reliance on the Reserve components to support
    national security directly affects the civilian employers of Guard and
    Reserve members. The Reserve commitment is no longer one weekend a
    month and 2 weeks during the summer--which was the traditional training
    regimen for the Reserve components. We have now established a new
    paradigm in which we call upon reservists to leave their civilian jobs
    more frequently to perform military duty, often at a time when
    businesses are streamlining their workforce and are relying on their
    reservist-employees to be in the civilian workplace. This places a
    burden on civilian employers who must sustain their business operations
    with fewer employees, while their reservist-employees are fulfilling
    their military obligation and performing their military duties. From an
    employer perspective, this affects their bottom line. Whether a for-
    profit company or not-for-profit organization, the effect of calling on
    their employees to serve in uniform is essentially the same for all
    employers. The employer must make difficult decisions such as
    redistributing the workload among other employees (overtime), hiring
    temporary replacements (additional payroll expense), or reducing
    production or services (reduced profit or decreased services provided).
        If the Department is to continue to call upon these shared human
    resources, we must determine what actions the Department can take to
    identify employers of Reserve component members. We must increase our
    focus on employer support efforts, improve communications between the
    Department and employers, identify future actions that will provide
    some relief for employers when we call upon their reservist-employees,
    and strengthen the relationship between the Department and employers
    that will enable us to continue to use our shared employees.
    Reserve Force Employment
        We also recognize that the process for employing Reserve component
    members, given the wide array of different duty categories in which
    they can serve, is unnecessarily complex and confusing. We have
    undertaken a comprehensive review to determine if greater efficiencies
    and increased flexibilities are possible in the process of employing
    National Guard and Reserve units and individuals. Associated
    compensation and benefits are also being addressed to identify and
    eliminate disparities between the active and Reserve components.
    New Missions
        Finally, the Secretary's call for transformation of the Department
    has offered new opportunities to look for innovative uses of the
    Reserve components. One area we are exploring is the growing shortage
    of cutting edge professionals in key areas such as biometrics and
    information technology that exists worldwide. One possibility might be
    to attract and retain individuals with cutting edge civilian skills in
    the Reserve components. Civilian industry would keep their skills
    sharp, yet they would be available when we needed them--putting the
    right person with the right skill in the right place at the right time.
    This may require building on or expanding some existing programs to
    better capitalize on civilian acquired skills; encouraging innovative
    forms of Reserve component participation such as virtual duty or remote
    duty; creating new ``critical specialty'' categories of Reserves that
    are incubators for new and emerging talent pools rather than way
    stations where reservists are managed; and identifying innovative ways
    to foster partnerships with leading edge firms in which we could share
    individuals with cutting-edge technology skills.
                                   conclusion
        Mr. Chairman, this concludes my statement. I thank you and the
    members of this subcommittee for your outstanding and continuing
    support for the men and women of the Department of Defense. I look
    forward to working with you closely during the coming year.

        Senator Cleland. Thank you very much, Mr. Abell.
        I would like to go to Senator McCain for any comments or
    questions.
        Senator McCain. I thank you very much, Senator Cleland. I
    want to thank you for your sponsorship of our Defend Our
    Freedom Act and I hope that we can act on the military portion
    of it in the markup of our bill.
        Secretary Abell, we all know that Guard and Reserve people
    are being extended now on active duty. Many of them are glad to
    serve. To many it is a great hardship. Unfortunately, because
    of the nature of the war, the conflict that we are in, we
    really do not know how long we are going to have to keep some
    of them; is that not correct?
        Mr. Abell. Yes, sir.
        Senator McCain. That makes for future problems possibly in
    recruiting and retaining people in the Guard and Reserve if it
    is not clear to them how long they may have to remain on active
    duty. My staff has had numerous discussions with you about this
    provision that we would like to add to the President's National
    Service Freedom USA Act, I believe. The President has strongly
    supported and actively campaigned--just this week he was out
    speaking, I think very eloquently, about the need for
    volunteerism and national service, and I know that he has met
    with staffers from the White House on this issue as well.
        My question to you is, I am sure you have thought about it
    and have some ideas, and I wonder if you have any thoughts or
    opinions that perhaps you could offer that would help us in
    trying to formulate this legislation and move it through the
    committee at this time?
        Mr. Abell. Yes, sir. I have given it some thought, and I
    should just be frank with you and say I have not vetted my
    thoughts within the Department or within the administration. My
    conversations with folks in the White House have been very
    informal.
        But as to the military component of it, one, we are very
    proud that the President and you have included military service
    as a part of national service. That is an important recognition
    to us.
        Senator McCain. Would you preface your comments with this
    Guard and Reserve active duty issue that I alluded to?
        Mr. Abell. Sir, we could not prosecute the war without the
    Guard and the Reserve. I take the President and the Secretary
    at their word that it is going to be a very long war, and the
    uncertainty is a difficulty for the Guard and Reserve. We are
    even as we speak conducting a 6-month review of our callup in
    the Department to see what can we do, do the missions still
    reflect the initial callup? Are there some that we can release?
    What might the future portend and how can we address the needs
    of the force with the expectations of the Guard and the Reserve
    members and their families?
        I am hopeful that in the very near future we will be able
    to communicate with the individual members and their families
    as to how long they should plan on being called up and then
    what the future may portend for that.
        Senator McCain. Please go back.
        Mr. Abell. Yes, sir. As far as the military component of
    the act that you and Senator Bayh have proposed, it seems to
    me, sir, that there is something there that is very workable.
    It is a great idea. My concerns are about the length of time. I
    would like to be able to have folks who enlist under this
    program have sufficient time after their initial training to be
    able to deploy to an overseas assignment or to take a full tour
    on-board a ship, whether it be Marines or Navy.
        In my view, that probably is in the order of say 15 months
    or so of service after their initial training. I think that in
    discussions with your staff there are some very interesting
    incentives that we might add to this program to offer it. We
    are trying to be very active in attracting the college market,
    and I would think that an incentive that would offer repayment
    of a certain amount of an existing educational loan would be
    very positive.
        I note from some of the information I have seen in the New
    York Times that the average would be around $18,000. I am sure
    we could find a number up there that would be mutually
    acceptable.
        It is also possible to use the Montgomery GI Bill as an
    incentive for a shorter term of service, to modify the
    Montgomery GI Bill to say, in return for offering us this
    service, we would offer you a scaled-down version of the
    Montgomery GI Bill benefit. For those who do not choose to take
    advantage of further education or whose education loans are
    paid for, if on their separation we could be able to offer them
    a modest, by defense means, maybe not modest by individual
    perspective, severance bonus for taking advantage of this
    national service program, and again I would just pick the
    number $5,000 out of the air. There may be a more
    scientifically derived number somewhere along the line.
        It would seem to me that we could offer those benefits as a
    series of options from which a potential recruit might select
    one as their choices of how they would like to be incentivized
    for their national service.
        The first principles that I believe are necessary and I am
    sure you share are that every recruit has to meet the same
    physical, moral, and ethical standards as any other recruit,
    and that every servicemember, no matter what program under
    which they enter, would have the options to extend or reenlist
    and stay with us for a longer time if they find military
    service to be their calling.
        Senator McCain. I thank you, Mr. Secretary, and I
    understand those are your personal views because they have not
    been vetted through the system. I just would make a couple
    points.
        One is that it is clear that the President would like to
    see action soon on this whole issue of national service and
    volunteerism. I think that is why he spent so much time out
    talking to the American people about it. Therefore I hope that
    we could get the official endorsement of at least of some of
    your ideas as we go through the markup process.
        I think it would be much more efficient to do that as part
    of the defense authorization bill as opposed to trying to go to
    the floor when the national service bill came up and amend
    that. I think it is a much more orderly fashion, although we
    would go that way if we had to.
        There is one other point. Every time I look around, there
    is another requirement for homeland security. We all know about
    ports, nuclear power plants, reservoirs, airports, the list
    goes on and on and on. Every time I walk through the airport,
    which is frequently, I see these Guard members standing there,
    and you could argue whether they were required or not. It would
    be an academic discussion, but the fact is they are there, and
    they are taking their time away from their home, their family,
    their job, to serve the country.
        I would envision that a lot of these people that we are
    talking about under this program could fulfil some of those
    homeland security requirements, which I just do not believe the
    Guard and Reserve are capable of performing for an unlimited
    period of time. Otherwise you are never going to get anybody to
    join. Why not join the active duty component if you are going
    to be on active duty all the time, as opposed to Guard and
    Reserve?
        Those are just thoughts that I had, and I would hope that
    we can get some official recommendations from the Pentagon. I
    thank you for your discussions with the staff and your already
    very helpful and constructive suggestions as we move forward.
        Finally, I would like to thank the chairman for his
    commitment on this issue. I do not think there is anybody that
    embodies more the concept of national service than the
    chairman. I thank you, Mr. Chairman.
        Senator Cleland. Thank you very much, Senator, and thank
    you very much for your leadership in terms of making it
    possible for Americans to participate in defending their
    homeland and participating as Americans. We appreciate that.
        Mr. Secretary, a word to the wise. It would be nice to hear
    from the administration in this regard. I will say that it is
    interesting that the Reserves were created for Reserves in a
    military sense. It is not wise to commit your Reserves in a
    wartime capacity for a long period of time. Otherwise you have
    no Reserves to commit if something else happens badly somewhere
    in the world.
        Second, the Guard was created pretty much for the home
    guard. In my experience, I have heard from Guard members in my
    State and they say they signed up to guard Albany, Georgia, not
    Albania. So I think that we have to keep things in perspective
    here. Certainly in the wake of 9-11 we all realize each one of
    us in terms of a homeland security role can be each other's
    first responder. So we have our work cut out for us.
        Thank you very much, Senator McCain.
        Senator Nelson.

                STATEMENT OF SENATOR E. BENJAMIN NELSON

        Senator Ben Nelson. Thank you, Mr. Chairman.
        I want to thank our panelists for being here today. I
    appreciate, Secretary Abell, the review that you are making on
    the rotation of our reservists and Guard. In a visit to
    Afghanistan, Pakistan, and Uzbekistan, it was the one point
    that was made quite often, that is the uncertainty as to their
    future. These folks had jobs when they left and hope they have
    the jobs when they get back and are able to get back to their
    ordinary lives, clearly. Not one complaint about serving, but a
    question about the uncertainty of the length of the service and
    what would be required, even though they did understand that it
    was not an easy thing to determine.
        Another area that I would like to get your reaction to,
    both of you: we recruit an individual and retain the family, so
    clearly family benefits become extremely important in the
    second part of the process. They are also important in the
    first part, but most single people are not worrying about child
    care centers, they are not necessarily worried about all the
    family benefits.
        In my experience in private life, one of the best things
    that we ever were able to do with employees is to give them a
    periodic listing--when I say ``periodic,'' I mean at relatively
    short intervals--of the benefits that they receive and what the
    true market value of these benefits are. For competition
    purposes I can assure you that people in the private side are
    doing that.
        If we are being competitive we ought to be able to identify
    benefits. For example, I am shocked that I cannot get a daily
    accounting of what my pension contributions are. I get it
    occasionally. But on the private side I can call and I can find
    out what my 401-K is doing. The Government does not always ring
    its bell as loudly as it can. This would be an area where I
    think we could do a great deal for educating and informing our
    personnel.
        I wonder, if you are doing something like that right now,
    how extensive is it, and how beneficial have you found it?
    Usually you get a pay slip that tells what your pay is, what
    was deducted, where it went, stuff like that, but you do not
    get an explanation of the value of the benefits that are not
    taxed that you are receiving.
        Mr. Abell. Senator, that is a good point. When I was
    growing up in the Army, we would get exactly that list
    occasionally, I think once a year.
        Senator Ben Nelson. That is probably not often enough,
    because you forget from year to year.
        Mr. Abell. Yes, sir. In preparing for this hearing, one of
    the questions I asked is do we still do that, and the answer is
    no. Somewhere over the years that practice has lapsed. So then
    I said: All right, well then, just show me the list of benefits
    so that we can work from there. Again, quiet in the room.
        So this hearing has been beneficial from the perspective of
    at least we have assembled all in one spot, at least what we
    believe is all in one spot, a comprehensive list of the
    benefits, and we are in fact discussing this exact point as to
    how best to array the list of benefits and their apparent
    value.
        Senator Ben Nelson. If it helps you in the process, you
    should let them know that I will continue to ask the question
    until it gets answered.
        Mr. Abell. Sir, that will be motivation for us.
        Mr. Stewart. Senator, I would like to add. That is a point
    that we found when we were doing our work, that servicemembers
    just are not aware of what benefits are available to them. So I
    think it would do a lot for the individual servicemember to
    know just what benefits there are, and then if you could put
    some value with those benefits I think that would be a real
    revelation for most of them.
        Senator Ben Nelson. It would help if you can do it in a way
    so it is informational as opposed to disclosure. Disclosure is
    what you get with a stock, something you cannot read, it is too
    thick, and you cannot understand it. Information is something
    that is readily understandable, presented in a user-friendly
    manner so that people can truly understand it.
        In that regard, one of the competitive benefits that is
    being offered by a lot of employers today is the child care
    center. We had some inquiries from Offutt Air Force Base in
    Nebraska and we have heard this from other military bases, that
    we do not have that child care center. If we are going to be
    focused on the family, that is one of the best things that can
    be done, and the cost of providing that service is relatively
    small in comparison to what the value is to the military
    personnel.
        I would hope that as we try to retain that family that
    those incentives can be considered. Clearly, to recruit and
    find a way to be able to help reduce the education debt, the
    loan, that is a tremendous advantage. I think in the Senate we
    have something comparable to that for personnel. It seems to me
    that we do not need to engage in give-away programs, but until
    our recruitment and our retention is at the level where we want
    it to be and until we are more than adequately competitive with
    the private sector, I think we have to continue to look for
    those types of benefits that will be helpful.
        I am pleased that we are increasing the base pay. Clearly,
    we do not want to lag behind in that area. But it is not the
    only thing that matters. If you do surveys among your
    personnel, very often you will find that it is not just the
    base pay that they focus on, but it is on other things,
    benefits being one of them, and esprit de corps obviously when
    it comes to the military is a major factor there.
        I think that is everything I have right now, Mr. Chairman.
    Thank you very much for responding, and for that motivation.
    Let them know that the next time we are together I am going to
    be asking to see the explanation. It can be presented in a very
    user-friendly way, and I think you will find it a useful tool.
        Mr. Abell. We will go to work on it, sir.
        Senator Ben Nelson. Thank you.
        Senator Cleland. Thank you very much, Senator Nelson.
        Mr. Abell, recent press reports indicate that a Pentagon
    plan to give some servicemembers the chance to transfer GI Bill
    benefits to family members appears to be unraveling. Would you
    like to comment on the Department's plans to implement the
    authority given by Congress to transfer unused GI Bill benefits
    to family members? Bring us up to date on that, please, sir.
        Mr. Abell. Yes, sir. The Navy has a plan that they intend
    to implement or begin implementing in June, I believe, that
    will allow in categories selected by the service secretary
    folks to take advantage of your legislation and transfer some
    part of their GI Bill benefit in return for a commitment. The
    Air Force has a plan that is a little less developed, that they
    intend to implement in October, I understand, pretty much along
    the same lines.
        The Army and the Marine Corps are not as far along. As a
    matter of fact, as I have discussed this with them they have
    not yet identified funds they would use to sponsor such a
    program. They have indicated interest, but they have not yet
    identified any funds.
        Senator Cleland. In the famous words of Senator Nelson, I
    will continue to ask the question.
        Mr. Abell. I am confident of that, sir.
        Senator Cleland. Mr. Stewart, you pointed out spousal
    employment, that in a married force the happiness of the spouse
    is important. You know the old adage, if mama ain't happy,
    ain't nobody happy. In order to keep mama happy or the spouse
    happy, part of that is gainful employment.
        One of the things I was thinking about in terms of the
    transferability of the GI Bill was also the ability of the
    spouse to go to school and therefore be qualified for better
    employment. Did you come across anything in your studies to
    indicate either a desire or some need for improvement by the
    Pentagon in this regard, to provide some of those kinds of
    encouragements for spouses to be happy?
        Mr. Stewart. The spousal employment program is a big issue.
    The DOD has had a formal program since 1985, but more attention
    has been paid recently to the program. There are still a lot of
    unemployed spouses, as I mentioned, who are seeking work. But
    the Department has a number of initiatives underway. For
    example, they are working with the Department of Labor to deal
    with a number of the State issues for relicensing and
    recertification when spouses move from one State to another,
    and they have to requalify again. That initiative is underway.
        The Department of Defense has several initiatives underway
    where they are partnering with private sector firms like
    Marriott and CVS to provide employment for military spouses.
        So the Department has a number of initiatives that should
    help to allay some of the concerns of the spouses.
        Senator Cleland. Mr. Stewart, I have often thought that
    maybe the biggest single change in the military since I served
    in the Vietnam War era 35 years ago was not so much that the
    military became a volunteer service, but that it became a
    married force. The volunteer part it seems can be a plus. It
    can be looked at as part of an elite unit. I know the Army is
    going to the black beret. Every soldier out there wears a black
    beret now. In many ways the military is now used very actively
    and very aggressively. One might say in special operations
    every operation is different. It is an elite unit that we put
    out there, the best and the brightest.
        The volunteer part can be dealt with somewhat. The married
    force part seems to me a very deep and abiding challenge. On
    the retention end, we always knew that education was a powerful
    part of recruitment and it still is. The advertising campaigns
    for recruiting and the massive investment in recruiters, all
    that is well and good.
        The problem it seems to me, though, is that we are not just
    looking for warm bodies. We are looking for talented, skilled
    people to fight smart wars with smart weapons. The smarter the
    individual, the better we like them, because they are more
    trained and talented and so forth.
        In many ways we are going after the same people that
    corporate America, universities, and other high tech endeavors
    are going after. Also, not just in recruiting, but in
    retention--it seems to me that something happens after the 4,
    5, 6-year mark, that if you were not married when you came in
    the odds are, after 6, 7, 8, 9 years, you are going to be
    married. That then begins to take over and drive the retention
    decision.
        I was out in Japan and an admiral mentioned to me at one of
    the naval bases there that the decision to remain in the Navy
    is made at the dinner table. This whole complex of issues,
    including education, health care, education for the youngsters,
    both K through 12 and on to college later, all of a sudden
    becomes a complex of issues generally called quality of life
    that drives that retention decision, and it is a family
    decision.
        The happiness of the spouse is one of the reasons I tried
    to move the educational piece to a more family-oriented asset,
    and that is one of the reasons we commissioned you to look at
    the series of benefits out there.
        Is it your conclusion that we still have work to do in
    being alert to the needs of family members, particularly in
    terms of being sensitive to their retention needs?
        Mr. Stewart. The DOD has done a remarkable job in
    addressing the needs of the family. Numerous family-friendly
    benefits have been implemented and there are plans to expand
    existing ones. Two of the three we identified--spousal
    employment and expanding the capacity for child care--those are
    issues that the DOD is aware of and is working on.
        The maternity-paternity leave program is an issue that I am
    not sure that the DOD is addressing. If you look at who is
    getting higher education, it is more and more women. More women
    go to college than men. If we are talking about recruiting
    high-tech, highly skilled people, you have to look at
    recruiting more women. The DOD does not project the number of
    women that will be coming into the force 3 years from now, 5
    years from now, 10 years from now.
        We think that some attention needs to be paid to that and
    then look at your benefits to see what combination of benefits
    you need to have to attract and retain female servicemembers,
    given that they are going to become mothers, et cetera.
        The study we did several years ago was very interesting.
    Over 2,000 women left active duty service before completing
    that initial enlistment period that they signed up for,
    anywhere from a 2- to 6-year contract, 4 years being typical.
    When they leave before that 4-year commitment is up, that costs
    the taxpayer. The cost of recruiting has soared and the cost of
    training continues to go up.
        When we did our report back in 1998, the cost to attract
    and train just through the first 6 months was $35,000 per
    recruit. I am sure it is up from that now. That is a heavy
    investment to make in an individual to have them leave after 7
    or 8 months of being in the force. That is an issue that we
    think DOD really needs to pay some attention to.
        But in general, Mr. Chairman, the benefits are outstanding.
    They exceed what you will find in the private sector. We do
    think that the servicemembers are not aware of all that they
    are getting and that DOD needs to go on a real campaign to make
    the members aware of just what they are getting and how that
    compares to the private sector.
        Senator Cleland. Ring the bell, as Senator Nelson has put
    it.
        It seems to me that we have to be outstanding. We are in a
    volunteer world here, and we are trying to retain a family. It
    does seem to me that the benefits have to be pretty outstanding
    because the stresses on that family are unbelievable. It is not
    like being married to a corporate executive. When you are an
    Apache helicopter pilot out at Fort Stewart, Georgia, you are
    gone all the time. If it is not Kuwait, it is Bosnia. If it is
    not Bosnia, it is Afghanistan. If it is not Afghanistan, it is
    South Korea. You are gone all the time, and the stresses and
    strains on the family are very serious.
        That is why all of us are searching for a way to make the
    military itself more family-friendly.
        Moving on that point, the commissary benefit is one of the
    most prized benefits for servicemembers. It does seem to me
    that it fits right in with the family-friendly approach that we
    need to take. The commissary benefit feeds that family, and it
    is looked upon as a benefit, and you have it charted here as a
    benefit.
        I will say it is one of the benefits out there that, based
    on anecdotal evidence, people really know that they have. They
    see it, feel it, taste it. They know they have it, they
    appreciate it, and they do not want anything to happen to it.
        Mr. Abell, this brings me to my next point: I understand
    that the administration's budget proposes significant cuts in
    appropriated funds support for commissaries, and this will
    result in personnel cuts of over 2,500 positions. I understand
    that commissary store managers and employees and commissary
    patrons are very concerned that these reductions will mean cuts
    in store hours, poorly stocked shelves, and longer checkout
    lines, and that seems to fly in the face of everything we are
    trying to do here.
        At a time when we are calling up the Reserves, building up
    our military, deploying forces overseas, and leaving their
    families behind in increasing numbers, why is the Department
    cutting the commissary system with no real knowledge of the
    impact these personnel and funding cuts will have on the
    quality of the benefit?
        Mr. Abell. Mr. Chairman, I am aware of the various letters
    and media reports in that regard. I do not accept those as
    totally accurate. With numbers, they can be shredded a variety
    of ways. What I will tell you is that we have listened to the
    patrons, we have talked to the commissary agency, and I have
    met with and listened to the various industry representatives.
    I am trying to discover where ground truth is in there.
        There are some cuts that the DeCA director, the Director of
    Commissary Agency, has recommended and implemented within his
    budget. The Department in its budget submission this year
    funded the full amount that the director requested. But he did
    recommend some personnel cuts.
        His take is that those are based on a template that was
    tested and will not result in a diminution of the benefit or
    service at the store. I do understand that there are contrary
    views to that. We have some folks going to look for us. What I
    will tell you is the patron surveys available today do not show
    a dissatisfaction.
        I am not naive. I understand that sometimes you do not hear
    about the results of a cut until after the cut has been in
    effect for a while. We are aware of that.
        The DeCA director will change this summer. My first charge
    to the new director will be to go out and make sure that he or
    she agrees with the cuts of the current director and to make
    sure, one, that there is no diminishment of the benefit and,
    two, that service does not suffer.
        Having said all of that, we are going to squeeze the
    inefficiency, the bureaucracy, and the layers out of DeCA as
    tightly as we can to make sure that the subsidy to the
    commissary benefit is not any more than it has to be to
    maintain the current benefit, about 30 percent savings.
        Senator Cleland. I realize the position that you are in,
    but I will tell you, we are asking our military to do almost
    incredibly impossible things. We have young men and women
    getting shot at and killed by the week. We are dipping in the
    Guard and Reserves. Our Army Chief of Staff said he is 40,000
    people short. On this committee and in Congress we may have to
    extend the basic level of the ceiling of DOD authorization. We
    may have to extend the end strength. We need more people to
    fulfill these commitments around the world.
        I just think it is the wrong time to begin cutting back on
    the commissary system which is a perceived benefit, especially
    by the spouses of our young men and women out there.
        On another issue, recent press reports state that our
    medical treatment facilities in Europe do not have enough
    vaccine for routine scheduled childhood vaccinations of the
    sons and daughters of our servicemembers assigned to European
    commands. Is that true?
        Mr. Abell. Mr. Chairman, I am not aware of that. I will
    find out and get back to you.
        Senator Cleland. We would appreciate that very much.
        [The information referred to follows:]

        Mr. Abell. There is a nationwide shortage of five vaccines
    (Diphtheria, Tetanus, and Pertussis (DtaP); Tetanus-Diphtheria (Td);
    Measles, Mumps, and Rubella (MMR); Varicella; and Pneumococcal
    Conjugate). DOD is following the guidelines from the Center for Disease
    Control (CDC). The services are aware of the shortages and the CDC
    guidelines. This information has been transmitted to each MTF. Our
    policy is to track the children who need the vaccines and, once vaccine
    becomes available in that area, the parents are notified and the
    vaccines administered.
        The recent (April 4) European Stars and Stripes article noted the
    shortages in Europe. The article stated that the Air Force was
    following the guidelines but that the Army was not notifying families
    when vaccine became available. The article reported that the Army had
    put the burden on the parents to check back to see if vaccine was
    available. The article was wrong and the correct Army procedures were
    reported in a subsequent European Stars and Stripes article (April 7).
    We are pushing lots of the shortage vaccines that we can procure
    through the medical logistics system to vaccinate as many of our
    children as possible. We will get all of them eventually, but the
    burden to notify parents of the availability of vaccine is a MTF and
    command responsibility.

        Senator Cleland. Mr. Stewart, not to beat this too badly,
    but your report documents the increased importance of spousal
    employment to military families. Do you have any suggestions
    yourself as to what you would do to enhance the chances for
    spousal employment in the Department?
        Mr. Stewart. Mr. Chairman, the DOD has a number of
    initiatives underway. I think that we will have to let those
    play out, and if they work the way that they are planned that
    should do a lot to relieve that situation. Again, part of the
    problem is frequent relocations. The spouses do not have a
    chance to build up tenure at a particular job, and so they make
    a little less than most folks because they move around a little
    bit more.
        If the spouse is a teacher or in a medical profession where
    they have to be licensed and they move from one State to
    another, then they have to get relicensed and recertified all
    over again. Those obviously are barriers to employment.
        But the Department of Defense recently partnered with the
    Department of Labor to see what can be done about situations
    like that from State to State. I think this is a situation that
    the Department has begun to devote some attention to recently,
    and we just need to see that play out. I think that is going to
    make the situation better.
        Senator Cleland. I thank you.
        Mr. Abell, in our conference report for last year we
    required the Secretary of Defense to examine existing
    Department of Defense and other Federal, State, and non-
    governmental programs to improve the employability of military
    spouses and help those spouses gain access to financial and
    other assistance. The Secretary was supposed to report the
    results of this examination by the end of March. Do you happen
    to know the status of this examination at all?
        Mr. Abell. Yes, Mr. Chairman, I do. I am embarrassed to
    tell you that the report is not ready. As I checked yesterday,
    the best estimate I could get was that it probably would not be
    available to you until November, and I apologize for that.
        Senator Cleland. We look forward to that report.
        Mr. Abell. Yes, sir.
        Senator Cleland. If there are no further questions, the
    first panel is adjourned. Thank you, gentlemen, for being here.
    We will take a 10-minute break and then hear from our second
    panel.
        Mr. Abell. Thank you, sir. [Recess.]
        Senator Cleland. I would like to welcome the members of our
    second panel, who are here to represent our beneficiaries. Your
    views are tremendously important to us. We would like to
    welcome Mr. Joseph Barnes of the Fleet Reserve Association to
    address pay and allowances issues; Ms. Joyce Raezer of the
    National Military Family Association, to address family issues
    and readiness; Mr. James Lokovic of the Air Force Sergeants
    Association, to address retired pay and survivor issues; Mr.
    Michael Cline of the Enlisted Association of the National Guard
    of the United States, to discuss Guard and Reserve issues; and
    Dr. Sue Schwartz of the Retired Officers Association, to
    address health care issues.
        We received your prepared statements, and they will be
    included in the record. I would like to give each of you an
    opportunity to issue your opening statement. Why do we not
    start with Mr. Barnes.

     STATEMENT OF MASTER CHIEF PETTY OFFICER JOSEPH L. BARNES, USN
      (RETIRED), DIRECTOR OF LEGISLATIVE PROGRAMS, FLEET RESERVE
                              ASSOCIATION

        Mr. Barnes. Thank you, Mr. Chairman. Thank you for the
    opportunity to present the Military Coalition's views on key
    personnel and compensation issues. I also extend the
    coalition's gratitude for the significant pay and allowance
    enhancements enacted last year. These improvements convey a
    powerful positive message to all uniformed services personnel.
    I will discuss several personnel issues, followed by my
    colleagues who will address other coalition concerns.
        The Military Coalition again recommends increasing service
    end strengths. During a House Armed Services Committee hearing
    last summer, Secretary of Defense Rumsfeld stated that we have
    a 30 percent smaller force doing 165 percent more missions. The
    services need adequate personnel to sustain the war on
    terrorism and current operational commitments.
        With regard to pay, the coalition urges the restoration of
    full pay comparability on the quickest possible schedule and to
    change the permanent law to eliminate annual pay caps.
    Servicemembers deserve annual raises at least equal to private
    sector wage growth. The coalition strongly supports the
    targeted plan being developed by DOD and additional funding
    earmarked for these increases.
        The coalition also urges the subcommittee to front-load as
    much of the remaining BAH upgrade as possible in 2003 and to
    authorize adjustments in grade-based housing standards.
        The coalition is concerned about the Department of
    Defense's interest in privatizing the commissary benefit and
    its continuing pressure to reduce DeCA's budget. The coalition
    restates its strong commitment to maintaining the commissary
    benefit as an integral part of the total military compensation
    package and its continuing opposition to privatizing the
    benefit. The intangible and highly valued aspect of this
    benefit is not quantifiable solely in monetary terms.
        DeCA's multiyear transformation plan includes an ambitious
    time line for achieving labor cost reductions. The agency's
    2003 budget is effectively reduced by $137 million to repay the
    services for funds borrowed as part of the surcharge fund
    revitalization, with the remaining reductions to be achieved
    via major staff cuts and store closures. I would note also
    that, in reference to the discussions by the first panel, many
    spouses and family members are employed in our commissaries.
        The coalition believes these reductions will negatively
    affect customer service and the objective of maintaining the
    benefit at the current level. Industry reps and some of our
    members are voicing concerns about reduced operating hours,
    longer checkout lines, less stock on the store shelves, and
    fewer store employees to do significantly more work.
        Finally, I would draw your attention to additional issues
    in the Fleet Reserve Association's statement. The first is
    extending the dislocation allowance to members retiring or
    transferring to inactive duty to assist with the expenses
    associated with their final change of station move. The second
    is a proposal to allow retention of the full final month's
    retired pay by surviving spouses of military retirees at the
    time of death.
        Again, thank you for this opportunity to present our views.
    Joyce Raezer will now discuss PCS reform and other family
    issues.
        [The prepared statement of Mr. Barnes follows:]
           Prepared Statement by Master Chief Joe Barnes, USN, (Ret.)
                                  introduction
        Mr. Chairman: The Fleet Reserve Association (FRA) is grateful to
    have been invited to present its priority personnel issues for fiscal
    year 2003. On behalf of the association's President and Board of
    Directors, I extend their appreciation for this opportunity while at
    the same time, thanking you and the members and staff of the
    subcommittee for the outstanding successes gained over the years for
    the men and women serving in the Armed Forces of the United States. FRA
    salutes each of you for a job well done.
        The FRA is the oldest and largest association in the United States
    representing enlisted men and women of the sea services whether on
    active duty, in the Reserves, or retired. Established in 1924, FRA's
    primary mission is to act as the premier ``watchdog'' organization for
    maintaining and improving quality of life for sea service personnel. In
    the past 5 years, for example, FRA led the way in a campaign to amend
    the military's ``REDUX'' retirement system for the better and provided
    a pay study referenced by Congress in the adoption of pay reform for
    mid-grade enlisted personnel in 2001, and subsequently by Congress in
    2002 with regard to further revising the pay for all noncommissioned
    and petty officers in grades E-5 thru E-9.
        In 1996 FRA sought recognition for the arduous duties performed by
    junior enlisted personnel serving aboard the Nation's naval vessels.
    Sea pay was recommended by the association only to have the proposal
    turned down by the Navy. Last year, Congress gave the Navy the
    authority to manage its sea pay program. The amounts paid to career
    personnel were increased and junior enlisted sailors again became
    eligible for sea duty pay.
        There are other issues and programs advocated by FRA over the past
    few years that are now a reality. TRICARE for Life and expanded
    pharmacy benefits for older military retirees are major benefit
    enhancements strongly advocated by FRA and other member organizations
    of The Military Coalition. (The association appreciates the great work
    and strong support of these programs by this subcommittee and its
    outstanding staff.)
        FRA is the leading enlisted association in the coalition and has
    the distinction of holding two of the six elected offices in the
    coalition President of the Coalition Corporation, and the
    Administrator. Additionally, three of nine coalition committees are co-
    chaired by members of the association's legislative staff including
    Personnel/Compensation/Commissaries, Health Care, and Taxes/Social
    Security/Medicare Committees.
                                 end strengths
        In a recent appearance before the Senate Armed Services Committee
    the Chairman, Joint Chiefs of Staff, avowed that the Armed Forces will
    defeat terrorism ``no matter how long it takes or where it takes us.''
    Missing from the statement was the promise to succeed ``no matter how
    many uniformed servicemembers are needed to do the job.''
        Since 1995, when it was obvious that the downsizing of strengths in
    the Armed Forces was causing increased operational and personnel
    tempos, FRA has annually requested increases in military manpower.
    Operational levels involving uniformed members of the Army, Navy,
    Marine Corps, Air Force, and Coast Guard have escalated significantly
    over the past decade to a point where the United States does not have
    adequate numbers of military personnel to fully accommodate the many
    commitments ordered by the Department of Defense and area commanders in
    chief.
        Today, those engagements have accelerated to meet anti-terrorism
    campaigns directed by the Bush administration, including Transportation
    (Coast Guard and Federal Aviation Administration), and other
    governmental agencies involved in homeland defense measures. Over
    70,000 National Guard and reservists are now serving in some active
    duty capacity, while increased numbers of active duty servicemembers
    are assigned duties in and near Afghanistan and in other foreign
    locations on land and sea.
        A February 5, 2002, news item in USA Today reported the Army has
    told the Pentagon it needs 20,000 to 40,000 additional troops in fiscal
    year 2003, the Air Force 8,000 to 10,000, and the Navy and Marine Corps
    an additional 3,000 each. However, the Secretary of Defense isn't
    favorable to the increase in manpower. FRA, on the other hand, must
    support the military services. Before September 11 some defense
    officials, both civilian and military, complained that uniformed
    personnel were doing more with less, were over deployed, overworked,
    and stretched thin--this during a peace-time environment. Now that the
    United States has ordered troops into Afghanistan and surrounding
    areas, military personnel are stretched much more. Nevertheless, the
    troops are serving magnificently. The question is: How much longer?
        Recently a military-oriented news source headlined two items
    dealing with deployments: ``Atlantic Fleet chief warns of higher
    operations pace'' and ``On watch for the holidays: Amphib group leaves
    early.'' Both attested to increased operational and personnel tempos.
    It's for certain that since the admiral's warning, operational tempos
    have not subsided and the military services need additional uniformed
    manpower.
        Recommendation: Congress should take heed of the need for greater
    strength authorizations and funding to ease both operational and
    personnel tempos now imposed upon a force not sufficient in numbers to
    continue the current demands for manning operational commitments.
    Although Congress did allow a small increase in the strengths of the
    Navy and Air Force, the numbers fell short of their needs. The Army and
    Marine Corps received no increase in manpower for fiscal year 2003, but
    they too are seeking increased numbers. FRA recommends Congress give
    greater credence to the needs of the individual services that have a
    greater knowledge of their manpower requirements. It may be worthwhile
    to subscribe to the following warning appearing in a Navy Times
    editorial of December 10, 2001, `Don't overextend military:' Time and
    again, America's Armed Forces have shown they'll do what it takes to
    serve their country. But history offers a warning: Work them too hard,
    keep them away from home too long, overlook their welfare and
    eventually they will walk.
                                   basic pay
        FRA is ecstatic with the 106th and 107th Congresses for providing
    pay reform for mid-career enlisted personnel in the Armed Forces as of
    July 1, 2001, and again on January 1, 2002, for this group as well as
    senior enlisted members in pay grades E-8 and E-9. FRA is particularly
    pleased that its 1999 study on mid-career noncommissioned and petty
    officers pay played a significant part in opening the path to pay
    reform for enlisted personnel in pay grades E-5 and above.
        It is the association's understanding that the Bush administration
    is seeking an additional $300 million in fiscal year 2003 to execute
    further pay reform for mid-career enlisted personnel and to target
    raises for some critical commissioned officer grades. FRA welcomes the
    President's effort to further reduce the 7.6 percent gap that now
    exists between comparable civilian wages and military pay. Most
    important is Congress' commitment to increase military pay each year by
    one-half percent more than the average wage hike in the civilian sector
    to close the pay gap by the year 2006.
        FRA salutes Congress for its resolution to provide comparable pay
    for the Nation's Armed Forces personnel. This is something that should
    have been authorized years ago when the gap was closed by two double
    digit pay increases in 1981 and 1982. In its adoption of the Uniformed
    Services Pay Act of 1981, Congress made it clear it was trying to
    restore in current dollars the relative relationship of military
    compensation to pay in the private sector ``that existed in 1972 when
    Congress adopted the all-volunteer force.''
        Congress also highlighted a requirement for further action. It
    declared that `substantial' improvements in pay rates ``are necessary
    in fiscal year 1982'' to provide necessary incentives for a career of
    military service. Additionally, the Senate found fault with the then-
    current mechanism determining comparability indices used for proposing
    annual increases in military pay, and suggested that a better mechanism
    be developed within the next year. Needless to say, budget constraints
    since then and until recently prevented any improvement in developing
    legislation addressing the pay gap.
        FRA further endorses pay reform for warrant officers but not as a
    comparison of their pay with that of the senior enlisted pay grades.
    When an enlisted member has an opportunity to accept a voluntary
    movement to a warrant officer grade, he or she continues to have the
    choice of remaining in the enlisted ranks with an expectation of
    subsequently reaching the most senior enlisted grade of E-9. If the
    choice is to leave the enlisted ranks and join the warrant grades, then
    FRA believes there is no basis to compare a warrant grade to that of a
    senior noncommissioned or petty officer. Enlisted personnel can be
    assigned to a warrant or commissioned officers' billets, while
    remaining at their enlisted grade. Warrant officers may be assigned to
    a commissioned officers' billet, but not that of an enlisted person.
    So, if there is to be a comparison, reasonably it should be between
    warrant officer grades and commissioned officer pay tables.
        Granted, FRA in its 1999 pay study did compare mid-career enlisted
    grades with mid-grade commissioned officers' pay cells. The reason FRA
    employed this contrast (as noted in the study) was attributed to a
    defense official's use of enlisted promotions and pay cells as partial
    justification to increase the pay of mid-level commissioned officers.
    However, FRA employed greater emphasis on comparisons between the
    enlisted grades before and after the advent of the all-volunteer force
    to make a case for mid-career enlisted pay reform.
        Recommendation: That Congress holds fast to its commitment to
    closing the military pay gap by 2006 through the use of higher-than-
    civilian-pay increases to military basic pay. However, in order not to
    allow military pay to again fall behind that in the civilian community,
    Congress needs to act before 2006 to repeal the law that authorizes
    capping annual military pay increases below that of civilian wages.
    Additionally, FRA recommends that future pay increases for the Armed
    Forces be based on the value of each pay grade within its own category;
    enlisted, warrant officers, and commissioned officers. Any comparison
    between categories should be based on the performance value of the
    grades reviewed. For example: If senior NCOs and petty officers have a
    greater value to the military than warrant or commissioned officers of
    certain pay grades, then the basic rate of pay for the senior enlisted
    should be of a greater premium. The opposite would also apply.
                             dislocation allowance
        Throughout a military career, servicemembers endure a number of
    permanent changes of station (PCS). Most often the moves require
    additional expenses for household relocations. Such expenses may
    include, but are not limited to, loss of rent deposits, abandonment or
    forced sale of items that must be replaced, added wear and tear on
    household goods in transit, disconnecting and connecting telephone
    service and other utilities, and the purchase of some furniture
    replacements for the new home.
        To help defray these additional costs, Congress in 1955 adopted the
    payment of a special allowance termed ``dislocation allowance'' to
    recognize that duty station changes and resultant household relocations
    reflect personnel management decisions of the Armed Forces and are not
    subject to the control of individual members. In 1989, Congress
    increased the allowance from 1 month's basic allowance for quarters
    (BAQ) to 2 months.
        Odd as it may appear, servicemembers retiring from the Armed Forces
    are not eligible for dislocation allowances, yet many are subject to
    the same additional expenses as their active duty counterparts. In
    August 2000, the Marine Corps Sergeants Major Symposium recommended the
    payment of dislocation allowances to retiring members who, in the
    opinion of the Sergeants Major, bear the same financial consequences on
    relocating as their active duty counterparts. Both reflect management
    decisions.
        Enlisted personnel, numbering two-thirds of the Armed Forces, upon
    effecting retirement know they will experience a dramatic reduction in
    pay beginning the first month of retirement. They will lose housing and
    subsistence allowances, family separation allowances, death gratuity,
    and a number of other payments and allowances earned while on active
    duty. Their retirement pay will average slightly more than one-third of
    their active duty compensation.
        Often they must seek employment knowing not what opportunities
    exist in the civilian world, where those opportunities are located,
    what the pay will be, or what will be their spouses' employment
    possibilities. Sometimes their prospective employers offer less wages
    to military retirees knowing that they are in receipt of retired pay,
    and falsely believe the retirees don't need the same salary as
    civilians applying for the same position. Additionally, the military
    retiree will have to meet financial demands for mortgages (or rentals),
    insurance, taxes, utilities, food, etc., on a smaller income that
    averages less than $1,000.00 monthly. [DOD Statistical Report on the
    Military Retirement System, fiscal year 2000, notes that enlisted
    military retirees in grades E-5 thru E-7 number 74 percent of the total
    of enlisted personnel on DOD's retirement rolls with an average monthly
    retirement check of $965.]
        Recommendation: That Congress amend 37 USC, 407, to authorize the
    payment of dislocation allowances to members of the Armed Forces
    retiring or transferring to an inactive duty status such as the Fleet
    Reserve or Fleet Marine Reserve who perform a ``final change of
    station'' move.
             termination of retired pay on date of retiree's death
        FRA believes it is insensitive for the Federal Government to
    continue recovering the balance of the retired pay of a member of the
    Armed Forces whose death occurs on any date in the final month of the
    retiree's life. Current regulations require the military's finance
    center to terminate payment of retired pay upon notification of the
    retiree's demise. Further, to recoup outstanding retired pay checks or
    direct deposit payments including any check or deposit paid for the
    month in which the retiree dies.
        Eventually, the finance center will pay the eligible survivor for
    each day the retiree was alive during the month of demise. Meanwhile,
    the eligible survivor will experience a considerable drop in income.
    The retiree, unlike his or her active duty counterpart, will receive no
    death gratuity and, in the case of many of the older enlisted retirees,
    will not have adequate insurance to provide a financial cushion for
    their surviving spouses. Although the SGLI program was initiated in
    1965, it covered the retiree only up to 120 days after the effective
    date of retirement. Retirees were then authorized to purchase an
    individual policy of permanent insurance in an amount equal to the SGLI
    coverage from any participating company in the program.
        The problem is one of finances. When the servicemember retires, his
    or her income decreases by two-thirds. As noted above, the average
    retiree is an enlisted member in grades E-5 thru E-7 (74 percent of
    total enlisted retirees in fiscal year 2000) whose monthly fiscal year
    2000 retired pay averaged only $965. It was much less in the earlier
    years. Simply stated, the majority of retirees with families could ill
    afford to convert their SGLI policies. Others believed that the
    military would pay a death gratuity to the family when the member
    passed away in retirement.
        Recommendation: Retirement and its related activities is a most
    agonizing if not an arduous experience for many military retirees and
    families transitioning to an unfamiliar civilian lifestyle. For the
    average enlisted member, finances can be a continuing concern. Upon his
    or her demise, in consideration of the member's service to the Nation
    and the trauma surrounding the member's death, the surviving spouse
    should be authorized to retain the final retired paycheck/deposit
    covering any month in which the member was alive for at least 24 hours.
                             sea and submarine pay
        Congress is to be lauded for authorizing the Navy to determine the
    pay its personnel will receive for sea and submarine duty. The Navy has
    taken steps to enhance its career sea pay program and to include junior
    personnel assigned to ships afloat. It has diverted other personnel
    funds totalling $150 million to finance the new pay rates. Submarine
    pay is another matter. The rates have not been changed for 13 years. In
    that time, the purchasing power of submarine pay has deteriorated
    significantly. There is no money in the Navy's fiscal year 2002 budget
    to increase the rates to reflect the arduous duty required of a
    submariner.
        The requirements in the performance of the duties related to both
    assignments can be mundane and repetitive, along with unusually
    excessive work hours. Today's operational commitments and shortages of
    manpower place even heavier burdens on personnel deployed on naval
    ships and submarines. They are deserving of higher rates for their
    outstanding effectiveness in discharging their mission to provide the
    United States with the world's most efficient and powerful naval force.
        Recommendation: Congress is urged to consider the sea and submarine
    duty programs as an imperative part of the Nation's vital defenses.
    Both programs should be funded independently. FRA requests of Congress
    the necessary appropriations to cover the costs of the new rates for
    the two pays as established by the U.S. Navy.
                               concurrent receipt
        The Fiscal Year 2002 National Defense Authorization Act (NDAA)
    includes a provision addressing the concurrent receipt of both military
    non-disability retired pay and any VA compensation for service-
    connected disabilities without a reduction in one or the other payment.
    Currently, the receipt of VA compensation causes a like reduction to a
    retired servicemember's military retired pay. This leads to the belief
    that retired servicemembers, earning retired pay as a result of 20
    years or more of service, are forced to pay for their own disablement.
        The fiscal year 2002 NDAA authorizes concurrent receipt but only if
    the administration seeks that authorization and includes the request
    for funding in the Federal budget. Such action is not expected and is
    not contained in the President's fiscal year 2003 budget. Although FRA
    is not privy to the administration's reason not to ask Congress to
    adopt and fund concurrent receipt, some Government officials reference
    a 1993 Congressional Research Service report that cites a number of
    programs (i.e. social security, unemployment compensation, black lung
    disease) that have offsets or limits in concurrent receipts. However,
    the report states emphatically that: ``. . . veterans' disability
    compensation is always payable fully and concurrently with income or
    benefits from nonmilitary sources because concern about preserving work
    incentives for disabled veterans and the long-standing policy that
    disabled veterans who are able to work in the private economy after
    separation from military service should not be penalized.'' (Emphasis
    added.)
        The report further noted that its review listed 25 pairs of
    programs that in a broad sense might be relevant to policies pertaining
    to military retired pay and veterans' compensation. ``However,'' the
    report warns, ``many of the program pairs are not similar enough to the
    veterans' situation to be instructive.'' (Emphasis added.)
        FRA also reminds Congress that its actions relative to tax changes
    to the military's disability retirement system forced many retired
    servicemembers to seek redress from the Veterans Administration, later
    the Department of Veterans Affairs (VA). Before 1975 all military
    disability pay was tax exempt. A perception of abuse to the system,
    mostly in the more senior Armed Forces grades, caused Congress to amend
    the Internal Revenue Code.
        The Tax Reform Act of 1976 forced the Department of Defense (DOD)
    to change the rules so that only a percentage of the member's
    disability retired pay attributable to combat-related injuries would be
    tax-exempt. Subsequently, many retiring servicemembers petitioned the
    VA for relief for service-connected injuries. (Example: A senior
    enlisted servicemember with 30 years active service, a veteran of three
    major conflicts, received a ``0'' disability upon retirement. The VA
    awarded him 60 percent, all exempt from taxation, but to receive the VA
    compensation, he forfeited an equal amount in the receipt of military
    non-disability retired pay.)
        Servicemembers, whether in uniform or retired, are considered
    Federal employees, subject not only to Title 10, U.S. Code, but Title
    5, U.S. Code, the latter that governs the conduct and performance of
    Government employees. Both active and retired Federal civilian
    employees eligible for veterans' compensation may also receive full
    benefits of Federal civil service pay or Federal civil service
    retirement payments, including disability retirement with no offsets,
    reductions, or limits.
        Recommendation: FRA encourages Congress to take the helm and fully
    authorize and fund concurrent receipt of military non-disabled
    retirement pay and veterans' compensation program as currently offered
    to other retired Federal employees--including those receiving benefits
    under the Federal Government's disability program. It is a
    constitutional requirement that Congress take the initiative in matters
    dealing with the uniformed services as well as Federal employees. For
    Congress to pass the issue to the administration is nothing more than a
    deceptive ploy to avoid responsibility. Congress must remember that
    U.S. servicemembers not only had a major hand in the creation of this
    Nation, but have contributed more than any group to the military and
    economic power of the United States for more than 200 years. Those who
    have served in the Armed Forces for 20 years or more certainly deserve
    the opportunity to have equity with their counterparts in the Federal
    service.
           uniformed services former spouses protection act (usfspa)
        The USFSPA was enacted nearly 20 years ago, the result of
    congressional chicanery that denied the opposition an opportunity to
    express its position in open public hearings. With one exception, only
    private and public entities favoring the proposal were permitted to
    testify before the Senate Manpower and Personnel Subcommittee. Since
    then, Congress has made 23 amendments to the act, 18 benefitting former
    spouses. All but 2 of the 23 amendments were adopted without public
    hearings, discussions, or debate. In the nearly 20 years since the
    USFSPA was adopted, opponents of the act or many of its existing
    inequitable provisions have had but one or two opportunities to voice
    their concern to a congressional panel. The last hearing, in 1999, was
    conducted by the House Veterans Affairs Committee and not before the
    Armed Services panel having oversight authority for amending the
    USFSPA.
        FRA believes strongly that Congress once again is avoiding its
    responsibility to the men and women who serve or have served in the
    Armed Forces of the United States. For nearly 200 years, Congress
    controlled the pay and allowances of active, Reserve, and retired
    military personnel. The States had no say as to how Federal payments
    would be regulated, even when the recipient retired from military
    service. In fact, the Federal courts ruled that in retirement the
    member was still in the military service and was `in all respects still
    performing service.' This led to the term, ``reduced pay for reduced
    but continuing service.'' In short, military retired (or retainer) pay
    is not a pension or an annuity. Through the media and other public
    forums, members of Congress, reporters, and outside advocates for the
    enactment of a former spouses protection act, used the term ``pension''
    to describe military retired pay. Today, the word has nearly replaced
    its true nomenclature.
        One of the major problems with the USFSPA is its few provisions
    protecting the rights of the servicemember. They are unenforceable by
    the Department of Justice or DOD. If a State court violates the right
    of the servicemember under the provisions of USFSPA, the Solicitor
    General will make no move to reverse the error. Why? Because the act
    fails to have the enforceable language required for Justice or Defense
    to react. The only recourse is for the servicemember to appeal to the
    court, which in many cases gives that court jurisdiction over the
    member that it didn't have when the original ruling violated the act.
    Another infraction is committed by some State courts awarding a
    percentage of veterans' compensation to ex-spouses; a clear violation
    of U.S. law. Yet, the Federal Government does nothing to stop this
    transgression.
        A recent DOD review of the USFSPA was more politically-flavored and
    less concerned with what effect the act may have on the servicemembers'
    morale and readiness. One of the stipulations attached by the military
    to the adoption of the act was it ``should not interfere with the
    ability of the Armed Forces to recruit and retain qualified
    personnel.'' (Emphasis added.) However, it appears DOD is skeptical of
    possible negative results from the USFSPA for it fails to publicize the
    provisions of the act to its uniformed members. Why? Could it be such
    action may cause retention problems? FRA believes that if the services
    should inform their members of the possibility of losing 50 percent or
    more of their retirement pay should they divorce regardless of the
    number of years of marriage retention could suffer.
        Recommendation: Congress needs to take a hard look at the USFSPA
    with a sense of purpose to amend the language therein so that the
    Federal Government is required to protect its servicemembers against
    State courts that ignore provisions of the act. More so, a few of the
    other provisions weigh heavily in favor of former spouses. For example,
    when a divorce is granted and the former spouse is awarded a percentage
    of the servicemember's retired pay it should be based on the member's
    pay grade at the time of the divorce and not at a higher grade that may
    be held upon retirement. The former spouse has nothing to do to assist
    or enhance the member's advancements subsequent to the divorce,
    therefore, the former spouse should not be entitled to a percentage of
    the retirement pay earned as a result of service after the decree is
    awarded. Additionally, Congress should review other provisions
    considered inequitable or inconsistent with former spouses laws
    affecting other Federal employees with an eye toward amending the act.
                               spousal employment
        Recently the Armed Forces have become concerned with the plight of
    military spouses who lose employment when their servicemember husbands
    or wives are transferred to new locations. Studies have concluded that
    many military families suffer significant financial setbacks when
    spouses must leave employment to accompany their military sponsor on
    permanent changes of station (PCS). Some losses are substantial. Worse,
    yet, is the lack of equal or even minimal employment opportunities at
    new duty stations.
        Currently, the services are launching new programs to assist
    spouses in finding full or temporary employment to include counseling
    and training. Other initiatives will help spouses find `portable'
    employment in companies with customer-service jobs that can be done at
    remote locations.
        Recommendation: Today's military societal environment requires the
    services to consider the whole family. It is no longer adequate to
    focus only on the morale and financial well-being of the member, but
    his or her family, too. Spousal employment is a major stepping stone to
    retention of the servicemember who is a valuable participant in the
    defense of this Nation. FRA salutes Congress for the provisions it
    adopted in the fiscal year 2002 NDAA to provide military spouses with
    financial and other assistance in job training and education. The
    Association urges Congress to continue its support of the military's
    effort to effect a viable spousal employment program and to appropriate
    sufficient funds to assure the program's future success.
                             survivor benefit plan
        FRA believes the Federal Government continues to renege on its
    commitment to members of the uniformed services who opt to participate
    in the military's Survivor Benefit Plan (SBP). First, the plan was to
    be patterned after the Civil Service/Federal Employees Retirement
    Systems. Second, the cost of the program would be shared; 40 percent by
    the Government and 60 percent by participating military retirees. Both
    of these themes appear numerous times in congressional hearings on SBP
    before the House and Senate Armed Services Committees.
        House and Senate Hearings in the 94th, 95th, 96th, and 99th
    Congress note that the military's SBP should ``conform identically to
    the formula'' or ``function in an identical fashion'' to the civil
    service plan. During a September 1976 hearing conducted by the House
    Armed Services Committee, a Department of Defense General Counsel
    letter of July 26, 1976, was inserted for the record. The letter read
    that if Congress failed to make certain corrections to the military's
    SBP as it had authorized for the civil service plan, it would
    ``constitute an unwarranted inequity that has extremely adverse impact
    on the morale of retirees and those nearing retirement.''
        The 40-60 share between the Government and the participating
    military retiree is also a topic of many congressional hearings. One
    such hearing is reported in Senate Hearing No. 99-298 of June 20, 1985
    that lists five different references to the intent of the plan to share
    the cost at the above percentage figures. Spokesmen for the
    Congressional Budget Office (CBO) and Department of Defense referred to
    the cost-sharing as follows:

              (CBO). Under current law, members retiring today will bear
            about 62 percent of the cost of the Survivor Benefit Plan;
            roughly consistent with the 60 percent goal for cost-sharing.
              (DOD) The legislative history of the SPB shows an intent that
            the Government contribute approximately 40 percent of the
            benefits.

        There has been some reluctance by congressional sources to accept
    the fact that the military's Survivor Benefit Plan was designed to
    emulate the civil service plan or that the participating servicemember
    was to incur but 60 percent of the program's costs. It's obvious these
    sources are ignoring the wishes of earlier Congresses to provide an
    attractive program that would be both equitable and reasonable.
        Equity has gone the way of all good intentions. Military SBP
    participants have seen their share of the plan's cost rise above the 70
    percent factor (approximately 73 percent overall, 79 percent for those
    enrolled since the 1970s.) The rise in the plan's cost-sharing for
    military retirees was predicted as early as 1980 (Senate Report No. 96-
    748, p. 7) and again in 1996 (Military Compensation Background Papers,
    Fifth Edition, Sep. 1996, p. 691). In fact, DOD, in the Senate Report
    referenced immediately above, warned that if certain changes were not
    made to the Plan, ``the officer portion of the cost sharing will
    escalate to 76 percent, while enlisted members share 125 percent of the
    costs.'' Nearly 10 years earlier, in the September 1, 1976, House
    hearing referenced above, a DOD General Counsel letter of August 30,
    1976, was inserted for the record. It stated that over time,
    ``inflation will cause the cost of the SBP participant to become
    increasingly out of balance with the cost to his or her counterpart
    participating in the comparable plan for Federal civil servants.''
    Meanwhile, the civil service and Federal employees' plans remain at
    participating costs of 50 percent and 58 percent, respectively.
        There is yet another cost-sharing inequity that exists in the
    military SBP. Participants in the plan pay premiums over a much longer
    period than their counterparts in the civil service/Federal employees'
    plans. This gives the Federal retiree a far more advantageous benefit-
    to-premium ratio.
        FRA is in agreement with Retired Air Force Colonel Mike Lazorchak
    who wrote in Navy Times, January 15, 2001, ``(E)ach year Congress fails
    to pass more meaningful SBP rates, military retirees are forced to give
    the Government an ever-increasing interest-free loan in return for
    their benefits. Admittedly, an increase in the Government subsidy will
    require Congress to increase the annual contribution to the Military
    Retirement Trust Fund, most of this increase is merely a repayment of
    the interest-free loans that military retirees have been required to
    give the Government for decades.''
        Recommendation: The high cost of participating in the military's
    Survivor Benefit Plan is contrary to the intent of Congress to pattern
    it after the Civil Service/Federal Employees survivor plans. To
    accomplish this goal, Congress is urged to amend the military's
    Survivor Benefit Program to repeal the minimum post-62 SBP annuity over
    a period of 10 years. [35 percent to 40 percent in October 2002, to 45
    percent in October 2005, and 55 percent no later than October 2011.]
    Additionally, to further amend the year 2008 to 2003, at which time the
    military retiree who has paid premiums for 30 years and is at least 70
    years of age, will be a paid-up participant.
                                   conclusion
        Mr. Chairman, in closing, allow me to again express the sincere
    appreciation of the association's membership for all that you and the
    distinguished subcommittee and staff have done for our Nation's
    military personnel over these many years.

        Senator Cleland. Ms. Raezer.

    STATEMENT OF JOYCE W. RAEZER, ASSOCIATE DIRECTOR OF GOVERNMENT
         RELATIONS, NATIONAL MILITARY FAMILY ASSOCIATION, INC.

        Ms. Raezer. Thank you, Mr. Chairman, for this opportunity
    to present the Military Coalition's (TMC) views on issues
    affecting military families. I will focus today on three
    important quality of life issues facing military families this
    year: relocation, spouse employment, and family support.
        We thank Congress for authorizing needed improvements in
    servicemembers' permanent change of station (PCS)
    reimbursements. These increases implemented over the next 2
    years will ease the financial burden faced by military families
    every time they move. Unfortunately, however, just as word was
    getting out about these improvements some families began
    hearing from their services that because of the cuts in PCS
    funding approved by Congress in the Defense Appropriations Act,
    they might not be able to move this summer.
        TMC understands the concerns of Members of Congress who
    want the services to reduce the number of PCS moves. Military
    spouses have unpacked enough boxes, quit enough jobs because of
    a move, enrolled our children in enough different schools to
    know that families should not move just for the sake of moving.
    But we believe that an appropriate baseline must be established
    for all the different types of military moves and reduction
    targets set from that baseline before substantial cuts are
    made.
        We also note that the GAO did not include the DOD
    relocation package as a benefit. This is no surprise to some
    family members who do not see DOD relocation services as a
    benefit, but actually a hardship.
        We urge this subcommittee to continue to press DOD for
    improvements in the actual move process, and we hope that
    reports due Congress on the recently terminated pilot program
    will provide guidance for improvements for all moves and not
    just for another round of pilots. Poor quality of service for
    many PCS moves is a major source of dissatisfaction with
    military life for family members. Dealing with the consequences
    of this poor quality often forces the servicemember's attention
    away from the mission.
        Another area where we are concerned about pilots rather
    than substantial improvement is in the area of spouse
    employment. The services have tried a lot of different pilots.
    What the GAO spoke of this morning as the need for a better
    focus is what we hear from family members as well. We are
    encouraged by DOD's efforts to work with the Department of
    Labor on some of the State issues affecting military spouses in
    licensure--in-State tuition is another one that comes up a lot
    in the education arena--but are very concerned to hear that DOD
    does not anticipate getting that report to you until November,
    because we would hope that report would lead to some quality
    initiatives a lot sooner for military spouse employment and the
    November time frame bothers us.
        We also thank Congress for its focus last year on key
    issues that promote the readiness of the family and thus the
    readiness of the force, including this direction to improve
    spouse employment, family support services, child and youth
    programs, and personal financial education for both
    servicemembers and spouses. As our military juggles the
    existing deployments and missions with the war on terrorism and
    homeland defense, the military family and community feel the
    strain, as you have noted today.
        The coalition believes family readiness must have resources
    commensurate with its importance to mission readiness. We urge
    Congress to ensure that families of all members of the total
    force have access to training, information, and support needed
    to ensure family readiness.
        The total force concept highlighted among the services has
    not yet reached the family support arena. Our Guard and Reserve
    families tell us they need better education about benefits such
    as health care. Sometimes they need education and assistance in
    dealing with changed financial circumstances. They tell us that
    their State and unit family program coordinators are stretched
    too thin to provide all the assistance needed by geographically
    dispersed families. They also tell us they need the same kind
    of access to child care as their active duty peers, who can use
    installation child development centers and family care
    providers.
        Programs to ensure the readiness of these families will
    have to be structured differently than for full-time active
    duty families living on military installations. Actually,
    Congress noted this last year in report language for section
    652 directing DOD to provide more family support. We always
    have to remember that we are not just talking Guard and Reserve
    families here. Over half of our active duty families live off
    the installation.
        Because the services do not have the manpower to provide
    family support everywhere and fight a war, the DOD and the
    services must involve local civilian community resources and
    make better use of technology to provide information and
    referrals, as well as actual services needed by these isolated
    families.
        Mr. Chairman, we thank you again for your advocacy for pay
    and benefit improvements necessary to retain the quality of
    force that now protects our homeland and wages war against
    terror. We ask you to remember that in time of war mission
    readiness is tied to servicemember readiness, which is tied to
    family readiness. Military members and their families look to
    you for continued support for the compensation and benefit
    packages that enhance their readiness and quality of life.
    Please do not let them down.
        Senator Cleland. Thank you, Ms. Raezer.
        Mr. Lokovic.

       STATEMENT OF CHIEF MASTER SERGEANT JAMES E. LOKOVIC, USAF
    (RETIRED), DEPUTY EXECUTIVE DIRECTOR AND DIRECTOR, MILITARY AND
         GOVERNMENT RELATIONS, AIR FORCE SERGEANTS ASSOCIATION

        Mr. Lokovic. Mr. Chairman, my comments will briefly reflect
    the coalition views on retiree and survivor issues. In light of
    some of the comments you heard from the first panel, we need to
    understand that the rules for budgeting and so forth for these
    concerns are different and not just to make the decisions based
    on ``do they directly aid recruiting and retention'' except in
    the long-term view.
        We also have to add questions: Do they fairly reflect
    promises that were made? Do they recognize the sacrifice that
    is made by the military member? Does the Government keep the
    faith? Certainly if we talk about recruiting and retention we
    are talking about a long-term view in terms of retiree and
    survivor issues.
        First, as a coalition we maintain that the time has come to
    stop taking away the military retired pay from those who have
    also suffered a disability as a result of their service. The
    coalition's top priority this year is achieving authorization
    and funding to allow such members to concurrently receive both
    military retired pay and veterans disability compensation.
        The VA adjudges disability levels because of the pain,
    suffering, potential loss of income, and certainly the reduced
    capacity for quality of life, and the VA fulfills its
    obligations in that regard. In clear contrast, military retired
    pay is for longevity of honorable service. Unfortunately, the
    law as it currently stands reduces the retiree's earned
    retirement pay on a dollar-for-dollar basis for each disability
    dollar the Veterans Administration provides these career
    servicemembers. In effect, the retirees are forced to subsidize
    their own disability checks.
        Co-sponsorship of legislation in both Houses confirmed
    support. Eighty one percent of the Members of this Senate agree
    that this unfairness should be ended. Similarly, 89 percent of
    the Members of the House as of this morning also concur that a
    remedy is warranted now. We urge this committee to take
    significant action on concurrent receipt legislation this year.
        With regard to survivor issues, we thank the committee for
    last year's authority to extend survivor benefit plan coverage
    to the survivors of all military personnel who die while on
    active duty, but we ask that more be done. The coalition
    supports repeal of the age 62 survivor benefit plan annuity
    reduction. We endorse the phaseout of the age 62 reduction or
    offset as supported by S.145 as a fiscally responsible way to
    get this done.
        This change would finally help restore the 40 percent
    Government-SBP cost share intended by Congress. The DOD actuary
    acknowledges that the Government's share has now fallen below
    27 percent, meaning that the beneficiary's obligation has
    increased from the intended fair share of 60 percent to over 73
    percent. Repealing the age 62 offset would also improve parity
    with SBP coverage provided the Federal civilians, whose
    survivors experience no reduction in their benefit at age 62.
        Finally, sir, your action toward repealing the age 62
    offset would keep faith with older retirees and spouses, many
    of whom were not told of the age 62 annuity drop when they
    signed up for the program back in the early 1980s.
        The coalition also recommends accelerating the 30-year
    paid-up SBP provision that will take place in 2008 under
    current law. The delayed effective date to 2008 severely
    disadvantages older participants, who paid substantially higher
    premiums from 1972 until the premium formula was reduced in
    1991. Additionally, many older retirees will complete 30 years
    of payment well before 2008. We are hearing from them already.
    Many more simply will not survive until 2008.
        These servicemembers deserve some earlier relief and we ask
    your support of making this paid-up aspect of the SBP program
    effective October 1, 2003.
        Mr. Chairman, that concludes my portion of the verbal
    statement.
        [The prepared statement of Mr. Lokovic follows:]
           Prepared Statement by CMSGT James E. Lokovic, USAF (Ret.)
        Mr. Chairman and distinguished committee members, on behalf of the
    135,000 members of the Air Force Sergeants Association, thank you for
    this opportunity to offer our views on the military personnel programs
    that affect those serving our Nation. AFSA represents active duty,
    Guard, Reserve, retired, and veteran enlisted Air Force members and
    their families. Your continuing efforts toward improving their quality-
    of-life benefits have made a real difference in the lives of those who
    devote their lives to service. Higher-than-mandated-by-law military pay
    raises sent a powerful message to servicemembers. Further targeting of
    pay toward enlisted members recognizes the imbalance of the current
    military payroll system. We hope you will provide further progress in
    this regard. Continued improvements in health care for all
    beneficiaries and, especially, the implementation of the TRICARE Senior
    Pharmacy program and TRICARE for Life for Medicare-eligibles were
    landmark achievements of this Congress. Another area of significance
    was the increase of PCS reimbursement for the lowest-ranking military
    members. Those we represent have asked that we pass on their gratitude.
    Your continued attention to the ever-expanding role of the Reserve
    component was important; we hope that effort increases--particularly
    toward lowering the Reserve component retirement age from 60 to 55 to
    give them parity with all other Federal retirees. In this hearing, I
    wish to discuss several items that the enlisted men and women serving
    our Nation consider very important. While there are other areas of
    importance to the members of this association, issues such a health
    care, military construction and Morale, Welfare, and Recreation (MWR)
    and family support programs will be covered elsewhere. I will divide
    this testimony into these issue areas: Air Reserve Component Benefits;
    Montgomery GI Bill Reform; Military Compensation and Benefits;
    Retirement Issues; and Survivor Programs.
                         air reserve component benefits
         Reserve Retirement: Today over 81,000 Air Reserve
    Component (Reserve and Guard) members have been mobilized in support of
    Operations Enduring Freedom and Noble Eagle, efforts that clearly could
    not succeed without their invaluable contribution. Yet, these members
    are the only Federal retirees who must wait until age 60 to collect
    retired pay. We have been told that Reserve retirement was originally
    set at 60 because Federal civilian retirement was the same.
    Unfortunately, when Federal civilian retirement changed to at age 55,
    military Reserve component retirement did not do the same. It is bad
    enough that Guard and Reserve members who ``voluntarily'' subject
    themselves to unlimited liability cannot begin retirement once they
    have satisfied the requisite number of ``good years.'' What is worse is
    that they must often wait well over a decade after military service
    before they can collect retirement. For years, this has been a thorn in
    the side of Guard and Reserve members--from the troops to the
    commanders; all say that this is the right thing to do. As we visit
    units, members repeatedly ask if anyone is taking action to lower the
    Reserve retirement age. It is time to correct this gross inequity. How?
    Lower the earliest Reserve retirement age from 60 to 55. One side issue
    of the retirement at age 60, which is avoided by DOD is that the
    current system stagnates the force by stifling career advancement and,
    therefore, affects force readiness. Because the Reserve component
    primarily promotes by vacancy, those who are over 55 but not yet 60
    occupy slots that could otherwise provide upward mobility for others.
    Additionally, many reservists continue serving past age 55 only to
    accumulate a few more points to factor into their retirement pay
    equation (which is significantly lower that active duty military
    retired pay). Our members tell us that most do this strictly because
    they are not permitted to collect retired pay prior to age 60. It is
    clear the Department of Defense's opposition to this is based on its
    fiscal ``priorities,'' with DOD reticence focusing on the increased
    one-time compensation required to revert to the lower retirement age.
    AFSA believes that the time has now come to provide fairness and equity
    for Reserve component members. The vast majority of those aged 55-plus
    tell us that they continue to serve after 55 only because they cannot
    retire earlier. So long as they cannot retire, they will continue to
    serve to accumulate additional points toward retirement. Also, remember
    that Guard and Reserve promotion is primarily by vacancy. Therefore,
    forcing potentially important manning positions to be manned by those
    biding their time until they can retire prevents promotion and the
    possibility of filling those jobs with younger (but very experienced)
    personnel. It is clearly time to correct this inequitable, nonsensical
    Reserve retirement system. We would subscribe to the argument supported
    by many that Reserve component members should be able to begin
    retirement once they have satisfied retirement criteria. Absent that
    change, reducing the earliest retirement age from 60 to 55 is a step in
    the right direction that would, at least, achieve some consistency with
    other Federal retirement programs. We ask this committee to make it
    happen, to lower the earliest Reserve retirement age from 60 to 55.
    Also, please take action to increase retired pay for enlisted Reserve
    component personnel decorated for extraordinary heroism; this would
    fairly recognize their singular service and maintain equity with those
    serving on active duty that are similarly decorated.
         Air Reserve Technician Retirement: For those who serve as
    Air Reserve Technicians (ARTs: military members and, at the same time,
    Federal civil servants), we tend to view their retirement from the
    point of view that is most-beneficial to the government. It is time
    that we stop treating these unique Reserve component members
    inequitably. We urge this committee to make ARTs eligible for an
    unreduced retirement at age 50 with 20 years of service, or at any age
    with 25 years of service, if involuntarily separated.
         Reserve Retirement Point Cap: The level of Reserve
    retirement compensation varies from individual to individual depending
    on the number of duty points accumulated over the requisite number of
    ``good years'' required to qualify for retirement. There is a
    limitation (a ``cap'') on the number of points creditable toward
    requirement each year that the member accumulates through inactive duty
    training (IDT). The current cap limits the number of IDT points
    creditable each year toward retirement to 90. With today's high
    operations tempo, it is inevitable that the vast majority of members
    will fairly consistently exceed 90 IDT points in a given year. It is
    simply unfair that the cap prevents counting all points earned. We urge
    this committee to eliminate the cap on IDT points creditable toward
    retirement.
         Family Support Focus: With the callups as part of
    Operations Enduring Freedom and Noble Eagle, the families of Reserve
    component members are clearly stressed and in need of your help. We
    urge full funding and support for family support programs that can help
    these family members. This included full access to benefits available
    to active duty members. Obviously, being called up and having to
    ``temporarily'' set aside one's normal civilian job and place in the
    community is traumatic. The family members of reservists must also make
    incredible lifestyle adjustments. We urge close scrutiny of available
    programs and provide funding and access to take care of these members
    of the military family.
         Selective Reserve Montgomery GI Bill: As committee members
    know, this program falls under title 10 rather than title 38. As such,
    it is important that this committee take action to enhance this
    important benefit and to correct inequities in the program. The
    Montgomery GI Bill for active members has dramatically increased in
    value due to the work of recent Congresses. The SR-MGIB, however, has
    not followed suit. We urge that you work to increase the value of the
    SR-MGIB and program parallel, equivalent increases in the value of this
    Reserve component-unique program. Further, we believe that this move
    toward equitable growth could best be achieved if this committee enact
    legislation to transfer the SR-MGIB authority from title 10 to title
    38. We ask you to do so. Another inequity is while the active duty MGIB
    ``10-year benefit loss clock'' starts at the end of military service;
    the SR-MGIB ``10-year benefit loss clock'' starts at the time of
    enrollment. This is clearly inequitable and needs to be corrected. We
    ask that this committee take action to change the start of the SR-MGIB
    benefit loss clock to ``at the end of military service.''
         TDY/PCS Compensation: A unique requirement for Guard and
    Reserve members is how they are compensated when they are sent to
    lengthy schools. Remember, an active duty member who attends a long
    school is usually sent in permanent change of station (PCS) status.
    When that happens, the member generally transfers his/her family and
    household effects and establishes a new home. Reserve component
    members, on the other hand, still maintain their home where their
    family lives. While long schools result in a different set of benefits
    (PCS) than those schools of shorter duration (temporary duty, or TDY
    benefits), this methodology has an impact on Air Reserve component
    members different than that on active duty. We ask that you examine the
    following: (1) Provide Basic Allowance for Housing (BAH) Type 1 for all
    Air Reserve component (ARC) members who are sent TDY to school for less
    than 139 days; and (2) Allow ARC component headquarters commanders to
    waive the requirement for PCS moves to schools that are 20 weeks or
    longer.
         Employer Support: More and more those who employ Guard and
    Reserve members make incredible sacrifices. While those who are called
    up are protected by law (their jobs and seniority are protected), it is
    increasingly difficult to expect civilian employers to readily employ
    those who are also guardsmen or reservists. It is time to provide tax
    credits to employers who employ members of the Guard and Reserve and to
    self-employed Air Reserve component members.
         General Compensation Issues: It is time to pay guardsmen
    and reservists equitably for special pays such as flight pay and
    hazardous duty pay. These pays are specifically to compensate military
    members for increased risk. Yet, a clear inequity is consciously
    administered by DOD when it comes to equal pay for equal risk. Active
    duty members who qualify for any of these special pays at any time
    during a month earn an entire month's pay. A Reserve component member
    can serve the same period of time or more and receive less
    compensations because a 1/30 formula per day is applied. AFSA contends
    that it is time to eliminate unfair benefit ratios and compensate
    Reserve component members fairly. Another area that we urge this
    committee to address is the need for reservists to expend out-of-
    pocket, personal expenses to serve. Simply put, it costs members to
    serve their nation because they are not fully reimbursed. We urge you
    to restore full tax-deductibility of non-reimbursable expenses related
    to military training and service. Also, especially in light of the
    current war on terrorism, we need to take all measures to compensate
    for financial losses caused by long-term deployments in support of
    contingencies.
         Reserve Leave: While the fiscal year 2002 provided a
    method whereby significant amounts of leave accumulated during the
    current War on Terrorism call-up, we need to do more. Basically
    speaking, Reserve component members can only take leave when they are
    on duty. In peacetime conditions with weekend drill each month and an
    annual 2-week encampment, it is very difficult to take leave. A basic
    rule is in effect that causes members to lose any leave they accumulate
    over 60 days. Because of the difficulty to take leave, our members ask
    that they be allowed to sell leave balances that they accumulate that
    exceed 60 days. In effect, this would eliminate the benefit loss caused
    by the very nature of Reserve duty.
         Reserve Commissary Benefit. It is time to give Guard and
    Reserve members and their families year-round commissary access. There
    is simply no justification to continue denying them this well-earned
    benefit. It also defies reason to continue paying millions of dollars
    each year to administer a ``Commissary Privilege Card'' system, simply
    to keep these servicemembers out of our military commissaries but 24
    visits per year. We urge you to immediately provide Guard and Reserve
    members year-round commissary benefits. This benefit will not cost
    money--it will save money and generate more business for the commissary
    system.
                           montgomery gi bill reform
        While the basic Montgomery GI Bill program falls under the Veterans
    Affairs umbrella, its implementation and mandated practices fall within
    the purview of this committee. The issues mentioned below are of
    particular importance to the enlisted men and women who serve our
    Nation. The two educational programs being addressed are the Veterans
    Education Assistance Program (VEAP) and the Montgomery GI Bill which
    followed the VEAP program and is the military's current educational
    benefit program. These are the specific actions in the order of
    priority that we would like this committee to pursue on behalf of the
    enlisted men and women serving this nation.
         Provide an MGIB Open Enrollment Opportunity for those who
    turned down VEAP or the MGIB at their single enrollment opportunity.
    The greatest need cited by our members is to provide a second chance
    for those who turned down their initial opportunity to enroll in either
    the Veterans Educational Assistance Program (VEAP) or the Montgomery GI
    Bill. Many turned down the VEAP program because it was a relatively
    insufficient, two-for-one matching program (the member contributed up
    to $2,700 and the Government matched up to $5,400); also, many VEAP-era
    people were counseled not to enroll in VEAP since a ``better''
    educational benefit program was on the horizon. Many thousands more
    have turned down the MGIB enrollment opportunity over the years
    primarily because it is offered as a one-time, irrevocable decision at
    Basic Military Training (when their pay is at its lowest). This is a
    time, of course, when giving up $100 per month for the first 12 months
    of one's military career is financially impossible for many. We have
    been told that 1,500 to 1,800 in the Air Force alone turn down the MGIB
    each year.
        The overall impact, then, is that over a quarter-of-a-million of
    those serving have no educational benefit, and many individuals
    retiring now have no transitional educational benefit. The Defense
    Manpower Data Center recently provided the following information:
         VEAP-Era Non-enrollees: Number of members currently on
    active duty who entered the service during the Veterans Educational
    Assistance Program (VEAP) era who declined VEAP benefits: 116,369 (Air
    Force: 39,464; Navy: 37,434; Army: 27,964; Marines: 6,783; Coast Guard:
    3,857; Public Health: 825; and NOAA: 42).
         MGIB-Era Non-enrollees: Number of members currently on
    active duty who entered the service during the Montgomery GI Bill
    (MGIB) era who declined MGIB benefits: 150,952 (Air Force: 50,151;
    Army: 42,524; Navy: 32,681; Marines: 16,650; Coast Guard: 6,773; Public
    Health: 2,113; NOAA: 60).
        We respectfully urge that Congress establish a limited-period
    opportunity for any currently serving military member to enroll in the
    Montgomery GI Bill. We would hope the cost would be $1,200 or $2,700
    (the cost during the most recent VEAP-MGIB enrollment opportunity).
    However, we would estimate that a cost moderately higher than that
    would even be welcome considering the current value of the benefit and
    the opportunities that such congressional action would provide for
    those transitioning from the military to civilian status.
        Clearly, the Montgomery GI Bill was an improvement over VEAP, but
    it was still a relatively insufficient program not enough to pay for
    the full cost of classes, and it didn't (and still doesn't) include an
    inflationary adjustment mechanism. In recent times, however, Congress
    has done great work in increasing the value of the MGIB to the point
    that (by 2004), it will cover more than three-quarters of the average
    costs of books, tuition, and fees at the average college or university
    for a commuter student. That actual cost is estimated to be between
    $1,100 and $1,400 at this time. By 2004, the cost-of-education figures
    will no doubt adjust upward somewhat due to increased costs of
    education. While AFSA urges a full transition to a WW II-type GI Bill
    that pays the full cost of books, tuition, and fees at any college or
    university, the point in this case is that this much-more-lucrative
    benefit was not in existence when many turned down either VEAP or MGIB.
    Please work to allow those who turned down either VEAP or MGIB a chance
    to correct that earlier decision.
         Allow military members to enroll in the MGIB later during
    their careers than at Basic Military Training: The one-time opportunity
    at Basic Training is a problem as explained above. We recommend
    allowing members to enroll later. Perhaps, allow them to enroll at any
    time during their first enlistment. Or (if there must be an enrollment
    fee) charge them $1,200 if they enroll any time in their first 4 years
    of service; $1,500 between the fourth and tenth years of service;
    $1,800 between 10 and 15 years of service; and $2,000 between the 15th
    and 20th year of service. Those numbers are only an example to show how
    the enrollment cost could be scaled to reflect enrollment entry point.
    We urge you to work to either waive the enrollment fee, or to offer
    enrollment later in careers (when members are better able to
    financially handle enrollment). While Rep. Jones' H.R. 2020 provision
    to spread out the $1,200 enrollment fee over the first 2 years of
    service is an improvement, a later enrollment opportunity would be
    fairer and more beneficial: under the 24-month payment plan, the Basic
    Trainee enrollee would still be faced with this financial decision
    under the pressure of Basic Training when they are making the least.
    Allowing them a later enrollment decision makes more sense,
    financially, for the member.
         Extend or eliminate the MGIB 10-year ``benefit-loss
    clock.'' Once an MGIB enrollee separates or retires, he/she has 10
    years to use their benefit or they lose any unused portion. The early
    years of a military career are pretty much consumed with initial entry
    and skill-level training, mastering the job, certifying, etc.
    Similarly, transitioning to civilian life includes a time of
    retraining, readjusting and certification. For many, using their earned
    educational benefit (for which they paid $1,200), must be delayed a few
    years. However, the clock is ticking as the benefit gets ready to be
    taken away. We urge that the 10-year clock be increased to 15 or 20
    years, or that the ``benefit-loss'' provision be repealed. In a very
    real sense, if the benefit has been earned through military service,
    and the Federal mechanism that tracks the program is not earmarked to
    go away, we don't believe it would be a problem to extend or eliminate
    the 10-year benefit loss clock.
        Guard and Reserve members enroll in the Montgomery GI Bill--
    Selected Reserve. This is a 10-year program under title 10. The benefit
    loss clock for this program begins upon enrollment. In this case,
    similar to the active duty program, we urge that you extend the use of
    the program, or delay the start of the 10-year benefit loss clock to
    the end of military service, to achieve ``equity'' with the active duty
    program.
         Offer ``Portability'' of MGIB Benefits to Family Members.
    While we appreciate the very positive intent of the ``portability''
    feature signed into law in the Fiscal Year 2002 NDAA that offered
    ``portability'' of benefits for those in ``critical skills,'' we urge
    that this benefit feature be extended to all MGIB enrollees. The
    overwhelming feedback we get from our members is that offering this to
    critical skills will have very little impact on promoting recruiting
    and retention of those actually serving in ``critical skills.''
    Portability, however, would be an important career incentive for the
    vast majority of military members. For enlisted members, in particular,
    it could mean the ability to offer a good college educational
    opportunity to their children. If we are wise, we could also make it a
    good retention tool across the board. Perhaps offer the option to
    transfer (at least a portion of) the benefit to family members once the
    individual has served 12 to 15 years. This would make the option
    available in time to help send your kids to college, and it would serve
    as an incentive to stay in the service. Once you have them 12 to 15
    years, you will have most of them at least 20 years. Please work to
    afford the ``portability'' option across the board to military
    enrollees (enlisted ones in particular).
                         military compensation/benefits
        Military pay needs to be further increased above the current
    formula mandated by law, i.e., Employment Cost Index plus one-half
    percent. This is necessary to close the growing gap between military
    pay and equivalent civilian occupations. A great effort should also be
    made to make the enlisted pay scales more realistic to reflect the
    increasing responsibility of enlisted members, and the clear imbalance
    between enlisted and commissioned military pay and compensation
    relative to the overall military responsibilities. We also urge
    continued emphasis on eliminating out-of-pocket housing costs for
    military members. You have made great progress toward this end, and we
    hope you will continue in that effort.
         Housing Allowances Formula: Military members are paid an
    allowance for housing. The amount varies strictly as a function of
    increasingly higher housing allowances as rank increases. For example,
    the allowance level is significantly higher for commissioned officers
    than for enlisted members. The amount of housing allowance a member
    gets is based on a square-footage, dwelling type standard factoring in
    housing costs for the locality of the housing. Among enlisted
    (noncommissioned) members, the only rank that is based on a stand-alone
    dwelling is the very highest grade (E-9); all others are based on
    townhouses an apartments. Unfortunately, the entire system is not
    realistic in terms of how people live and decide on where they will
    reside. Historically, the lower the rank a member hold, the greater is
    their out-of-pocket housing expenses. The reason for this is simple.
    Enlisted members, who already make significantly lower compensation,
    want no less for their families to live near good schools and in good,
    safe neighborhoods. In order to achieve that (since their pay and
    housing allowances are so much lower), these members must expend
    significantly more out of pocket. We urge a study of the entire system
    of housing allowance to provide more equity for those who hold lower
    ranks. At the least, we urge an increase in the amount of housing
    allowance paid to enlisted members. In the implementation of the DOD
    plan to eliminate average out-of pocket expenses by 2005, we urge that
    the subcommittee ``front load'' as much as much of the remaining BAH
    upgrade as is possible for fiscal year 2003.
         Expand CONUS COLA: Another important change would be to
    increase continental U.S. cost-of-living adjustment (CONUS COLA) to
    more localities. Several high-cost areas across the country do not
    receive CONUS COLA. The Washington, DC area (for which designated
    housing allowances are clearly inadequate according to our members),
    for example, does not receive this allowance. We urge this committee to
    provide CONUS COLA to more areas where the increase is warranted.
         Further Permanent Change of Station (PCS) Funding
    Enhancement: Our members greatly appreciate the changes this
    subcommittee made in the fiscal year 2002 NDAA. Reimbursement of member
    expenses, increases in weight allowances for the lowest-ranking airmen,
    increases in the Temporary Lodging Expense, advance payment of POV
    storage expenses, and the shipment of one POV within CONUS are all
    authorities that recognize the financial burden placed on military
    families as they are moved at the pleasure of the Government. We would
    encourage further upgrades in reimbursement of PCS costs.
         Commissary Benefit Protection/Oversight: We urge close
    scrutiny of this benefit. Reports from the field are that recent ``belt
    tightening'' on the part of the Defense Commissary Agency is already
    being belt by the beneficiaries as lines have clearly been getting
    longer and longer. We urge full commissary funding and ask for your
    firm oversight to prevent any reduction in services to commissary
    patrons
                               retirement issues
         Concurrent Receipt/Retired Pay Restoration: While it is
    important that military retirees continue to receive their cost-of-
    living adjustments on time, we have a situation today where many
    military retirees are denied their retirement pay because they have a
    VA-adjudged disability rating. We note that both the House and Senate
    Budget Committees have included fiscal year 2003 funding to provide
    full concurrent receipt of retired pay and VA disability compensation
    for those with a VA disability rating of 60 percent or higher (to be
    phased in over the next 5 years). We also note that there are members
    in this body who are calling for full concurrent receipt for all,
    regardless of VA rating level. We ask you to authorize and fund the
    full restoration of military retired pay for those who also receive VA
    disability compensation. As many of you have noted, these members
    earned their military pay by their honorable and faithful service for a
    significant portion of their lifetimes. The disability compensation is
    for a very different reason and is fully justified--their period of
    service took a toll on their bodies and/or minds. We owe them both.
    They held up their part of the bargain; our Government must do the
    same.
         Uniformed Services Former Spouses Protection Act (USFSPA)
    Reform: The members of this association strongly urge the subcommittee
    to conduct hearings on needed USFSPA changes, both to gather all inputs
    needed for appropriate corrective legislation and to guard against
    inadvertently exacerbating current inequities via well-intended,
    piecemeal legislative action initiated outside of this subcommittee.
    Our members have clearly communicated that this anachronistic statute
    specifically targeted at military members is not needed. While we would
    favor full repeal of the act; fairness would dictate that at a minimum,
    the ``windfall provision'' of the act be amended. This provision bases
    the portion of retirement that is given to a former spouse on the
    member's final military grade, and not that which the member held at
    the time of the divorce. We would also favor termination of the portion
    of the military retired pay (which is earned in a very unique,
    dangerous way compared to the retirements of many other citizens) if
    the former spouse remarries.
                               survivor programs
        Our members greatly appreciate the provision in the fiscal year
    2002 NDAA extending Survivor Benefit Plan (SBP) eligibility to members
    killed on active duty, regardless of years of service. This action
    corrected a long-standing inequity. But more still needs to be done.
         Reduce or Eliminate the Age-62 SBP Reduction: Before age
    62, SBP survivors receive an annuity equal to 55 percent of the
    retiree's SBP-covered retirement pay. At age 62, however, the annuity
    is reduced to a lower percentage, down to a floor of 35 percent. For
    many older retirees, the amount of the reduction is related to the
    amount of the survivor's Social Security benefit that is potentially
    attributable to the retiree's military service. For member who attained
    retirement eligibility after 1985, the post-62 benefit is a flat 35
    percent of covered retired pay. Although this age-62 reduction was part
    of the initial SBP statute, large number of members who retired in the
    1970s (or who retired earlier but enrolled in the initial SBP open
    season) were not informed of the reduction at the time they enrolled.
    As such, many still are very bitter about what they view as the
    Government changing the rules on them in the middle of the game. Thus,
    thousands of retirees signed up for the program in the belief that they
    were ensuring their spouses would receive 55 percent of their retired
    pay for life. They are further ``stunned'' to find out that the
    survivor reduction attributed to the retiree's Social Security-covered
    military earning applies even to widows whose Social Security benefit
    is based on their own work history. To add further to the need for
    changes in this program, the DOD actuary has confirmed that the 40-
    percent government subsidy for the SBP program, which has been cited
    for more than two decades as an enticement for retirees to elect SBP
    coverage, has declined to less than 27 percent. Clearly, this benefit
    has become more beneficial and less costly for the Government, and more
    costly and less beneficial for the retirees and survivors the program
    was created to protect. We urge you to step in and correct some of
    these inequities. The paid-up SBP initiative enacted in 1998 will ease
    this disparity somewhat for members retiring after 1978, but the
    subsidy will still fall far short of the promised 40 percent and now
    comes too late for many older retirees. In other words, members who
    enrolled in SBP when it first became available in 1972 (and who have
    already been charged higher premiums than subsequent retirees) will
    have to continue paying premiums for up to 36 years to secure paid-up
    coverage. Unfortunately, the 1998 paid-up provision does not become
    effective until 2008. That is simply too late for many enrolled in the
    program; we urge that you accelerate the paid up provision to October
    2003 at the latest.
        Mr. Chairman, thank you for this opportunity to highlight a few
    areas that reflect the interests of our members. We truly appreciate
    the continuing efforts of this subcommittee on behalf of those who
    serve. We explain to them that the reason you solicit the views of
    associations such as this one is that you are extremely interested in
    knowing how your decisions directly affect military beneficiaries. We
    will continue to let them know your hard work on their behalf. As
    always, the Air Force Sergeants Association is ready to work with you
    on matters of mutual concern.

        Senator Cleland. Thank you, Mr. Lokovic.
        Mr. Cline.

     STATEMENT OF MASTER SERGEANT MICHAEL P. CLINE, USA (RETIRED),
    EXECUTIVE DIRECTOR, ENLISTED ASSOCIATION OF THE NATIONAL GUARD
                          OF THE UNITED STATES

        Mr. Cline. Mr. Chairman, thank you for letting me present
    the views of the Military Coalition's Guard and Reserve
    Committee.
        Support of active duty operations: over the past 12 years
    and especially since the tragic events of September 11, the
    roles and missions of the National Guard and Reserve have
    increased tenfold. The effects of the total force policy is in
    full play, except those issues concerning benefits for Reserve
    component members. National Guard and Reserve members have
    answered the call to arms and are doing so in a very patriotic
    manner.
        Mr. Chairman, I have to express that I am deeply concerned
    at some of the comments that were made by the first panel. The
    total force policy was created to avoid the pitfalls of
    Vietnam. When the Guard and Reserve are called to war, Mr.
    Chairman, America goes to war. We are the next door neighbor,
    we are the firefighter, we are the truck drivers--we are
    America.
        The only complaints that we hear from our members, Mr.
    Chairman, is if you call us up, let us know how long you are
    going to use us. Do not call us for 30 days at a time and
    continue to renew us. We hear that same complaint from our
    employers. They can deal with the idea that if you are going to
    call us for a year, they can make exceptions and work around
    that. But when you constantly are calling people up for 30
    days, it creates a problem.
        However, one significant problem has arisen concerning the
    members of the National Guard serving on title 32 status in our
    Nation's airports, at the nuclear power plants, and on our
    bridges. These men and women do not have the protection of the
    Soldiers and Sailors Civil Relief Act (SSCRA). Senator Paul
    Wellstone introduced S.1680, which would have given SSCRA
    protection to National Guard members on title 32 active duty at
    the request of the President. The language was rolled into last
    year's defense appropriations bill, but fell out in conference.
    Similar legislation has been introduced in the House this year.
        Members of the National Guard who are currently deployed at
    airports, bridges, tunnels, and nuclear power facilities in
    title 32 status are on Federal orders and are receiving active
    duty pay, benefit, and Federal retirement points.
        Montgomery GI Bill: the Military Coalition would like the
    committee to consider extending the period of eligibility of
    the Montgomery GI Bill 1606 benefits from 10 years to at least
    as long as a member is active in the National Guard or Reserve.
    Eligibility for this benefit is automatic upon incurring a 6-
    year Reserve service obligation and completing initial active
    duty training. Extending the MGIB would expand its value as not
    only a recruiting incentive, but also a retention incentive.
        Chairman Cleland, you introduced and sponsored legislation
    last year, S.937, to extend the MGIB benefits to members of the
    National Guard and Reserve to 5 years after separation from the
    Selected Reserve. There is also legislation in the Senate,
    S.1517, to change the period from its current 10 years to 20
    years. These two initiatives alone would cost an additional 5
    to $7 million a year. At a time when we have approximately 18
    percent attrition rate just in the Army National Guard, we have
    over 59,500 people separating from the service every year at a
    cost of approximately $70,000 for training these individuals,
    that would be a considerable cost savings to the taxpayers.
        OMB has acknowledged that extending the benefit would have
    a greater effect on retention within the Guard and Reserve, and
    they have sent over an initiative to extend that privilege an
    additional 4 years, which would cost, as OMB has scored, $1
    million a year. By extending the MGIB benefit, retention would
    improve. Now more than ever, it is important to keep trained
    National Guard and Reserve members in the selected Reserve.
        The Military Coalition recommends that the Reserve MGIB
    benefit, title 10, chapter 1606, be transferred to title 38 so
    that increases to the basic benefit can be easily made by the
    VA. Currently, any time a change is made to the chapter 30
    program a respective change in the chapter 1606 program does
    not happen because DOD and VA do not coordinate enhancements to
    the basic MGIB program.
        Health care for members of the National Guard and Reserve:
    the Military Coalition urges making the TRICARE medical
    programs available for members of the National Guard and
    Reserve components and their families on a cost-sharing basis
    in order to ensure medical readiness and provide continuity of
    coverage. Last year Senator Leahy along with Senators Daschle
    and DeWine and nine other Senators co-sponsored legislation
    that would require DOD to study methods to provide coverage.
    This report is due out in May of this year.
        Also, Mr. Chairman, you have made comments about the
    commissary. Currently Guard and Reserve people are limited to
    24 commissary visits a year. We believe it is time to do away
    with this unnecessary commissary card that is costing DOD
    anywhere from $2.5 million to $17 million a year. Our Guard and
    Reserve people have earned this benefit, and we believe that
    money could be better used elsewhere.
        Now Dr. Schwartz will address health care issues.
        [The prepared statement of Mr. Cline follows:]
                     Prepared Statement by Michael P. Cline
        Mr. Chairman, members of the Senate Committee on Armed Services
    Personnel Subcommittee, I am honored to have this opportunity to
    present the views of the enlisted men and women of the National Guard
    of the United States. Our members are very confident that you will,
    through your diligent and conscientious efforts, give serious
    consideration to the needs of today's citizen soldiers. The men and
    women who willingly enlisted to serve their communities and their
    country are truly the finest ever.
        The National Guard has been called upon more than at any time in
    history to provide peacetime and combat-ready support for contingencies
    around the world. The Army and Air National Guard has represented a
    stable force and has acted as a storehouse for skilled professional
    personnel as well as an effective structure to retain skilled personnel
    departing the active services. The Army and Air National Guard need to
    assure its members that it can recognize them for the important
    contributions that they make to the national security and defense of
    our country.
        On September 11, 2001, the American people were introduced to a new
    situation that will become a fact of life in the 20th century.
    Terrorism is a relatively new concept to many Americans. It was
    something we saw as affecting countries across the great divide of the
    Atlantic and Pacific oceans. It was a foreign concept to many of us,
    and something we had to worry about only if we were traveling overseas
    to certain countries and at certain times. Terrorism is no longer
    foreign. It has been brought home to America and will remain a constant
    threat, one that will remain in the backs of our minds and keep us
    looking over our shoulders as we go about the routine of our daily
    lives. We all must now keep in mind that the threat of a nuclear,
    biological, or chemical attack upon our Nation is imminent. The role of
    the National Guard in homeland defense and security is now at the
    forefront of issues facing the administration and Congress. What we
    decide at this juncture will set into motion the course that our
    country will take and the future of our children. We understand the
    magnitude of the decisions facing our leaders, and know that they are
    not being taken lightly or in haste. The men and women of the Army and
    Air National Guard thank you for giving us the opportunity to voice
    some of our issues.
     immediate annuity retirement system for members of the national guard
                             and reserve components
        The first issue EANGUS would like to see addressed is that of an
    immediate annuity retirement system for members of the National Guard
    and Reserve components with 20 years of service. This immediate
    retirement annuity upon attainment of 20 years of service would provide
    a significant recruiting and retention incentive. Currently, when a
    National Guard member or reservist retires, he/she must wait until they
    become 60 years of age to draw their retirement. When this age
    requirement was established, the Nation did not use the National Guard
    and Reserve components as much as we do now. The Guard participates in
    real world contingencies on a regular and frequent basis and maintains
    the same readiness standards as their active duty counterparts. After
    20 years of dedicated service in uniform, a disparity exists between
    the traditional Guard members and their Active component counterparts.
    We applaud Congressman Saxton's introduction of H.R. 3831 to reduce the
    retirement age from 60 to 55. We believe that this is a big step in
    bringing about equity in the Total Force, along with the increase in
    retirement points that this committee has approved. The retirement
    program for the Reserve components has gone unchanged since 1948;
    however, we believe it is time to eliminate the current point limit and
    allow members to receive credit for all points earned.
          extension of the period of eligibility of mgib 1606 benefit
        Extend the period of eligibility of the Montgomery GI Bill 1606
    benefit from 10 years to for as long as the member is active in the
    National Guard or Reserve components. Eligibility for chapter 1606 of
    the Montgomery GI Bill is automatic upon incurring a 6-year Reserve
    service obligation, earning a high school diploma or its equivalency,
    and completing initial active duty training. A part-time student could
    take up to 10 years to finish an undergraduate degree due to
    interruptions for changes in work, family, Guard assignments, or other
    situations. Eligibility for chapter 1606 MGIB benefits to members of
    the Selected Reserve should be extended for as long as they remain
    members in good standing of a Selected Reserve unit. This would expand
    the value of the MGIB from not only a recruiting incentive, but also as
    a retention incentive. Last year Congressmen Buyer and Taylor
    introduced HR1962 that would have extended the MGIB benefit to members
    of the National Guard and Reserves for as long as they remain members
    of the Selected Reserve. This would have cost $5 million per year. Last
    year, Charles Cragin, former Acting Under-Secretary of Defense for
    Reserve Affairs sent a letter to the Co-chairs of the House Armed
    Service Committee addressing this issue. In his letter, Mr. Cragin
    acknowledged that extending the benefit to 14 years would have a great
    effect on retention within the Guard and Reserves and cost $1 million
    annually. Several years ago, an informal study was done on the number
    of members of the Guard and Reserves leaving the service. The study
    revealed that men and women with 8 to 15 years of service leave the
    Army and Air National Guard at the rate of about 57,000 over a 3-year
    period. The National Guard has invested time and money into training
    these men and women and the loss of well-trained soldiers and airmen at
    such an alarming rate should be considered unacceptable. With very
    little to offer these men and women, other than a small retirement they
    cannot begin collecting until age 60, there is not much else to entice
    them into reenlisting and remaining members of the Selected Reserves.
    EANGUS believes that by offering these men and women the opportunity to
    use their MGIB benefit for as long as they remain within the Guard and
    Reserves, we would be able to retain rather than lose these members.
    Now more than ever, it is important to keep trained National Guard
    members and reservists within the Reserve components.
    change sscra (title 50) to include members of the national guard called
    to active duty under title 32 at the request of the president & revise
     sscra to increase rent protection, add protections for vehicle leases
                   and college students called to active duty
        While it is not the jurisdiction of this committee, we are trying
    to raise the awareness among all of Congress and focus their attention
    to the issue of the Soldier and Sailor Civil Relief Act (SSCRA). The
    men and women of the National Guard have been contributing to the
    defense of the homeland since the events of September 11 unfolded. They
    have been on duty at the Nation's airports, nuclear power plants, water
    treatment facilities, national parks, the Nation's capitol, and will
    assume border patrol duties shortly. They are deployed under two
    Federal titles as well as State active duty. The difference between the
    two Federal titles and State active duty poses a problem with
    compensation and protections that these members of the National Guard
    who are deployed receive. If fortunate enough to be called to active
    duty under Federal title 10, these men and women will receive all
    Federal pay and benefits including medical coverage under TRICARE, job
    protection under the Federal Uniformed Services Employment Reemployment
    Rights Act, and protections under the Federal Soldier and Sailors Civil
    Relief Act. The members of the National Guard deployed under Federal
    title 32 receive some Federal benefits such as pay, but do not receive
    protection under the Federal Soldier and Sailors Civil Relief Act
    (Title 50).
        Another problem with the SSCRA would be that it does not offer
    protection for vehicle leases. If a servicemember has a vehicle loan,
    he has options to free him from the debt, minimize his losses, and
    eliminate the financial obligation. Under a lease agreement, military
    members are committed to the lease term and must pay extensive
    financial penalties to get out of the lease, frequently more than the
    cost of the lease payments would have been!
        Since the SSCRA has not been updated since 1991, EANGUS would like
    for Congress to revisit the amount of financial protection covered for
    rent or mortgage protection. In 10 years, the cost of living has gone
    up considerably, and the $1,200 of rent protection would not come close
    to what a two-bedroom apartment can cost in the DC Metro area, where
    rent on a two bedroom can exceed $2,000 per month. In Los Angeles, CA,
    a two bedroom unit costs on average around $1,700 per month. The same
    applies to New York City.
        EANGUS would also like to see revisions to the SSCRA to cover
    college students called to active duty so that if their education
    becomes interrupted due to a mobilization, they would be able to go
    back in good standing without penalty in regard to either grading or
    tuition for classes already paid for but not completed due to the
    mobilization. Most colleges already cover members of the Guard and
    Reserve if called to active duty before a semester or quarter is
    completed; however, there are a few that do not.
        The Enlisted Association of the National Guard of the United States
    is seeking the support of Congress to amend the Soldiers and Sailors
    Civil Relief Act of 1940 (SSCRA) to include members of the National
    Guard called to active duty under title 32 at the request of the
    President as well as raising the amount of rent protection, and adding
    provisions to cover vehicle leases and students who are attending
    colleges and universities or any other accredited educational program.
     commissary card & national guard and reserve component and gray area
                          retirees commissary benefit
        While considering parity in benefits in regards to the active duty
    and Reserve components, the issue we would like to bring to the
    attention of the Personnel Subcommittee would be that of the pink
    commissary card. National Guard and Reserve members are currently
    authorized only 24 commissary visits per year. Not only are the visits
    limited for members of the National Guard and Reserve components, they
    are tracked by a cumbersome and costly access card that must be re-
    issued each year by Reserve component commands. Millions of dollars per
    year could be saved by not having to print and mail commissary cards to
    Guard and Reserve members and gray area retirees. Equal access to
    commissary stores, in parity with their active duty counterparts, is a
    benefit that recognizes the increased responsibility of the Reserve
    Forces for homeland defense and worldwide deployments.
                   other important personnel issues of eangus
             National Cemeteries are intended for those who have
            served their country in the defense of this Nation. Many
            reservists are eligible for burial in these cemeteries based on
            their service after mobilization. Service in the Reserves is as
            important, as much a hardship, and potentially as dangerous as
            service in the Active-Duty Forces. Statutory authority should
            be given to implement and allow consideration of reservists as
            equal to active duty personnel regarding burial rights in
            National Cemeteries.
             National Cemeteries allow for dependents' burial, but
            make no provision for single soldiers to allow parents to be
            buried with them. EANGUS believes that the parents of a single
            soldier/airman, with surviving spouse or dependant child,
            should be able to be buried.
             Military technicians are actually traditional Guard
            personnel, and are paid as traditional Guard personnel.
            Currently, technicians are not eligible for reenlistment bonus
            incentives. EANGUS believes that military technicians should
            receive bonuses based on the same criteria as other traditional
            guard personnel.
             The National Guard comprises a significant percentage
            of the total Armed Forces of the United States. The men and
            women of the National Guard deploy worldwide for humanitarian
            and national security reasons. Certain retired men and women of
            the National Guard with 20 or more years of creditable service
            are qualified for Federal military retirement benefits, but
            have never served on active duty, and therefore were not issued
            a DD Form 214. These men and women without a DD 214 are not
            considered ``veterans'' by the Department of Veterans Affairs
            and are denied significant benefits they have earned and
            deserve. EANGUS believes that the retired men and women of the
            National Guard described above should be considered veterans
            for the purpose of establishing eligibility for benefits
            provided by and through the Department of Veterans Affairs,
            including but not limited to, health care services and medical
            treatment at Veterans Affairs hospitals and similar facilities.
             Space Available Travel access needs to be broadened
            for National Guard and Reserve members. Implementation of this
            proposal would not require an increase in the number of
            aircraft available therefore cost is minimal or revenue
            neutral. All services, and both enlisted members and officers,
            would benefit from worldwide availability. Increasing access to
            Space-A Travel would provide a greater efficiency per flying
            hour with more seats filled as well as contributing to an
            important and vital component of the total force and an
            integral part of our national security. The future of our
            military is dependent on the contributions and existence of our
            young airmen and soldiers. The National Guard's force strength
            is challenged and there needs to be an additional incentive to
            join the National Guard.
             EANGUS believes there should be a first time
            enlistment bonus for a term of 6 years for all soldiers and
            airmen from any Military Occupational Specialty (MOS) or Air
            Force Skill Code (AFSC). We also urge Congress of the United
            States to fund reenlistment bonuses for airmen and soldiers
            completing their initial enlistment obligation and committing
            to an additional term of 6 years, in any MOS or AFSC.
             Currently, in order to receive a commission, an
            individual must be able to complete 20 years of active
            commissioned service before reaching age 55. This means that
            he/she must be commissioned prior to their 35th birthday. In
            order to retire, a member must have 20 years of creditable
            service upon reaching age 60. A more reasonable upper limit for
            a commissioning age would be 40. This initiative provides an
            incentive for the enlisted force pursuing an education, and
            EANGUS believes that the maximum commissioning age should be
            increased to 40.
             To qualify for Reserve retired pay, a member must be
            credited with 20 satisfactory years of service, with the last 8
            qualifying years in a Reserve component. The National Defense
            Authorization Act in Fiscal Year 1995, to only require the last
            6 years to be in a Reserve component, amended this. This
            restriction made sense back in the 1950s when the Reserve
            components wanted to ensure Reserve members had time vested in
            the Reserve components to be eligible for a retirement. But
            today, with movement between the active and the Reserve
            components, and the emphasis on Total Force, it is an
            impediment to active duty members who would like to join a
            Reserve component. EANGUS believes that this requirement should
            be eliminated by the elimination of 10 USC 12371(A)(3).
             The aircrew flight incentive pay for all Army and Air
            Selected Guard and Reserve members is based on a 1/30 of a
            month's pay for each day the duty is performed. All active duty
            and Active Guard and Reserve (AGR) aircrew members are eligible
            for the full month's entitlement regardless of how many days
            they perform the duty. The training requirements for the Active
            component and Guard and Reserve members are the same. EANGUS
            urges Congress to enact legislation to equalize the Flight
            Incentive entitlement for all aviators of the U.S. military
            forces.
             Section 101(22) of title 37 states that inactive duty
            for training does not include work or study in connection with
            a correspondence course of a uniformed service. In addition,
            section 206 of title 37 states, ``this section does not
            authorize compensation for work or study performed by a member
            of a Reserve component in connection with correspondence
            courses of the Armed Forces.'' The code was affirmed in a July
            6, 2000, memo to the Principal Deputy Assistant Secretary of
            Defense for Reserve Affairs in which the DOD General Counsel
            indicated that ``Congress apparently intended to limit
            compensation to training and instruction appropriately
            undertaken in settings normally thought of as constituting
            `drills' or active duty training.'' EANGUS believes that all
            computer-based distributed learning that is required by a unit
            and scheduled as an additional training assembly for a certain
            date and time that provides for interaction and monitoring
            between an instructor and unit personnel, regardless of where
            unit personnel access the DL training, should be compensated
            without legal objection. The dramatic shift in training
            technologies and philosophies over the previous 10 years
            warrants a change. EANGUS urges DOD and Congress to incorporate
            appropriate language in title 37 to allow compensation for all
            Reserve component personnel taking any means of unit-required
            distributed learning training and for all unit-required
            distance learning.
             The Department of Defense operates child development
            centers in military installations to provide certified
            childcare for active duty and civilian personnel provides
            funding to defray at least 50 percent of the operating costs.
            Traditional Guard members, AGRs and Military Technicians in the
            National Guard have the same need for reasonably priced,
            certified childcare. The current military child care system
            requires non-appropriated fund accounting systems and
            competitive service employees, neither of which are available
            in the National Guard. The National Guard is capable of
            operating child development centers using State or contractor
            employees through the existing Master Cooperative Agreements
            between the Federal Government and the States and territories.
            EANGUS strongly urges DOD, the Department of the Army, the
            Department of the Air Force and National Guard Bureau to
            support and authorize military child development centers in the
            National Guard. EANGUS also urges Congress to enact legislation
            to provide funding for these centers.
             Military pay still significantly trails years of
            accumulative inflation. Prior to last year, pay raises were .5
            percent below the consumer price index. The National Guard is
            in competition for personnel who can choose to work overtime at
            their civilian jobs or get drill pay. Many States are under
            strength. Increased pay is an incentive to recruit and retain
            personnel. The Enlisted Association of the National Guard of
            the United States urges Congress to enact legislation
            authorizing a ``catch-up'' pay raise.
             Current military pay regulations do not recognize
            service beyond 26 years of service. National Guard and Reserve
            military personnel tend to serve for 10-20 years longer than
            their active duty counterparts, who draw their retirement check
            between age 37 and 42 (on average). The seventh quadrennial
            review of military compensation recommended a pay step at 28
            years of service is implemented. EANGUS strongly urges Congress
            to support legislation authorizing pay raises recognizing 28
            years of military service.
             There is an active discrimination practice against
            single members without dependents in the Reserve components.
            Single members are not afforded the same BAH allowance as
            married members when on active duty. DOD Financial Management
            Regulation, Volume 7A, chapter 26, paragraph 260203 allows a
            Reserve component member without dependents who is called or
            ordered to active duty on or after 5 December 1991, in support
            of a contingency operation (other than a member who is
            authorized transportation of household goods as a part of the
            call or order to duty), to be entitled to BAH at the ``without
            dependent rate.'' The member is unable to occupy his/her
            primary residence because of the call or order to active duty.
            The single member, while performing active duty for the
            Government, still has the requirement to have some kind of
            housing, whether by ownership or by renting. EANGUS urges the
            Department of Defense and Congress of the United States to
            support extension of this provision to authorize BAH payment
            for any active duty performed by single members.
             The Selected Reserve Incentive Programs do not enjoy
            permanent statutory authority. These programs are effective
            tools to obtain and retain National Guard and Reserve component
            members. The temporary nature of the Selected Reserve Incentive
            Programs reduces their effectiveness as retention tools because
            Reserve component members are unsure of program funding in
            future years. EANGUS requests that Congress make the Selected
            Reserve Incentive Programs permanent.
             In 1997, the Defense Authorization Act increased from
            60 to 75 the number of retirement points a Guard or Reserve
            member can earn in a year. Legislation passed last year to
            increase it further to 90. Most reservists earned at least 63
            points each year, losing 3 of them in the years prior to 1997.
            The Reserve components have maintained an accounting of all
            points earned. EANGUS urges Congress to amend section 12733(3)
            of title 10 to make the increase in retirement points
            retroactive and eliminate the ceiling on points that can be
            earned per year.
             The Chief of Staff of the Army has initiated a program
            to reduce the percentage of non-commissioned officers (NCOs) to
            a level at or below 47 percent of the total enlisted strength
            of the Army, Army Reserve and Army National Guard. This change
            would jeopardize the readiness of the Total Army. These force
            reductions cause instability within the force and have
            significant adverse affects on recruiting and retention. EANGUS
            urges Congress of the United States to support maintaining the
            current structure in the Non-Commissioned Officer corps in the
            Army, Army Reserve, and Army National Guard.

        The active duty military is dependant upon the National Guard in
    order to sustain readiness to meet the demands of the current national
    military strategy. It is a fact that 52 percent of combat support is
    found within the Reserve components. This ``total force'' structure has
    taken more than 20 years to achieve, and cannot be undone in a short
    period of time. Add to the worldwide contingency operations the new
    homeland defense mission, and it becomes very clear that the National
    Guard will be called upon to contribute to this Nation's defense more
    than ever before.
        During the period of the 1990s this country saw unprecedented
    growth and financial opportunity. The wall that separated East and West
    Germany came down and with its demise came the end of the Cold War, and
    with that end came a force draw down of America's military. Optimism
    was plentiful and seemed to grow with the closing of each military
    installation. Defense spending was cut and, therefore, new equipment to
    replace aging and increasingly unreliable equipment slowed and the
    resources stretched beyond the limits of reasonable life expectancy as
    the drawdown continued. We didn't invest in our Nation's defense for 10
    years, and then came the events of September 11, 2001. According to our
    President, there are two inescapable truths about terrorism in the 21st
    century: first--America's vulnerability to terrorism will persist long
    after we bring justice to those responsible for the events of September
    11, and second--the technological ability to launch destructive attacks
    against civilian populations and critical infrastructure spreads to
    more and more organizations and individuals with each passing year.
    This trend is an unavoidable byproduct of the technological,
    educational, economic, and social progress that creates jobs, wealth,
    and a good quality of life. Keeping all of this in mind, EANGUS
    believes that it is not only time to invest in the Nation's military
    defenses, but also in the people who choose to serve their country. We
    must make sure that the men and women the American people will come to
    depend upon even more in the near future for their protection and
    security must themselves feel secure in the knowledge that their
    families will not become homeless because they couldn't pay the
    mortgage or the rent, or that financial ruin will follow them because
    of their unselfish and patriotic decision to serve their country and
    their people.

        Senator Cleland. Dr. Schwartz.

        STATEMENT OF SUSAN SCHWARTZ, D.B.A., DEPUTY DIRECTOR OF
       GOVERNMENT RELATIONS/HEALTH AFFAIRS, THE RETIRED OFFICERS
                              ASSOCIATION

        Dr. Schwartz. Good morning. Chairman Cleland and
    distinguished members of the subcommittee, once again, the
    Military Coalition appreciates the opportunity to present our
    views on the defense health care program for your
    consideration.
        First, we want to reiterate our gratitude for the landmark
    health care initiatives implemented last year, especially for
    Medicare-eligible beneficiaries and active duty families. The
    TRICARE Senior pharmacy program is winning rave reviews and
    TRICARE For Life (TFL) is maturing as intended with the
    resolution of some initial startup issues.
        The coalition appreciates that last year your efforts
    resulted in full funding of the Defense Health Program for the
    first time in many years. We believe that full funding is
    essential to sustain this program, so critical to the welfare
    of the uniformed services community.
        However, one lingering concern the coalition has is for
    TRICARE For Life eligibles under the age of 65, whom the
    Defense Department is still excluding from electronics claims
    processing with Medicare. As a result, these disabled
    beneficiaries are unable to use many Medicare providers and are
    stuck with filing paper TRICARE claims in addition to their
    Medicare claims. We hope the subcommittee will help encourage
    DOD to provide equal treatment for all Medicare eligibles as
    intended by law.
        The coalition also urges the subcommittee's aggressive
    action on several issues affecting younger beneficiaries.
    Despite the numerous initiatives this subcommittee has
    promoted, our members in many areas still have difficulty in
    finding providers who are willing to accept TRICARE patients.
    These providers complain of low and slow payments, as well as
    burdensome administrative requirements.
        A major problem is that TRICARE fees are tied to Medicare
    rates. Medicare reimbursement has been declining despite rising
    provider costs. As more providers are refusing to take new
    Medicare patients or dropping out of the program, they are also
    becoming more reluctant to be TRICARE providers. While it is
    reported that provider participation in TRICARE is at its
    highest levels, the question that needs to be answered is: Are
    you taking any new patients? Generally the answer is no.
        The coalition urges the subcommittee to consider additional
    steps to improving provider participation. Specifically, we
    hope you will encourage DOD to more aggressively use existing
    authority to raise TRICARE reimbursements as necessary to
    attract providers, to further reduce TRICARE administrative
    requirements, and to take additional steps to rapidly expand
    electronic claims processing.
        The coalition also urges the subcommittee to consider
    further actions to increase the consistency of the TRICARE
    benefit across all eligible populations. One example is the
    coordination of TRICARE payments with other insurance. Under
    TRICARE For Life, TFL acts as a true supplement to Medicare and
    pays whatever Medicare does not. But for other types of
    insurance, TRICARE will pay nothing if the other insurance pays
    as much as TRICARE would.
        Until several years ago TRICARE paid the other insurance's
    copayment, but a DOD policy change eliminated that practice.
    What this does is it unfairly shifts costs to beneficiaries who
    happen to have other insurance and effectively denies them any
    TRICARE benefit. We urge the subcommittee to restore TRICARE as
    a true second payer to other health insurance and reinstate the
    same coordination of benefits methodology that is afforded to
    TFL beneficiaries.
        For active duty beneficiaries, the coalition is grateful
    for the subcommittee's authorization of TRICARE Prime Remote
    for families assigned where TRICARE Prime is not available.
    However, the wording of the law has yielded some unintended
    adverse consequences. The law specifies that family members are
    eligible only if they reside with the servicemember in a
    TRICARE Prime Remote zip code. Ironically, this means that an
    eligible family member will lose the benefit if the
    servicemember is subsequently assigned to an unaccompanied
    remote assignment and the family is unable to follow.
        Similarly, activated reservists are often sent to in-
    process at one point, then deployed to another. Again, this
    denies Prime Remote eligibility to their families.
        The coalition urges the subcommittee to amend TRICARE Prime
    Remote eligibility rules to cover family members who are unable
    to reside with a servicemember.
        Mr. Chairman and distinguished members of the subcommittee,
    we thank you for your strong continuing efforts to meet the
    health care needs of the entire uniformed services community. I
    look forward to answering your questions.
        [The prepared statement of the Military Coalition follows:]
               Prepared Statement by the Military Coalition (TMC)
        Mr. Chairman and distinguished members of the subcommittee. 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
             Air Force Women Officers Associated
             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,
            U.S. Coast Guard
             Commissioned Officers Association of the U.S. 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.
                              active force issues
        Personnel Strengths and Operations Tempo. 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 consider all
    possible manpower options to ease operational stresses on active,
    Reserve, and National Guard personnel.
        Pay Raise Comparability and Pay Table Reform. The Coalition urges
    the subcommittee to restore full pay comparability on the quickest
    possible schedule, and to change the permanent law to eliminate annual
    pay caps as the statutory default. The Military Coalition believes all
    members need and deserve annual raises at least equal to private sector
    wage growth. To the extent targeted raises are needed, the Department
    of Defense needs to identify the ultimate ``objective pay table''
    toward which the targeted raises are moving. Specific objectives for
    inter-grade relationships must be established, publicized, and
    understood, or members will perceive repeated differential raises as
    unfair.
        Basic Allowance for Housing (BAH). The Military Coalition urges the
    subcommittee to ``front-load'' as much of the remaining BAH upgrade as
    possible in fiscal year 2003, and to direct adjustments in grade-based
    housing standards to more adequately cover members' current out-of-
    pocket housing expenses.
        Basic Allowance for Subsistence (BAS). The Military Coalition urges
    the subcommittee to repeal the statutory provision limiting BAS
    eligibility to 12 percent of single members residing in government
    quarters. As a long-term goal, the Coalition supports extending full
    BAS eligibility to all single career enlisted members, beginning with
    the grade of E-6 and extending eligibility to lower grades as budgetary
    constraints allow.
        Permanent Change of Station (PCS). The Military Coalition urges
    continued upgrades of permanent change-of-station reimbursement
    allowances in fiscal year 2003 to recognize that the Government, not
    the servicemember, should be responsible for paying the cost of doing
    the Government's business.
        Family Readiness and Support. The Military Coalition urges improved
    education and outreach programs and increased childcare availability to
    ensure a family readiness level and a support structure that meets the
    requirements of increased force deployments for active, National Guard,
    and Reserve members.
        Commissaries. The Military Coalition opposes privatization of
    commissaries and strongly supports full funding of the benefit to
    sustain the current level of service for all commissary patrons.
                       national guard and reserve issues
        Support of Active Duty Operations. The Military Coalition urges
    continued attention to ensuring an appropriate match between National
    Guard and Reserve Force strengths and missions. The Coalition further
    urges an evaluation of the Soldier's and Sailor's Civil Relief Act
    (SSCRA) for adequacy in today's environment, particularly as it applies
    to National Guard members activated by State governors under title 32,
    at the request of the President, in support of homeland defense
    missions.
        Health Care for Members of the National Guard and Reserve. The
    Military Coalition urges making the TRICARE medical program available
    for members of the National Guard Reserve component and their families
    on a cost-sharing basis in order to ensure medical readiness and
    provide continuity of coverage to members of the Selected Reserve.
        Selected Reserve Montgomery GI Bill (MGIB) Improvements. The
    Military Coalition recommends that the Reserve MGIB authority be
    transferred to title 38 so that increases to the basic benefit can be
    more easily made, proportionally, in the Reserve program. The Coalition
    also supports extending the Reserve Montgomery GI Bill benefits usage
    period an additional 5 years after separation from the National Guard
    or Reserve.
        Tax issues. The Military Coalition urges restoration of full tax-
    deductibility of non-reimbursable expenses related to military
    training. The Military Coalition urges authorization of tax credits for
    employers of National Guard and Reserve employees.
        Retirement Credit for All Earned Drill Points. The Military
    Coalition recommends lifting the 90-point cap on the number of Inactive
    Duty Training (IDT) points earned in a year that may be credited for
    National Guard and Reserve retirement purposes.
        Unlimited Commissary Access. The Military Coalition recommends
    doing away with the 24-visit access cards and extending unrestricted
    commissary access to members of the National Guard and Selected
    Reserve.
                               retirement issues
        Concurrent Receipt of Military Retired Pay and Veterans Disability
    Compensation. The Military Coalition urges subcommittee leaders and
    members to voice their support of concurrent receipt to House and
    Senate leaders most strongly, to ensure authority and funding for
    substantive concurrent receipt relief in fiscal year 2003.
        Former Spouse Issues. The Military Coalition urges the subcommittee
    to conduct hearings on needed USFSPA changes, both to gather all inputs
    needed for appropriate corrective legislation and to guard against
    inadvertently exacerbating current inequities via well-intended,
    piecemeal legislative action initiated outside the subcommittee.
        Involuntary Separation Pay. The Military Coalition urges
    reinstatement of involuntary separation pay eligibility for officers
    twice deferred from promotion who decline continuation to 20 years.
                            survivor program issues
        Age-62 SBP Offset. The Military Coalition strongly recommends
    elimination of the age-62 Survivor Benefit Plan (SBP) annuity
    reduction. To the extent that immediate implementation may be
    constrained by fiscal limitations, the Coalition urges enactment of a
    phased annuity increase as envisioned in S. 145 and H.R. 548.
        30-Year Paid-Up SBP. The Military Coalition recommends accelerating
    the implementation date for the 30-year paid-up SBP initiative to
    October 1, 2003.
                               health care issues
        Provide Adequate Funding for the Defense Health Budget
        The Military Coalition strongly recommends the subcommittee
    continue its watchfulness to insure full funding of the Defense Health
    Program, to include military medical readiness, TRICARE, and the DOD
    peacetime health care mission
    Legislative Adjustments to TFL
        Claims Processing for Under-65 Medicare-Eligible Beneficiaries
        The Coalition urges the subcommittee to change the law to specify
    that all Medicare-eligible uniformed services beneficiaries, regardless
    of age or status (active duty dependents or retired beneficiaries),
    shall be entitled to the same TFL benefits, claims processing
    treatment, and benefits information notification currently afforded to
    Medicare-eligible beneficiaries over age 65.
        Requirement for Prior Authorization for TFL Inpatient Mental Health
    Hospitalization. The Coalition urges the subcommittee to eliminate the
    requirement for prior authorization for inpatient mental health
    services for TFL beneficiaries when Medicare is the primary payer.
        Medicare Part B Penalty. The Military Coalition recommends that
    individuals who attained age 65 prior to October 1, 2001, who would
    otherwise be subject to a Medicare Part B penalty, should have the
    option to decline enrollment in Medicare Part B, with TRICARE assuming
    first-payer responsibilities, as applicable, for such beneficiaries.
    The Military Coalition urges the subcommittee to eliminate the
    requirement to enroll in Medicare Part B for otherwise-eligible TFL
    beneficiaries who reside in foreign countries where Medicare benefits
    cannot be used.
        Dual-Eligible DOD-VA Beneficiaries. The Coalition urges the
    subcommittee to remain vigilant in its efforts to ensure that military
    retirees also eligible for VA care should not be forced to make an
    election between VA and DOD health care.
                            improvements in tricare
        The Military Coalition most strongly urges the subcommittee to
    ensure aggressive action to implement existing authorities to raise
    reimbursements where necessary to attract adequate provider
    participation, to reduce administrative requirements for providers, and
    to take additional steps as necessary to ensure rapid implementation of
    electronic claims processing.
        Coordination of Benefits and the 115 Percent Billing Limit Under
    TRICARE Standard. The Military Coalition strongly recommends that the
    subcommittee direct DOD to eliminate the 115 percent billing limit when
    TRICARE Standard is second payer to other health insurance and to
    reinstate the ``coordination of benefits'' methodology.
        TRICARE Prime Improvements. The Military Coalition urges the
    subcommittee to expand TRICARE Prime Remote coverage to include active
    duty servicemembers' family members, who are unable to reside with the
    servicemember, and to instruct DOD to identify and counsel active duty,
    Reserve, and Guard families in this situation. The Military Coalition
    recommends that subcommittee authorize extension of TRICARE Prime
    Remote coverage to retirees and their family members and survivors at
    the same locations where it is established for active duty families.
        Requirements for Nonavailability Statements under TRICARE Standard.
    The Military Coalition strongly recommends that all requirements for
    Nonavailability Statements be removed from the TRICARE Standard option
    and that all waivers be eliminated, effective upon enactment.
        TRICARE Retiree Dental Plan. The Coalition requests that the
    Government provide a subsidy for retiree dental benefits and provide an
    OCONUS retiree dental benefit.
        Commonwealth of Puerto Rico CONUS Designation. In light of the
    large number of retiree beneficiaries residing in Puerto Rico and the
    importance of the Commonwealth as a source for recruitment and an
    initiative for retention, The Coalition urges the subcommittee to
    support inclusion of the Commonwealth of Puerto Rico with the CONUS for
    TRICARE purposes.
        Tax Relief for Uniformed Services Beneficiaries. The Coalition
    urges the subcommittee to support H.R. 2125 to provide uniformed
    services beneficiaries a tax exemption for premiums paid for TRICARE
    Prime enrollment fees and Standard supplements.
        Codify Requirement to Continue TRICARE Prime in BRAC Areas. The
    Coalition urges the subcommittee to amend title 10 to require
    continuation of TRICARE Prime coverage for all uniformed services
    beneficiaries in BRAC areas.
        Custodial Care. The Military Coalition recommends Congress provide
    continued oversight to assure that medically necessary care will be
    provided to all Custodial Care beneficiaries; that Congress direct a
    study to determine the impact of the new legislation upon all
    beneficiary classes and that Beneficiary Advisory Groups' inputs be
    sought in the development of implementing regulations.
        Health Care Coverage for Reserve Component Members and Their
    Families. The Military Coalition urges the earliest possible action to
    ensure an adequate health coverage ``safety net'' for National Guard
    and Reserve members and families.
        FEHBP-65 Demonstration. The Military Coalition urges the
    subcommittee to work with its Government Reform Committee counterparts
    to authorize remaining FEHBP-65 demonstration enrollees to convert to
    regular FEHBP coverage.
                                personnel issues
        Mr. Chairman, the Military Coalition (TMC) thanks you and the
    entire subcommittee for your consistent support of members of the
    uniformed services. We are most grateful to the leadership and members
    of this subcommittee for their strong support leading to last year's
    significant improvements in military pay, housing allowances, and
    permanent change of station allowance enhancements. These and the many
    other important provisions of the Fiscal Year 2002 National Defense
    Authorization Act will pay strong retention and readiness dividends in
    the years ahead.
        But as much as Congress accomplished last year, very significant
    inequities and readiness challenges remain to be addressed.
        In particular, the uniformed services still find themselves facing
    significant personnel recruiting, retention and readiness challenges,
    with ever-smaller numbers of servicemembers being asked to make
    progressively greater sacrifices in terms of their workload, their
    compensation and benefits package, and their families. The subcommittee
    has made great strides toward restoring pay comparability, increasing
    allowances, and more. But additional steps are needed, regarding both
    compensation and force structure for active and Reserve forces.
        Significant inequities also persist for retirees and survivors,
    whose past service preserved the freedoms we enjoy today. Congress made
    significant strides in restoring lifetime health coverage for this
    population, but the disabled members and survivor communities both
    experience unfair reductions in their retired pay and survivor
    annuities. Correcting those problems remains a major Coalition
    priority.
        In testimony today, the Military Coalition offers its collective
    recommendations on what needs to be done to address these important
    issues and sustain long-term personnel readiness.
                              active force issues
        Since the end of the Cold War, the size of the force and real
    defense spending have been cut more than a third. But national leaders
    also have pursued an increasingly active role for America's forces in
    guarding the peace in a still-dangerous world--even more so since last
    September--so that today's servicemembers are being deployed many times
    more often than those of the mid-1980s.
        Past years' budget-driven reductions have taken an unfortunate toll
    in the services' ability to retain highly skilled military personnel.
    Despite the notable and commendable improvements made during the last 2
    years in military compensation and health care programs, retention
    remains a significant challenge, especially in technical specialties.
        From the servicemembers' standpoint, the increased personnel tempo
    necessary to meet continued and sustained training and operational
    requirements has meant having to work progressively longer and harder
    every year. ``Time away from home'' has become a real focal point in
    the retention equation. Servicemembers have endured years of longer
    duty days, increased family separations, difficulties in accessing
    affordable, quality health care, curtailed (until recently) pay and
    allowance increases, deteriorating military housing, less opportunity
    to use education benefits, and more out-of-pocket expenses with each
    military relocation.
        The war on terrorism has only heightened already burdensome mission
    requirements, and operating--and personnel--tempos continue to
    increase. Members' patriotic dedication will help uphold the increased
    workload in the short term, and a temporarily depressed economy also
    may deter some losses. But the longer-term outlook is problematic.
        Experienced (and predominantly married) officers, NCOs, and petty
    officers are under pressure to make long-term career decisions against
    a backdrop of a strong market demand for their skills and services even
    through the recent economic downturn. In today's environment, more and
    more servicemembers and their families debate among themselves whether
    the rewards of a service career are sufficient to offset the attendant
    sacrifices inherent in uniformed service. They see their peers
    succeeding in the civilian world and a rebounding economy with a more
    stable career and family life, often including an enhanced compensation
    package and far less demanding working conditions. Too often, our
    excellent soldiers, sailors, airmen, and marines are opting for
    civilian career choices.
        On the recruiting front, one only needs to watch prime-time
    television to see powerful marketing efforts on the part of the
    services. But this strong marketing must be backed up by an ability to
    retain these talented men and women. This is especially true as the
    services become more and more reliant on technically trained personnel.
    To the subcommittee's credit, you saw the current retention crisis
    coming before most, and you made significant efforts to forestall it.
    We know you do not intend to rest on your well-deserved laurels and
    that you have a continuing agenda in place to address these very
    important problems. But we also know that there will be stiff
    competition for proposed defense budget increases. The truth remains
    that the finest weapon systems in the world are of little use if the
    services don't have enough high quality, well-trained people to
    operate, maintain, and support them.
        The subcommittee's key challenge will be to ease servicemembers'
    debilitating workload stress and rebuild the trust that has been
    strained by years of disproportional sacrifice. Meeting this challenge
    will require a substantial commitment of resources on several fronts.
        Personnel Strengths and Operations Tempo. The Coalition has been
    dismayed at low force levels and the very modest service requests for
    additional end strength increases resulting in high operational tempo
    levels.
        The force is unduly stressed due to insufficient numbers of
    personnel to support the war on terrorism and associated operational
    requirements, resulting in a negative impact on the quality of life for
    uniformed services personnel. Recent statements by the administration
    and military leaders warn of a long-term mission against terrorism,
    meaning more servicemembers deployed to Central Asia and other foreign
    countries around the world. The services do not have sufficient numbers
    to sustain the war on terrorism, deployments, training exercises, and
    other commitments, resulting in the recall of significant numbers of
    Guard and Reserve personnel. 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 real problem is twofold. First, there are simply too few
    servicemembers to do all the work that needs to be done. Second,
    because too many career personnel are opting out of the military,
    relatively junior members must assume jobs previously done by much more
    experienced personnel. The result is that today's force is not only
    much smaller than the robust force we had during Operation Desert
    Shield/Storm, but much less experienced, as well.
        The Coalition strongly believes that earlier force reductions went
    too far and that the size of the force should be increased,
    commensurate with missions assigned. The force was already overstrained
    to meet its deployment requirements, even before taking on new
    requirements arising from the war on terrorism. 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. With no evidence of declining missions, this
    can only be achieved by increasing the size of the force.
        This is the most difficult piece of the readiness pie, and one of
    the most important. Pay and allowance raises are essential to reduce
    other significant career dissatisfiers, but they can't fix fatigue and
    rising family separations.
        Some argue that it will do little good to increase end strengths,
    since the services are already experiencing difficulty meeting current
    recruiting goals. The Coalition believes strongly that this severe
    problem can and must be addressed as an urgent national priority, with
    commensurate increases in recruiting budgets.
        Others point to high reenlistment rates in deployed units as
    evidence that high operations tempo actually improves morale. But much
    of the reenlistment rate anomaly is attributable to tax incentives that
    encourage members to accelerate or defer reenlistment to ensure this
    occurs in a combat zone, so that any reenlistment bonus will be tax-
    free. Over the long run, smaller but more heavily deployed forces will
    experience family-driven retention declines.
        Action is needed now to prevent a downward spiral of recruiting,
    retention, and readiness. Failing to do so will only deepen stress-
    related retention shortfalls and make future recruiting challenges even
    worse.
        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 consider all possible manpower options to ease
    operational stresses on active, Reserve, and Guard personnel.
        Pay Raise Comparability. The Military Coalition is extremely
    appreciative of the subcommittee's leadership during the last 3 years
    in reversing the routine practice of capping servicemembers' annual pay
    raises below the average American's. In servicemembers' eyes, all of
    those previous pay raise caps provided regular negative feedback about
    the relative value the Nation placed on retaining their services.
        Your determination to begin making up for those past shortfalls has
    offered much-needed acknowledgment that the commitment between
    servicemembers and their Nation cannot be a one-way street. The January
    2002 pay raise, the largest in 20 years, and the increased allowances
    you approved in the Fiscal Year 2002 Defense Authorization Act provided
    more appropriate financial recognition for career and high-performing
    servicemembers. But the Coalition urges the subcommittee not to
    consider its 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. As significant and laudable as those efforts have
    been, it must be acknowledged that the annual increases approved so far
    will make up only about half of the cumulative pay raise sacrifices
    imposed on servicemembers over the previous two decades. The last time
    a large pay comparability gap coincided with a retention crisis (in the
    late 1970s), the gap was eliminated via double-digit raises in both
    1981 and 1982.
        It is worth noting that the remaining 7.6 percent pay raise
    comparability gap--reduced substantially from 13.5 percent in 1999,
    thanks to this subcommittee's impressive leadership--is still larger
    than the worst gap of the late 1970s (7.3 percent).
        The President's Budget proposes an average 4.8 percent raise for
    fiscal year 2003, which would shrink the gap another 1.2 percentage
    points. Even at that rate, it would take another 6 years to restore
    full comparability. But current law would only reduce the gap by one-
    half percentage point per year through 2006--and then once again begin
    capping military raises below private sector wage growth (see chart
    below).

        The Coalition urges the subcommittee to restore full pay
    comparability on the quickest possible schedule and to change the
    permanent law to eliminate annual pay caps as the statutory default.
        Pay Table Reform. The subcommittee also has worked to address some
    shortcomings within the basic pay table by authorizing special
    ``targeted'' adjustments for specific grade and longevity combinations
    in recent years. The Coalition has supported these raises to recognize
    the education and technical expertise of certain career officers and
    enlisted members. More may need to be done in this area to address
    concerns such as pay compression between warrant officer pay and senior
    enlisted pay. However, the Coalition is concerned about potential
    perceptions of creating annual ``haves'' and ``have nots'' among
    members in different grades.
        The Military Coalition believes all members need and deserve annual
    raises at least equal to private sector wage growth. To the extent
    targeted raises are needed, the Department of Defense needs to identify
    the ultimate ``objective pay table'' toward which the targeted raises
    are moving. Specific objectives for inter-grade relationships must be
    established, publicized, and understood, or members will perceive
    repeated differential raises as unfair.
        Basic Allowance for Housing (BAH). The Military Coalition is most
    grateful to the subcommittee for acting in 1999 to reduce out-of-pocket
    housing expenses for servicemembers. Responding to the subcommittee's
    leadership on this issue, DOD proposed plans to reduce out of pocket
    expenses to 11.3 percent in 2002 and reduce the median out-of-pocket
    expense to zero by fiscal year 2005. Through the leadership and support
    of this subcommittee, these commitments have been put into law. 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 the subcommittee's action, but we ask that more be done.
    Housing and utility costs continue to rise, and we are years away from
    closing the existing pay comparability gap. Members residing off base
    face higher housing expenses along with significant transportation
    costs. Relief is especially important for junior enlisted personnel who
    live off base and do not qualify for other supplemental assistance.
        In a related issue, TMC supports revised housing standards that are
    more realistic and appropriate for each pay grade. As an example,
    enlisted members are not authorized to receive BAH for a 3-bedroom
    single-family detached house until achieving the rank of E-9.
        The Military Coalition urges the subcommittee to ``front-load'' as
    much of the remaining BAH upgrade as possible in fiscal year 2003, and
    to direct adjustments in grade-based housing standards to more
    adequately cover members' current out-of-pocket housing expenses.
        Basic Allowance for Subsistence (BAS). The Coalition is grateful to
    the subcommittee for establishing a food-cost-based standard for BAS
    and ending the one percent cap on BAS increases. But more needs to be
    done to permit single career enlisted members more individual
    responsibility in their personal living arrangements. In this regard,
    the Coalition believes it is inconsistent to demand significant
    supervisory, leadership and management responsibilities of
    noncommissioned and petty officers, but dictate to them where they must
    eat their meals.
        The Military Coalition urges the subcommittee to repeal the
    statutory provision limiting BAS eligibility to 12 percent of single
    members residing in Government quarters. As a long-term goal, the
    Coalition supports extending full BAS eligibility to all single career
    enlisted members, beginning with the grade of E-6 and extending
    eligibility to lower grades as budgetary constraints allow.
        Permanent Change of Station (PCS). The Military Coalition is most
    appreciative of the significant increases in the Temporary Lodging
    Expense (TLE) allowance authorized for fiscal year 2002 and the
    authority to raise PCS per diem expenses to match those for Federal
    civilian employees in fiscal year 2003. These are very significant
    steps to upgrade allowances that had been unchanged in over 15 years.
    Even with these much-needed changes, however, servicemembers continue
    to incur significant out-of-pocket costs in complying with Government-
    directed relocation orders.
        For example, PCS mileage rates have not been adjusted since 1985.
    The current rates range from 15 to 20 cents per mile--significantly
    lower than the temporary duty mileage rate of 36.5 cents per mile for
    military members and Federal civilians. Members are authorized time off
    for housing-hunting trips in advance of a PCS relocation, but must make
    any such trips at personal expense, without any government
    reimbursement such as Federal civilians receive. Further, Federal and
    State cooperation to provide unemployment benefits is required to
    provide unemployment compensation equity to military spouses forced to
    leave jobs due to PCS orders. The Coalition also believes continuation
    of and adequate funding for the Relocation Assistance Program is
    essential.
        We are sensitive to the subcommittee's efforts to reduce the
    frequency of PCS moves. But we cannot avoid requiring members to make
    regular relocations, with all the attendant disruptions of childrens'
    schooling, spousal career sacrifices, etc. The Coalition believes
    strongly that the Nation that requires them to incur these disruptions,
    should not be requiring them to bear the attendant high expenses out of
    their own pockets.
        The Military Coalition urges continued upgrades of permanent
    change-of-station reimbursement allowances in fiscal year 2003 to
    recognize that the government, not the servicemember, should be
    responsible for paying the cost of doing the government's business.
        Family Readiness and Support. The family continues to be a key
    consideration in the readiness equation for each servicemember. The
    maintenance of family readiness and support programs is part of the
    cost of performing the military mission. We must ensure that families
    have the opportunity to develop the financial and readiness skills
    needed to cope with deployment situations. It is important to meet the
    childcare needs of the military community including National Guard and
    Reserve members. Overall family support programs must meet the needs of
    National Guard and Reserve members being called to active duty in ever
    increasing numbers.
        The Military Coalition urges improved education and outreach
    programs and increased childcare availability to ensure a family
    readiness level and a support structure that meets the requirements of
    increased force deployments for active, National Guard and Reserve
    members.
        Commissaries. The President's fiscal year 2003 budget reduces
    Defense Commissary Agency funding by $137 million and eliminates over
    2,600 positions from stores and headquarters staff by September 30,
    2003. While DeCA indicates there will be no loss in service to the
    customer, the Coalition is concerned that the size and scope of the
    reductions may negatively impact quality and service to customers,
    including additional store closings, reduced hours, longer cashier
    lines and reduced stock on store shelves. This would have a
    significantly adverse impact on the benefit, which is widely recognized
    as a valuable part of the servicemember's compensation package and a
    cornerstone of quality of life benefits. As it has in the past, The
    Military Coalition opposes any efforts to privatize commissaries and
    strongly supports full funding of the benefit in fiscal year 2003 and
    beyond.
        The Military Coalition opposes privatization of commissaries and
    strongly supports full funding of the benefit to sustain the current
    level of service for all commissary patrons.
                       national guard and reserve issues
        The Military Coalition applauds the longstanding efforts of this
    subcommittee to address the needs of our Nation's National Guard and
    Reserve Forces, to facilitate the Total Force concept as an operational
    reality, and to ensure that National Guard and Reserve members receive
    appropriate recognition as full members of the Armed Forces readiness
    team.
        Support of Active Duty Operations. National Guard and Reserve
    members and units shoulder ever-greater day-to-day operational
    workloads. Along with Active-Duty Forces, they increasingly have come
    to face many of the same challenges as their active counterparts.
        Compounding the problem for National Guard and Reserve personnel,
    their increasing support of day-to-day active duty operations also has
    placed greater strains on the employers of these members. Employer
    support was always strong when National Guard and Reserve members were
    seen as a force that would be mobilized only in the event of a major
    national emergency. That support has become less and less certain as
    National Guard and Reserve members have taken longer and more frequent
    leaves of absence from their civilian jobs. In the last few months, the
    requirements of the war on terrorism led to the activation of over
    76,000 National Guard and Reserve members for homeland defense and
    overseas deployments.
        The Coalition understands and fully supports the Total Force Policy
    and the prominent role of the National Guard and Reserve Forces under
    this policy. Still, the Coalition is concerned that ever-rising
    operational employment of National Guard and Reserve Forces is having
    the practical effect of blurring the distinctions between the missions
    of the active and National Guard/Reserve Forces. National Guard and
    Reserve members could eventually face resistance with employers and
    increased financial burdens when activated which would negatively
    impact their ability to perform assigned missions and reduce their
    propensity to remain in Reserve service.
        The Military Coalition urges continued attention to ensuring an
    appropriate match between National Guard and Reserve Force strengths
    and missions. The Coalition further urges an evaluation of the
    Soldier's and Sailor's Civil Relief Act (SSCRA) for adequacy in today's
    environment, particularly as it applies to National Guard members
    activated by State governors under title 32, at the request of the
    President, in support of homeland defense missions.
        Health Care for Members of the National Guard and Reserve. Health
    insurance coverage for National Guard and Reserve members varies
    widely. Some have coverage through private employers, others through
    the Federal Government, and still others have no coverage at all. The
    latter group includes an unknown number of junior enlisted members,
    many of whom are seasonal workers or students.
        For Reserve families fortunate enough to have health insurance
    coverage through their private employers, employers can remove their
    insurance subsidies and force reservists to pay full premium
    themselves, plus a 2 percent administrative fee. Although TRICARE
    ``kicks in'' 30 days after activation, many National Guard and Reserve
    families are left to figure out how to utilize their health care
    benefits while their sponsor is deployed. Offering TRICARE benefits to
    members of the National Guard and Reserve as an option for health care
    insurance reduces these problems by ensuring continuity of coverage for
    servicemembers and their families.
        The precedent has already been set for Reserve insurance coverage
    under the TRICARE family dental insurance program. Reserve sponsors pay
    family dental premiums until activation. On activation, premiums cease
    and the family is enrolled in the active TRICARE dental insurance
    program.
        More recently, DOD signaled acknowledgment of the problem of
    ``continuity of care'' for activated National Guard and Reserve
    servicemembers by agreeing to cover the cost of Federal Employee Health
    Benefit program insurance premiums during periods of extended
    activation. TMC applauds the efforts of Congress to expand this benefit
    to other Federal agencies and by charging the Comptroller General to
    study this issue and report on cost effective options for providing
    health care benefits for members of the Selected Reserve.
        The Military Coalition urges making the TRICARE medical program
    available for members of the National Guard and Reserve component and
    their families on a cost-sharing basis in order to ensure medical
    readiness and provide continuity of coverage to members of the Selected
    Reserve
        Selected Reserve Montgomery GI Bill (MGIB) Improvements.
    Individuals who first become members of the National Guard or Reserve
    are eligible for the Selected Reserve Montgomery GI Bill (MGIB-SR). The
    MGIB-SR is authorized under title 10, whereas the basic MGIB program is
    governed by title 38 (Veterans Benefits). As a result, when increases
    to the MGIB program are made under title 38, proportional adjustments
    are often overlooked in the title 10 MGIB-SR program. For example,
    basic benefits for full-time students under the MGIB will increase 46
    percent over the next 2 years, but no corresponding proportional
    increase was funded for the Reserve program. [On January 1, the MGIB
    (title 38) benefit for full-time students rose from $762 a month to
    $800. A second increase, to $900 a month, is set for October 1 of this
    year and will be followed by a third increase, to $985, in October
    2003.] In addition, the MGIB-SR is paid out of the National Guard and
    Reserve personnel appropriations, and the Reserve chiefs are forced to
    absorb any MGIB-SR increases out of these accounts. The Coalition
    believes that total force equity requires automatic proportional
    adjustments to the MGIB-SR. One way to facilitate this objective is to
    transfer the MGIB-SR program to title 38.
        A second MGIB-SR concern is the usage period. In today's high-
    OPTEMPO National Guard and Reserve environment, these servicemembers
    find it difficult to juggle employment and school commitments with
    family and military responsibilities. A part-time student-National
    Guard or Reserve member could easily take all of the 10 years currently
    authorized for MGIB benefits to complete an undergraduate degree. As a
    result, National Guard and Reserve members are often forced to either
    attend school during their first enlistment or risk the loss of their
    benefits, even if they subsequently serve a full career in a National
    Guard or Reserve unit. Last year, the Department of Defense recognized
    the need to increase the usage period and supported an initiative to
    extend the period for National Guard and Reserve usage by 4 years. The
    Military Coalition believes that the solution is to extend eligibility
    for MGIB-SR benefits to 5 years after separation from the National
    Guard or Reserve. This benefit could be extended to those who remain in
    the National Guard or Reserve for a specified period of time and would
    have the added benefit of creating a retention incentive for National
    Guard and Reserve members.
        The Military Coalition recommends that the Reserve MGIB authority
    be transferred to title 38 so that increases to the basic benefit can
    be more easily made, proportionally, in the Reserve program. The
    Coalition also supports extending the Reserve Montgomery GI Bill
    benefits usage period an additional 5 years after separation from the
    National Guard or Reserve.
        Tax issues. The Coalition understands that tax matters fall under
    the purview of a different committee. But there are unique issues
    affecting members of National Guard and Reserve Forces, and we hope
    that members of the subcommittee will seek the support of the Ways and
    Means Committee in addressing them.
        Guardsmen and reservists are being asked to train more to enhance
    their readiness to support contingency missions, and are incurring
    considerable un-reimbursed expenses for such training-related items as
    travel, overnight lodging, meals, and uniforms. Prior to the 1986 tax
    code revision, these expenses were fully deductible; under current law,
    they are only deductible to the extent they exceed two percent of
    adjusted gross income. In a case where the member and spouse, combined,
    earn $40,000, the member must absorb the first $800 per year of his or
    her Reserve-related expenses. A member and spouse earning $30,000 each
    must absorb $1,200 per year. This is a significant financial penalty
    for members seeking to serve their country, and needs to be corrected.
    National Guard and Reserve members should not be required to subsidize
    their own military training.
        The Military Coalition urges restoration of full tax-deductibility
    of non-reimbursable expenses related to military training.
        With today's increasing operations tempo, the support of National
    Guard and Reserve members' employers is more essential than ever. Yet
    more frequent absence of National Guard and Reserve employees for
    training or operations is undermining that support, as mentioned above.
    The subcommittee's help is needed to foster additional incentives for
    employers to help offset their costs associated with their employees'
    military activities.
        The Military Coalition urges authorization of tax credits for
    employers of National Guard and Reserve employees.
        Retirement Credit for All Earned Drill Points. The role of the
    National Guard and Reserve has changed significantly under the Total
    Force Policy, especially during the post-Cold War era. Congress
    responded to the need for increased readiness by allowing guardsmen and
    reservists to credit for retirement more of their earned inactive duty
    training (IDT). During most of the Cold War period, the maximum number
    of IDT points that could be credited was 50 per year. The cap has since
    been raised on three occasions to 60, 75 and most recently, 90 points.
    (Section 652 of the fiscal year 2001 National Defense Authorization
    Act, P.L. 106-398). The Coalition is most appreciative of Congress'
    approval of the increase. However, the fundamental question is why
    National Guard and Reserve members are not permitted to credit for
    retirement all the training that they've earned in a given year. The
    typical member of the National Guard and Reserve consistently earns IDT
    points above the new 90-point maximum creditable toward retirement.
    Placing a ceiling on the amount of training that may be credited for
    retirement serves as a disincentive to professional development and
    takes unfair advantage of those National Guard and Reserve member
    commitments to the readiness mission.
        The Military Coalition recommends lifting the 90-point cap on the
    number of Inactive Duty Training (IDT) points earned in a year that may
    be credited for National Guard and Reserve retirement purposes.
        Unlimited Commissary Access. National Guard and Reserve members are
    authorized 24 commissary visits per year. Visits are tracked by a
    cumbersome and costly access card that must be reissued each year by
    Reserve component commands. The process of issuing, checking, and
    accounting for these separate cards contradicts DOD's policy of a
    ``seamless, integrated total force'' symbolized by the issuance of
    green ID cards to all members of the Selected Reserve. Because only 35-
    40 percent of National Guard and Reserve members live close enough to
    commissary stores to be able to use them conveniently, there is little
    chance of excessive use by National Guard and Reserve members. In fact,
    the 24-visit limit is tantamount to full privileges for the vast
    majority of National Guard and Reserve personnel. Thus, the sole
    effects of the 24-visit limit are to treat National Guard and Reserve
    members as second-class citizens and to place unnecessary, expensive
    and time-consuming documentation requirements on National Guard and
    Reserve units. Equal access to commissary stores by the National Guard
    and Reserve is an imperative that recognizes the increased
    responsibility of National Guard and Reserve Forces for the National
    security.
        The Military Coalition recommends doing away with the 24-visit
    access cards and extending unrestricted commissary access to members of
    the National Guard and Selected Reserve.
                               retirement issues
        The Military Coalition is grateful to the subcommittee for its
    historical support of maintaining a strong military retirement system
    to help offset the extraordinary demands and sacrifices inherent in a
    career of uniformed service.
        Concurrent Receipt of Military Retired Pay and VA Disability
    Compensation. The Coalition was most disappointed that agreement could
    not be reached by last year's Conference Committee to provide
    unconditional concurrent receipt in the fiscal year 2002 Defense
    Authorization Act. The Coalition appreciates the Armed Services
    Committees' difficulties in addressing this area without Budget
    Resolution headroom or full leadership agreement. We also appreciate
    the statement of moral support for concurrent receipt that the
    subcommittee did manage to insert in that Act. The subcommittee's
    acknowledgement of the significant inequity the current law imposes on
    disabled military retirees is very important to us. Similarly, the
    act's provision of modest adjustments to the Special Compensation for
    Certain Severely Disabled Retirees took at least an additional step to
    expand the population eligible for at least some small easing of the
    onerous disability offset penalty.
        But the Coalition strongly believes the time has come to turn this
    support into action, and to exert all possible effort to provide budget
    headroom for this initiative in the fiscal year 2003 budget resolution.
        The Military Coalition has long held that military retired pay and
    veterans disability compensation are paid for different purposes, and
    one should not offset the other. Specifically, retired pay is earned
    compensation for completing a career of arduous uniformed service,
    while veterans disability compensation is paid for pain and suffering
    and loss of future earnings' potential caused by a service-connected
    disability.
        Previous attempts to fix this inequity have all been met with the
    same response-the cost is too large. But the cost to men and women in
    uniform who have been injured while serving this Nation is far greater.
    No one disabled in the course of serving his or her country should have
    to forfeit an earned retirement--for years of faithful and dedicated
    service-in order to receive VA disability compensation for the wounds,
    injuries, or illnesses incurred in such service.
        Congress recently affirmed a similar principle in repealing the
    outdated statutory provision that, before October 1, 1999, required
    partial forfeiture of military retired pay by retired servicemembers
    who accepted post-service employment as Federal civilians. The same
    rationale applies to disabled servicemembers. That is, both categories
    of retirees deserve to receive the full retired pay they earned by
    virtue of their career of military service. Just as they should not be
    required to forfeit that retired pay based on their subsequent civilian
    employment, they should not have to pay a retired pay penalty because
    their service in uniform caused them long term disability. Compensation
    for the latter condition must be provided in addition to their earned
    retired pay, not in place of it.
        Rep. Michael Bilirakis' H.R. 303 and Sen. Harry Reid's S. 170 would
    correct the unfair and outdated retired pay/disability compensation
    offset, and these bills enjoy cosponsorship of 86 percent of the House
    and 76 percent of the Senate, respectively.
        The Coalition believes strongly that that level of cosponsorship
    support is inconsistent with continued inaction, and that there needs
    to be a greater correlation between what Congress says and what it
    does. The remaining disabled warriors of the Greatest Generation and
    Korea have earned and deserve better treatment, and Congress needs to
    provide substantive relief as a matter of urgency before any more of
    their number fade into history.
        Last year, Congress opted to leave the issue to the Executive
    Branch. The sad reality is that administrations of any party have been
    consistently reluctant to seek the budget resources to solve expensive
    personnel equity problems. Military members have had to look to
    Congress to do the right thing, and more often than not, Congress has
    done so.
        With other options exhausted, it is finally time for Congress to
    take real action to address the grossly unfair financial penalties
    visited for so long on those who already have suffered most for their
    country--military retirees disabled as a result of their service.
        The Military Coalition urges subcommittee leaders and members to
    voice their support of concurrent receipt to House and Senate leaders
    most strongly, to ensure authority and funding for substantive
    concurrent receipt relief in fiscal year 2003.
        Former Spouse Issues. The Military Coalition is concerned that many
    inequities persist in the application of the Uniformed Services Former
    Spouse Protection Act (USFSPA). The Coalition appreciates the
    sensitivity and complexity of this issue and the need for the
    subcommittee to hear all relevant inputs. Several times in recent
    years, Congress has enacted piecemeal changes to the law prior to
    hearing testimony on the full range of inequities. The Coalition
    believes strongly that such piecemeal changes should be suspended until
    the subcommittee has heard all relevant inputs and can strike a balance
    between the needs and rights of the various affected parties. Although
    the intent of the USFSPA was to assist former spouses in obtaining a
    fair share of their military spouses' retired pay, the law is ambiguous
    and weakly written. This has resulted in State courts awarding
    judgments that ignore the provisions of the USFSPA intended to protect
    the veteran.
        Delivery of the recent DOD report to Congress on USFSPA now clears
    the road for congressional consideration of possible improvements to
    the law.
        The Military Coalition urges the subcommittee to conduct hearings
    on needed USFSPA changes, both to gather all inputs needed for
    appropriate subsequent legislation and to guard against inadvertently
    exacerbating current inequities via well-intended, piecemeal
    legislative action initiated outside the subcommittee.
        Involuntary Separation Pay. A law change enacted in 2000 denies
    separation pay to officers twice deferred for promotion who decline
    continuation to 20 years of service.
        The Coalition urges the subcommittee to reconsider. This
    legislation is particularly unfair to officers deferred a second time
    for promotion to O-4 (at approximately 13 years of service), who can
    find themselves coerced into an untenable choice between serving an
    additional 7 years without advancement opportunities or separating
    after more than a decade of service without any separation pay.
    Previously, officers could decline such an offer and still receive
    separation pay, in recognition of the inconsistency between deeming an
    officer noncompetitive for advancement in the military and
    simultaneously create financial barriers to allowing the officer to
    pursue civilian career opportunities.
        The Coalition believes such an insensitive practice can only
    encourage officers to leave service early rather than risk investing 13
    years of service and be treated so unfairly if deemed noncompetitive.
    Perceptions of this unfairness have led to varied applications in
    different services, which only heightens the inequity.
        The Military Coalition urges reinstatement of involuntary
    separation pay eligibility for officers twice deferred from promotion
    who decline continuation to 20 years.
                            survivor program issues
        The Coalition thanks the subcommittee for the provision in the
    Fiscal Year 2003 Defense Authorization Act that extended Survivor
    Benefit Plan (SBP) eligibility to members killed on active duty,
    regardless of years of service. This action went a long way toward
    addressing a long-standing survivor benefits disparity.
        But more serious SBP inequities remain to be addressed. The
    Coalition hopes that this year the subcommittee will be able to support
    some increase in the minimum SBP annuity for survivor's age 62 and
    older, in addition to a more equitable paid-up SBP implementation
    schedule for pre-1978 SBP enrollees.
        Age 62 SBP Reduction. Since SBP was first enacted in 1972, retirees
    and survivors have inundated DOD, Congress and military associations
    with letters decrying the reduction in survivors' SBP annuities that
    occurs when the survivor attains age 62. The amount of the reduction
    varies by the circumstances in each case. Before age 62, SBP survivors
    receive an annuity equal to 55 percent of the retiree's SBP covered
    retired pay. At age 62, the annuity is reduced to a lower percentage,
    down to a floor of 35 percent of covered retired pay. For many older
    retirees, the amount of the reduction is related to the amount of the
    survivor's Social Security benefit that is potentially attributable to
    the retiree's military service. For members who attained retirement
    eligibility after 1985, the post62 benefit is a flat 35 percent of
    covered retired pay.
        Although this age 62 reduction was part of the initial SBP statute,
    large numbers of members who retired in the 1970s (or who retired
    earlier but enrolled in the initial SBP open season) were not informed
    of it at the time they enrolled. This is because the initial
    informational materials used by DOD and the services to describe the
    program made no mention of the age 62 offset. Thus, thousands of
    retirees signed up for the program in the belief that they were
    ensuring their spouses would receive 55 percent of their retired pay
    for life. Many retirees who are elderly and in failing health, with few
    other insurance alternatives available at a reasonable cost, are
    understandably very bitter about what they consider the Government's
    ``bait and switch'' tactics.
        They and their spouses are also stunned to learn that the survivor
    reduction attributed to the retiree's Social Security-covered military
    earnings applies even to widows whose Social Security benefit is based
    on their own work history.
        To add to these grievances, the DOD Actuary has confirmed that the
    40-percent Government subsidy for the SBP program--which has been cited
    for more than two decades as an inducement for retirees to elect SBP
    coverage--has declined to less than 27 percent. The statute assumed
    that retiree premiums would cover 60 percent of expected long-term SBP
    costs based on the actuary's assumptions about future inflation rates,
    interest rates, and mortality rates. However, actual experience has
    proven these assumptions were too conservative, so that retiree
    premiums now cover 73 percent of expected SBP benefit costs. In effect,
    retirees are being charged too much for the long-promised benefit.
        The paid-up SBP initiative enacted in 1998 will ease this disparity
    modestly for members retiring after 1978, but the subsidy will still
    fall far short of the promised 40 percent and comes too late for many
    older retirees.
        In addition, a significant inequity exists from the military
    retiree's standpoint in that the survivor benefit plan coverage
    provided for Federal civilian employees provides both a higher post-62
    benefit and a higher Government subsidy, as indicated in the chart
    below.

              FEDERAL CIVILIAN VS. MILITARY SBP ANNUITY AND SUBSIDY
    ------------------------------------------------------------------------
                                           CSRS \1\    FERS \2\    Military
    ------------------------------------------------------------------------
    Post-62 percent of Ret. Pay.........          55          50          35
    Gov't Subsidy.......................          50          42         27
    ------------------------------------------------------------------------
    \1\ Civil Service Retirement System
    \2\ Federal Employees Retirement System

        Some might argue that Federal civilians warrant higher benefits and
    subsidies on the basis of their extended careers, but that is false
    reasoning. Military members, except for disabled members, must serve at
    least 20 years to qualify for retirement and often serve much longer.
    While many Federal civilian employees do, in fact, serve even longer
    periods, this is not necessary to qualify for retirement and survivor
    coverage, as many nondisabled Federal civilians qualify for retirement
    after serving considerably less than 20 years--and can do so with as
    little as 5 years' service, depending on age.
        More importantly, because they retire at younger ages than Federal
    civilians, retired servicemembers pay premiums for a far longer period.
    The combination of greater premium payments and lower age-62 benefits
    leave military retirees with a far less advantageous premium-to-benefit
    ratio--and therefore a far lower Federal survivor benefit subsidy--than
    their retired Federal civilian counterparts.
        The Fiscal Year 2001 Defense Authorization Act included a ``Sense
    of Congress'' provision specifying that legislation should be enacted
    to increase the SBP age-62 annuity to ``reduce (and eventually
    eliminate)'' the different levels of annuities for survivors age 62 and
    older vs. those for younger survivors. But that statement of support
    remains to be translated into substantive relief.
        The Military Coalition strongly supports legislation sponsored by
    Sen. Thurmond and Rep. Miller (S. 145 and H.R. 548, respectively) that,
    if enacted, would eliminate the disparity in a three-stage process--
    raising the minimum SBP annuity to 40 percent of SBP-covered retired
    pay immediately; to 45 percent on October 1, 2004; and to 55 percent on
    October 1, 2011.
        We appreciate only too well the cost and other challenges
    associated with such mandatory spending initiatives, and believe this
    incremental approach offers a reasonable balance between the need to
    restore equity and the need for fiscal discipline. Despite a shrinking
    Federal surplus, action is needed now to correct this long-standing
    inequity.
        The Military Coalition strongly recommends elimination of the age-
    62 Survivor Benefit Plan annuity reduction. To the extent that
    immediate implementation may be constrained by fiscal limitations, the
    Coalition urges enactment of a phased annuity increase as envisioned in
    S. 145 and H.R. 548.
        30-Year Paid-Up SBP. Congress approved a provision in the Fiscal
    Year 1999 Defense Authorization Act authorizing retired members who had
    attained age 70 and paid SBP premiums for at least 30 years to enter
    ``paid-up SBP'' status, whereby they would stop paying any further
    premiums while retaining full SBP coverage for their survivors in the
    event of their death. Because of cost considerations, however, the
    effective date of the provision was delayed until October 1, 2008.
        As a practical matter, this means that any SBP enrollee who retired
    on or after October 1, 1978 will enjoy the full benefit of the 30-year
    paid-up SBP provision. However, members who enrolled in SBP when it
    first became available in 1972 (and who have already been charged
    higher premiums than subsequent retirees) will have to continue paying
    premiums for up to 36 years to secure paid-up coverage.
        The Military Coalition is very concerned about the delayed
    effective date, because the paid-up SBP proposal was initially
    conceived as a way to acknowledge the particular circumstances of those
    who have paid SBP premiums from the beginning. Many of these members
    entered the program when it was far less advantageous and when premiums
    represented a significantly higher percentage of retired pay. In this
    regard, SBP premiums were reduced substantially in 1990, so these older
    members paid the higher premiums for up to 18 years. The Coalition
    believes strongly that their many years of higher payments warrant at
    least equal treatment under the paid-up SBP option, rather than
    imposing an additional 6-year waiting period upon them.
        The Military Coalition recommends accelerating the implementation
    date for the 30-year paid-up SBP initiative to October 1, 2003.
                               health care issues
        The Military Coalition (TMC) is most deeply appreciative of the
    subcommittee's exceptional efforts over the last 2 years to honor
    government health care commitments to uniformed services beneficiaries,
    particularly for Medicare-eligibles and active duty members and
    families. The long and impressive list of accomplishments is well worth
    enumerating once more:

             Authorization of TRICARE For Life (TFL) and the
            TRICARE Senior Pharmacy Program (TSRx) for Medicare-eligibles;
             Establishment of the Military Medicare-eligible
            Retiree Health Care Fund to guarantee funding for older
            beneficiaries' care through military facilities, TFL or TSRx,
            beginning Oct. 1, 2002;
             Reduction of the TRICARE Catastrophic Cap on retired
            beneficiaries' out-of-pocket expenses from $7,500 to $3,000 per
            year per family;
             Elimination of TRICARE Prime copayments for active
            duty family members;
             Expansion of TRICARE Prime Remote for active duty
            families assigned where Prime is not available;
             Full funding of the Defense Health Program in fiscal
            year 2002, for the first time in many years;
             Upgrade of the custodial care program, especially for
            active duty families; and
             Statutory protection of retired veterans' rights to
            access earned care from both Department of Defense and
            Department of Veterans Affairs health programs.

        These and other subcommittee-sponsored enhancements are saving
    military beneficiaries thousands of dollars a year and represent the
    greatest military health care advancements in a generation.
        The Coalition also thankfully recognizes the subcommittee's
    continuing efforts to facilitate improvements in TRICARE claims
    processing, portability, and access.
        However, much remains to be done to fully implement this host of
    laudable initiatives, to address certain chronic program shortcomings,
    and to address remaining initiatives that will be essential to
    providing a more equitable and consistent health for all categories of
    TRICARE beneficiaries, regardless of age or geography.
        The Coalition looks forward to continuing its productive and
    cooperative efforts with the subcommittee's members and staff in
    pursuit of this common objective.
             provide adequate funding for the defense health budget
        A top Coalition priority for fiscal year 2003 is to work with
    Congress and DOD to ensure continued full funding of the Defense Health
    Budget to meet readiness needs and deliver needed care, through both
    the military direct care system and managed care support contracts, for
    ALL uniformed services beneficiaries, regardless of age, status, or
    location. 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. The subcommittee's continuing
    conscientious scrutiny of the adequacy of annual budget proposals will
    be essential to avoid a return to the chronic underfunding situations
    that previously led to execution shortfalls, shortchanging of the
    direct care system, inadequate equipment capitalization, failure to
    invest in infrastructure, and substitution of annual emergency
    supplemental funding requests for candid and conscientious budget
    planning.
        In years past, part of the funding problem was attributable to the
    lack of a clearly defined benefit. With the introduction of TFL, the
    benefit is more clearly defined and funding requirements should be
    better understood.
        The Military Coalition strongly recommends the subcommittee
    continue its watchfulness to ensure full funding of the Defense Health
    Program, to include military medical readiness, TRICARE, and the DOD
    peacetime health care mission.
                        tricare for life implementation
        The Coalition is pleased to report that, thanks to this
    subcommittee's focus on beneficiaries, TMC representatives continue to
    be actively engaged in two OSD-sponsored TFL action groups. The TFL
    Steering Level Panel is comprised of military association CEOs, the
    Assistant Secretary of Defense for Health Affairs, members of the
    ASD(HA) staff and members of the TRICARE Management Activity. The
    Steering Panel meets quarterly to address major policy decisions,
    consistent with the latitude provided by existing statutes. The TFL
    Working Group has representation from the same organizations and meets
    bi-weekly, or as necessary, to coordinate details of implementation
    plans, identify problem solutions, and refer issues to the steering
    panel as needed. From our vantage point, the Defense Department
    continues to be committed to implement TFL consistent with
    Congressional intent and is working vigorously toward that end.
        The Coalition is concerned that several TFL implementation
    ``glitches'' have arisen since October 1 that have posed frustrating
    delays or erroneous claims rejections for significant numbers of
    TRICARE beneficiaries. The TFL Working Group has provided a much-needed
    forum to exchange DOD and beneficiary perspectives and identify
    corrective actions. Although many of these remain to be fully resolved,
    we believe the Department is making a sincere and energetic effort to
    do so. The Coalition will continue to work closely with DOD to monitor
    the automated claims processing to expedite payments and eliminate
    beneficiary claim-filing requirements.
        While in the process of developing TFL implementation plans and how
    TFL will interact with Medicare under various scenarios, the Coalition
    has identified certain statutory limitations and inconsistencies that
    we believe need adjustment to promote an equitable benefit for all
    beneficiaries, regardless of where they reside.
        In addition, the Coalition plans to remain vigilant in its efforts
    to identify gaps in coverage between Medicare and TRICARE benefits to
    make TRICARE for Life the true ``wrap around coverage'' as intended by
    Congress. It's extremely important that beneficiaries are confident
    they will no longer require Medicare supplemental insurance policies
    and are willing to rely wholly on TFL. Unintentional gaps in coverage
    will result in financial hardships for beneficiaries, and undermine
    confidence in the program. The Coalition is particularly concerned that
    DOD appears not to have budgeted the necessary funds to adequately
    inform beneficiaries and providers about the dramatically upgraded TFL
    and TSRx benefits. In most cases, informing beneficiaries was left to
    the four regional managed care support contractors (MCSCs). The result
    was a great disparity in the quantity and quality of notice members
    received about these extraordinarily important benefit changes. In many
    cases, the MCSCs put limited resources into mailings and beneficiary
    briefings because they had not budgeted for such things, and received
    little, if any, extra funding from DOD for this purpose.
        In many cases, beneficiaries' best sources of information were
    magazines and other TFL- or TSRx-specific publications published by
    beneficiary associations. Unfortunately, many beneficiaries did not
    have access to the association publications and thus were inadequately
    informed.
        The Coalition recommends the subcommittee establish safeguards to
    ensure adequate funding is provided for beneficiary education whenever
    significant changes occur in military health or pharmacy programs.
    Legislative Adjustments to TFL
        Claims Processing for Under-65 Medicare-Eligible Beneficiaries.
    When TFL was enacted last year, the Coalition believes Congress
    intended that ALL Medicare-eligible beneficiaries should receive the
    same benefit and the same claims-processing treatment. Unfortunately,
    this has not turned out to be the case as DOD has interpreted and
    implemented the TFL statute.
        First, the Coalition is very concerned about continuing claims
    processing limitations for the under-65 Medicare-eligible population.
    These TFL beneficiaries--who are eligible for Medicare due to 100-
    percent disability--so far have been left out of the electronic claims
    processing that is the standard for TFL beneficiaries over 65.
    Eligibility for automated claims is essential to make TFL work
    smoothly, since it opens up TRICARE access to any Medicare-
    participating provider. In this regard, Medicare providers incur no
    extra paperwork with TFL patients, because Medicare automatically
    processes the claims to TFL. But younger disabled beneficiaries and
    their providers are still saddled with filing individual paper claims
    with TRICARE for each episode of care (which entails much slower
    processing and payment), so many providers are unwilling to treat them
    or require payment upfront at the time of service. The Department of
    Defense has indicated its intent to include under-65 retired Medicare-
    eligible beneficiaries in the electronic claim system at some point in
    2002, but has not committed to making this happen by any specific date.
        Unfortunately, another group of Medicare-eligibles is even more
    severely disenfranchised from TFL participation--under-65 Medicare-
    eligible dependents of active duty family members. These beneficiaries
    are not only barred from the automated claims process, but they also
    endure a much more restricted benefit.
        Congress specified that TFL is to perform as a second-payer to
    Medicare on a ``benefits plus benefits'' basis. That is, TRICARE pays
    whatever Medicare will not for any service covered by Medicare and
    TRICARE. But the language of the TFL law applies only to retired
    beneficiaries and their dependents, and to eligible survivors and
    certain former spouses. As presently written, the TFL law does not
    address Medicare-eligible active duty family members. For the latter
    case, the Department of Defense operates TFL as second-payer to any
    other insurance--including Medicare--on a ``benefits less benefits''
    basis. Under this methodology, TRICARE payment calculation involves a
    complex comparison of Medicare vs. TRICARE allowables and payments, and
    the beneficiary is subject to TRICARE Standard deductibles (TFL
    beneficiaries are not). The confusing methodology often leads to
    payment problems and is extremely hard for patients and providers to
    understand (indeed, even TRICARE managers have difficulty explaining
    it). Thus, TRICARE is of considerably more limited value to Medicare-
    eligible active duty family members.
        The Coalition believes this situation is extremely unfair and
    imposes an undue burden on beneficiaries, many of whom are the most in
    need of care and often endure financial hardship because of their
    disability.
        Further, all disabled beneficiaries under 65 do not receive any
    formal communication from DOD about how their TRICARE benefits change
    upon becoming eligible for Medicare Part B. The Coalition, through the
    TFL working group and senior level panel, has continued to urge DOD to
    take a more proactive stance in aggressively educating this group about
    the benefits changes associated with attainment of Medicare
    eligibility.
        The Coalition urges the subcommittee to change the law to specify
    that all Medicare-eligible uniformed services beneficiaries, regardless
    of age or status (active duty dependents or retired beneficiaries),
    shall be entitled to the same TFL benefits, claims processing
    treatment, and benefits information notification currently afforded to
    Medicare-eligible beneficiaries over age 65.
        Requirement for Prior Authorization for TFL Inpatient Mental Health
    Hospitalization. Despite TFL's role as second payer to Medicare, one
    holdover from DOD's overly zealous prior authorization requirements is
    the requirement for prior authorization for inpatient mental health
    services for TFL beneficiaries. The Coalition strongly disagrees with
    placing this additional administrative burden upon TFL beneficiaries
    when TFL is second-payer to Medicare. When Medicare authorizes
    inpatient mental health hospitalization, TRICARE authorization also
    should be automatic, just as it is for other Medicare-covered services.
    The current preauthorization requirement not only burdens
    beneficiaries, but also causes unnecessary paperwork and increased
    administrative costs with little or no demonstrated impact on
    effectiveness or improved outcomes.
        The Coalition urges the subcommittee to eliminate the requirement
    for prior authorization for inpatient mental health services for TFL
    beneficiaries when Medicare is the primary payer.
        Medicare Part B Penalty. Currently, about 6 percent of the
    Medicare-eligible beneficiaries residing in the United States would be
    subject to a Medicare Part B late enrollment penalty if they desire to
    participate in TFL. The penalty, which increases by 10 percent per
    year, is particularly onerous for more senior retirees (principally the
    veterans of World War I and World War II), lower grade retirees, and
    survivors. Under these rules, a 75-year old would have to pay double
    Part B premiums for life. An 85-year old would incur triple Part B
    premiums for life. Although we would prefer to see this penalty waived,
    TMC recognizes that jurisdiction over any aspect of the Medicare
    program is outside the scope of the Armed Services Committees.
        TMC proposes an alternative, under the jurisdiction of the
    subcommittee, which parallels the treatment of Medicare Part B for
    participants in TSRx. Specifically, beneficiaries who attained age 65
    prior to April 1, 2001, are not required to enroll in Medicare Part B
    to participate in the TSRx program. Those who become 65 after that date
    must enroll in Part B to be eligible for TSRx. TMC believes similar
    ground rules should be extended to TFL. Beneficiaries who became 65
    before October 1, 2001, should be provided the option of having TRICARE
    as primary payer (without requiring enrollment in Part B) for services
    normally covered by Medicare Part B. Under this proposal, such
    beneficiaries would be subject to applicable TRICARE deductibles and
    copayments for such services. (The individuals in question are entitled
    to Medicare Part A).
        The Military Coalition recommends that individuals who attained age
    65 prior to October 1, 2001, who would otherwise be subject to a
    Medicare Part B penalty, should have the option to decline enrollment
    in Medicare Part B, with TRICARE assuming first-payer responsibilities,
    as applicable, for such beneficiaries.
        Beneficiaries Residing Overseas. Under TFL, approximately 11,000
    Medicare-eligible beneficiaries, who reside in foreign countries, are
    required to participate in Medicare Part B, even though Medicare does
    not function overseas. This is a particularly onerous burden for
    elderly retirees who have resided outside of the United States for
    years and, for obvious reasons, did not enroll in the non-existent
    Medicare program at 65. For example, an 80-year old retiree overseas
    would have to pay 250 percent of the normal Part B premium for the rest
    of his life to gain TFL coverage--even though Medicare would not pay a
    cent for his care. The Coalition believes this situation is highly
    inequitable.
        Overseas beneficiaries have been actively discouraged by the Health
    Care Financing Administration--now known as the Centers for Medicare &
    Medicaid Services (CMS)--from enrolling in Part B. Specifically, HCFA/
    CMS letters to overseas retirees have advised, ``Therefore, unless you
    believe that you may be returning to the United States in the near
    future either to live or to receive medical care, it is probably not to
    your advantage to enroll in medical insurance at this time.'' The
    Coalition believes members who were counseled by the government not to
    enroll in Part B because they live overseas where Medicare does not
    apply should not be compelled to enroll in Part B years later. It is
    particularly unfair to deny elderly military beneficiaries the belated
    TFL benefit they earned by extended arduous service unless they agree
    to pay an artificially inflated fee for a Medicare benefit they can
    never use.
        The Military Coalition urges the subcommittee to eliminate the
    requirement to enroll in Medicare Part B for otherwise-eligible TFL
    beneficiaries who reside in foreign countries where Medicare benefits
    cannot be used.
    Other TFL Considerations
        TRICARE Plus. The Coalition is pleased with DOD's decision to offer
    Medicare-eligible beneficiaries the opportunity to enroll in a primary
    care program at selected military treatment facilities (MTFs) where
    capacity exists. The Coalition appreciates that DOD will guarantee
    primary care access for Plus enrollees on the same basis as other
    enrolled TRICARE Prime beneficiaries.
        TRICARE Senior Prime enrollees were ``grandfathered'' into the Plus
    program. In addition, TRICARE Prime beneficiaries under age 65 are
    permitted to ``age into'' Plus when they become Medicare-eligible.
    Other Medicare-eligibles who have been enrolled or empanelled in a
    health program at a MTF enjoyed a higher enrollment priority than those
    with no such prior relationship.
        The Coalition is well aware of the finite capacity and resource
    limitations of the MHS and supports a DOD policy that balances TRICARE
    Plus enrollees' needs with the readiness mission and the primary care
    access needs for active duty and retiree beneficiaries.
    Dual-Eligible DOD-VA Beneficiaries
        The Coalition is very grateful to the subcommittee for the fiscal
    year 2002 National Defense Authorization Act (NDAA) provision that
    prohibits the Secretary of Defense from forcing beneficiaries who are
    also eligible for Veterans Administration (VA) medical care DOD
    beneficiaries to choose between DOD and VA care. The Coalition is
    disappointed that the administration continues to support this ``forced
    choice'' initiative. It is the Coalition's view that this policy
    change, if ever implemented, would constitute 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 (68 percent of enrolled retired veterans are in Priority
    Groups 1-3), or with other factors codified in law (Priority Groups 3-
    6), 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 urges the subcommittee to remain vigilant in its
    efforts to ensure that military retirees also eligible for VA care
    should not be forced to make an election between VA and DOD health
    care.
                            improvements in tricare
        The Coalition is pleased that the fiscal year 2001 NDAA made an
    effort to address the lack of physician participation in TRICARE by
    requiring:

             DOD to designate specific rates for reimbursement for
            services in certain localities where access to health care
            services would be severely impaired; and
             Prepare reports analyzing the utility of increased
            reimbursements to ensure the availability of network providers,
            and to determine the extent to which physicians are choosing
            not to participate in contracts to provide health care in rural
            areas.

        However, beneficiaries in certain geographies continue to report a
    lack of provider participation in TRICARE networks or as participating
    providers for Standard, thus limiting in access and choice. Despite
    many initiatives to improve the program, we continue to hear complaints
    from providers of low and slow payments, as well as burdensome
    administrative requirements and hassles. These problems must be
    addressed by increasing reimbursement, streamlining claims processing
    requirements with greater reliance on electronic claims technology and
    eliminating unnecessary TRICARE reporting requirements. Only by
    decreasing the administrative burden placed on providers and building a
    simplified and reliable claims system that pays in a timely way can
    Congress and DOD hope to establish TRICARE as an attractive program to
    providers and a dependable benefit for beneficiaries.
        A key problem is that, since 1991, TRICARE fees have been tied to
    Medicare reimbursement rates that have been in continual decline. While
    Congress has previously given the authority to the Secretary of Defense
    to increase reimbursements and mandated improvements in TRICARE
    business practices, only some of these improvements have been
    implemented. To date, the Secretary of Defense has made only very
    limited use of his existing authority to increase participation by
    raising reimbursement levels. The test demonstration of a Web-based
    automated claims system, required by the section 723 of the fiscal year
    2001 NDAA to begin October 1, 2001, has not been activated. Because of
    the slow pace of change and reluctance to use existing authorities,
    there has been little increase in provider participation.
        Large numbers of beneficiaries continue to report that prospective
    providers:

             Tell them they will not accept TRICARE reimbursement
            or TRICARE patients; or
             Require payment in advance because they refuse to
            accept the TRICARE Maximum Allowable Charge (TMAC) as an
            appropriate reimbursement rate and/or are unwilling to accept
            TRICARE's cumbersome administrative requirements and slow
            payments.

        Once providers have left the system, promises of increased
    efficiencies have done little to encourage them to return. Lessons
    learned from TFL implementation demonstrate the effectiveness of
    electronic claims processing.
        An additional administrative improvement under the TFL program
    deemed all Medicare providers as TRICARE authorized providers--
    eliminating the unnecessary cost and inconvenience of additional
    credentialing.
        TFL has dramatically improved access to care for Medicare-eligibles
    by streamlining administrative procedures, processing claims
    electronically, making the system simple for providers, and paying
    claims on time.
        But TRICARE remains a morass of paper claims, bureaucratic
    layering, and low and slow payments that has stubbornly resisted the
    kinds of upgrades that are essential to make TRICARE an attractive and
    reliable program for providers and beneficiaries.
        Having implemented dramatic improvements in health coverage for
    Medicare-eligibles over 65 and active duty dependents, it is essential
    for the subcommittee to apply similar aggressive action to make TRICARE
    similarly responsive to the needs of under-65 beneficiaries.
        The Military Coalition most strongly urges the subcommittee to
    ensure aggressive action to implement existing authorities to raise
    reimbursements where necessary to attract adequate provider
    participation, to reduce administrative requirements for providers, and
    to take additional steps as necessary to ensure rapid implementation of
    electronic claims processing.
                           tricare prime improvements
        The Coalition is grateful for the fiscal year 2001 NDAA provision
    authorizing TRICARE Prime Remote coverage for families of
    servicemembers assigned to areas where there is no TRICARE Prime
    option. However, this program has a shortcoming in that it requires
    that the family member must reside with the servicemember. This
    requirement may be reasonable when the family has a choice of
    accompanying the member, but this is not always the case. It can prove
    particularly troublesome for family members whose sponsor has Permanent
    Change of Station (PCS) orders that are ``unaccompanied.'' In such
    circumstances, there can be many good reasons why the family finds
    itself living in an area without Prime access while awaiting the end of
    the unaccompanied tour.
        Further, families of deployed guardsman and reservists called to
    active duty for over 179 days are eligible for the Prime Remote
    benefit, but in most circumstance the servicemember is sent far from
    their residence, and the family remains behind. Other circumstances
    where families are separated include families who may return to their
    home of record during deployment and college students residing away
    from home. These families are unfairly burdened by having to pay much
    higher copayments for care than their counterparts fortunate enough to
    have an opportunity to reside with the sponsor.
        The Military Coalition urges the subcommittee to expand TRICARE
    Prime Remote coverage to include active duty servicemembers family
    members who are unable to reside with the servicemember, and to
    instruct DOD to identify and counsel active duty, Reserve, and Guard
    families in this situation.
        The fiscal year 2001 NDAA represented landmark legislation in
    reducing out-of-pocket TRICARE expenses for active duty beneficiaries
    and Medicare-eligible retirees. However, the great strides made to
    improve benefits for these groups also tends to highlight 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 and cumbersome Standard benefit. Many, especially those
    who live in rural or metropolitan areas that are medically underserved,
    have great difficulty in locating TRICARE participating providers. This
    presents a dilemma for members who have no choice but to rely on
    providers who can charge higher prices and 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 enhancements recently provided to the over-65
    retirees (TFL) and active duty beneficiaries, extra steps are needed to
    provide a more consistent benefit to the under-65 retirees whose needs
    are not being met by TRICARE Standard.
        The Military Coalition recommends that subcommittee authorize
    extension of TRICARE Prime Remote coverage to retirees and their family
    members and survivors at the same locations where it is established for
    active duty families.
    Codify Requirement to Continue TRICARE Prime in BRAC areas
        In addition to our concerns about current benefits, the Coalition
    is apprehensive about the future benefits of military beneficiaries as
    DOD begins another round of base closures. Many beneficiaries
    deliberately retire in localities in close proximity to military bases,
    specifically to have access to military health care and other
    facilities.
        Currently, under current TRICARE Managed Care Support Contracts,
    the Contractors are required to provide the Prime benefit in Base
    Realignment and Closure (BRAC) areas. But these contracts can be
    renegotiated, and the contracting parties may not always agree on the
    desirability of maintaining this provision.
        The Coalition believes continuity of the TRICARE Prime program in
    base closure areas is important to keeping health care commitments to
    retirees, their families and survivors and would prefer to see the
    current contract provision codified in law.
        The Coalition urges the subcommittee to amend title 10 to require
    continuation of TRICARE Prime coverage for all uniformed services
    beneficiaries in BRAC areas.
    Fully Implement Portability and Reciprocity
        Section 735 of the fiscal year 2001 NDAA required DOD to develop a
    plan, due March 15, 2001, for improved portability and reciprocity of
    benefits for all enrollees under the TRICARE program throughout all
    regions. DOD has issued a memorandum stating that DOD policy requires
    full portability and reciprocity.
        However, because of contract complications, the delayed
    implementation of the National Enrollment Database (NED) and other
    unspecified reasons, this policy has yet to be fully implemented in all
    existing TRICARE regions. Enrollees are still experiencing a disruption
    in enrollment when they move between regions and are still not able to
    receive services from another TRICARE Region without multiple phone
    calls and much aggravation.
        The lack of reciprocity presents particular difficulties for
    TRICARE beneficiaries living in ``border'' areas where two TRICARE
    regions intersect. In some of the more rural areas, the closest
    provider or pharmacy may actually be located in another TRICARE region,
    and yet due to the lack of reciprocity, these beneficiaries cannot use
    these providers or pharmacies without great difficulty. This problem
    suffers especially by comparison with TFL, as TFL beneficiaries have
    full portability and reciprocity of both pharmacy and medical surgical
    benefits. Meanwhile, active duty and under-65 retired beneficiaries
    remain tied to the region where they reside. Under-65 beneficiaries who
    obtain prescriptions outside of their region actually must pay for
    their medications ``up front'' and apply to TRICARE for reimbursement.
        It is unfathomable that, despite years of focus on the need for
    portability and reciprocity, and the obvious disruptions and financial
    problems imposed on beneficiaries in the interim, this same problem
    persists year after year. Something is seriously wrong when our
    government requires nationwide mobility of military families, but has
    such little sense of urgency about making sure their health benefits
    can follow them.
        The Military Coalition strongly urges the subcommittee to direct
    DOD to expend the resources it needs to facilitate immediate
    implementation of portability and reciprocity to minimize the
    disruption in TRICARE services for beneficiaries.
    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, which
    unfairly transferred significant costs to servicemembers, their
    families and survivors. Under the TFL program, as second payer to
    Medicare, TRICARE pays beneficiary out of pocket expenses, called
    ``benefits plus benefits''. However, when Standard beneficiaries have
    other health insurance (OHI), TRICARE as second payer seldom pays out-
    of-pocket expenses, ``called benefits, less benefits.''
        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, and 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-1995 policy, TRICARE will not pay any reimbursement
    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
    direct DOD to eliminate the 115 percent billing limit when TRICARE
    Standard is second payer to other health insurance and to reinstate the
    ``coordination of benefits'' methodology.
    TNEX--TRICARE Next Generation of Contracts
        Last fall, DOD began development and discussions about the next
    round of managed care support contract procurements. The Coalition
    agrees that this is a critically important step, both for the
    Department and for beneficiaries. In this regard, we believe it will be
    important for representatives of beneficiary advocate groups to have
    direct and early input to that process. The Coalition believes strongly
    that TFL implementation has proceeded as well as it has only because of
    beneficiary organizations' collaboration, and that a DOD partnership
    with beneficiaries is essential to achieve mutual goals in enhancing
    health care programs and delivery.
        As the future contracts are procured, accountability is the
    Coalition's ultimate concern. If the current contracts are to be
    modified, to whom can the beneficiary go for the ``one-stop shopping''
    that is currently in place? Where will the beneficiary go for support?
    Who will ultimately be responsible for coordinating quality and
    efficacy issues among DOD policymakers and contractors, and how will
    this be accomplished?
        The Coalition is anxious to ensure that a stable program (while not
    without its difficulties) is not radically changed without clear
    evidence that outcomes of the effort will be an improvement and that
    the current level of service is not compromised. Transitions to new
    contractors, even when the contract design has not dramatically changed
    (as is proposed), has historically been tumultuous to all stakeholders,
    most importantly, the beneficiaries. The Coalition will be looking to
    determine what systems will be put in place, or are being contemplated,
    that will make the transitions to new contracts as seamless as possible
    to the beneficiary.
        The Coalition recommends that the subcommittee provide oversight to
    the development of the next generation of TRICARE contracts and ensure
    that Beneficiary Advisory Groups' inputs be sought early in the
    contract redesign process.
    TNEX Pharmacy Issues
        The discrepancy between Medicare-eligibles and other beneficiaries
    in the administration of the pharmacy program causes a great deal of
    problems and confusion for beneficiary families. Under TFL, the program
    is administered along Medicare boundaries, which comprise whole states.
    The TRICARE program for under-65 beneficiaries is subject to the
    arbitrary TRICARE regional boundaries. For example, a beneficiary
    couple residing in Northern VA faces a bewildering task finding help
    with pharmacy billing or other problems if one family member is over 65
    and the other is not. For TRICARE purposes, the spouse under 65 would
    be subject to Sierra's pharmacy network, because Northern Virginia is
    in TRICARE's Northeast Region. But the spouse over 65 can use both the
    Sierra network (Northeast) and the Humana network pharmacy (consistent
    with Medicare's ``whole state'' administration, all of Virginia's
    military Medicare-eligibles are managed under the auspices of Humana's
    Mid-Atlantic Region contract). Should the under-65 spouse attempt to
    get their medication filled at the over-65 spouse's Humana pharmacy in
    Northern VA, it may prove to be a not in Sierra's network--subjecting
    the beneficiaries to the higher out of network pharmacy costs. Trying
    to keep this myriad of ``who participates in which region/State''
    straight is an unnecessary burden for beneficiaries.
        This issue could be simply solved by changing the administration of
    the pharmacy contract to remove regional barriers from pharmacies and
    make the pharmacy network nation-wide. This would permit under-65
    beneficiaries the same portability as over-65 Medicare-eligible
    beneficiaries and solve the aforementioned portability and reciprocity
    issues, at least for pharmacy coverage.
        The Coalition urges the subcommittee to authorize DOD to modify the
    pharmacy contract to remove arbitrary barriers and make network
    pharmacy access universal for all beneficiaries.
        Another organizational issue concerns inequities in the
    administration of the pharmacy program. Currently, the TRICARE Managed
    Care Support Contractors are given great leeway in administering the
    program's prior authorization rules. Because four different contractors
    now administer the program, it is possible for one beneficiary to be
    granted access to a specific medication that is denied to a beneficiary
    with the same clinical findings who happens to live in a different
    region.
        In many cases, members receiving a medication without problems in
    one area have had the same medication denied after moving to another
    region. The Coalition believes that it is critical that the program be
    administered in a equitable manner.
        The Coalition urges the subcommittee to require the Department of
    Defense to develop a plan to provide for uniform administration of the
    pharmacy benefit nationwide.
    Uniform Formulary Implementation
        The Coalition is committed to work with DOD and Congress to develop
    and maintain a comprehensive uniform pharmacy benefit for all
    beneficiaries mandated by Section 701 of the fiscal year 2000 NDAA and
    will the monitor activities of the Pharmacy and Therapeutics Committee.
    The Coalition is hopeful for a robust formulary with a broad variety of
    medications in each therapeutic class based on clinical outcomes that
    fairly and fully captures the entire spectrum of pharmaceutical needs
    of the millions of uniformed services beneficiaries.
        The Coalition is grateful to this subcommittee for the role it
    played in mandating a Beneficiary Advisory Panel to comment on the
    formulary. Several Coalition members are members of the Beneficiary
    Advisory Panel and are eager to provide input on the program. The
    Coalition is aware that there will be limitations to access some
    medications; our efforts will be directed to ensuring that prior
    authorization requirements for obtaining non-formulary drugs and
    procedures for appealing decisions are communicated clearly to
    beneficiaries and administered equitably.
        The Coalition continues to believe DOD must do a better job of
    informing beneficiaries about the scope of the benefit (source
    documents), and program guidelines (to include prior authorization
    requirements, generic substitution policy, limitations on number of
    medications dispensed, and a listing of the formulary). The Coalition
    is pleased that some of this information has finally been posted on the
    web for the retail pharmacy benefit. However, we remain concerned that
    many beneficiaries don't have access to the Internet, and this
    information is not available through any other written source. As DOD
    approaches the uniform formulary implementation, it will be critical to
    make this information readily available to beneficiaries and providers.
        The Coalition urges the subcommittee to ensure a clinically based
    robust uniform formulary is developed and adequate communication is
    provided to beneficiaries about program benefits, pre-authorization
    requirements, appeals, and other key information.
    Requirements for Nonavailability Statements under TRICARE Standard
        The Coalition is grateful for the provision in the fiscal year 2002
    NDAA that waives the requirement for a beneficiary to obtain a
    Nonavailability Statement (NAS) or preauthorization from an MTF in
    order to receive treatment from a civilian provider and appreciates
    that the time line for implementation of this provision has been moved
    up from the fiscal year 2001 NDAA plan. However, except for maternity
    care, there are also several provisions for waivers that further
    diminish the practical effects of the intended relief from NAS and
    provide a great deal leeway for the reinstatement of NAS at the
    Secretary's discretion. The requirement would be waived if:

             The Secretary demonstrates that significant costs
            would be avoided by performing specific procedures at MTFs;
             The Secretary determines that a specific procedure
            must be provided at the affected MTF to ensure the proficiency
            levels of the practitioners at the facility; or
             The lack of an NAS would significantly interfere with
            TRICARE contract administration.

        The Coalition is disappointed that except for maternity care, the
    waiver of the TRICARE Standard NAS requirement has become a ``road
    paved with good intentions,'' but little more.
        The rationale for a complete waiver of NAS requirements is
    compelling. By choosing to remain in Standard, beneficiaries are
    voluntarily accepting higher copayments and deductibles in return for
    the freedom to choose their own providers. The Coalition appreciates
    that the intent of the NAS system, when CHAMPUS was an evolving
    program, was to maximize the use of MTFs. However, when TRICARE was
    created, it offered beneficiaries a choice in how to exercise their
    health care benefit.
        The Coalition is pleased to note that the TRICARE Reserve Family
    Demonstration Project (TRFDP) provides for increased access to health
    care for family members of activated reservists and guardsmen--
    including a total waiver of NAS requirement for ALL inpatient services.
    While this group of beneficiaries is most worthy of a robust health
    care benefit and deserves to maintain established relationships with
    their health care providers, the Coalition believes this benefit should
    be extended to all uniformed services beneficiaries--active duty and
    retired--as well.
        DOD must honor the decision made by beneficiaries and not insist
    that they ``jump through administrative hoops'' to exercise this
    choice, particularly since most care in MTFs and clinics is being given
    on a first priority basis to Prime enrollees anyway. More importantly,
    this capricious policy frequently denies TRICARE Standard
    beneficiaries, who have chosen the more expensive fee-for-service
    option, one of the most important principles of quality health care,
    continuity of care by a provider of their choice.
        The Military Coalition strongly recommends that all requirements
    for Nonavailability Statements be removed from the TRICARE Standard
    option and that all waivers be eliminated, effective upon enactment.
    TRICARE Retiree Dental Plan
        The Coalition is grateful for the subcommittee's leadership role in
    authorizing the TRICARE Retiree Dental Plan (TRDP). While the program
    is clearly successful, participation could be greatly enhanced with two
    adjustments.
        Unlike the TRICARE Active Duty Dental Plan, there is no Government
    cost-share for the premiums. This is a significant dissatisfier for
    retired beneficiaries. The Coalition believes dental care is integral
    to a beneficiary's overall health status. Dental disease left untreated
    can lead to more serious health consequences and should not be excluded
    from a comprehensive medical care program. As we move toward making the
    health care benefit uniform, this is an important feature that should
    be made more consistent across all categories of beneficiaries.
        Another problem with the TRDP is that it is only available within
    the continental United States (CONUS). The Coalition requests that the
    subcommittee extend the TRDP to uniformed services beneficiaries
    residing overseas.
        The Coalition requests that the Government provide a subsidy for
    retiree dental benefits and provide an OCONUS retiree dental benefit.
    Commonwealth of Puerto Rico CONUS Designation
        The Commonwealth of Puerto Rico is included in the TRICARE Overseas
    Program, which means TRICARE Prime is available only to active duty
    servicemembers and their families. Retirees living in Puerto Rico are
    excluded from this benefit. Under OCONUS regulations, the more
    expensive TRICARE Standard is the only available option for retired
    military personnel, their families and survivors. DOD has very limited
    direct care facilities, a limited benefit structure, and a severely
    limited contract provider network to serve this growing population.
        In addition, the TRICARE network pharmacies in Puerto Rico only
    serve the active duty population. The retiree population does not have
    access to network pharmacies, so they must rely on the National Mail
    Order Pharmacy (NMOP) or pay the higher cost of using non-network
    pharmacies. Because Medicare is provided as a benefit in Puerto Rico,
    TFL beneficiaries can participate in the program, but they still are
    subject to the serious pharmacy limitations.
        In light of the large number of retiree beneficiaries residing in
    Puerto Rico and the importance of the Commonwealth as a source for
    recruitment and an initiative for retention, The Coalition urges the
    subcommittee to support inclusion of the Commonwealth of Puerto Rico
    with the CONUS for TRICARE purposes
    Tax Relief for Uniformed Services Beneficiaries
        To meet their health care requirements, many uniformed services
    beneficiaries pay premiums for a variety of health insurance, such as
    TRICARE supplements, the active duty dental plan or TRICARE Retiree
    Dental Plan (TRDP), long-term care insurance, or TRICARE Prime
    enrollment fees. For most beneficiaries, these premiums and enrollment
    fees are not tax-deductible because their health care expenses do not
    exceed 7.5 percent of their adjusted gross taxable income, as required
    by the IRS.
        This creates a significant inequity with private sector and some
    Government workers, many of whom already enjoy tax exemptions for
    health and dental premiums through employer-sponsored health benefits
    plans. A precedent for this benefit was set for other Federal employees
    by a 2000 presidential directive allowing Federal civilian employees to
    pay premiums for their Federal Employees Health Benefits Program
    (FEHBP) coverage with pre-tax dollars.
        The Coalition supports H.R. 2125, introduced in the first session
    of the 107th Congress, that would amend the tax law to let Federal
    civilian retirees and active duty and retired military members pay
    health insurance premiums on a pre-tax basis. H.R. 2125 would extend
    the same privilege to all active and retired servicemembers and Federal
    civilians that is now enjoyed by current Federal workers. The Coalition
    hopes that the subcommittee will lend its support to this legislation
    and help ensure equal treatment for all military and Federal personnel.
        The Coalition strongly supports a first dollar tax exemption or
    credit for premiums paid for health, dental, or long-term care
    insurance products, as well as for TRICARE Prime enrollment fees.
        The Coalition urges the subcommittee to support H.R. 2125 to
    provide uniformed services beneficiaries a tax exemption for premiums
    paid for TRICARE Prime enrollment fees and Standard supplements.
    Custodial Care
        Once again, the Coalition thanks the subcommittee for including
    provisions in the fiscal year 2000 and fiscal year 2001 Defense
    Authorization Acts a definition of Custodial Care that meets industry
    standards to provide medically necessary care. 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.
        The Coalition remains committed to following closely the new
    program mandated by P.L. 107-107 and we urge continued oversight by
    Congress to monitor implementation and its impact on all classes of
    beneficiaries.
        The Military Coalition recommends Congress provide continued
    oversight to assure that medically necessary care will be provided to
    all Custodial Care beneficiaries; that Congress direct a study to
    determine the impact of the new legislation upon all beneficiary
    classes and that Beneficiary Advisory Groups' inputs be sought in the
    development of implementing regulations.
    Health Care Coverage for Reserve Component Members and Their Families
        Continuity of health care coverage is increasingly important to
    Guard and Reserve servicemembers and families activated in support of
    counter-terror or other operations. Health insurance coverage varies
    widely for members of the Guard and Reserve: some have coverage through
    private employers, others through the Federal Government, and still
    others have no coverage.
        For Reserve families fortunate enough to have employer-based health
    insurance, coverage can be dropped during an extended activation.
    Although TRICARE ``kicks in'' at 30 days activation, many Guard and
    Reserve families would prefer continued access to their own health
    insurance providers. Being dropped from private sector coverage as a
    consequence of extended activation adversely affects family morale and
    ``readiness'' and discourages some from reenlisting.
        Positive steps were taken in 2001 to address this issue, and TMC is
    appreciative of the leadership shown by DOD and Congress in this
    regard. First, DOD signaled there was indeed a problem by changing the
    department's policy for its reservist employees: DOD now pays employee
    premiums under the Federal Employee Health Benefit Program for
    reservist-employees activated for extended periods. Then, the
    subcommittee endorsed a change in law subsequently included in the
    fiscal year 2002 NDAA that authorizes other Federal agencies to pay the
    FEHBP premiums for their employees called up for more than 30 days. But
    these welcome new protections only potentially affect about 10 percent
    of the approximately 880,000 members of the Selected Reserve.
        Another provision included in the NDAA extends post-activation
    TRICARE coverage for Guard and Reserve servicemembers being released
    after an extended period of active duty. This is certainly encouraging
    progress, but TMC believes more needs to be done to assist Guard and
    Reserve servicemembers who are being called upon to support the two-
    front war on terrorism.
        The following initiatives would further expand the health care
    safety net for the Guard and Reserve:

             Establish TRICARE ``wraparound'' coverage as an option
            for reservists on a cost-share basis in ``peacetime'' and
            further expand TRICARE ``COBRA'' coverage for up to 1 year
            after deactivation;
             Amend the TRICARE Prime Remote for Family Members law
            to allow reservist family members not residing with their
            mobilized sponsors to participate in TPRFM.

        The Military Coalition urges the earliest possible action to ensure
    an adequate health coverage ``safety net'' for National Guard and
    Reserve members and families.
                             fehbp-65 demonstration
        By way of background for new subcommittee members, the Coalition
    wishes to update the subcommittee about the provision in the Fiscal
    Year 1999 Defense Authorization Act that directed the Defense
    Department to allow up to 66,000 Medicare-eligible uniformed service
    beneficiaries to enroll in the Federal Employees Health Benefit Program
    (FEHBP-65) at 6 to 10 sites around the country. The FEHBP-65
    demonstration was programmed to run from January 1, 2000, through
    December 31, 2002.
        During the first enrollment period, about 2,500 beneficiaries
    enrolled, and at the Coalition's request, this subcommittee supported
    an effort to expand the demonstration to two additional sites with
    beneficiary populations of 25,000 or more. During the second open
    enrollment period (November 2000), enrollments tripled from the year
    before and more than 7,500 Medicare-eligible service beneficiaries
    enrolled in FEHBP-65.
        As we anticipated, many of those beneficiaries have rethought their
    FEHBP enrollment since enactment of TRICARE For Life. As of January
    2002, 4,508 beneficiaries remain enrolled for this calendar year. Of
    those, 2,861 are residents of Puerto Rico, where access to pharmacy and
    other TRICARE programs are limited for retirees. The other 1,647
    beneficiaries are experiencing circumstances under which continuing to
    pay thousands of dollars per year in FEHBP premiums is preferable to
    alternative TRICARE options. Based on member comments, we suspect many
    participants have encountered difficulty finding a TRICARE-
    participating provider.
        The Coalition is concerned about disrupting continuity of health
    care for the remaining FEHBP-65 beneficiaries when the FEHBP-65
    demonstration concludes at the end of 2002. We believe the remaining
    enrollees are those who will have difficulty securing access to
    military health coverage if their eligibility for FEHBP participation
    is discontinued.
        Considering TRICARE For Life (TFL) costs that will be foregone, the
    cost to the Government of continuing their eligibility is very modest,
    while yielding very positive continuity of care benefits for the
    beneficiaries affected.
        The Coalition understands that maintaining a separate demonstration
    program for such a small population could pose a considerable
    administrative challenge. But discussions with the Office of Personnel
    Management and other interested parties has led us to believe that
    there would be no objection from the Federal civilian community to
    allowing this small number of remaining enrollees to convert their
    current participation to the normal FEHBP plan, as if they were retired
    Federal civilian employees. The Coalition believes this option offers a
    reasonable option to end the FEHBP-65 demonstration and still preserve
    essential continuity of care for this small group that is so obviously
    concerned about the availability of other coverage options.
        The Military Coalition urges the subcommittee to work with its
    Government Reform Committee counterparts to authorize remaining FEHBP-
    65 demonstration enrollees to convert to regular FEHBP coverage.
                                   conclusion
        The Military Coalition would like to reiterate its profound
    gratitude for the extraordinary progress this subcommittee has made in
    seeking to restore health care equity for all uniformed services
    beneficiaries, particularly those who are Medicare-eligible. The
    subcommittee's efforts to authorize the implementation of TFL and TSRx
    are giant steps toward honoring the lifetime health care commitment.
    With minor refinements, TFL should provide a comprehensive and
    equitable health care benefit for all Medicare-eligible beneficiaries
        But much work remains to be done with the TRICARE program. More
    urgent effort is essential, both by Congress and DOD, to enable TRICARE
    to attract and retain quality health care providers; to ensure prompt
    upgrade of the claims processing system; to reduce or eliminate
    preauthorization and NAS requirements; and to deliver a more uniform
    health care benefit across all ages and geographic areas.
                               closing statement
        Thank you very much for the opportunity to present the Coalition's
    views on these critically important topics. We look forward to
    addressing further details of these and other issues with you and the
    subcommittee staff.

        Senator Cleland. Thank you very much, Dr. Schwartz. You all
    have done a very fine presentation today of the issues facing
    the committee and our military families out there.
        Mr. Barnes, thanks for mentioning the commissary issue. We
    would like to have you all elaborate on it a little bit. It
    does seem to me that, with the tremendous tasks that our
    military is called upon to perform around the world and the
    strain and stress on our families, that this is not the time to
    cut back on our commissary system, especially since it is
    perceived as a benefit, and categorized as a benefit by the
    GAO. It is a very tangible one which families, especially the
    spouses who we are trying to make a little happier out there,
    engage in certainly weekly.
        I just wondered if you had any further comment on that.
        Mr. Barnes. Mr. Chairman, I appreciate your comments before
    the first panel about the importance of this benefit. As you
    mentioned, the commissary is consistently ranked as one of the
    top benefits, if not the top one or two benefits, for the
    family and military communities. The concerns are based on the
    personnel reductions as we understand are under way during the
    current fiscal year and will continue into fiscal year 2003. We
    anticipate the further along we go the more we are going to
    hear from our members, who are the commissaries.
        We are hearing anecdotal comments about long lines and
    reduced checkers. I also heard mention this morning of a trial
    run on how a store is going to operate with reduced staffing. I
    heard this while we were in line outside the hearing room.
        We would stress the importance of the benefit. We do
    acknowledge the significant management improvements and
    increased savings that General Courter and the staff at DeCA
    have implemented in recent years. We track this very closely.
    Joyce Raezer and myself both sit on the DeCA Patron Council and
    we are watching this very closely, and we appreciate your
    strong support of the benefit.
        Senator Cleland. Thank you. Keep an eye on that for us,
    please. This is something that I think is really important,
    especially to our military families.
        Thanks for mentioning the end strength challenge. I really
    do not see how we are going to keep our commitments out there,
    particularly pursuing the war on terrorism and going wherever
    Osama bin Laden and his terrorist cadre carry us in hot
    pursuit, and expanding the war in Indonesia, the Philippines,
    Yemen, and so forth. I do not see how in the world we are going
    to continue to expand our commitments with the current end
    strength.
        The Chief of Staff of the Army testified before our
    committee that he needed 40,000 more people. Now, that is not
    3,000. That is 40,000 more people. That is what, three or four
    divisions? I do not know.
        The Chief of Staff of the Navy testified that he needed
    8,000 people. The Chief of Staff of the Air Force testified
    that he needed 1,200 more pilots. The American military is
    terrific, but if you do not have the people you cannot do the
    job, and we are stressing our people out there big time, as you
    all well know, and that takes its toll on the families and
    retention and all the things we want.
        So thanks for mentioning that as one of the issues we have
    to tackle.
        Ms. Raezer, better information to families, that is a great
    thing. In the terms of the total force concept, it is
    interesting. You put it in an interesting way, the family is
    part of the total force. You put that beautifully.
        May I say, your emphasis on child care is a painfully
    obvious one for our working families.
        Mr. Lokovic, concurrent receipt is something that I guess I
    have dealt with for 35 years now myself, having been wounded in
    1968 as a young Army captain and in effect having to choose
    between military retirement and VA compensation. It is a
    terrible choice to have to make for the some 3 million disabled
    American veterans out there, many of whom are military
    retirees. They have to make a choice, but they did not have too
    much of a choice when they were wounded.
        I am on that legislation, and I hope we can do something
    good with it.
        Mr. Cline, Dr. Schwartz, any further comments on anything
    you have on your mind, particularly on this commissary issue?
    That seems to be one that is really hot and boiling and one we
    need to get right on top of.
        Mr. Cline. The one thing I would like to say, Mr. Chairman,
    is that in our own organization, we would like to see the
    commissary card done away with. It is a burdensome thing for
    the full-time administrator at the unit. He spends an enormous
    amount of time every year, actually almost a week of work,
    giving these cards out to the people, and we believe that money
    could be used elsewhere for other programs like the Montgomery
    GI Bill. To relegate our Guard and Reserve people who are
    answering the call to second-rate status is bothersome.
        Senator Cleland. Thanks.
        Dr. Schwartz.
        Dr. Schwartz. I know my boss is in the room, but as soon as
    this hearing is over I am running over to the commissary to do
    some shopping. This is a very important benefit to me. I am an
    active duty spouse and I try to get to the commissary as much
    as I can. It is definite cost savings to us, and we really
    appreciate how the commissary has improved the service. In the
    national capital area, as an active duty spouse I can run in,
    run out. The shelves are stocked, the staff is doing a great
    job, and we really appreciate your support for this very
    important benefit.
        Senator Cleland. We all have psychological reasons for
    going in the military and psychological benefits for having
    served. But there is nothing like something that reminds you
    that the country cares, that you can see and touch and feel and
    experience. For me, going to a commissary is not so much the
    money I save, but it is just the fact that there is something
    there that shows that the country still cares.
        Dr. Schwartz. Well, Mr. Chairman, I like the money savings,
    but I agree with you.
        Senator Cleland. Right. I do not have a spouse, and maybe
    that is the reason I do not worry about it.
        But the point is, for many families they do need the
    monetary savings, but for me it is just a message there, a
    psychological message that I receive: The country still cares,
    the country still thinks about me, and they have not forgotten
    me. For me personally, it is a very important part of our whole
    way that we take care of our own.
        Anyone else have a comment? Yes, ma'am, Ms. Raezer.
        Ms. Raezer. I would like to emphasize that as well. That
    feeling that somebody is watching out for us is especially
    important for those folks overseas.
        Senator Cleland. Yes.
        Ms. Raezer. That is one of our big concerns about the whole
    staff cutback, how that is going to affect the service to the
    most remote of some of our families, for whom this is home, and
    it is a sign that the country still cares in a very tangible
    way.
        We have applauded DeCA's outreach efforts to young
    families, the families who were not using the benefit, to our
    Guard and Reserve families, to bring them in and make them
    aware of this benefit. The generation who came in without
    knowledge of the commissary and really did not understand what
    this benefit was now, thanks to the efforts of the store
    directors in their local communities, understand the savings
    and are using it. DeCA is providing nutrition information, menu
    preparation help, making the stores more attractive for people
    to go in and grab a quick lunch on the base, which is very
    important now. With all the heightened security, it is a lot
    harder to get on and off base.
        We really do applaud those efforts. When we look at some of
    these cutbacks, we are worried that that outreach might go away
    and that our beneficiaries might not be able to have that
    robust benefit anymore, and for the overseas folks the touch of
    home. That is one of the things that scares us about some of
    the privatization talks as well--who is going to watch those
    folks in Incirlik, Turkey, and Misawa, Japan, and those real
    far-away areas?
        Senator Cleland. I look at the support for the troops, let
    us put it that way generically, as a command responsibility. I
    feel like I am in the chain of command and that as a citizen,
    as a Senator, I have responsibility for the troops,
    particularly in this office here, and that support for the
    troops is a command responsibility and that the further they
    are away from the flagpole the more that we have to work hard
    to make sure that they know we support them. In fact, the
    further away that family is from home, the more valuable that
    touch of home, those products of home, mean.
        Money saved is important, absolutely. But just the fact
    that it is there and we are working hard to make sure that it
    is available to you as a family, I think that is powerful. I
    think the reverse is true. To begin cutting back on something
    like that, given the entire Pentagon budget of a billion a day,
    is a little bit short sighted, it seems to me.
        So you can count on me as chairman of this subcommittee to
    oppose privatization and support the commissary system in every
    way, because I think it is one of the best investments we can
    make to shore up our families that are under tremendous stress
    out there as they serve our country, as they literally defend
    our Nation and our way of life.
        Thank you all very much for coming. I want to thank our
    staff here for their patience this year in putting together
    these hearings.
        The subcommittee is adjourned.
        [Questions for the record with answers supplied follow:]
                   Questions Submitted by Senator Ben Nelson
        1. Senator Ben Nelson. Secretary Abell, I would like to thank you
    for your very comprehensive and informative written testimony. Both you
    and Mr. Stewart from the GAO mentioned a concern that I have heard from
    Offutt Air Force Base in Nebraska, as well as many other military
    installations across the country--a lack of child care centers. The
    number of military families continues to rise, and due to the remote
    locations of many of our bases it is difficult for military families to
    find adequate and accredited child care. I believe child care centers
    are inexpensive to operate and go a long way towards increasing
    retention. As our servicemembers are older and have larger families now
    more than in the past, it is important that we become more family
    friendly. What are we doing to meet this increasing demand and does
    this budget support the need for child care centers?
        Mr. Abell. The Department is committed to increasing the
    availability of quality, affordable child care for the Total Force. The
    Department and the military services continue to work closely together
    to meet the child care need through a balanced mix of child development
    centers, school-age care programs and Family Child Care (FCC) homes.
    While center construction and operation is not necessarily inexpensive,
    DOD operates programs in the most efficient manner to ensure care is
    affordable to the military customer.
        Currently, there are over 800 child development centers throughout
    DOD. The projected need for center construction was outlined in a
    report to Congress last year. The proposal is to increase the number of
    center spaces by 25,000, in conjunction with increasing the number of
    FCC spaces and other viable expansion options. The construction program
    for fiscal year 2003 included only two child development centers. We
    have resolved to increase management oversight to ensure that the
    military services maintain a focus on their commitment to expand child
    care spaces.

        2. Senator Ben Nelson. Secretary Abell, as authorized in 1996, the
    Department of Defense is executing the Military Housing Privatization
    Initiative. The initiative was intended to improve the quality of life
    for military families living on base. However, since the servicemember
    must now pay his or her housing allowance to a private firm, the
    housing allowance is considered income. The unintended consequence has
    resulted in the disqualification of many military children from the
    National School Lunch Program. Some school districts like Bellevue
    Public Schools in Nebraska are heavily impacted by this procedure. Do
    you know of a solution to this problem other than legislation that
    would exempt their housing allowance as income in determining the
    eligibility of a student living in private on base housing for the
    National School Lunch Program?
        Mr. Abell. Students qualify for free or reduced price meals based
    on family income. Even though they do not have housing or utility
    costs, families may qualify when they live in base housing and do not
    receive a housing allowance. Similar families may not qualify when they
    live in off-base housing because the Basic Allowance for Housing (BAH)
    is considered as par of their take-home pay. This has been the case for
    many years. When a military housing area is privatized, BAH is added to
    the income of all the occupants--even though they turn it over to their
    privatized housing provider. These families do not have additional
    housing or utility costs. One consequence is that the local school
    district receives reduced funding to support instructional programs and
    food service programs in those cases where funding is based on the
    number of students in the National School Lunch Program.
        The value of improved quality, size and numbers of Government
    quarters as a result of privatizing military housing combined with the
    recent and planned military pay raises, which will exceed inflation,
    will offset the potential loss of school lunch eligibility for some
    families.
                                     ______

                   Question Submitted by Senator Wayne Allard
        3. Senator Allard. Secretary Abell, first thank you for returning
    here. It is good to hear your wisdom again. Second, I want to ask you
    about the TRICARE Next Generation (T-NEX) contracts. I have continued
    to hear mostly good things from my constituents regarding their TRICARE
    benefits, but lately I have begun to hear some concerns from service
    providers. Memorial Hospital, in the Colorado Springs area is among the
    largest service providers in the western region. The Colorado Springs
    area itself has the third highest concentration of military retirees in
    the country, and the volume at Memorial reflects this. But TRICARE
    reimbursement rates are the same for a procedure regardless of the
    setting in which it is performed, which sometimes puts hospitals at a
    disadvantage to clinics and outpatient facilities. In a large volume
    hospital this becomes cost prohibitive. Are there plans to address this
    in the next round of contracts, or sooner?
        Mr. Abell. The Department is also concerned over the impact of our
    reimbursement system on network providers, especially in areas such as
    Colorado Springs with its high military presence. The congressional
    mandate to follow Medicare guidelines has driven a negative trend in
    some ambulatory procedure reimbursement levels.
        More specifically, TRICARE formerly paid ``billed charges'' for
    outpatient hospital services. However, like Medicare, we now require
    use of Health Care Procedure Code System (HCPCS) codes (rather than
    revenue codes) for some services. Those services are paid at the
    CHAMPUS Maximum Allowable Charges (CMAC) associated with those codes,
    and CMAC rates are now the same as Medicare rates. TriWest, the Managed
    Care Support Contractor for the Central Region, confirms that this
    change in payment methodology has resulted in lower payments to
    Memorial for outpatient services, although the hospital has partially
    recouped the difference by renegotiating its discount rates for
    services to TRICARE beneficiaries.
        While the Department is still in the process of finalizing the
    requirements under T-NEX, the Department does plan to align TRICARE
    more closely with the Medicare Ambulatory Reimbursement System,
    including eventual implementation of Medicare's prospective payment
    system for outpatient hospital services.
                                     ______

                  Questions Submitted by Senator Susan Collins
        4. Senator Collins. Secretary Abell and Mr. Stewart, dependent
    education is a significant quality of life issue that faces our
    military today. The Department of Defense Dependent Schools (DODDS)
    system offers a quality educational experience to the children of our
    military personnel--as evidenced by students' achievement levels and
    high test scores. In order to maintain this valuable benefit and
    quality education we must actively recruit, retain, and adequately
    compensate the DODDS educators. Please describe what actions are being
    taken to recruit, retain, and ensure adequate compensation for these
    educators who dedicate their services in often remote and high cost-of-
    living areas?
        Mr. Abell. The Fiscal Year 2002 National Defense Authorization Act,
    Senate Report 107-62, asked that the General Accounting Office (GAO)
    study the adequacy of teachers'  compensation. The Department of
    Defense Dependent Schools have cooperated with the GAO. To ensure that
    Department of Defense Dependent Schools recruit and retain high quality
    educators, we have developed and implemented a number of strategies.
    Locally available qualified teachers, often military spouses, are given
    hiring priority. To increase work force diversity, recruitment efforts
    are targeted at Historically Black and Hispanic Association colleges
    and universities. Colleges and universities with nationally recognized
    or disinguished teacher educator programs are also a target for
    recruitment efforts.
        We have increased the number of student teaching agreements between
    Department of Defense Dependent Schools and colleges and universities.
    Working with the Office of Personnel Management, we have obtained the
    authority to pay recruitment and relocation bonuses and retention
    allowances to DODDS educators. We are developing guidance to implement
    the authority to use Student Loan Repayment as a recruitment and
    retention incentive. Finally, DODDS conducted a Teacher Transfer
    Program designed to foster movement into and out of hard-to-fill duty
    locations.
        Mr. Stewart. We currently have work underway in this area The
    National Defense Authorization Act for Fiscal Year 2002 (Public Law
    107-107) requires GAO to report on the adequacy of compensation for
    teachers in DOD's overseas schools for recruitment and retention. We
    have met with staff of the Senate and House Armed Services Committees
    to discuss the scope and timing of this study, and agreed to provide a
    report by the end of the calendar year. Key questions are: (1) To what
    extent do Department of Defense Dependent Schools (DODDS) experience
    difficulties recruiting teachers? (2) To what extent do DODDS
    experience difficulties retaining teachers? and (3) How are DODDS
    teachers compensated, and what, if any revisions should be made to the
    system?

        5. Senator Collins. Secretary Abell and Mr. Stewart, the Nation has
    come to depend more and more upon our Reserve Forces and National Guard
    to defend our freedom. Proof of this is the fact that as of April 10,
    83,264 total Reserve and Guardsmen have mobilized for active duty to
    support current military operations. These forces are serving a
    critical role in support of Operation Enduring Freedom/Operation Noble
    Eagle and homeland security efforts to fight the global war against
    terrorism. These brave men and women are serving side-by-side with our
    Active-Duty Forces. As such, it is my belief that our Reservists should
    be provided quality of life benefits that will ensure that we retain
    and recruit these valuable men and women. Specifically, recent
    initiatives in Congress have led to a significant increase in
    Montgomery GI Bill (MGIB) benefits for our active duty servicemembers;
    however, the Selected Reserve (SR) benefits have not seen a
    proportional increase to their title 10 benefits. This could be a great
    recruiting and retention tool in light of increased operations and
    reliance on this SR force. Please comment on the current SR MGIB
    educational benefits compared to the Active-Duty Forces, and further
    describe how this military benefit will support retaining and
    recruiting our Reserve Forces.
        Mr. Abell. The Montgomery GI Bill for the Selected Reserve (MGIB-
    SR) education benefit program is a non-contributory program that
    provides educational assistance to Reserve component members who
    enlist, reenlist, or agree to serve in the Selected Reserve for 6
    years. Each Reserve component is required to deposit an amount into the
    Educational Benefits Trust Fund to cover the cost of this program for
    their eligible servicemembers. In contrast, the active duty program
    requires the servicemember to contribute $1,200 in the first year of
    service if the member wishes to participate in the program. Active
    component members must complete 2 years of active duty to establish
    eligibility and if they use their Montgomery GI Bill while on active
    duty they receive benefits up to the authorized amount. Unlike previous
    GI Bill programs and the Montgomery GI Bill for active duty
    servicemembers, the Montgomery GI Bill-Selected Reserve program
    provides for receipt of benefits before the qualifying military service
    is completed. As such, this unique characteristic of the Montgomery GI
    Bill-Selected Reserve program makes it a very attractive and important
    recruiting tool.
        The retention of quality servicemembers beyond their service
    obligation enhances readiness, reduces training costs, reduces
    recruiting requirements, and promotes I unit cohesion. Since
    eligibility for benefits is contingent upon the Guard or Reserve member
    continuing to serve in the Selected Reserve, it also functions very
    effectively as a retention tool with participants retaining eligibility
    for up to 10 years if they continue to serve in the Selected Reserve.
        For full-time students the benefits are currently paid at the rate
    of $272 per month for up to 36 months of education. This differs from
    the active component program that requires completion of their military
    service prior to the start of the 10-year delimiting period. The
    current full-time rate payment for the active duty Montgomery GI Bill
    benefits is $800 per month.
        During fiscal year 2002 there were 431,692 Selected Reservists
    eligible for Montgomery GI Bill-Selected Reserve with 154,190
    participating in the program.
        In December 2001, in conjunction with the Reserve components and
    the Board of Actuaries, the Department analyzed the potential for
    increasing Montgomery GI Bill--Selected Reserve benefits. The review
    indicated that, although desired, an increase proportionate to the
    Active component in the monthly benefits for this program is not
    feasible at this time based on resource constraints.
        Similar to the active duty enhanced educational benefit, an
    enhanced educational benefit was enactecl in 1996 (section 1076 of
    Public Law 104-106; 110 Stat. 450, February 10, 1996). This is commonly
    called the MGIB-SR ``Kicker'' and is paid in addition to the basic
    educational benefit. The kicker pays up to $350 per month for members
    of the Selected Reserve who agree to serve in a skill or specialty that
    has been designated as critically short. This additional benefit has
    assisted the Reserve components in meeting their recruiting and
    retention needs within critical skills and units. The Active component
    ``kicker'' allows for up to a maximum of $950 per month to meet skill
    and specialty requirements.
        We recognize the tremendous contributions made by the Reserve
    component members to defend our freedom as they were designed to do,
    side-by-side with the active duty counter parts in times of national
    emergencies, such as Operations Noble Eagle and Enduring Freedom.
    Furthermore, we support annual increases in the Montgomery GI Bill-
    Selected Reserve educational assistance program. However, these
    increases must be uniform and in concert with the Reserve components'
    ability to resource them. At this time, an increase proportional to the
    active duty program increases would be costly and current usage rates
    do not support such an increase.
        A side-by-side comparison of the basic and kicker benefits
    available under the Montgomery GI Bill-Selected Reserve and Montgomery
    GI Bill programs is attached.

        Mr. Stewart. In our testimony, we focused on benefits for active
    duty members and did not review benefits for members of the Reserves.
    We will be pursuing Reserve benefit issues pursuant to a mandate in
    House Report 107-436 on the National Defense Authorization Act for
    Fiscal Year 2003. The report requires GAO to review Reserve
    compensation, benefit, and personnel support programs and to report our
    findings and recommendations to Congress by March 31, 2003.

        [Whereupon, at 11:35 a.m., the subcommittee adjourned.]